On Tuesday, the Monetary Authority of Singapore (MAS) extended digital payment token (DPT) restrictions that seek to prevent money laundering and financing of terrorism.

The changes mean Singapore’s Payment Services Act now covers more activities - including provision of custodial services, facilitation of DPT exchange or transmission between accounts, and facilitation of cross-border money transfers.

Cross-border money transfers made by entities in Singapore are now covered by the Act, even when the money is not accepted or received in the city-state.

The Act was introduced in 2020 to regulate the industry by requiring things like licenses for payment service providers to operate in Singapore, proper bookkeeping, and segregation of any customer assets from that of the business.

The Act also imposes penalties for noncompliance and empowers investigations by MAS.

MAS claimed the amendments - which come into effect in stages from April 4th - not only protect against money laundering and financing of terrorism, but also provide user protection and financial stability.

Existing entities that find themselves newly beholden to the regulations have 30 days to notify MAS and six months to apply for a license. They also must undergo an audit within nine months to show they are compliant.

The move follows the launch of a platform, just one day prior, that combines efforts across six major commercial banks in the city-state.

The platform, called COSMIC, targets identification of money laundering and terrorism financing by sharing info about suspicious customer behavior across banks.

While being generally friendly to the development of central bank digital currencies (CBDCs), Singapore has sought to manage digital assets and associated industries, including cryptocurrency. It has continually refined regulations on digital assets towards reflecting the rules governing conventional financial institutions.

MAS board member and minister of state Alvin Tan argued back in 2022 that regulations on digital payment tokens or cryptocurrency activities may be necessary even for activities conducted overseas, as Singapore could face "reputational risk" if service providers were established in the island nation.

The country has already seen disgraced digital asset ventures within its borders, such as Do Kwon's Terraform Labs, which is headquartered in Singapore. Former MAS managing director Ravi Menon cited Terraform Labs as having never applied for a license from MAS - just months after its so-called "stablecoin" cratered.

Readers may also recall that not segregating customer funds, as the PS Act requires, is in large part what has got many a cryptocurrency exchange in trouble worldwide. FTX, anyone? ®

https://www.theregister.com//2024/04/03/singapore_adds_psact/