Sanctions against Russia: Regulations for Financial Institutions

How does MAS view the use of cryptocurrencies and DeFi to avoid financial sanctions?

In light of the financial sanctions imposed against Russia (as of date of writing), MAS has affirmed in the speech below that sanctioned parties will not be able to use non-traditional forms of finance such as cryptocurrencies to circumvent sanctions. This is enforced through MAS Notice SNR-N01, as well as other compliance measures imposed on Singapore financial institutions. 

According to MAS (Parliamentary Replies)
last revised 4 April 2022

1. The financial measures imposed by the Singapore Government in relation to Russia apply to all financial institutions in Singapore (FIs), including digital payment token (DPT) service providers, otherwise known as “cryptocurrency” service providers. MAS requires all FIs to ensure compliance with the measures, regardless of whether transactions are facilitated using traditional financial channels, or through cryptocurrency exchanges or “decentralised finance” protocols. To guard against circumvention, these financial measures specifically prohibit DPT transactions that may be used to facilitate any prohibited activity or transaction. In short, FIs will not enable sanctioned parties to use non-traditional forms of finance to bypass the measures. 

2. Both licensed and exempted DPT service providers must have robust controls to avoid facilitating prohibited transactions. These include procedures to know their customers and the beneficial owners of customers, and to screen these persons and their counterparties. MAS has issued a circular to DPT service providers to underscore the importance of proper implementation of these controls, and the need to be vigilant against potential circumvention of the financial measures. 

3. All FIs are required to demonstrate their compliance with the financial measures to MAS and are subject to MAS’ scrutiny and inspection. MAS will take appropriate regulatory actions against FIs found to have breached these financial measures.