The Singapore Payment Services Act 2019 (PSA) was published earlier last month as a draft, which will be effective in Singapore later this month from the 28th of January 2020. MAS also released a statement that sections relating to consequential amendments to other legislation (111, 113 & 114) have not come into force yet.
New legilation will revoltionise the city-states dealings with all virtual currencies and e-trading platforms, with experts stating that Asian nations are likely to follow suit with the selected categories and some of the guidance due to the robust nature of Singapores infrastructure and legal research.
New Payment Service Classifications
As per the new legislation, there will be seven types of payment services regulated under the PSA 2019, as follows:
Account issuance service.
Domestic money transfer service.
Cross border money transfer service.
Merchant acquisition service.
E-money issuance service.
A digital payment token service.
A cash exchange service.
Going forward, Singapore providers offering any of the above payment services will require a license under the PSA regarding the type of payment service that is provided; unless it is otherwise exempted from doing so. Notably, a person that provides a payment service which is incidental or related to the primary business will be presumed to be carrying on a business of providing such payment service under the PSA.
The law sets a new precedent regarding the common law ruling in Chinpo Shipping Co Ltd v Public Prosecutor (2017) which suggests that the selling or buying of remittances that are incidental to an individual’s primary business would not constitute the carrying on of a remittance company as per the Money-changing & Remittances Act (Cap 187).
Accordingly, it would be important for Singapore companies to consider if they will provide any regulated payment service even if such payment service may be connected to their primary companies.
The following subsequent laws as the PSA have been published and will also be effective from the commencement date above:
The Payment Services Regulations 2019.
Payment Services (Saving and Transitional Provisions) Regulations 2019.
Payment Services (Composition of Offences) Regulations 2019.
Payment Services (Singapore Dollar Cheque Clearing System and Inter-bank GIRO System) Regulations 2019.
Payment Services (Exemption for Specified Period) Regulations 2019.
The MAS Fit & Proper Guidelines
In line with the implementation of the PSA, MAS has also updated the Fit & Proper Guidelines to include the PSA within its scope. The fit & proper criteria are applicable to all relevant persons carrying out any activity regulated by the MAS.
The definition of a relevant person has been amended to include the following stakeholders in any of the following capacity in relation to the company:
The payment services licensee.
Key personnel of the licensee.
The Directors of the licensee.
Its Chief Executive Officer or Deputy CEO.
the Chief Financial Officer.
Head of Treasury.
Its employees & controllers.
The MAS has also revised the Guidelines for E-Payments User Protection for further financial security online. The first set of revisions will take effect on January 28th 2020 and the second set will take effect later in the year on September 5th.
Pursuant to the second set of revisions, that issued the relevant accounts and certain exempt payment service providers will be subject to duties and measures in the User Protection Guidelines.
New Notices for Cyber Crime & AML in Technology
Licensed Singapore payment institutions that may have been previously exempt will now have 9 months to allow for any system enhancements. The 9-month preparation period has been extended from 6 months, and is similar to the incubation time given to banks earlier last year.
The MAS issued the following additional notices on the 5th of December 2019:
Prevention of Money Laundering & Countering the Financing of Terrorism.
Notice on Reporting of Suspicious Activities & Incidents of Fraud.
The Submission of Regulatory Returns.
Notice on Submission of Statement of Transactions & Profit/Loss.
Technology Risk Management.
Notice on Disclosures & Communications.
Notice on Specified Matters and Forms.