Obtaining licences in Singapore – how can Waystone help? - Waystone

      Obtaining licences in Singapore – how can Waystone help?

      The financial services industry in Singapore is regulated by the Monetary Authority of Singapore (MAS). Any person carrying on a regulated activity is required to be regulated by MAS, unless an applicable exemption from this requirement can be relied upon.

      Singapore regulates a broad range of financial activities including dealing in capital market products, fund management, financial advisory services and payment services.

      Who can obtain a Capital Market Services License?

      A Capital Market Services (CMS) Licence is required to be obtained by firms who are intending to carry out any of the activities listed below which are regulated by the Securities Futures Act:

      • dealing in capital market products
      • advising on corporate finance
      • fund management
      • real estate investment trust management
      • product financing
      • providing credit rating services
      • providing custodial services for securities.

      Who can obtain a Financial Advisers License?

      A Financial Advisers Licence is required to be obtained by firms who intend to conduct advisory services regulated by the Financial Advisers Act which covers providing advice on investment products, issuing or promulgating research analyses or research reports concerning any investment products, and arranging life policies.

      A Payment Services Act Licence is required to be obtained by firms who intend to carry out regulated payment services such as:

      • money-changing
      • account issuance
      • domestic money transfer
      • cross-border money transfer
      • merchant acquisition
      • digital payment token
      • e-money issuance.

      Types of MAS licences Waystone Compliance Solutions can assist with 

      Our APAC compliance solutions team can assist with determining the appropriate MAS licence your firm is required to hold in Singapore in order to carry out regulated activities. Waystone Compliance Solutions can also assist you with the preparation of the following licence applications:

      • Capital Market Services Licences for conducting various activities such as dealing in capital market products, custodial services, corporate finance advisory (CMS)
      • Licensed Fund Management Company dealing with accredited/institutional investors (LFMC A/I)
      • Licensed Fund Management Company dealing with retail investors (LFMC Retail)
      • Registered Fund Management Company (RFMC)
      • Venture Capital Fund Management Company (VCFM)
      • Financial Advisers Licence (FA)
      • Exempt financial adviser (EFA)
      • Exempt Corporate Finance Advisory (ECA)
      • Major Payment Institution Licence (MPI)
      • Standard Payment Institution Licence (SPI)
      • Insurance broker registration.

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      MAS licence requirements

      We have provided licensing requirements for some of the key licensing categories below:

      1. CMS License/Licensed Fund Management Company
      2. Registered Fund Management Company
      3. CMS Dealing in Capital Market Products
      4. CMS Dealing in Corporate Finance Advisory
      5. Payment Services Act (PSA)
      6. Financial Advisers Licence

      1) CMS License/Licensed Fund Management Company

      This license comprises three categories:

      • Accredited and Institutional (A/I) – Fund management with accredited and institutional investors only
      • Retail – fund management with all types of investors, including retail
      • Venture Capital (VCFM) – manages venture capital funds only that are restricted to servicing accredited and institutional investors.

      2) Registered Fund Management Company

      This registration as a fund management company allows fund managers to operate with up to S$250 million of assets under management (AUM), and 30 accredited and institutional investors.

      Summary of Requirements:

      Requirements Licensed FMCs-Retail Licensed FMCs -Accredited Investor (A/I) RFMC Licensed FMCs-VCFM
      Amount of Assets under Management Above S$250 million Above S$250 million Maximum of S$250 million Any Amount
      The number of Directors & Experience Minimum of 2 Directors with more than 5 years of relevant experience, and 1 CEO with more than 10 years of relevant experience. Of the 2 Directors at least 1 must be Executive and Singapore-resident. Minimum of 2 Directors with more than 5 years relevant industry experience. At least 1 must be Executive and Singapore-resident. Minimum of 2 Directors with more than 5 years relevant industry experience. At least 1 must be Executive and Singapore-resident. Have at least two directors, at least one of whom should be full-time and resident in Singapore
      Minimum Base Capital Requirements S$500,000 or S$1 million S$250,000 S$250,000 No Specific requirements
      Investor Type All investors – no limitation Limited to [1]Qualified Investors Limited to Qualified Investors Accredited & Institutional only
      Number of Investors No Limits- All type of investors No Limits- All type of investors Maximum of 30 investors (which may include up to 15 funds) No Limits- Accredited Investors or Qualified Investors.
      Compliance Arrangements Full time, the independent compliance function This function can be outsourced if the AUM is less than S$1 b. Can be outsourced as per complexity and scale of business This function can be outsourced if the AUM is less than S$1 b
      Professional Indemnity Insurance Compulsory, coverage proportionate to AUM Encouraged to be maintained Encouraged to be maintained None stipulated so far, but this should be commensurate to the scale, nature, and complexity of the specific set up
      Reporting requirements Annual and Quarterly Annual and Quarterly Annual Annual
      Risk-Based Capital Requirements 120% of Operational Risk Requirements 120% of Operational Risk Requirements None None stipulated so far, but this should be commensurate to the scale, nature, and complexity of the specific set up

      3) CMS Dealing in Capital Market Products

      Dealing in capital market products includes marketing or dealing in and introducing broker activity relating to capital market products such as securities, debentures, units of CIS, exchange-traded derivatives, over-the-counter derivatives, and spot foreign exchange contracts for the purpose of leveraged foreign exchange trading.

      Summary of requirements:

      • established track record for the past 5 years
      • operate out of a physical office in Singapore
      • ensure applicant, employees, representatives and substantial shareholders are fit and proper
      • minimum of 2 board members, at least one of whom is resident in Singapore
      • CEO is resident in Singapore
      • at least 2 full time employees
      • letter of responsibility or undertaking from parent company
      • potential banker’s guarantee, Professional Indemnity Insurance or Letter of Undertaking
      • base capital ranging from 50,000 to 5 million depending on type of broking activities carried out
      • representatives meet minimum examination qualifications.

      4) CMS Dealing in Corporate Finance Advisory

      Corporate finance advisors are licensed and governed under the Securities and Futures Act and its subsidiary legislation. The scope of corporate finance advisors may include:

      • giving advice on the laws or regulatory requirements on fund-raising by an entity, trust or collective investment scheme
      • giving advice on an offer to acquire or to dispose of capital markets products
      • giving advice relating to an arrangement, reconstruction or take-over of a company or a business trust, or any of its assets or liabilities.

      Capital markets products include securities, securities-based derivatives contracts and collective investment schemes.

      Summary of Requirements:

      • established track record for the past 5 years
      • operate out of a physical office in Singapore
      • ensure applicant, employees, representatives and substantial shareholders are fit and proper
      • minimum of 2 board members, at least one of whom is resident in Singapore
      • CEO is resident in Singapore
      • at least 2 full time employees
      • letter of responsibility or undertaking from parent company
      • potential banker’s guarantee, Professional Indemnity Insurance or Letter of Undertaking
      • base capital of S$250,000
      • representatives meet minimum examination qualifications.

      Exemptions

      There are several exemptions available for advising on corporate finance which include:

      • If a company gives advice to accredited, expert or institutional investors and such advice is not for the offer of capital markets products to the public. Where the accredited, expert or institutional investor is a public company or a company listed on an exchange or its subsidiary, such advice is also not circulated to that investor’s shareholders. An exempt corporate finance application must be submitted to MAS in order to operate in Singapore.
      • If a company is already licensed by MAS as a bank, merchant bank, finance company or insurance company, it will be deemed to be an exempt corporate finance adviser and submit relevant notification to MAS.

      5) Payment Services Act (PSA)

      The Payment Services Act (PSA) streamlines the payment services regulatory framework into a single piece of legislation. There are two regulatory frameworks which run parallel. The first framework is a designation regime that enables MAS to designate significant payment systems and regulate operators, settlement institutions and participants of these designated payment systems for financial stability reasons and efficiency reasons. The second framework is the licensing framework for payment service providers.

      There are three (3) license-types available within the PSA:

      • Money-Changing License
      • Standard Payment Institution License
      • Major Payment Institution License.

      Under the Standard and Major Payment Institution License categories the following activities can be carried out:

      • account issuance – issuing payment account or any service relating to any operation for operating a payment account
      • domestic money transfer – service providing local funds transfer within Singapore
      • cross border money transfer – service providing inbound and outbound remittance services in Singapore
      • merchant acquisition – service providing merchant acquisition in Singapore where service provider processes payment receipts on behalf of merchants
      • e-money issuance – service issuing e-money to allow the user to pay merchants or transfer to another individual
      • digital payment token – service of buying and selling digital payment tokens or providing platform to allow persons to exchange digital payment tokens
      • money changing – the service of buying and selling foreign currency notes.

      Whether one falls under Standard Payment Institution or Major Payment Institution depends on meeting certain thresholds. In the event the below thresholds are exceeded, you are required to apply for Major Payment Institution Licence.

      • S$3 million monthly transactions for any payment service (other than e-money account issuance and money-changing services)
      • S$6 million monthly transactions for two or more payment services (other than e-money account issuance and money-changing services)
      • S$5 million of daily outstanding e-money.

      Summary of Requirements:

        Major Payment Institution Licence Standard Payment Institution Licence Money Changing Licence
      Fit and Proper The sole-proprietor, partners, directors or shareholders, CEO and employees must be fit and proper in accordance to MAS Guidelines on Fit and Proper Criteria.
      Competency Requirements The sole-proprietor, partners, or executive directors and CEO are required to have sufficient experience in operating a business in the payment services industry or related areas in the financial services industry.
      Governance & ownership requirements At least one Executive Director is a Singapore citizen or permanent resident; or, at least one Executive Director is a Singapore Employment Pass holder and at least one other director is a Singapore citizen or permanent resident. Sole-proprietor – must be a Singapore citizen.

      Partnership or limited-liability Partnership –majority partners are Singapore citizen and each partner have at least 1 year’s relevant working or business experience on a full-time basis.

      Singapore-owned company – more than 50% shareholding is owned or controlled by Singapore citizens. Majority of board of directors are Singapore citizens and each executive director have minimum of 1 year’s relevant working experience or business experience on a full-time basis.

      Foreign-owned company – based on size, track record and reputation.

      Capital Requirements S$250,000 &

      S$100,000 or S$200,00010 (cash deposit or bank guarantee)

      S$100,000 N.A.
      Office space and structure Singapore-incorporated company or a foreign corporation registered in Singapore with permanent place of business or registered office in Singapore. Can be operated by Sole-Proprietorship, Partnership, Limited Liability Partnership, Singapore owned company or foreign owned company.

      Permanent place of business or registered office where the books and records can be securely held.

      Compliance arrangements Compliance arrangements that correspond with the business’s nature, scale and complexity.
      Audit arrangement Independent audit arrangements that are commensurate with nature, scale and complexity of business focusing on adherence to regulatory requirements and internal controls. Annual audit to be conducted on accounts and transactions.
      Other business conduct requirements Penetration tests for online financial services.

      Technology and cyber hygiene risk management measures.

      AML/CFT requirements.

       

      Safeguarding requirements Adherence to safeguarding requirements N.A. N.A.

      6) Financial Advisers Licence

      A Financial Advisers Licence is governed by the Financial Advisers Act and relevant subsidiary legislation.

      This covers advising others concerning any investment products (including securities, debentures, units of CIS, exchange-traded derivatives, over-the-counter derivatives, spot foreign exchange contracts and life policies), issuing or promulgating research analyses or research reports concerning any investment products, and arranging life policies.

      SUMMARY OF REQUIREMENTS:

      • meet fitness and propriety of the company its shareholders and directors
      • track record, management expertise and financial soundness of the company and its parent company or major shareholders
      • ability to meet the minimum financial requirements and professional indemnity insurance requirements with paid up capital ranging from S$150,000 to S$300,000
      • strength of internal compliance systems
      • business plans and projections
      • minimum of 2 directors, at least one of whom should be a resident of Singapore
      • Chief Executive Officer with at least 10 years of relevant experience, of which at least 5 years must have been in a managerial capacity, and who is resident in Singapore
      • Minimum of 3 full-time Singapore-based individuals who have at least 5 years of relevant working experience.

      Exemptions

      Several exemptions from holding the Financial Advisers Licence are available:

      • if the financial adviser only gives advice or provides research analysis on bonds to accredited investors, expert investors or institutional investors
      • if the financial adviser only gives advice or provides research analysis to not more than 30 accredited investors – you must submit an exemption notification to MAS.
      • if the financial adviser is already licensed by MAS as a bank, merchant bank, finance company, insurance company, insurance broker, or capital markets services licence holder – you must submit an exemption notification to MAS.

      If you would like to find out more about how Waystone Compliance Solutions can assist you to apply for and obtain any of the licences discussed, please reach out to your usual Waystone Compliance Solutions representative or contact us below.

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