When it comes to Cryptos, the Singaporean government adopts a realistic, wary, as well as individualized stance. Whereas the government sees the economic and social potential of Cryptocurrencies and wants to create a regulatory environment that encourages their use within Singapore's financial system, it is also being cautious and working to identify the risks associated, particularly with respect to consumer protection and preventing the fraudulent transactions of funds for terrorist organizations.

Also Read: How Cryptocurrency Is Used In Singapore?

Is Crypto Legal in Singapore?

In Singapore, Cryptocurrency ownership as well as trading is sanctioned. Cryptocurrency is recognized as a means of exchange under the Payment Services Act (PSA) of 2019. As a result, Cryptocurrency may be used not just as a method of payment but also for debt cancellation. Organizations that facilitate the buying, selling, or holding of Cryptocurrencies must implement stringent KYC, Anti-Money Laundering (AML), as well as Combating the Financing of Terrorism (CFT) protocols to guarantee they are in compliance with the PSA.

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Singapore's central bank, the Monetary Authority of Singapore (MAS), really hasn't produced or endorsed any commercial Cryptos. It has however teamed up with other players in the sector to launch a joint venture called "Project Ubin," which will investigate the feasibility of using blockchain as well as distributed ledger technologies for payments as well as securities clearance. The prototype payments network built during this research would be useful for creating cross-border payments infrastructure and consumer apps.

Singapore Regulatory Bodies Governing Crypto

The Monetary Authority of Singapore (MAS) is in charge of monetary policy and financial regulation. Banks, stock markets, insurance, as well as payments are all areas that the Monetary Authority of Singapore (MAS) is tasked with regulating and monitoring under the MAS Act. To ensure that all economic sector rules, including those pertaining to Cryptocurrencies, are being followed, the MAS provides supervisory control. The MAS also issues the Singapore Dollar (SGD).

AML/KYC Requirements for Singapore Crypto Businesses

In Singapore, the PSA is the primary Crypto-related piece of law. Notice PSA-N02 addresses anti-money-laundering and countering the financing of terrorism as one major area of attention. The MAS updated the PSA 2019 on Cryptocurrencies on December 5 with a Notice that describes PSN02 Prevention of Money Laundering and Countering the Financing of Terrorism i.e., Digital Payment Token Service.  Effective January 28, 2020, the PSN02 directive enacts stringent AML or CFT standards and laws to identify and halt the unlawful movement of Crypto money via Singapore. Incorporating policies like Know Your Customer (KYC) procedures like beneficial ownership, which is described as the organic individual or individuals who finally can own and control a legal entity or arrangement, such as a company, trust, or foundation", account reviews, and suspicious transaction monitoring as well as providing information are all required by the regulatory frameworks.

Procedures and Policies of AML/CFT

Policies and procedures for anti-money laundering and countering the financing of terrorism (AML/CFT) must:

        1. Risk Bucketing

Risk evaluations of consumers are required of obligated parties.

        2. Customer Due Diligence (CDD)

A client acceptance policy should be developed by all Cryptocurrency enterprises. They must identify high-risk consumers and treat them differently from average ones. A user's residence address, registered or business address, date of birth, date of incorporation of company, citizenship, and place of profession are all examples of personally identifying information that Crypto firms must collect.

        3. Enhanced Due Diligence (EDD) Measures

Entities dealing in Cryptocurrency ought to do additional due diligence on consumers who've been flagged as a "greater risk for AML/CFT." This would comprise consumers from nations with insufficient AML/CFT rules as well as politically exposed individuals [PEP].

        4. Transaction Monitoring

Enterprises dealing in Cryptocurrency should keep an eye out for suspicious activity from their counterparties that might be indicative of money laundering or terrorist funding.

        5. Suspicious Transaction Reports (STRs)

There should be a documented institutional elevation mechanism in place for Crypto firms before they may transmit STRs to the Commercial Affairs Department of the Singapore Police Force and the MAS. To comply with AML/CFT regulations, businesses must also maintain extensive customer data.

        6. Recordkeeping

Cryptocurrency companies must also do routine account audits to monitor for any unusual or fraudulent activity. They need to keep up-to-date client information and make sure that CDD and EDD records are kept properly. In addition, the AML/CFT risk of those clients who are already considered to be high risk should be monitored very closely. In addition, they have a responsibility to follow Singapore's Personal Data Protection (PDP) Act while storing, collecting, maintaining, as well as updating the records.

Licensing Requirements

An electronic payment system supplier's license is a requirement for every Cryptocurrency firm. Instead of adopting a blanket licensing policy for DPT services in Singapore, the MAS has decided for an activity-based licensing structure that takes ML/TF risks into account. To stay up with the fast expansion of digital payment systems without inhibiting technical advances, the MAS has adopted activity-based licensing levels, which are more responsive as well as adaptable.
Disclaimer: The author’s thoughts and comments are solely for educational reasons and informative purposes only. They do not represent financial, investment, or other advice.