Payment services: Cross-border money transfer service

We are a Company based in Singapore, offering cross-border money and cryptocurrency transfer services, what should we look out for?

Governing PS Act: The Payment Services Act (No.2 of 2019) (“PS Act”) now regulates companies that facilitate the movement of funds between entities in different countries, even if the funds are not accepted or received in Singapore. As long as the Company is based in Singapore, it would be regulated under the PS Act even if none of the funds are accepted here. 

Licensing under the PS Act: A cross-border money transfer service needs to obtain a Standard Payment Institution licence or a Major Payment Institution licence under the PS Act. The Company should carefully assess the payment services it provides in valuing the quantum of transactions executed through its platform before determining which licence it requires. 

Provision of Payment Service under the PS Act:  If the platform provides its own service of issuing a payment account, or a related service, such as an e-wallet to store money and tokens, the Company would also be providing an account issuance service. The Company should further consider if it provides any other payment services, e.g. merchant acquisition services where the platform processes payment transactions for any merchant. All these payment services are regulated under the PS Act. 

Whether the tokens transferred would constitute as DPTs under the PS Act: Additionally, if the Company intends to provide a platform for cross-border cryptocurrency transfers, the Company would be considered a Digital Payment Token Service Provider (“DPTSP”). Thus, any of the cryptocurrency transacted through the Company’s platform constitute Digital Payment Tokens (“DPTs”). For tokens to constitute DPTs, the company should consider whether any of the cryptocurrency/tokens being transferred would constitute “digital payment tokens” under the Payment Services Act No. 2 of 2019 (the “PS Act”) and fall within the definition of DPTs under Section 2(1) of the PS Act: 

any digital representation of value (other than an excluded digital representation of value) that:-

  1. is expressed as a unit;
  2. is not denominated in any currency, and is not pegged by its issuer to any currency;
  3. is, or is intended to be, a medium of exchange accepted by the public, or a section of the public, as payment for goods or services or for the discharge of a debt;
  4. can be transferred, stored or traded electronically; and
  5. satisfies such other characteristics as the Authority may prescribe.

Advertising restrictions: Moreover, the MAS in its recent Guidelines on Provision of Digital Payment Token Services to the Public [PS-G02] to DPTSPs, has emphasised that DPTSPs should not promote their services to the general public or in any public areas which the Company should be mindful of.

Mitigation of risk and other AML/CFT considerations: Further, the Company should take note of the various risk mitigating measures it is required to put in place for the different payment services it provides. This includes AML/CFT requirements, technology and cyber security risk management, user protection and interoperability standards where applicable. Notably, where the Company’s payment services do not involve transacting with DPTs, the Company would still be required to comply with AML/CFT requirements. Companies may refer to the MAS Notice PSN01 and its accompanying Guidelines for more information on these AML/CFT requirements.