MAS proposes to introduce a new payments legislation
30 November 2017
MAS has issued a second consultation relating to the introduction of the Payments Services Bill in Singapore. The focus of the Bill is to streamline payment services under a single legislation, revise the scope of regulated activities and adopt a modular regulatory regime. Open for feedback until 8 January 2018, MAS is inviting comments from the industry, corporates and the general public.
With the rapid changes in the payment services landscape over the past few years, including the emergence of virtual currencies, MAS wishes to adapt to and mitigate new risks that have surfaced as a result. The Payment Systems (Oversight) Act (2006), and the Money-Changing and Remittance Businesses Act (1979) are to be combined into a single legislation which will also take into account the new risks associated with developments in the field, such as ‘e-payments’. This was also prompted by recent developments in FinTech which have led to the convergence of payment and remittance services.
The scope of regulated activities under the Bill is proposed to cover:
- Account issuance services
- Domestic money transfer services
- Cross border money transfer services
- Merchant acquisition services
- E-money issuance
- Virtual currency services
- Money-changing services
Payment firms will need only one licence which will enable them to carry out one or all of the above activities (subject to MAS approval). AML/CFT requirements are proposed to be implemented across most of them, along with user protection safeguards, while technology management guidelines will apply across all of them. Smaller entities, however, are only subjected to AML/CFT and general regulatory requirements. Exemptions for deposit-taking institutions will apply across all the activities highlighted above (excluding E-money issuance and virtual currency services) if they are already regulated under the Banking Act, MAS Act and Finance Companies Act. For the newly regulated entities, there is a transitional 6 month grace period proposed for them to submit their licence application.
The modular approach to regulation will provide MAS with the flexibility to adapt to the evolving business models in the payments value chain, and help provide clarity and confidence for payment service providers to access and provide a wider spectrum of payment services for the Singapore market. These changes are being proposed to enhance user protection and to encourage the adoption of ‘e-payments’.
The revised, and simplified, regulatory framework will undoubtedly bring business opportunities. Please get in touch if you’d like to discuss the regulatory implications.