Monetary Authority of Singapore Proposes Legislative Amendments to Effect Newly Scoped-In Services Under Payment Services Act 2019

(i) New transitional licensing exemption for Affected Persons

• A six (6)-month licensing exemption will be granted to persons (Affected Persons) who
  • need to be licensed under the PSA as a result of such person carrying out the Newly Scoped-in Payment Services or
  • need to vary an existing licence issued under the PSA to include the Newly Scoped-in Payment Services.
• The Affected Persons must have commenced business on or before the commencement date of the Amendment Act and must have notified MAS of the date on which they commenced business within 30 days after the commencement of the Amendment Act.
• The Affected Persons must apply for a licence or apply to vary their existing licence before the end of the six-month period. Once this is done, the licensing exemption will be extended until the date on which the application is approved, refused, or withdrawn.
• An Affected Person who fails to submit the relevant application within the six-month period will have to cease providing the relevant payment service at the end of the six-month period.
• Persons who are already licensed under the PSA to provide cross-border money transfer, domestic money transfer service, or DPT service need not submit an application to MAS as they already hold the requisite licence. Such persons will not be covered by the transitional exemption.

(ii) New requirements to be imposed on Affected Persons

• Given that it will take time for MAS to review applications submitted by Affected Persons, MAS is considering imposing additional requirements on Affected Persons in the interim to address key risk areas.
• The measures being considered include requiring an Affected Person to
  • obtain the services of an external auditor to conduct an audit on the controls of the Affected Person addressing key risk areas and submit the report to MAS or
  • obtain the services of an independent third party to assess and confirm the adequacy of compliance policies and procedures to meet obligations under the PSA.
• As part of the application to MAS, an Affected Person should submit proof of the third-party assessment containing positive confirmations as to a defined set of key controls. A submitted application will not be accepted by MAS if the third-party assessment is not submitted together with the application.

(iii) New exemption from safeguarding requirements for newly scoped-in cross-border money transfer service

• The Newly Scoped-in Payment Service under the Amendment Act in relation to cross-border money transfer service is defined as any service of arranging for the transmission of money from any country or territory to another country or territory, whether as principal or agent.
• Where a major payment institution under the PSA (MPI) provides the above newly scoped-in cross-border money transfer service, the MPI will be exempted from the safeguarding requirements under Section 23 of the PSA if
  • both the payer and payee are foreign persons
  • the relevant money is not accepted or received by the MPI in Singapore
  • the MPI informs all foreign persons in writing that the money the MPI receives from or on account of the foreign person is not safeguarded under the PSA
• For the other Newly Scoped-in Payment Services, the existing safeguarding requirements under the PSA will continue to apply.

(iv) Amendments to MAS Notices on anti-money-laundering and countering the financing of terrorism

• Newly Scoped-in Payment Services: The existing requirements for anti-money-laundering and countering the financing of terrorism (AML/CFT) as set out in PSN01 and PSN02 will apply to the Newly Scoped-in Payment Services. The following key amendments will be made to PSN01 and PSN02 to reflect the Newly Scoped-in Payment Services:
  • PSN01 will be amended to reflect the newly scoped-in cross-border money transfer service (see proposal (iii) above) and to clarify that the wire transfer obligations apply to the service of arranging for the cross-border wire transfer of funds.
  • PSN02 will be amended to reflect the newly scoped-in DPT services and to clarify that the value transfer obligations apply to the service of arranging for the value transfer of one or more DPTs.
• Groupwide AML/CFT policies to be implemented: Licensed and exempt payment service providers (collectively, PSP) under the PSA that are incorporated in Singapore will be required to develop and implement groupwide AML/CFT policies.
  • This should include policies and procedures for sharing information required for the purposes of customer due diligence, and money laundering and terrorism financing risk management within the group.
  • Where a PSP has a branch or subsidiary in a host country or jurisdiction known to have inadequate AML/CFT measures or in relation to which the Financial Action Task Force has called for countermeasures, the PSP must ensure that the group AML/CFT policy is strictly observed by the management of that branch or subsidiary.
  • Where the AML/CFT requirements in the host country or jurisdiction differ from those in Singapore, the overseas branch or subsidiary of the PSP must apply the higher of the two standards, to the extent permitted by the law of the host jurisdiction.
• Extending requirements on agency arrangements to DPT service providers: PSN02 will be amended such that DPT service providers will be required to comply with new requirements relating to agents that are appointed by DPT service providers to assist in the provision of DPT services. In such agency arrangements, the agent does not provide DPT services to the DPT service provider but instead provides them to third parties on behalf of the DPT service provider. These requirements are currently set out in PSN01 for other payment service providers and will be extended to PSN02.
• Exemption of specific wire transfers from the travel rule: A wire transfer that meets the following conditions will be excluded from the wire transfer requirements under PSN01:
  • The wire transfer flows from a transaction carried out using a charge card, credit card, debit card, prepaid card, or electronic wallet (Card/Wallet).
  • The transaction is for the purchase of goods or services.
  • The wire transfer is accompanied by (i) the Card/Wallet number and (ii) the name of the issuer of such Card/Wallet.

The exclusion will not apply where a Card/Wallet is used as a payment system to effect a person-to-person wire transfer.

(v) Submission of regulatory returns

• PSN04 will be amended to introduce additional fields relating to the Newly Scoped-in Payment Services. MAS will collect additional data to augment its surveillance of the payments services sector, including statistics on exposure to anonymity-enhancing technologies.
• To allow licensees sufficient time to make the necessary system enhancements to collect and report the additional data, the revised PSN04 will take effect six (6) months from the commencement date of the Amendment Act.

(vi) Amendments to PSN07 and money transfer timeframe for corporate customers

• The business conduct requirements under PSN07 will be amended to apply to the Newly Scoped-in Payment Services.
• Further, where a domestic or cross-border money transfer service is provided to corporate customers, the prescribed money transfer timeframe under PSN07 will be relaxed to allow a PSP to transmit the money to the customer within such period as may be agreed in writing between the PSP and the customer. This is to facilitate businesses that involve only corporate customers and operate on a delayed payment basis.

(vii) Amendments to PSN08

• The risk warnings in PSN08 will be amended to reflect the newly scoped-in DPT services.
• Licensed DPT service providers will also be required to clarify the extent to which DPT service providers are regulated under the PSA and to make clear that DPT service providers are not regulated in respect of services provided in relation to other cryptocurrency-related products (e.g., trading of DPT derivatives).