Financial Crime World

Singapore Tightens Anti-Money Laundering Requirements

The Monetary Authority of Singapore (MAS) has introduced stricter anti-money laundering (AML) requirements for financial institutions, payment service providers, and other designated businesses. These new regulations aim to strengthen Singapore’s financial system and prevent money laundering (ML) and terrorist financing (TF).

Overview of AML Requirements

Under the new regulations, financial institutions (FIs), including banks and insurance companies, and designated businesses, such as moneylenders, pawnbrokers, and professional accountants, are required to implement procedures to identify and mitigate risks related to ML and TF. The AML requirements cover a range of activities, including:

  • Risk assessment and risk mitigation
  • Customer due diligence (CDD)
  • Recordkeeping
  • Suspicious transaction reporting
  • Other internal policies, procedures, and controls

Higher Exposure to ML Risks

Financial institutions and designated businesses with higher exposure to ML risks will be subject to more stringent AML requirements.

Payment Service Providers Under Scrutiny

Payment service providers (PSPs), including those that offer account issuance services, domestic money transfer services, cross-border money transfer services, and digital payment token services, are required to:

  • Register and obtain a PSP licence under the Payment Services Act 2019
  • Meet AML/CFT requirements under MAS Notice PSN01

Excluded from these requirements are services related to limited-purpose digital payment tokens (DPTs) and limited-purpose e-money.

Cryptocurrency Industry Under AML Lens

Cryptocurrency companies, or DPT service providers, are required to:

  • Register and obtain a PSP licence under the Payment Services Act 2019
  • Meet AML/CFT requirements under MAS Notice PSN02

The types of cryptocurrency-related businesses and activities subject to AML requirements include dealing in DPTs, facilitating the exchange of DPTs, transferring or arranging for the transfer of DPTs, and safekeeping and administration of DPTs or instruments enabling control over DPTs.

Non-Fungible Tokens (NFTs) Under Scrutiny

While NFTs are not specifically regulated under Singapore law, existing AML requirements may apply to NFTs depending on their underlying characteristics. The MAS takes a tech-neutral stance and “looks through” to the underlying characteristics of the token to determine if it is to be regulated.

Recordkeeping and Reporting Requirements

FIs and designated businesses must:

  • Retain CDD information and other data, documents, and information relating to a transaction for at least five years
  • Maintain records of cash transactions exceeding S$20,000, as well as customer information, for a period of five years

Reports must be filed with the relevant authorities at specific thresholds, including:

  • Cash transactions or designated transactions that exceed S$20,000 in a transaction (or in a day)
  • Sale of precious stones, precious metals, or precious products to customers for which cash (or a cash equivalent) exceeding S$20,000 is received as payment

Conclusion

The new AML requirements aim to strengthen Singapore’s financial system and prevent ML and TF. Failure to comply with these regulations can result in serious consequences, including fines and criminal charges. It is essential that all relevant entities understand the new requirements and take necessary steps to ensure compliance.