MAS Offers New AML/CFT Guidance for VASPs

MAS has identified several VASPs that have not come forward for licensing despite operating in Singapore or soliciting business from Singapore residents.

MAS (Monetary Authority of Singapore) has published a new infographic setting out its supervisory expectations on AML/CFT controls for the Digital Payment Token (DPT) sector.

The infographic is intended to raise industry awareness among DPT service providers of sectoral money laundering and terrorism financing (ML/TF) risks, and provide additional information to support their implementation of effective controls.

MAS points to a 12-month review conducted by the FATF (Financial Action Task Force), in which it noted that virtual assets have been commonly used as a means of layering illicit transactions, where VASPs operating in jurisdictions that lack effective AML/CFT regulation were more likely to be exploited. The ongoing Covid-19 pandemic has also resulted in an increased use of virtual assets to move and conceal illicit funds.

In Singapore, MAS has noted an upward trend of suspicious virtual asset transactions reports lodged with law enforcement, including transactions relating to scams, fraud, cybersecurity related offences, and darknet marketplaces. Law enforcement agencies have also taken a series of enforcement actions against illicit DPT activities, including the jailing of a woman for providing an unlicensed payment service using bitcoin.

MAS surveillance efforts have also identified several VASPs that have not come forward for licensing despite operating in Singapore or soliciting business from Singapore residents. Action has been taken against such entities – including to list them on MAS’ investor alert list and refer them to law enforcement.

Existing VASPs operating in Singapore were required to notify MAS and submit licence applications by 28 Jul 2020, following the introduction of the new Payment Services Act in January 2020, which brought into scope DPT dealing and exchange activities.

Further amendments to the Act were made in Jan 2021 to include additional DPT activities – providing custodial wallet services and facilitating the transfer of DPT. Further updates to Notice PS-N02 and the accompanying Guidelines are in train to apply AML/CFT requirements to the newly scoped-in DPT services, MAS says.

“Entities that deal in DPT; facilitate the exchange of DPT; facilitate the transmission of DPT; and/or provide custodian wallet services, will therefore be required to be licensed as DPT service providers, and comply with the AML/CFT requirements.”

The infographic outlines the key components of PS-N02, with which DPT service providers are expected to comply.

Specifically, detailed guidance is provided in relation to requirements to assess risk in new products and technologies; enhanced CDD for PEPs and higher risk customers; ongoing monitoring of business relations and transactions; and value transfer requirements.

MAS also highlights that DPT service providers should conduct regular reviews of their policies, procedures and controls.

The infographic is available here.

It should be read in conjunction with the Notice PS-N02 and accompanying Guidelines.

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