SINGAPORE Law and Practice Contributed by: Kenneth Pereire and Lin YingXin, KGP Legal LLC
2.15 Financial Action Task Force Standards
lated activities, though this practice is subject to careful scrutiny by the MAS. For example, CMS licence holders may engage in activities like trading bitcoin futures or other payment token derivatives, which are currently not regulated in the same way as traditional financial services. These activities are often structured within the same legal entity; however, the MAS closely monitors these practices to ensure that the unregulated activities do not compromise the integrity or stability of the regulated services. Regulators have issued guidance to address the risks posed by combining regulated and unreg - ulated services, emphasising that firms must manage potential conflicts of interest, opera - tional risks and consumer protection issues. With the introduction of the Financial Institutions (Miscellaneous Amendments) Bill 2024, the MAS will gain additional authority to issue directives to CMS licence holders involved in unregulat - ed ventures. These directives will set minimum standards and safeguards to ensure that even unregulated activities do not undermine the reg - ulated functions of these entities. 2.14 Impact of AML and Sanctions Rules Singaporean fintech companies must comply with MAS’s robust AML and sanctions rules aligned with FATF standards. They conduct risk assessments, CDD, KYC and EDD for high- risk customers like PEPs (politically exposed persons). Regular account reviews and report - ing suspicious transactions to the Commercial Affairs Department are mandatory. The Payment Services (Amendment) Act 2021 strengthens compliance with AML/CTF standards for virtual assets.
Singapore’s AML and sanctions rules align with the FATF standards. The MAS enforces regula - tions under the PSA, SFA and FAA, requiring customer due diligence, transaction monitoring and reporting of suspicious activities. Addition - ally, Singapore complies with international sanc - tions, including those from the United Nations and other jurisdictions. These efforts ensure that Singapore’s financial sector adheres to global Singapore’s laws do allow for otherwise regu - lated products and services to be offered from another jurisdiction under a reverse solicitation scenario, without triggering domestic regula - tions. Under the SFA and FAA, reverse solicitation permits foreign financial institutions to offer ser - vices to Singapore-based clients without being subject to local licensing requirements, provided that the services are solicited by the client, not by the provider. In such cases, the client must initiate the contact, and the foreign provider must not actively market or promote its services within Singapore. AML and sanctions standards. 2.16 Reverse Solicitation However, the MAS emphasises that firms must still comply with relevant AML regulations. If any promotional activities occur within Singapore or if the services are marketed to the public, full compliance with licensing requirements will be triggered. These provisions are overseen by the MAS and are similar to the EU’s MiFID II regulations for third-country entities providing services on a cross-border basis.
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