Nature of Financial Advisory services
I am an independent financial adviser planning to provide my clients with investment advice on cryptocurrency / tokens, do I need a licence?
Clients would typically approach financial advisers for investment purposes. Hence, financial advisers need to consider what type of cryptocurrency they intend to advice their clients on. If the advice relates to cryptocurrency/tokens that constitute Capital Markets Products, financial advisers are generally required to be licensed under the Financial Advisers Act (Cap.110) (“FAA”).
If the financial adviser proposes to the client to purchase ‘ABC crypto tokens’ that are representations of ownership in ABC company, such tokens share similarities with owning shares in a company that would likely constitute a Capital Markets Product under the Securities and Futures Act (Cap.289) (“SFA”).
If a financial adviser fails to obtain a licence under the FAA, he or she may be held criminally liable and be subject to a fine not exceeding S$ 75,000.00 or imprisonment not exceeding three years, or both.
Licensed financial advisers would also need to comply with AML/CFT requirements which broadly includes the obligation to perform customer due diligence, monitor transactions, maintain records of transactions and to notify the relevant authorities of any suspicious transactions. Financial Advisers may refer to the MAS Notice FAA-N06 and its accompanying Guidelines for more information on the AML/CFT requirements.