Newly-introduced omnibus Bill consolidates MAS's key supervisory powers

SINGAPORE has introduced an omnibus Bill that consolidates the financial watchdog's key supervisory powers and among other things, enhances regulation of virtual asset service providers.

The Financial Services and Markets Bill introduced in Parliament on Monday (Feb 14) will align the scope of digital token services in line with the enhanced standards set by the Financial Action Task Force (FATF), an intergovernmental organisation founded to combat money laundering.

If passed, the Bill will let the Monetary Authority of Singapore (MAS) regulate virtual asset service providers (VASPs) primarily for money laundering and terrorism financing risks as MAS considers all transactions relating to digital token services to carry higher risks due to their anonymity and speed, it said in the explanatory brief. The Bill will introduce general powers over these entities, including licensing requirements and powers to conduct anti-money laundering and counter-terrorism financing inspections.

FATF defines VASPs to include providers of exchange services between virtual assets and fiat currencies, or between one or more forms of virtual assets, those offering transfer services, those offering custodian services, as well as entities that provide financial services related to an issuer's offer and/or sale of a virtual asset. Here, virtual assets refer to a digital representation of value that can be digitally traded, transferred or used for payment or investment purposes.

Under the Bill, VASPs that provide digital token services outside of Singapore will also be regulated - as a new class of financial institutions, with licensing and ongoing requirements.

The Bill will also allow MAS to prohibit any person who is not fit and proper from engaging in any activity regulated by MAS and from performing a prescribed list of key roles and functions in the financial sector. This broadens the categories of persons who may be subject to prohibition orders and widens the scope to cover functions that are "critical to the integrity and functioning of financial institutions", MAS said.

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If passed, the Bill will also consolidate MAS's powers to impose requirements on technology risk management.

It will also provide statutory protection from liability for mediators, adjudicators and employees of those who operate approved dispute-resolution schemes. "This will strengthen the confidence and autonomy of these individuals when they carry out their duties," MAS said.

The Bill was introduced by Minister of State for Trade and Industry Alvin Tan on behalf of Senior Minister and Minister-in-charge of MAS Tharman Shanmugaratnam. MAS first introduced the proposed omnibus Act in July 2020 through an industry-wide consultation paper.