Introduction
The Payment Services Act 2019 (PS Act), which came into force in 2020, created a single licensing and regulatory framework for payment service providers in Singapore. Its objectives are to provide regulatory certainty, strengthen consumer safeguards, and encourage the growth of payment services and financial technology (FinTech).
The Act consolidates regulation across a range of activities, including domestic and cross-border money transfers, merchant acquisition, e-money issuance, and digital payment token (DPT) services.
In April 2024, amendments to the PS Act and the Payment Services Regulations 2019 (PSR) took effect, broadening the scope of regulation, particularly for DPT service providers. The amendments also address money laundering and terrorism financing risks, while ensuring customer assets are safeguarded.
The PS Act Amendments and Money Laundering Risks
The Payment Services (Amendment) Act 2021, effective from 4 April 2024, expanded the definition of a cross-border money transfer service to include facilitating transfers of money between persons in different jurisdictions, even where funds are not received in Singapore.
This expansion has brought new players into MAS’ regulatory perimeter. The move was also timely: in 2024, Singapore saw its largest-ever money laundering case (valued at S$3 billion), involving illicit gambling proceeds funnelled through local financial channels. That case underscored the urgent need for robust safeguards under the PS Act and related regulations.
Recent Developments via Licensing Guidelines
On 26 July 2024, MAS published amendments to the Guidelines on Licensing for Payment Service Providers (PS-G01). These changes apply to both Standard Payment Institutions (SPIs) and Major Payment Institutions (MPIs) and take effect from 26 August 2024.
I. Legal Opinion for Licence Applications
Applicants for SPI or MPI licences must now submit a legal opinion as part of their application. Similarly, existing licensees applying to vary their licence to add a DPT service must provide a legal opinion.
- The opinion must be prepared by a law firm with specialist expertise in the Payment Services Act in Singapore.
- In-house counsel opinions are insufficient.
- The legal opinion should:
- Summarise the applicant’s business model, services, and products.
- Assess whether each service/product is a regulated payment service under the PS Act.
- Explain how any exemptions or exclusions apply.
- Acknowledge that the legal opinion may be disclosed to MAS.
MAS has also clarified it may request a second legal opinion if the first is inadequate.
II. Independent Auditor’s Assessment
Applicants must also submit an independent external auditor’s report covering:
- AML/CFT policies and controls, and
- Consumer protection arrangements.
More than one auditor may be engaged, e.g., one for AML/CFT and another for consumer protection.
III. Base Capital
Although base capital requirements remain unchanged, MAS has emphasised that applicants must demonstrate sufficient resources to sustain operations for 6–12 months and have contingency planning in place.
Licence Type | Base Capital Requirement |
Major Payment Institution (MPI) | S$250,000 |
Standard Payment Institution (SPI) | S$100,000 |
MAS expects ongoing monitoring of financial resources, with contingency plans for potential shortfalls.
IV. Technology Risk Management
With effect from 6 November 2024, PSPs providing DPT services must comply with MAS’ Notice on Technology Risk Management (TRM) (FSM-N13).
This brings PSPs in line with banks and insurers, requiring:
- Formal board-level oversight of technology risk.
- Governance frameworks proportional to the risk and complexity of services.
- Strong cybersecurity controls, resilience planning, and incident response protocols.
V. Compliance Arrangements
Previously, PSPs could rely on compliance support from a parent or related entity. Under the updated Guidelines, every entity providing DPT services must appoint a dedicated in-house compliance officer for its Singapore operations.
This reflects the heightened volatility and legal risks inherent in the digital assets sector.
VI. Licence Application Review & “Case-on-hold” Process
Under the revised process, MAS may now place applications “on hold” for up to six months if there are significant changes in:
- Ownership or control;
- Business model or activities;
- Key personnel or management; or
- Financial or operational fundamentals.
During this period, applicants must address the changes and update MAS with mitigating measures. MAS may then resume or reject the application depending on the outcome.
External consultants or counsel may not attend interviews with MAS case officers in place of the applicant’s key executives or compliance officer.
Why Legal Opinions are Central to the PS Act
The July 2024 update underscores MAS’ shift toward higher standards of accountability for PSPs. Requiring a specialist legal opinion ensures that applicants have carefully mapped their business models against the regulatory framework. It also enables MAS to review applications more efficiently.
In practice, this means PSPs must:
- Engage legal advisers experienced in the Payment Services Act Singapore.
- Address MAS Notices, Guidelines, FAQs, and Circulars in their analysis.
- Ensure compliance extends across AML/CFT, consumer protection, technology risk, and capital requirements.
Our Team
At Advomi, we regularly assist clients in preparing legal opinions, structuring PSP and DPT operations, and liaising with MAS during licence applications. Our Financial Services & Regulatory Practice comprises:
- Former in-house advisers to major technology companies and payment platforms.
- FinTech, crypto, and digital asset specialists.
- Practitioners experienced in compliance, government relations, and regulatory affairs.
We are prepared to support applicants through the PS Act licensing process, including SPI and MPI applications, DPT licence variations, and compliance reviews.
