The Monetary Authority of Singapore (MAS) announced significant amendments to the Payment Services Act (PS Act) and its subsidiary legislation, marking a pivotal step in expanding the regulatory framework for payment services within the city-state.
These amendments, which aim to incorporate a broader spectrum of digital payment services under regulatory oversight, will be implemented in phases starting April 4, 2024.
The modifications are designed to encompass a wider range of activities under the PS Act’s regulatory domain, including:
- The provision of custodial services for digital payment tokens (DPTs),
- The facilitation of DPT transmissions between accounts, and the facilitation of DPT exchanges, even when service providers do not directly handle the funds or DPTs,
- And the facilitation of cross-border money transfers between different countries, irrespective of whether the funds are received or accepted in Singapore.
These comprehensive changes are intended to empower MAS with the authority to impose stringent requirements on DPT service providers.
These requirements pertain to anti-money laundering and countering the financing of terrorism, in addition to ensuring user protection and maintaining financial stability.
To facilitate a smooth transition under the expanded scope of the PS Act, MAS will offer transitional arrangements for entities currently engaged in activities now subject to regulation.
These entities must promptly notify MAS within 30 days and submit a licensing application within six months from April 4, 2024, if they intend to continue their operations provisionally during the license review process.
Furthermore, the licensing application must be supported by an attestation report on the entity’s business activities and its adherence to anti-money laundering and countering the financing of terrorism standards.
This report must be verified by a qualified external auditor and submitted within nine months of April 4, 2024. Once the amendments take effect, entities failing to meet these requirements will be compelled to discontinue their regulated activities.
Additionally, the amended Payment Services Regulations concerning the safeguarding of customer assets by DPT service providers will be enforced six months from the initial implementation date.
These regulations mandate the segregation of customer assets into trust accounts for their benefit, the maintenance of accurate books and records, and the establishment of robust systems and controls to safeguard the integrity and security of customer assets.
These regulatory enhancements signify MAS’s commitment to bolstering the safety, stability, and integrity of Singapore’s rapidly evolving digital payment landscape.
