MAS Publishes FAQ on Payment Services Act
Our previous e-bulletin “Transitions to the Payment Services Act” released on 14 June 2019 highlighted the affected payment services that will be regulated under the new Payment Services Act (“PS Act”) and the transition arrangements to apply for a licence.
Since then, the Monetary Authority of Singapore (“MAS”) has published the Frequently Asked Question (FAQs) on the Payment Services Act (PS Act) (“FAQ”) on 4 October 2019[1]. This is accompanied by a helpful infographic on the classes of licence and regulated payment activities. In the FAQ, MAS reiterates that the PS Act is targeted to commence in January 2020.
Notable Points under the FAQ
Can foreign companies apply for a licence?
Yes, foreign companies can apply for a licence.
Notably, applicants are still required to have a Singapore resident director. Further, the licensee must have a permanent place of business that is manned during office hours and where the records of all the licensee’s transaction in relation to any payment service provided by the licensee are maintained.
How is e-money different from deposits and digital payment tokens (“DPT”)?
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E-money vs DPT:
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E-money is denominated in or pegged by the issuer to a fiat currency. The electronically stored amount is not e-money but may be a DPT where the monetary value of the electronically stored amount in fiat currency cannot be determined without referring to some form of market mechanism, for example, through the trading of the electronically stored monetary value on an exchange. |
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E-money vs Deposits: |
E-money is money paid in advance under a contract for the provision of a service. E-money are not bank deposits and therefore are not protected by deposit insurance. That said, major payment institutions are required to safeguard their e-money float. |
Will investors of digital payment tokens be protected under the PS Act?
MAS does not intend to provide any regulatory safeguards for investments in DPT, the safety and soundness of DPT service providers or the proper processing of DPT transactions. Providers of DPT services will be regulated primarily for ML/TF risks.
Responses relating to Stored Value Facilities
The FAQ affirmed that the provision of stored value facilities and stored value will be regulated under the PS Act as account issuance service and e-money issuance service. Currently, only stored-value facilities where the float is over $30 million are regulated under the Payment Systems (Oversight) Act.
Further, the Stored Value Facility Guidelines dated June 2006 is to be cancelled without replacement at the commencement of the PS Act.
To facilitate this transition, MAS intends to publish the Notice on Anti-Money Laundering/Counter-Terrorist Financing (“AML/CFT”) requirements to facilitate the transition of existing stored value facility holders (“PSN01A”). Companies providing stored value facility services should monitor the publishing of PSN01A.
Responses relating to AML/CFT
The FAQ explains that the AML/CFT requirements are calibrated according to the degree of risks posed by each of the respective payment services. Activities assessed to be lower risk will be subject to lesser requirements or be exempted. Below we summarise the application of the AML/CFT requirements under PSN01 and PSN02[2].
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Application of the AML/CFT Notices |
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Regulated Payment Activities that are covered under the AML/CFT Notices |
PSN01 – Notice to payment services providers (specified payment services) on prevention of money laundering and countering the financing of terrorism
Activities Covered:
(“Specified Payment Services”)
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PSN02 – Notice to payment services providers (digital payment token service) on prevention of money laundering and countering the financing of terrorism
Activities Covered:
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Licensees excluded from AML/CFT requirements |
Activities excluded from complying with AML/CFT Notices:
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Example of Requirements |
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Restrictions on Cash Pay-outs |
Licensees cannot pay-out more than S$20,000 in cash, unless certain conditions have been fulfilled.[5]
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Travel Rule |
Licensees are required to document and share the information about the value transfer originator and value transfer beneficiary to the beneficiary institution.
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Download the article here.
For further information contact:
Claudia Teo
Partner & Head, Corporate and Financial Services
claudiateo@eversheds-harryelias.com
+65 6361 9845
Derick Ting
Partner
derickting@eversheds-harryelias.com
+65 6361 9363
Tan Tien Wei
Senior Associate
tienweitan@eversheds-harryelias.com
+65 6361 9863
Terence Teoh
Associate
terenceteoh@eversheds-harryelias.com
+65 6361 9335
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1 https://www.mas.gov.sg/regulation/faqs/faqs-on-payment-services-act-2019
2 https://www.mas.gov.sg/publications/consultations/2019/consultation-on-proposed-payment-services-notices-and-guidelines
3 Due to the nature of their transactions, digital payment token services are regarded by MAS to carry inherent or higher ML/TF risks. The AML/CFT requirements for digital payment token services are aligned with the Financial Action Task Force’ standards (Consultation Paper on New Payment Services Notices on Prevention of Money Laundering and Countering the Financing of Terrorism, Paragraph 2).
4 Depending on the payment service being provided, such criteria may refer to having limits on payment transaction value, or where the transaction involves only payment for goods or services and are funded from identifiable sources (PSN01, Paragraph 3.2)
5 Cash pay-out of S$20,000 or more can be only made by cheque provided that the cheque is crossed and made payable to a customer who is an account holder with a bank in Singapore and the payment service provider maintains a register of all crossed cheques issued with the corresponding transactions reference numbers (PSN01, Paragraph 11.2)