MAS gets more applications for payment services licences

Singapore's financial regulator has received more than 580 applications for payment services licences so far and reviewed more than half of them, said Monetary Authority of Singapore (MAS) board member Alvin Tan yesterday.

This is up from the 500 applications the MAS previously said it had received as at January, of which more than a third were applications to provide digital payment token services.

Mr Tan, who is also Minister of State for Trade and Industry, gave the latest update in Parliament in answer to a question by Workers' Party MP Louis Chua (Sengkang GRC) about the progress of licence applications for service providers of digital payment tokens, commonly known as cryptocurrencies.

They were debating the omnibus Financial Services and Markets (FSM) Bill, which was passed yesterday expanding the MAS' powers in areas such as digital token services, penalties on financial institutions and prohibition orders.

In a separate written reply, Senior Minister and Minister-in-charge of the MAS Tharman Shanmugaratnam said that of the 580 licence applications received, 415 received temporary exemption from holding a licence under transitional arrangements.

The exemption remains in force until the applications are approved or rejected by the MAS or withdrawn by the applicant.

"To date, 87 applications have been approved, 11 rejected, and 147 applications withdrawn after engagement with MAS. Around 170 entities remain exempted from licensing, whose applications are pending reviews," said Mr Tharman on Monday in response to another question by Mr Chua.

It is unclear how many of the 580 applications are for digital payment token licences.

Mr Tan said yesterday that the MAS is monitoring the adoption of digital payment tokens in Singapore and will consider if user protection measures are needed.

It is unclear how much protection those measures could give, he said in response to points raised by Mr Saktiandi Supaat (Bishan-Toa Payoh GRC) and Nominated MP Janet Ang about protecting consumers from digital tokens' risks.

"Consumer education and awareness remain key," he said, adding that MAS and other agencies will continue to raise public awareness of the risks of unregulated entities and investment products.

MPs examined other aspects of the Bill, which will also raise the maximum penalty for a breach of a technology risk management requirement to $1 million. Mr Derrick Goh (Nee Soon GRC) asked how the MAS will weigh the accountability of financial institutions (FIs) if their cloud service providers are negligent, as many FIs are not able to audit such providers.

Mr Tan said MAS expects FIs to perform adequate due diligence on all third parties they engage and are responsible for any disruption that results from the service provider's negligence.

"In determining the action to take against the FI, MAS will assess the impact of the breach, the extent to which necessary controls have been implemented to manage the outsourcing risk, as well as to comply with MAS' requirements and remediation efforts," he said.

In other replies, Mr Tan said the new maximum penalty is a significant increase from current fines under various Acts administered by the MAS and reiterated that the authority can also take other steps like imposing additional regulatory capital requirements on FIs.

Mr Louis Ng (Nee Soon GRC) questioned why the Bill does not require the MAS to publish an explanation for imposing prohibition orders (POs), while Mr Goh asked if foreign employees would draw the same due diligence as local staff.

The proposed law gives the regulator broader powers to impose POs - issued in cases of serious misconduct such as fraud - against people who have shown themselves to be unfit to perform key duties in the financial industry.

Mr Tan said MAS will give a notice of intention before it issues a PO and also the opportunity for the person to respond. POs apply to both foreign and local employees, he added.

Mr Saktiandi asked if the Bill is the first step in a broader exercise to rationalise Singapore's regulations on a sectorwide basis.

Mr Tan said more existing powers in various Acts administered by the MAS could be harmonised in the future, if the authority found an approach effective.