Singapore’s Monetary Authority published new AML/CFT rules

Recent reports from Singapore indicate that its MAS (Monetary Authority of Singapore) still sees a lot of potential risks that cryptocurrencies might pose. The MAS is concerned about digital coins’ potential impact on the economy, but also about criminal activities, such as money laundering and terrorism financing.

The small country was relatively late when it comes to issuing any kind of crypto regulation, with its central bank issuing a framework for payment-related activities only recently, in late January. However, MAS believes that there are other issues to address.

On December 5th, it issued a notice regarding countering the financing of terrorism and prevention of money laundering, detailing AML and CFT requirements for digital payment token service providers. The notice also included risk assessment, as well as risk mitigation methods, but also customer due diligence, relying on third parties, wire transfers, correspondent accounts, suspicious transaction reporting, record keeping, and more.

MAS has a healthy approach to regulating crypto

The notice was then clarified only a few days ago, on March 16th, when MAS issued a 73-page-long set of rules and guidelines for crypto service payment providers. The new rules state that the rapid technological improvements have had a far-reaching impact, which included the world of payments. It noted numerous enhancements in the financial technology industry, and while these innovations do open up multiple new opportunities, they also provide new terrorist financing and money laundering possibilities.

MAS recommends that the best way to deal with this is to trace previous token payments ‘as far back as necessary.’ That way, it can be determined whether or not there were suspicious transactions and circumstances that should be investigated further.

However, MAS also brought the new rules while still honoring cryptocurrencies and not automatically discriminating against them and their users, nor against businesses that work with them. The announcement continues to say that MAS surveillance suggested that the crypto activity in Singapore has seen an increase over the past several years.

There was a lot of speculative trading of digital assets on crypto exchanges, and it even hit its peak in 2018, as many of the altcoins reached their ATH. The Payment Services Act that was passed on January 28th also recognized the potential for ML/TF risks when it comes to cryptocurrencies, while the regulations designed and brought by MAS were largely considered forward-looking and flexible. The country’s next goal is developing a framework that would create a proper ecosystem and attract crypto businesses.