MAS Widens the Net: Why More Payment Businesses Now Need a Licence
A Report by CYS Global Remit FinTech Development Unit
Singapore's Payment Services Act now reaches further than ever — capturing firms that facilitate money movement even when they never touch the funds themselves. Here's what the expanded perimeter means.
Closing the Gaps
When the Payment Services Act (PS Act) first came into force in 2020, it was built around a relatively intuitive premise: if your business handles customers' money or digital tokens, you need a licence. But as payment business models evolved, some firms found ways to facilitate the movement of funds or digital assets without ever technically taking possession of them — arguably sitting outside the letter of the original law, even while performing functions the law was designed to regulate.
MAS closed this gap through amendments to the PS Act that took effect in stages from 4 April 2024, with additional customer-asset protection requirements commencing from 4 October 2024. The changes reflect a broader regulatory philosophy: what matters is the function a business performs in the payment chain, not merely whether money passes through its own accounts.
Three Activities Now Explicitly in Scope
The amendments bring the following activities within MAS's regulatory perimeter:
Provision of custodial services for Digital Payment Tokens (DPTs) — holding tokens on behalf of customers, including in wallets
Facilitation of the transmission or exchange of DPTs between accounts, even where the service provider never comes into possession of the moneys or tokens involved
Facilitation of cross-border money transfers between countries, even where the funds are never accepted or received within Singapore itself
This last point is particularly significant for the payments and remittance industry. A firm coordinating a transfer that neither originates nor terminates in Singapore — but which is structured or facilitated from Singapore — now falls within MAS's regulatory reach.
The Regulatory Principle at Work "Same activity, same risk, same rules." MAS's approach mirrors the philosophy behind FATF's own standards: regulation should follow function, not corporate structure.
Why This Matters
The Financial Action Task Force (FATF) has long used the term Virtual Asset Service Providers (VASPs) to describe firms that facilitate token-based financial activity, regardless of whether they take custody of the assets involved. Singapore's amendments explicitly bring VASPs — as FATF defines them — into the PS Act's scope, closing a gap that could otherwise have been exploited to sidestep AML/CFT obligations.
For genuinely regulated, licensed payment institutions, this expansion is reassuring rather than burdensome: it means competitors offering similar cross-border facilitation services can no longer avoid the compliance costs of licensing by structuring their operations to avoid direct possession of funds.
What Licensed Providers Must Now Do
Entities newly brought into scope face the same categories of obligation as existing Major Payment Institutions and Standard Payment Institutions:
AML/CFT programmes consistent with MAS Notices PSN01 (for Major Payment Institutions) and PSN02 (for Standard Payment Institutions)
Customer asset segregation — client funds held in trust accounts separate from the business's own funds
Detailed recordkeeping covering the status and movement of every customer asset held or facilitated
Technology risk management controls consistent with existing MAS guidelines
Entities that were conducting newly regulated activities before the amendments took effect were given transitional arrangements — a notification window followed by a formal licence application process — to bring themselves into compliance without an abrupt cessation of business.
What It Means for Businesses Choosing a Payment Partner
For SMEs and financial institutions selecting a cross-border payment provider, this expanded perimeter is a useful due-diligence signal. A provider genuinely licensed under the PS Act — including for activities where it never takes direct possession of funds — has demonstrated it meets MAS's AML/CFT and consumer protection standards across the full breadth of its operations, not just the parts that were always obviously regulated.
Asking a prospective payment partner directly whether their full range of services, including token facilitation or multi-jurisdictional routing arrangements, falls under their MAS licence is now a legitimate and important question — one that a properly regulated provider should answer without hesitation.
Sources
Monetary Authority of Singapore (MAS) — MAS Expands Scope of Regulated Payment Services: https://www.mas.gov.sg/news/media-releases/2024/mas-expands-scope-of-regulated-payment-services
MAS — Payment Services Act 2019 (as amended): https://www.mas.gov.sg/regulation/payments
Financial Action Task Force (FATF) — Guidance for a Risk-Based Approach to Virtual Assets and VASPs: https://www.fatf-gafi.org
Allen & Gledhill — Payment Services (Amendment) Bill: Second Reading Summary: https://www.allenandgledhill.com
