Regulatory Influencer: Second Stage of the Financial Services and Markets Act 2022 Comes into Effect in Singapore

May 15, 2024
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Vixio’s global roundup of imperative regulatory developments. Your lowdown on what the world’s regulatory leaders are up to this month.

The second stage of the Financial Services and Markets Act 2022 (FSMA) came into effect from May 10, 2024 in Singapore.

How does this change things?

If you are a payment service provider licensed under the Payments Services Act, not  much will change, as most of the existing regulation has simply been migrated over to the FSMA from the patchwork of earlier parent acts. However, the Monetary Authority of Singapore’s (MAS) powers over anti-money laundering (AML) and technology risk management have been expanded by the FSMA, so additional regulation may be released. 

If you are a crypto provider who is licensed under Part 9 of the FSMA, you will now need to integrate the technology risk management requirements, which have been newly imposed by the MAS, in your business operations.

Key considerations

Payment service providers licensed under the Payments Services Act should take note that the circulars and notices issued by the MAS relating to technology risk management and cyber hygiene have changed.

Crypto providers licensed under Division 2 of the FSMA should begin implementing the technology risk management requirements imposed by the MAS to meet the November 6, 2024 deadline.

Financial institutions should also remain vigilant with regard to the changes in Singapore’s AML regime relating to the assistance of foreign and domestic AML authorities and the imposition of dispute resolution schemes.

Why should you care?

The passing of this act is a watershed moment for financial regulation in Singapore as it is the first time that a financial regulatory act of this nature has been passed without any transitory measure other than staggered implementation dates.

Previous introductions of new regulatory regimes have often involved transitory periods that have dragged on for years, such as the Payment Services Act, which took effect in February 2020 but still has a number of firms operating under its transitory measures more than four years later

This could be indicative of a move on the part of the MAS towards a more simplified and direct implementation practice for future legislation.

The introduction of dispute resolution schemes, while reflective of rising scam levels and customer discontent in Singapore, is likely to result in a need for additional operational and financial resources from payment service providers, especially if these schemes are implemented in addition to the MAS’ proposed shared responsibility framework.

Finally, the MAS has also recently indicated that it may expand its COSMIC platform to other financial institutions, which means payment service providers may have to add to their compliance plans in the not too distant future. The sharing of AML information looks set to move beyond the shores of the island nation, with Hong Kong also currently consulting on a similar system, so this may well be the start of a regional or even global change in AML: reporting requirements. 

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