SINGAPORE - Measures to counter money laundering and terrorist financing here will be strengthened, under changes in the law that regulates virtual payment services providers.
The proposed changes will also strengthen laws governing digital payment tokens to make sure that companies issuing such tokens protect the assets of their users, said the Monetary Authority of Singapore (MAS).
The amendment to the Payment Services Act was introduced in Parliament on Monday (Nov 2) by Transport Minister Ong Ye Kung, an MAS board member, to regulate payment service providers like banks, remittance companies and tech firms.
The Bill seeks to enhance the regulatory framework for virtual asset service providers (Vasp) like digital exchanges, cryptocurrency firms and companies that offer e-wallet services.
The proposed changes will implement enhanced standards set by an international body that are aimed at addressing money laundering and terror financing risks posed by such providers.
"The speed, anonymity and cross-border nature of Vasp activities make them inherently more vulnerable to money laundering/terrorist financing risks," said MAS in an explanatory brief on Monday.
Companies that manage these virtual assets could be exploited by criminals to move assets by transferring value in the form of digital payment tokens from one person to another, MAS said.
The Bill seeks to expand the definition of a digital payment token service to include services like the transfer of such tokens.
The proposed amendments also broadens the definition of a cross-border money transfer service to cover providers that actively facilitate transfers between entities in different countries, whether or not such funds are accepted or received in Singapore.
This is to mitigate the money laundering and terrorist financing risks that has arisen from "certain cross-border business models", said the authority.
The prospective changes will require cross-border money transfer service providers here to be licensed and be subject to MAS regulations.
It will also let the MAS impose user protection measures on digital payment token service providers to ensure the safekeeping of customer assets.
The authority will also be empowered to invoke measures the authority deems necessary in the interest of the public, the stability of the financial system in Singapore, or the monetary policy of MAS.
While MAS already regulates the digital payment sector primarily for risks related to terrorist financing and money laundering, it said enhanced measures are needed as the sector continues to evolve and development of new tokens could lead to quick user adoption.
The Payment Services (Amendment) Bill was among three Bills introduced in Parliament on Monday.
