24 May 2023
On 8 May 2023, the Monetary Authority of Singapore (“MAS”) published a consultation paper seeking feedback on proposed regulations and notices to operationalise amendments introduced by the Payment Services (Amendment) Act 2021 (“Amendment Act”). The Amendment Act, which has not come into force, expands the scope of digital payment token (“DPT”) services under the Payment Services Act 2019 (“PS Act”), beyond the services of dealing in DPT and facilitating the exchange of DPT, for alignment with the enhanced standards adopted by the Financial Action Task Force applicable to DPT service providers on money laundering and terrorism financing (“ML/TF”) risks.
The consultation covers proposed amendments to the Payment Services Regulations 2019 (“PSR”) and existing notices applicable to payment service providers, as well as new proposed regulations on exemptions for a specified period to cater for the expanded scope of cross-border money transfer service, domestic money transfer service and DPT services. The consultation closes on 8 June 2023.
Exemption from safeguarding requirements under the PSR
The existing requirements under the PSR will apply to the newly scoped-in payment services. However, MAS considers that where a cross-border money transfer service has no strong nexus to Singapore, major payment institutions (“MPIs”) can be exempted from safeguarding requirements under section 23 of the PS Act in respect of the relevant moneys which they receive when arranging for the transmission of money from any country or territory to another country or territory (whether as principal or agent). The conditions for this exemption are that both the payer and payee are foreign persons, and the relevant money is not accepted or received by the MPI in Singapore.
To ensure that foreign persons are clear as to the treatment of their money in such cases, the MPI will be required to inform all foreign persons in writing that the money the MPI receives from or on account of the foreign person is not safeguarded under the PS Act.
Revise the scope of application of PSN01 and PSN02
MAS also proposes to amend:
- PSN01 and PSN02 to apply the anti-money laundering and countering the financing of terrorism (“AML/CFT”) requirements in these notices to the newly scoped-in payment services following the commencement of the amendments to the PS Act;
- PSN01 and PSN02 to require licensees and exempt payment service providers under the PS Act which are incorporated in Singapore to develop and implement group-wide AML/CFT policies, including policies and procedures for sharing information required for the purposes of customer due diligence, and ML/TF risk management within the group;
- PSN02 to introduce requirements in respect of agents that are appointed by the DPT service providers to assist in the provision of DPT services; and
- PSN01 to exclude wire transfers that flow from a transaction carried out using a charge card, credit card, debit card, prepaid card or electronic wallet for the purchase of goods or services from the requirements set out under paragraph 15 of PSN01 on “Wire Transfers”, so long as both the charge card, credit card, debit card, prepaid card, or electronic wallet number and the name of the issuer of such charge card, credit card, debit card, prepaid card or electronic wallet, accompany the transfers.
Extension of data collection requirements in PSN04
MAS proposes to apply the requirements in PSN04 on Notice on Submission of Regulatory Returns to the newly scoped-in payment services following the commencement of the amendments to the PS Act. MAS will also be adding data fields to PSN04 to augment MAS’s surveillance of the payment services sector.
As transactions involving anonymity-enhancing technologies pose higher ML/TF risks, MAS also proposes the collection of statistics on financial institutions’ exposure to anonymity-enhancing technologies.
The revised PSN04 will take effect six months from the date the amendments to the PS Act come into operation.
Revise the scope of application of PSN07 and PSN08
PSN07 covers general conduct requirements, while PSN08 covers disclosure requirements.
MAS proposes to amend:
- PSN07 and PSN08 to apply the requirements in these notices to the newly scoped-in payment services following the commencement of the amendments to the PS Act; and
- PSN07 to provide some flexibility in the money transmission requirements arising from industry feedback.
In addition, MAS seeks comments on the 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.
New Payment Services (Exemption for Specified Period) Regulations 2023
MAS proposes to exempt, for a specified period, entities that need to be licensed, or that need to vary their licence, under the PS Act arising from the broadened scope of cross-border money transfer services, domestic money transfer services and DPT services.
MAS is also considering imposing additional requirements to obtain independent third party assessments and confirmations, to be submitted with any applications by such entities.