Response to feedback received on MAS consultation paper – Payment Services Act 2019

      The Monetary Authority of Singapore (“MAS”) released a consultation paper on 23 December 2019 on proposed changes to the Payment Services Act 2019 (“Payment Services Act”). The consultation paper closed on 28 January 2020 and MAS has released comments on responses received from the industry.

      We have described key queries raised by the respondents and clarifications provided by the MAS.

      Amendments relating to AML/ CFT

      MAS has offered clarifications pertaining to the following type of persons who would fall within the regulated activities of Payment Services Act:

      • Entities buying or selling any digital payment tokens, including their own tokens, in exchange for any money or any digital payment token, constitutes “dealing in digital payment tokens” and will be required to be licensed under Payment Services Act
      • Intermediaries who carries on the business of buying or selling digital payment tokens on an issuer’s behalf will also need to be licensed under Payment Services Act
      • The Payment Services Act prohibits any person from soliciting provision of payment services if unless the person is licensed, exempt payment services provider or is exempted from being licensed
      • MAS intends to regulate financial institutions, entities created in Singapore but are carrying out the business of providing virtual asset activities outside of Singapore to be licensed under Payment Services Act
      • Entities buying or selling digital payment token including their

      Transfer of digital payment tokens

      MAS has offered clarifications pertaining to the management of transfers of digital payment tokens within the Payment Services Act.

      • Any service of  accepting digital payment tokens  from one digital payment token account to another account for the purposes of transmitting, or arranging for the transmission of digital payment tokens to another digital payment token account be regulated under Payment Services Act
      • Enhanced due diligence measures should be applied where transfer involves persons who do not fall within the definition of an “ordering institution” or a “beneficiary institution” such as unregulated digital payment token provider or a private wallet
      • Entities involved in pure technical activities such as blockchain mining or development of software are not required to be regulated under Payment Services Act
      • Entities who operate a digital payment token exchange for the purposes of an offer or invitation to buy or sell any digital payment token in exchange for any money or any digital payment token will be regulated under Payment Services Act as an entity “facilitating the exchange of digital payment tokens”
      • Digital payment token service provides would be required to maintain accurate originator information and required beneficiary information on token transfers immediately and securely submit the information to beneficiary digital payment token service providers and counterparts
      • Digital payment token service provider must screen the value transfer originators and beneficiaries even if they are not its customer, against relevant information sources to identify and mitigate against its ML/TF risks
      • Digital payment token service providers must comply with AML/CFT requirements even if the functions are outsourced to third party services providers and adhere to MAS Outsourcing Guidelines

      Provision of custodial wallets for or on behalf of customers

      • Entities providing custodial wallet services who have “control” over the digital payment tokens will be required to be regulated under the Payment Services Act. “Control” means the digital payment token service provider has the ability to control access to any digital payment token or to execute transactions involving digital payment tokens
      • A digital payment token service provider who carries on the business of transmitting or arranging the transmission of digital payment tokens would be caught for services of safeguarding or administration of digital payment tokens and will be subjected to comply with  AML/CFT requirements.
      • Any entities who maintain e-wallets that hold both moneys and digital payment tokens and the entities carry on the business of providing digital payment token services, account issuance services and e-money issuance services would need to be regulated under the Payment Services Act.

       

      Active facilitation of digital payment token activities

      • Entities that carry on the business that actively facilities the buying and selling of digital payment tokens for any money or other forms of digital payment tokens will be captured under the scope of licensing under Payment Services Act
      • Entities involved in general marketing and advertising activities may not be caught under the payment services act as a digital payment token service provider

      Brokering of cross-border money transfer

      • Entities based in Singapore who do not accept or receive money in Singapore but nonetheless provides the services of arranging the transmission of money from any country to another country are required to be regulated under PSA and operate as a cross-border money transfer service provider
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