Out-Law News | 22 Nov 2018 | 12:44 pm | 2 min. read
The bill had its first reading in the Singapore Parliament earlier this week and is expected to receive a second reading in January.
Currently, payment services in Singapore are regulated under the Payment System (Oversight) Act (PS(O)A) and Money-Changing and Remittance Business Act (MCRBA). However, the existing regime under the two statutes has not been clear on how newer digital payments services and methods should be regulated.
The proposed bill will streamline the regulation of all digital payment services within a single activity-based regime that will be overseen by the Monetary Authority of Singapore (MAS). Both the PS(O)A and the MCRBA will be repealed when the new Bill comes into force at the end of 2019.
The new Bill consists of two parallel frameworks: a designation framework and a licensing framework. The designation framework is similar to the current PS(O)A, in that it allows the MAS to name payment systems that are crucial to financial stability as "designated payment systems". Such payment systems will be subject to more stringent obligations under the new Bill to ensure financial stability and efficiency of their operations.
Under the licensing framework, payment service providers will be required to hold a licence for the payment services that they provide. The licensing regime establishes three classes of licences that will correspond to the risk posed by the nature and scale of the payment services provided: a money-changing licence; a standard payment institution licence, and a major payment institution licence.
Money-changing licensees will only be allowed to conduct money-changing services. Standard payment institutions can conduct any combination of regulated payment service activities below a specified threshold; if the service provider's activities exceed that threshold, they will have to obtain a major payment institution licence. The regulations for major payment institutions, which means those providing payment services above specified thresholds, will be regulated more comprehensively than the service providers who are licenced as standard payment institutions and money-changers.
In describing the Bill, MAS managing director Ravi Menon said that the proposed regime will “enhance the regulatory framework for payment services in Singapore, strengthen consumer protection and engender confidence in the use of e-payments. The Bill also illustrates our shift towards regulation that is modular, activity-based and facilitative of growth and development in the Singapore payments landscape”.
Technology law expert Bryan Tan of Pinsent Masons MPillay, the Singapore joint venture partner of Pinsent Masons, the law firm behind Out-Law.com, said, "The bill also establishes for the first time licensing for cryptocurrency players issuers such ase exchanges and ewallet providers, many of which have set up or will be setting up in Singapore, a leading fintech hub. With such regulatory oversight, the reluctance of banks to deal with such players should be greatly reduced."
The Singapore parliament passed the Serious Crimes and Counter Terrorism (Miscellaneous Amendments) Bill on the same day. The new amendments impose harsher penalties on individuals and corporations that are involved in money-laundering and terrorism financing activities.
When the amendments are implemented, individuals who do not report terrorism financing offences could face a maximum fine of $250,000 and a jail term of up to five years. Corporations that fail to uphold their professional obligations to report terrorism financing offences can also face a maximum fine of $1 million or twice the value of the property or services related to the terrorism financing activities, whichever is higher.