The Monetary Authority of Singapore (MAS) has proposed to expand the scope of the Payment Services Act 2019 (PS Act) to cover additional digital payment token (DPT) services and money transfer services.  MAS’s proposals, set out in a December 2019 consultation paper, are largely driven by enhanced standards adopted by the Financial Action Task Force, a global standard-setting organisation focused on anti-money laundering and countering the financing of terrorism (AML/CFT).  If adopted, MAS’s proposals would extend the payment services licensing and AML/CFT regime to companies providing the affected DPT and money transfer services.

DPT and Money Transfer Services Affected by the Proposed Amendments

MAS proposes to regulate the following services under the PS Act:

1. Services that accept DPTs for the purpose of transferring or arranging the transfer of them from one address or account to another, whether either account or address is in Singapore;
2. Services that arrange the transmission of DPTs from one address or account to another, whether either account or address is in Singapore;
3. Services that safeguard or manage DPTs or instruments that enable control over DPTs, where the service provider has control over the DPTs or the instruments;
4. Services that actively facilitate DPT transactions even if the service provider does not come into possession of money or DPTs; and
5. Cross-border money transfer services where the service provider does not accept or receive moneys in Singapore.

Other Amendments

MAS also proposes the following amendments to the PS Act:

• Authorising MAS to impose user protection measures on certain DPT service providers to ensure the safekeeping of customer assets.  This new power will enable MAS to impose, for example, measures to ring fence and prevent comingling of customer assets and to prescribe the manner of maintaining assets.
• Authorising MAS to regulate certain DPT service providers by way of subsidiary legislation.
• Expanding the scope of domestic money transfer service to include situations where either the payer or the payee is a financial institution (the present scope of “domestic money transfer services” under the PS Act covers only payment transactions between a payer and payee in Singapore where neither party is a financial institution).

It should be noted that MAS is not proposing specific user protection measures or subsidiary legislation in this consultation; it is proposing new authorities in this consultation and will propose specific user protection measures and subsidiary legislation in future consultations.

MAS also intends to introduce a new class of financial institutions that are created in Singapore and provide virtual asset services outside of Singapore.  MAS will consult on this topic in the future.

The submission for comments on the proposed amendments will close on 28 January 2020.

For More Information

OrionW regularly advises FinTech clients on payment services regulation and licensing matters.  For more information about the Payment Services Act, or if you have questions about this article, please contact us at info@orionw.com.

Disclaimer: This article is for general information only and does not constitute legal advice.

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