MAS seeks comments on AML/CFT notices for payment services providers

27 June 2019

The Monetary Authority of Singapore (“MAS”) is seeking comments on draft Notices on Prevention of Money Laundering and Countering the Financing of Terrorism (“AML/CFT Notices”) that will apply to payment services providers who will be regulated under the Payment Services Act 2019 (“PS Act”). Comments on the proposals set out in the consultation paper on “Proposed Payment Services Notices on Prevention of Money Laundering and Countering the Financing of Terrorism” (“Consultation Paper”) must be submitted to MAS by 5 July 2019.

Under the PS Act, MAS will regulate significant payment systems and the provision of payment services in Singapore. The PS Act provides for the licensing and regulation of payment services providers and the oversight of payment systems. Payment services will be streamlined through the combination of the Payment Systems (Oversight) Act (“PS(O)A”) and the Money-Changing and Remittance Businesses Act (“MCRBA”) in the PS Act. The PS(O)A and the MCRBA will be repealed when the PS Act comes into force.

MAS proposes to issue new AML/CFT Notices for payment services providers pursuant to the Monetary Authority of Singapore Act (“MAS Act”). The new AML/CFT Notices will bring together and update requirements applicable to activities currently regulated under the MCRBA and PS(O)A, and introduce new requirements on newly regulated payment services under the PS Act.

Who are subject to AML/CFT Notices? 

The proposed AML/CFT Notices will apply to all three classes of licensees under the PS Act as well as persons exempt from holding a licence to provide any payment service (collectively, “Payment Services Providers”).

What activities are subject to AML/CFT Notices?

MAS proposes that a Payment Services Provider which carries out the following payment services will be subject to the AML/CFT Notices as these activities carry money-laundering and terrorism financing (“ML/TF”) risks:

  • account issuance services (“Activity A”); 
  • domestic money transfer services (“Activity B”); 
  • cross-border money transfer services (“Activity C”); 
  • digital payment token services (“Activity F”); and 
  • money-changing services (“Activity G”).

The AML/CFT Notices will not apply to a Payment Services Provider which carries out activities relating to merchant acquisition and e-money issuance.

Two new AML/CFT Notices

Due to the higher inherent ML/TF risks posed by transactions under Activity F, MAS proposes to set out a separate framework for the regulation of Activity F. Therefore, MAS proposes to issue two sets of AML/CFT Notices for Payment Services Providers under the MAS Act.

  • AML/CFT Notice to Payment Services Providers (Specified Payment Services) (“PS Notice 1”): PS Notice 1 will apply to Payment Services Providers which carry out Activity A, B, C or G. When PS Notice 1 is in force, it will supersede but remain aligned with the AML/CFT requirements currently set out in MAS Notice 3001 (for holders of money-changer’s licence and remittance licence) and MAS Notice PSOA-N02 (for holders of stored value facilities). The Consultation Paper sets out proposed transitional arrangements for existing holders of stored value facilities.

PS Notice 1 will not apply to a Payment Services Provider if it provides only services relating to Activity A, B or C that meet certain low risk criteria for ML/TF set out in the Consultation Paper. Such services include those involving payment that is below a specified threshold or when the payment for goods or services is funded from an identifiable source.

Where a Payment Services Provider provides services in the form of a product involving Activity A, B or C which is defined by MAS as having low ML/TF risks (“exempted product”), it will not be required to comply with certain AML/CFT measures in relation to the exempted product, for example, requirements on customer due diligence, foreign currency exchange transactions, etc. MAS seeks comments on the proposed requirements applicable to Payment Services Providers when they are offering “exempted products”. 

  • AML/CFT Notice to Payment Services Providers (Digital Payment Token Service) (“PS Notice 2”): PS Notice 2 will apply to Payment Services Providers which carry out Activity F. There are no low risk exemptions in respect of Activity F.

Where a Payment Services Provider performs one or more regulated activities (e.g. Activities A and B) as well as Activity F, PS Notice 2 will apply to those aspects of the business operations that relate to Activity F and transactions related to Activity F, while PS Notice 1 will apply to the other regulated activities.

Reference materials

The following materials are available on the MAS website www.mas.gov.sg:

 

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