The Monetary Authority of Singapore (MAS) has announced a new law that updates its regulatory framework for companies operating in the crypto sector
Announced by MAS on Tuesday, January 28, the Singapore Payment Services Act 2019 (PSA) brings so-called Digital Payment Services (DPT), which effectively places all Singapore-based crypto and exchange companies under the coverage of the country's current money laundering (AML) and anti-terrorist financing (CTF) rules.
As such, Singapore-based crypto companies will first need to register and then apply for a license to operate in the country.
The PSA is similar to the Fifth European Anti-Money Laundering Directive (AMLD5), which came into force on 10 January. Singapore's new rules have long been awaited: the PSA was created in January 2019. In the following months, Singapore further cemented a forward-looking jurisdiction in the regulation of the crypto sector.
From January 28, companies will have one month to register with MAS, declaring that they are based in Singapore and are operating a DPT business. After obtaining registration, a six-month period begins, during which they must apply for a license to operate as a payment institution.
"The Payment Services Act provides a flexible and forward-looking regulatory framework for the payments industry," said Loo Siew Yee, assistant managing director at MAS. “The activity-based and risk-focused regulatory framework allows the rules to be applied proportionately and to be robust for changing business models. PSA will facilitate growth and innovation, mitigating risks and promoting confidence in our payment landscape. ”
When it comes to implementing regulations for crypto, countries around the world are starting to keep pace with the latest recommendations from the Financial Action Task Force (FATF), first made in October 2018 and updated in June 2019.
This means preparing for the future when payment data related to the originator and beneficiary of a crypto transaction circulates with the payment, guidance known as the FATF “travel rule”.
"The interesting thing about MAS is that, in a way, it is ready for FATF," said Malcolm Wright, head of the AML Working Group at the Global Digital Finance business group. “They were the first to come out with a consultation in July saying, 'this is what we are proposing in terms of implementing the PES, with regard to sending source and beneficiary information.”
MAS also launched a public consultation on the law just before Christmas, adding some changes to the PSA in relation to crypto. Aligning Singapore further with the FATF, the amendments extend the rules to include the transfer of DPTs (in addition to being exchanged); providing custody portfolios for or on behalf of clients; and the intermediation of DPT transactions.
"They (MAS) went a bit beyond FATF in terms of some criteria, but at the same time some of the other aspects of it are probably not as far away as FATF intended," said Wright.
Also read: Ubin Project; Learn about Singapore's plan to become a crypto hub