Financial Services and Markets Bill 2022
How will the Financial Services and Markets Bill 2022 affect businesses dealing in crypto assets?
The Financial Services and Markets Bill 2022 ("FSM") will align Singapores legislation closer to that of the Financial Action Task Force standards. It will expand the scope of "Digital Tokens" as well as the AML/CFT measures for Virtual Asset Service Providers (VASPs).
To fully align with the enhanced FATF standards and mitigate the reputational and ML/TF risks, the FSM Bill will regulate all VASPs created in Singapore that provide virtual asset services outside of Singapore. Such VASPs which provide digital token (“DT”) services outside of Singapore, will be regulated as a new class of FIs, with licensing and ongoing requirements to ensure that MAS has adequate supervisory oversight over them.
Scope of DT Services
The FSM Bill will align the scope of DT services to the enhanced FATF standards. DT services include:
a) dealing in DTs;
b) facilitating the exchange of DTs;
c) inducing or attempting to induce any person to enter into or to offer to enter into any agreement for or with a view to buying or selling any DTs in exchange for any money or any other DTs (whether of the same or a different type);
d) accepting DTs for the purposes of transmitting, or arranging for the transmission of, the DTs;
e) safeguarding of a DT or DT instrument, where the service provider has control over the DT or over one or more DTs associated with the DT instrument; and
(f) financial advice relating to the offer or sale of DTs.
AML/CFT Supervisory Oversight
MAS considers all transactions relating to DT services to carry higher inherent ML/TF risks due to their anonymity and speed. The FSM Bill will regulate VASPs primarily for ML/TF risks. The FSM Bill will introduce general powers over VASPs, including licensing requirements, powers to conduct AML/CFT inspections and render assistance to domestic authorities and MAS’ foreign AML/CFT supervisory counterparts.
MAS will impose licensing and ongoing requirements on VASPs to ensure that such VASPs have a meaningful presence in Singapore and that MAS has adequate supervisory oversight over them. AML/CFT requirements imposed on VASPs will be aligned with the requirements imposed on digital payment token service providers regulated under the PS Act.