Singapore Announces New AML Rules for Crypto Businesses

The Financial Authority of Singapore (MAS) is updating its regulatory framework for digital funds.

Introduced Tuesday, Singapore’s Fee Companies Act 2019 (PSA) brings so-called Digital Fee Token (DPT) companies – successfully masking all crypto companies and exchanges based mostly in Singapore – beneath present anti-money laundering (AML) and counter-terrorist-financing (CTF) guidelines.

As such, crypto companies in Singapore are required to first register after which apply for a license to function within the jurisdiction. 

Much like the Fifth European Anti-Cash Laundering Directive (AMLD5), which went into impact Jan. 10, Singapore’s new guidelines are long-awaited: the PSA was handed again in January 2019. Within the intervening months, Singapore has additional cemented itself a forward-thinking jurisdiction in regulating the cryptocurrency business.

As of Jan. 28, companies may have a month to register with MAS, stating they’re based mostly in Singapore and are working a DPT enterprise. As soon as companies have registered, there’s a six-month grandfathering interval throughout which they’ve to use for a cost establishment license. 

“The Fee Companies Act supplies a forward-looking and versatile regulatory framework for the funds business,” MAS Assistant Managing Director Bathroom Siew Yee stated in an announcement. “The activity-based and risk-focused regulatory construction permits guidelines to be utilized proportionately and to be strong to altering enterprise fashions. The PS Act will facilitate development and innovation whereas mitigating threat and fostering confidence in our funds panorama.”

In terms of implementing crypto laws, international locations all over the world are dancing to the beat of the most recent Monetary Motion Job Drive (FATF) suggestions, first made in October 2018 after which up to date in June 2019. 

This implies making ready for a future when cost information referring to the originator and beneficiary of a crypto transaction travels with the cost, steerage generally known as FATF’s “journey rule.”

“The attention-grabbing factor concerning the Financial Authority of Singapore is that, in a way, it’s FATF-ready,” stated Malcolm Wright, head of the AML Working Group at commerce group World Digital Finance. “They have been first out the door with a session again in July saying that is what we’re proposing by way of the implementation of the PSA, because it pertains to sending origination and beneficiary info.”

MAS additionally launched a session simply earlier than Christmas, including some amendments to the PSA concerning digital belongings. Additional aligning Singapore with the FATF, the amendments widen guidelines to incorporate the switch of DPTs (in addition to them being exchanged); the availability of custodial wallets for or on behalf of shoppers; and the brokering of DPT transactions.

“They [MAS] have gone a bit additional than FATF by way of some standards, however on the identical time among the different features of it are most likely not so far as FATF has supposed,” stated Wright, who can be chief compliance officer at Diginex, a Hong Kong-based agency providing institutional-grade infrastructure for digital belongings.

There are at all times fears that regulation may stifle innovation in such a nascent area as crypto. Certainly, the arrival of AMLD5 throughout Europe could convey elevated M&A exercise as companies consolidate to satisfy the elevated prices of regulation. 

U.Okay.-based Bottle Pay, a cryptocurrency funds supplier, stated it was closing down in December 2019, citing forthcoming EU money-laundering guidelines; crypto mining pool Simplecoin and bitcoin gaming platform Chopcoin have been additionally reported to be shutting down for a similar cause.

In the meantime, Deribit, a Netherlands-based crypto derivatives change, stated it’s planning to relocate to Panama as a result of its dwelling nation’s model of AMLD5 “would put too-high boundaries for almost all of merchants, each regulatory and cost-wise.”

David Carlisle, head of neighborhood at blockchain analytics agency Elliptic, supplied a unique take. He stated the AMLD5 laws imposed on crypto companies are “bread-and-butter necessities,” together with know-your-customer (KYC) procedures and the monitoring of suspicious transactions. Companies will want an appointed particular person to hold out these duties, he stated, similar to a money-laundering reporting officer.

“We now have actually not heard any rumblings or intention by companies to maneuver their operations,” stated Carlisle. “Singapore and Switzerland are two international locations that present you possibly can strike a steadiness between having significant regulation in place and never being prevented from attracting companies.”