Knowledge Highlights 11 October 2024
MAS expands scope of regulated payment services, amends ongoing compliance requirements, and introduces user protection requirements for DPT service providers under Payment Services Act 2019
On 2 April 2024, regulatory instruments relating to the Payment Services Act 2019 (“PS Act”) to expand the scope of payment services regulated by the Monetary Authority of Singapore (“MAS”), amend ongoing compliance requirements, and impose user protection and financial stability-related requirements on digital payment token (“DPT”) service providers were published. These amendments, implemented by way of the Payment Services (Amendment) Act 2021 (“Amendment Act”), subsidiary legislation, and notices, take effect in stages from 4 April 2024.
Background
On 23 December 2019, MAS proposed to make amendments relating to anti-money laundering and countering the financing of terrorism (“AML/CFT”), amendments in respect of DPT services, and certain technical amendments, in the PS Act. The Amendment Act was gazetted in 2021 and on 8 May 2023, MAS published a consultation paper seeking feedback on the proposed regulations and notices to operationalise amendments introduced by the Amendment Act. This was followed by another consultation paper published on 3 July 2023 in which MAS proposed amendments to the Payment Services Regulations 2019 to implement key segregation and custody requirements for DPT services under the PS Act. On 2 April 2024, MAS published its responses to feedback received from the 8 May 2023 and 3 July 2023 consultation papers.
Expansion of scope of regulated payment services
The scope of regulated activities has been expanded to include the following:
Previously unregulated payment service |
Description |
Previously unregulated domestic money transfer service |
The service of accepting money for the purpose of executing or arranging for the execution of, any of the payment transactions, each of which is between a payer in Singapore and a payee in Singapore, in any case where either the payer or the payee is a financial institution:
|
Previously unregulated cross-border money transfer service |
Any service of arranging for the transmission of money from any country or territory to another country or territory, whether as principal or agent. |
Previously unregulated DPT service |
Any service of:
|
Following feedback, the transitional arrangements provided for entities currently conducting activities under the PS Act’s expanded scope will be staggered. Such entities must notify MAS within 30 days, and submit a licence application within six months from 4 April 2024, if they wish to continue the activities on a temporary basis while MAS reviews their licence applications. The licence application must be accompanied by an attestation report of the entity’s business activities and compliance with AML/CFT requirements, duly completed by a qualified external auditor, within nine months from 4 April 2024.
Entities that do not fulfil the requirements above are required to cease the activities when the amendments come into effect.
Amendment of ongoing compliance obligations
Revised scope of application of PSN01 and PSN02
Effective 4 April 2024, the existing AML/CFT requirements in PSN01 (Prevention of Money Laundering and Countering the Financing of Terrorism - Specified Payment Services) and PSN02 (Notice PSN02 Prevention of Money Laundering and Countering the Financing of Terrorism - Digital Payment Token Service) have been revised to apply to all newly scoped-in payment services.
With the general support from the feedback received, MAS will implement the “group policy” requirements which are also currently imposed on other financial institutions, and are in line with the enhanced standards adopted by the Financial Action Task Force. Accordingly, the guidelines to PSN01 and PSN02 will be updated in due course, setting out the supervisory expectations on the implementation of the “group policy”.
Extension of data collection requirements in PSN04
Following feedback, MAS will delay the effective date of the revised PSN04 (Notice on Submission of Regulatory Returns), from the consulted six months from the commencement date of the Amendment Act, to begin on 1 January 2025 instead. This means that entities that are licensed prior to 1 January 2025 will continue to submit the existing forms set out in PSN04. From 1 January 2025, all licensed entities will be required to submit the amended forms accordingly.
Updates to requirements in PSN07 and PSN08
MAS had sought comments on the proposed amendments to PSN07 (Notice on Conduct) and PSN08 (Notice on Disclosures and Communications), including on the money transmission requirement to accord more flexibility to licensees dealing with corporate customers, and proposed enhancements to the risk disclosure statements under PSN08 to better inform customers of the unregulated status of certain services provided by licensed DPT service providers.
Following feedback, MAS will accommodate more flexibility for a broader range of customers who were businesses to contractually determine the money transmission timelines. As the policy intent behind the transmission timelines was to set baseline service conduct standards to cater for customers who were transacting as private individuals (rather than in the course of business), MAS will expand the scope beyond corporate customers, to include sole proprietors.
Following feedback, MAS has also amended PSN07 to specifically cover the business model of merchant acquirers.
MAS has also clarified that PSN08 applies to all customers, including accredited and institutional investors.
The revised PSN07 takes effect on 4 October 2024, while the revised PSN08 took effect on 4 April 2024.
Implementation of DPT consumer protection measures
The amendments to the Payment Services Regulations 2019 on safeguarding of assets belonging to customers of DPT service providers will take effect on 4 October 2024. These measures include segregating customers’ assets and placing them in a trust account for the benefit of customers, maintaining proper books and records, and ensuring that effective systems and controls are in place to protect the integrity and security of customers’ assets. MAS has also published the Guidelines on Consumer Protection Measures by DPT Service Providers (PS-G03).
Reference materials
The following materials are available on the MAS website www.mas.gov.sg:
- Media release: MAS Expands Scope of Regulated Payment Services; Introduces User Protection Requirements for Digital Payment Token Service Providers
- Notification: Expanded Scope of the Payment Services Act 2019
- Response to Feedback Received on Proposed Amendments to the Payment Services Regulations
- Response to Feedback Received on Proposed Amendments to Payment Services Regulations 2019, Notices issued under the Payment Services Act 2019 or MAS Act, and Proposed New Regulations on Exemptions for a Specified Period
- Notice PSN01 Prevention of Money Laundering and Countering the Financing of Terrorism – Specified Payment Services
- Notice PSN02 Prevention of Money Laundering and Countering the Financing of Terrorism – Digital Payment Token Service
- PSN04 Notice on Submission of Regulatory Returns
- PSN07 Notice on Conduct
- PSN08 Notice on Disclosures and Communications
- Guidelines to Notice PSN01 on Prevention of Money Laundering and Countering the Financing of Terrorism - Specified Payment Services
- Guidelines to Notice PSN02 on Prevention of Money Laundering and Countering the Financing of Terrorism - Digital Payment Token Service
- Guidelines on Consumer Protection Measures by DPT Service Providers [PS-G03]
The following materials are available on Singapore Statutes Online sso.agc.gov.sg: