The Monetary Authority of Singapore (MAS) today introduced amendments to the Payment Services Act (PS Act) and its secondary legislation to expand the scope of payment services regulated by the MAS and impose user protection and financial stability requirements on service provider digital payment token (DPT).
These amendments will take effect gradually from 4 April 2024.
The amendments will bring the following activities within the scope of regulation under the PS Act:
- Provision of custodial services for DPTs.
- Facilitating the transfer of DPT between accounts and facilitating the exchange of DPT, even when the service provider does not hold the money or DPT. and
- Facilitate cross-border money transfer between different countries, even when money is not accepted or received in Singapore.
The amendments will empower MAS to impose anti-money laundering and anti-terrorist financing, user protection and financial stability requirements on DPT service providers.
Transitional arrangements will be provided for entities currently operating under the expanded scope of the PS Act. These entities must notify MAS within 30 days and apply for a license within six months of April 4, 2024, if they wish to continue operations on a temporary basis while MAS reviews their license applications. The license application must be accompanied by a report certifying the entity’s business activities and compliance with anti-money laundering and anti-terrorist financing requirements, duly completed by a qualified external auditor, within nine months of April 4, 2024.
Entities that do not meet the above requirements are required to cease operations when the amendments take effect.
The amended Payment Services Regulations regarding the safeguarding of assets belonging to customers of DPT service providers will come into effect six months from 4 April 2024. These include the segregation of customer assets and placing them in a trust account for the benefit of of customers, keeping proper books and records, and ensuring that effective systems and controls are in place to protect the integrity and security of customer assets.