MAS issues revised Guidelines on Licensing for Payment Service Providers

8 August 2024

On 26 July 2024, the Monetary Authority of Singapore (“MAS”) published a revised version of the Guidelines on Licensing for Payment Service Providers (PS-G01) (“Guidelines”). The Guidelines set out the eligibility criteria and application procedures for payment service providers under the Payment Services Act 2019 (“PS Act”).

To ensure greater clarity, better facilitate application reviews, and enhance the efficiency of the licensing process, MAS will, from 26 August 2024:

  • require the submission of a legal opinion for (i) all new applicants applying for a standard payment institution (“SPI”) or a major payment institution (“MPI”) licence, and (ii) existing licensees applying to vary their licence to add a digital payment token (“DPT”) service;
  • require the submission of an independent external auditor (“EA”) assessment for all new licence and licence variation applications to carry out DPT services; and
  • implement a case-on-hold process for applications assessed to be insufficiently ready for review.

Submission of legal opinion

The Guidelines have been revised to provide that (i) all new applicants applying for an SPI or MPI licence, and (ii) existing licensees applying to vary their licence to add a DPT service, will need to submit a legal opinion together with their applications. The legal opinion should be issued by a law firm that has experience advising on the PS Act in Singapore. The legal opinion should include a clear and concise summary of the applicant’s business model and an assessment of whether the applicant’s proposed service(s) and/or product(s) are regulated payment services under the PS Act.

Other than the abovementioned applications, MAS may also require any other applicant to provide a legal opinion if warranted (e.g. complex business model).

In all cases, MAS reserves the right to request a second legal opinion if the initial legal opinion is unclear.

Submission of independent EA assessment

A new applicant intending to provide DPT services (except for a notified entity that has notified MAS pursuant to the Payment Services (Amendment) Act 2021 (Saving and Transitional Provisions) Regulations 2024) must appoint a qualified independent EA to perform an independent assessment of its policies, procedures, and controls in the areas of (i) anti-money laundering/countering the financing of terrorism (“AML/CFT”) and (ii) consumer protection.

The EA’s independent assessment report (“Report”) must be submitted together with the applicant’s licence application (Form 1). The submitted Report must have been issued and signed off by the EA(s) within the last three months from the date of application submission.

Prior to engaging the EA, the applicant should have ready relevant information such as its business plan and policies and procedures on AML/CFT and consumer protection.

The onus is on the applicant to ensure that it appoints an appropriate and suitably qualified EA to conduct the independent assessment. The applicant may engage more than one EA to perform the independent assessment of each area as appropriate, depending on the EA’s expertise, experience, and track records in the field.

MAS reserves the right to require the applicant to appoint another EA to re-perform the independent assessment if there are concerns on the quality and/or comprehensiveness of the EAs’ independent assessment.

Case-on-hold process for cases under review

The revised Guidelines provide that MAS reserves the right to place on hold for six months any application that is assessed to be insufficiently ready for review in the event of an applicant’s major corporate restructuring, substantial changes to key management personnel, or material variations in the business model/activities, at any point during the review process. While such significant changes could be unforeseen on the applicant’s part, the on-hold period allows for resources to be redirected away from such incomplete applications, to ensure fairness to all other ready applicants in the queue.

During this on-hold period, the onus is on the applicant to ensure timely resolution/completion of all necessary changes and to provide MAS with the relevant documentation to be assessed at the end of the on-hold period. The default on-hold period is six months and is not extendable. If the significant change is not completed within the on-hold period, the application will be assessed to be insufficiently ready for review and the applicant should consider withdrawing the application.

Applications submitted before 26 August 2024

MAS states that for all relevant applications (new or variations) outlined above that are submitted before 26 August 2024, the requirements above do not apply. However, as per current practice, MAS reserves the right to request for, on an ad hoc basis, legal opinions or independent EA assessments where it deems necessary based on the risks and complexity of the respective applications.

Reference materials

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