The first Notice covers account issuance, money transfers and money changing services. The second Notice sets out a separate framework for digital payment tokens.
MAS (the Monetary Authority of Singapore) has issued a consultation paper on proposed AML/CFT Notices for payment services providers under the new Payment Services Act.
Following the passage of the Payment Service Bill in January 2019, the Payment Services Act will empower MAS to regulate significant payment systems and the provision of payment services in Singapore. In April, MAS issued a consultation on new requirements for payment services licensees and designated payment systems.
The licensing framework under the Act comprises three classes of payment services licences: money-changing licensees; standard payment institutions; and major payment institutions.
The Proposed Notices
MAS is proposing to issue two new AML/CFT notices, applicable to all classes of payment services providers, which will bring together and update existing requirements and introduce new requirements on newly regulated payment services.
The first Notice (draft) covers services related to account issuance, domestic money transfers, cross-border money transfers and money-changing, superseding but remaining aligned with current AML/CFT requirements for money-changers, remittance providers and stored value facilities.
The second Notice (draft) sets out a separate framework for regulating services related to DPTs (digital payment token), commonly known as cryptocurrencies.
In the paper, MAS reiterates that it considers DPT transactions to carry higher inherent ML/TF risks due to the anonymity, speed and cross-border nature of the transactions, a view is consistent with the position taken by FATF (the Financial Action Task Force) in its standards for so-called VASPs (virtual asset services providers).
In line with the FATF Standards, MAS will introduce AML/CFT requirements on licensees that are DPTS (digital payment token service) providers who deal in DPTs, or facilitate their exchange for fiat currency or any other DPT.
MAS intends to require that AML/CFT measures also be applied for providers that facilitate the transfer of DPT or provide custodian wallet services, and asks for suggestions on other types of DPT-related services that could also pose ML/TF risks.
The Proposed Requirements
The AML/CFT requirements will make licensees obligated to take appropriate steps to identify, assess and understand their ML/TF risks, and develop and implement policies, procedures and controls for the effective management of such risks.
This includes policies, procedures and controls in relation to CDD (customer due diligence), transaction monitoring, screening, suspicious transactions reporting and record keeping. Enhanced measures should be performed where higher ML/TF risks are identified.
The requirements also include monitoring the implementation of policies, procedures and controls, and enhancing them if necessary.
MAS is requesting comments on a number of areas, including proposed requirements for licensees relating to low risk ‘exempted products’; whether simplified CDD should be permitted; whether third party reliance for CDD is appropriate; and proposed requirements for correspondent account services, among others.
The consultation paper, available here, is open for comment until 5 July.