Proposed Payment Services Bill in Singapore
At present, the Monetary Authority of Singapore ("MAS") regulates different types of payment services under the Payment Systems (Oversight) Act (Cap. 222A) and the Money-Changing and Remittance Businesses Act (Cap. 187).
As the payment services landscape has evolved rapidly in recent years, new risks have emerged from activities beyond the scope of the Acts. For instance:
- New payment services such as (i) Issuance of e-wallets or non-bank credit cards services, (ii) Domestic Money Transfer services and (iii) Cross Border Money Transfer services present potential Money Laundering and Terrorist Financing (“ML/TF”) risks;
- Virtual Currency services and Money-changing services also present further ML/TF risks and may face related requirements for service providers;
- Merchant acquisition services where the service provider contracts with a merchant to accept and process payment transactions resulting in a transfer of money to the merchant, and E-Money issuance where users pay merchants or transfer e-money to another individual, poses risks during the transit of funds.
This changing landscape might also result in situations where consumers are conducting financial transactions through newer and potentially less secure systems such as digital and online platforms, which could be targeted by highly sophisticated cyber criminals.
Payment Services Bill (the "Bill")
As an integrated solution to these developments, the MAS intends to streamline the licensing of payments services under a single, activity-based modular framework. Under the proposed new Payment Services Bill (Consultation paper on Proposed Payment Services Bill dated Nov 2017), only one license is required to conduct any or all of the specified payment activities. An entity can apply for one of the following three classes of licenses:
- Money-changing licensee;
- Standard Payment Institution;
- Major Payment Institution.
Service providers need to meet only the regulations pertinent to the specific payments activities they undertake, rather than all the regulations. The proposed Bill adopts an activity-based approach, covering activities that face either customers or merchants, or processes funds or acquire transactions. The activities to be regulated under the Bill are:
- Account issuance services;
- Domestic money transfer services;
- Cross border money transfer services;
- Merchant acquisition services;
- Electronic money (“e-money”) issuance;
- Virtual currency services;
- Money-changing services.
Proposed Regulated Activities from MAS
The proposed changes will affect entities previously not required to adhere to AML/CFT procedures. In addition, the process of acquiring the necessary licenses may pose complications for entities unfamiliar with requirements.
How Sia Partners can help
Sia Partners Regulatory and Compliance team in Asia have experience assisting the corporates in obtaining payment license such as the Stored Value Facility licensing in Hong Kong, as well as providing AML/CFT expertise in the region.
We are confident of helping you understand your business, obtaining the right license in a cost-efficient manner, navigating the AML/CFT regulations in the e-payments arena and meeting the MAS’ licensing application requirements.