Robust compliance for FinTech organizations in Singapore
The Payment Service Act (PSA) entered into force on January 28, 2020 introducing new rules for establishing and licensing a business for digital payment services. Our team of FinTech lawyers will help you navigate your way through the regulations and achieve full compliance with the newest statutory requirements.
The main goal of the PSA as stated by the Monetary Authority of Singapore is to provide a flexible framework for the payment service providers in the country while encouraging innovation and sustaining the healthy local environment for FinTech companies. The development in the industry has been taken into account in order for all payment services to be streamlined under a single legislation.
The Act introduces a licensing framework for payment service providers as well as a set of requirements for businesses that want to operate in the payment service industry.
Apart from the different types of licensing, the PSA offers also a new approach to Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) that businesses are required to comply with.
Recognized Payment Services in Singapore
The PSA recognizes seven different types of services and introduces specific rules for the provision of any of these activities.
If you want to establish and develop a business focused on any of the these services you will need to comply with the new regulations.
Account issuance services
Domestic money transfer services
Cross-border money transfer services
Electronic money issuance
Digital payment token services
Types of Payment Service Licenses
For any combination of the seven services, your company must hold the respective license for a payment service provider. The only exception is the money-changing services that can be performed with a simple Money Changing License.
Standard Payment Institution License
Average monthly transactions over a calendar year not exceeding S$3 million;
Average daily E-money float over a calendar year not exceeding S$5 million.
Major Payment Institution License
Once any of the Standard Payment Institution License thresholds are reached the payment service provider must obtain the license for a major payment institution.
Requirements for operating a FinTech business
In order to apply for at least Standard Payment Institution License your company must cover the following criteria:
A company registered in Singapore or a corporation registered outside Singapore with a permanent place of business in the country.
An executive director who is a Singapore citizen or a Permanent resident of Singapore.
The satisfaction of certain prescribed financial and operational criteria.
Minimum base capital of S$100,000.
These are the most important basic requirements for starting a FinTech business in Singapore. Furthermore each new payment service provider is reviewed by the Monetary Authority of Singapore which takes into account factors like financial condition and track record of the applicant, qualification and experience, ability to comply with obligations under the PS Act, etc.
ICOs and STOs in Singapore
In recent years Initial Coin Offerings have become one of the easiest ways for new companies to access capital in Singapore. The fact that the country has always offered favorable conditions for this type of fundraising have led many companies operating in the blockchain and digital token area to the local market.
The Singapore regulation has introduced rules for the issuance of and trading with digital tokens. The rules only apply to the so-called security tokens: digital tokens that constitute capital market products:
Shares when in general they confer or represent ownership, rights, and liabilities in a corporation;
Debentures that constitute evidence of indebtedness of the issuer;
Tokens that represent an ownership interest in the trust property of a business trust;
Tokens that represent securities-based derivatives contracts involving any of the assets mentioned above;
Tokens that represent rights of interest in collective investment schemes (CIS).
Entities who make offers of security tokens must comply with the requirements of the Securities and Futures Act. The same applies to platforms that facilitate the issuing and trading of digital tokens. Complying with these rules is essential for businesses who want to be involved in any kind of coin offering or tokenomics in Singapore.
Featured FinTech Lawyers
Corporate and Commercial law, Mergers & Acquisitions, Regulatory Compliance, Securities Regulation and Employment law. Kenneth has vast experience in assisting in submission of Stored Value Facility (SVF) notifications to MAS for an overseas e-money company intending to establish a presence in Singapore; rendering legal opinions on business that may be regulated under the new Payment Services Act; legal support to a major crypto exchange in Singapore; acting for a crypto wallet company in Singapore.
Arul Kumaran is a Legal Executive. He is a tremendous asset to the FinTech Team and assists with company incorporation and advisory, bank account selection, capital-raising support and blockchain project support including drafting of Whitepapers for Crypto issues, token economics and governance and compliance support for FinTech and Blockchain companies, IP support and grant applications.
How can we assist you?
At Advomi we have a team of expert lawyers specializing in the FinTech industry. We can help you with everything including:
Legal Opinions on any matters regarding the FinTech industry in Singapore;
Structuring & Establishing of Singapore companies;
Statutory compliance with the regulation governing payment services, AML/CFT measures, ICO/STOs;
Obtaining a license for payment institution;
Drafting legal documents like corporate documents, prospectuses, white papers and commercial agreements.