SINGAPORE - Singapore's financial regulator has received more than 580 applications for payment services licences so far and completed review of more than half of them, said Monetary Authority of Singapore (MAS) board member Alvin Tan on Tuesday (April 5).
This is up from the 500 applications the MAS has previously said it had received as at January, of which more than a third were applications to provide digital payment token services.
Mr Tan gave the latest update in Parliament in response 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 on Tuesday, expanding the MAS' powers in areas such as digital token services, penalties on financial institutions and prohibition orders.
Over 85 applications of the 500, including five for digital payment token applications, have been awarded in-principle approval, MAS has said before.
In a separate written reply, Senior Minister and Minister-in-charge of the MAS Tharman Shanmugaratnam said that among the 580 licence applications received, 415 were temporarily exempted from holding a licence, as they had notified MAS within a specified period.
Under transitional arrangements, entities that were engaged in regulated activities before the Payment Services Act commenced in January 2020 do not have to hold licences pending approval of applications submitted before July 2020 for digital payment token activities, or January 2021 for other regulated activities.
The exemption remains in force until the applications are approved or rejected by the MAS or withdrawn by the applicant.
"To date, 87 applications have been approved, 11 rejected, and 147 applications withdrawn after engagement with MAS.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. The MAS has in recent months given such licences to players such as Singapore-based fintech firm FOMO Pay and DBS' brokerage arm DBS Vickers.
Mr Tan said on Tuesday that the MAS is monitoring the adoption of digital payment tokens in Singapore and will consider if user protection measures are needed.
"However, even with user protection measures, it is just not possible for laws to protect against investment losses, especially for consumers who choose to seek investment opportunities overseas or online," 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... MAS and relevant government agencies will continue to raise public awareness, including advising the public not to deal or invest with unregulated entities or investment products," said Mr Tan.
MPs also 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, considering that many FIs are not able to audit such providers.
Events such as serious cyber attacks or disruptions to essential financial services could involve breaches of several requirements, so the penalty could be much more than $1 million.
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 added.
Mr Yip Hon Weng (Yio Chu Kang) asked how often the maximum penalty would be meted out and questioned if a fixed penalty was a good deterrent, given inflation.
Mr Tan replied that the new maximum penalty is a significant increase from current penalties 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.
These measures signal the importance of having robust technology risk management without being excessive for smaller FIs, he added.
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 be subject to 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, setting out the material facts and grounds on which the authority has determined that a person is not fit and proper, and will also give the person the opportunity to respond.
POs apply to both foreign and local employees to ensure that they do not perform roles or activities they have been prohibited from carrying out, he added.
Mr Saktiandi asked whether the Bill is the first step in a broader exercise to rationalise Singapore's regulations on a financial sector-wide basis.
Mr Tan said: "It's possible that some of the existing powers in various MAS-administered Acts may be harmonised in the FSM in the future, if MAS (views) that such an approach would enable it to address financial sector-wide risks more effectively."