AML/CFT for crypto service providers

How do you KYC a crypto wallet?

Companies that facilitate crypto transactions in Singapore, including crypto wallets, must comply with the KYC requirements detailed in the Payment Services Act (PSA), which generally follow current FATF and AMLD5 guidelines, unless the company qualifies for an exemption.

In early 2021, Singapore amended the Payment Services Act of 2019 (Amended PSA) and MAS issued new guidance stating that companies engaging in crypto (Digital Payment Tokens “DPT”) transactions, including crypto wallets, would have to obtain a license under the PSA and comply with all relevant regulations, including KYC requirements.

Under the Amended PSA, Singapore has adopted KYC regulations that align closely with the Financial Action Task Force (FATF) and the Fifth Anti Money Laundering Directive (AMLD5) protocols and applied them to crypto firms, including the transfer of DPTs (as well as exchanges); custodial wallets for or on behalf of customers; and the brokering of DPT transactions. These regulations include current FATF know-your-customer (KYC) procedures and the monitoring of suspicious transactions. Firms will need an appointed person to carry out these tasks, such as a money-laundering reporting officer.

In August 2021, MAS also announced that it is working on the adoption of an e-KYC program using the national Singpass system. This new digital ID process and e-KYC program would: 1) streamline the on-boarding of new customers, 2) allow companies to authenticate customers with their fingerprints using the Singpass system app, and 3) provide digital authorisations and signatures using an end-to-end digital and paperless process. Further developments using this technology are expected in the coming year.