Money Transfer
Your business description
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:-
- is expressed as a unit;
- is not denominated in any currency, and is not pegged by its issuer to any currency;
- 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;
- can be transferred, stored or traded electronically; and
- 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.
Does the transfer of crypto fall under money transfer services?
No. Regulated money transfer services involve the transfer of fiat or e-money. From MAS' regulatory standpoint, crypto is not considered e-money because:
"DPT is a concept unique to Singapore and the regulatory regime surrounding it sits alongside that for a more traditional concept of e-money, derived from and very similar to the UK/European concept. It seeks to capture crypto assets like bitcoin and ether – the "classic" virtual currencies. In defining a DPT, Singapore sought to create a mutually exclusive regime from e-money."
Source: Osborne Clarke, last revised on 17 February 2020
"As the framework of the PSA helpfully differentiates between e-money and DPTs, it is clear that any person who intends to provide the services of transferring fiat currency or e-money, or both, would require a payment service provider licence in respect of domestic money transfer services and cross-border money transfer services, as applicable."
"Furthermore, [...] the service of dealing in DPTs (buying or selling, or both) and the service of facilitating the exchange of DPTs through establishing or operating a DPT exchange would constitute DPT services, for which a licence is required under the PSA."
"While at present the transfer of DPTs is not a service for which a licence is required under the PSA, in light of forthcoming amendments to the PSA, this will change in the future."
Domestic Money Transfer definition
“domestic money transfer service” means the service of accepting money for the purpose of executing, or arranging for the execution of, any of the following payment transactions, each of which is between a payer in Singapore and a payee in Singapore, in any case where neither the payer nor the payee is a financial institution:
(a) a payment transaction executed from, by way of or through a payment account;
(b) a direct debit (including a one‑off direct debit) through a payment account;
(c) a credit transfer (including a standing order) through a payment account;
(d) accepting any money from any person for transfer to the payment account of a different person;
Cross-Border Money Transfer definition
“cross-border money transfer service” means either of the following services:
(a) any service of accepting money in Singapore, whether as principal or agent, for the purpose of transmitting, or arranging for the transmission of, the money to any person outside Singapore (other than any such service that the Authority may prescribe);
(b) any service of receiving any money from outside Singapore for, or arranging for the receipt of any money from outside Singapore by, any person in Singapore (other than any such service that the Authority may prescribe), whether as principal or as agent;
According to MAS (Guidelines)
last revised 18 December 2019
Providing inbound or outbound remittance service in Singapore.
As a money transfer service, what licence will I need?
If your business offers money transfer service, you will be required to apply for one of the following licences under the Payment Services Act:
- Standard payment institution licence
- Major payment institution licence
Are there any licensing exemptions for money transfer services?
According to MAS (PS Act Guide)
[D]omestic money transfer service providers that only facilitate the domestic leg of cross-border money transfers on behalf of a customer of
a) a licensed cross-border money transfer service provider;
b) a person who is exempted from holding a licence to perform cross-border money transfer service under regulation 28(1) of the Payment Services Regulations; or
c) an exempt payment service provider,
do not need to hold a licence to provide cross-border money transfer services.
How will domestic/cross-border money and e-money transfers be affected by the Payment Services (Amendment) Act?
According to MAS (Speeches)
last revised on 04 January 2021
The [PS (Amendment) Act] will also pre-emptively address ML/TF risk that is outside of the DPT space. The [PS (Amendment) Act] will broaden the definition of cross-border money transfer service to include facilitating transfers of money between persons in different jurisdictions, where money is not accepted or received by the service provider in Singapore. That way, such service providers will come under the regulatory ambit of MAS even if the moneys do not flow through Singapore[...]
[T]he PS Act currently accords protection to consumers, whether they are payers or payees, during a domestic money transfer. As financial institutions are sophisticated entities that can protect themselves, the Act carves out the situation where a financial institution is part of the transaction. However, that means that an individual involved in a domestic money transfer transaction with a financial institution is not accorded protection under the Act. The [PS (Amendment) Act] will therefore broaden the scope of protection of the PS Act, to carve out only situations where both payer and payee are financial institutions.