Singapore SPI License

Singapore Standard Payment Institution License

N5Bank assists our international clients to secure the Singapore Standard Payment Institution License. On 28 January 2020, Monetary Authority of Singapore (MAS) announced the introduction of Singapore Payment Services Act with the aim of enhancing the regulatory framework for payment services in Singapore. The main goal is to promote higher confidence in the overall use of electronic payments while protecting the safety of consumers.

In the past, it is possible for local companies to obtain a license exemption from MAS if they are conducting Stored Value Facility (SVF) or money remittance business. As of now, new applicants are all required to apply for the Payment Institution License. If your Singapore company has been carrying out the above-mentioned services previously, N5Bank can assist you to request for a grace period from MAS.

Introduction

Under the Singapore Payment Services Act, payment service providers are required to secure Standard Payment Institution License in order to provide payment services below.

A person must have in force a standard payment institution license to be entitled to carry on a business of —

Providing one of the following payment services:

1. An account issuance service;
2. A domestic money transfer service;
3. A cross border money transfer service;
4. A merchant acquisition service;
5. An e money issuance service;
6. A digital payment token service; or

Providing 2 or more of the following payment services:

1. An account issuance service;
2. A domestic money transfer service;
3. A cross border money transfer service;
4. A merchant acquisition service;
5. An e money issuance service;
6. A digital payment token service;
7. A money changing service.

The thresholds for the Standard Payment Institution License are:

S$3 million monthly transactions for any payment service (other than e-money account issuance and money-changing services).

S$6 million monthly transactions for two or more payment services (other than e-money account issuance and money-changing services).

S$5 million of daily outstanding e-money

To illustrate the above, you will be subject to a threshold of S$3 million monthly transactions if you are planning to only conduct domestic money transfer services and e-money account issuance. This is because your payment service provider is only providing one payment service since e-money account issuance is not included.

On the other hand, you will be subject to a threshold of S$6 million monthly transactions if you are planning to conduct both domestic and cross border money transfer services. This is because your business is now providing two payment services.

If your business exceeds the above-mentioned threshold, you will be required to apply for a Major Payment Institution License.

Advantages of obtaining a Singapore Standard Payment Institution License

An entity applying for a standard payment institution license in Singapore may get the following advantage:

• Access to the Singapore market: Singapore is a leading financial hub in Asia and obtaining an standard payment institution license can provide a gateway to the Singapore market and the wider Asia-Pacific region.
• Credibility and trust: Being licensed by the Monetary Authority of Singapore (MAS) can enhance a company’s credibility and instill trust among customers, partners, and investors.
• Ability to offer a range of payment services: With an standard payment institution license, a company can offer a wide range of payment services, such as account issuance, domestic and cross-border money transfers, e-wallets, and digital payment tokens.
• Regulatory oversight: MAS regulates and supervises standard payment institutions to ensure they comply with anti-money laundering and counter-terrorism financing regulations, as well as consumer protection standards.
• Access to regulatory sandboxes: MAS provides regulatory sandboxes that allow SPIs to test and launch new products and services in a controlled environment.
• Opportunities for partnerships: Standard payment institutions can partner with banks, fintech companies, and other payment institutions to expand their business and offer innovative solutions to customers.
• International recognition: Singapore has a reputation for having a robust regulatory framework and obtaining an standard payment institution license can provide international recognition for the company’s compliance standards.

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Mandatory requirements for Singapore Standard Payment Institution License

1. The application must be submitted by a company registered in Singapore or a foreign branch registered in Singapore.
2. You are required to have either a local registered office address or a physical office.
3. The minimum paid-up capital of SG$100,000 should be deposited into your corporate bank account.
4. As per MAS’s latest update on Technology Risk Management Guidelines on 18 January 2021, all license holders are now required to appoint a Chief Information Officer, Chief Technology Officer or Head of IT. This personnel is principally responsible for establishing and implementing the overall information technology strategy, overseeing the day-to-day information technology operations, and managing the information technology risks of the financial institution.
5. It is also mandatory to appoint a Chief Information Security Officer or Head of Information Security to be responsible for the information security strategy and programmer of the financial institution, including but not limited to information security policies and procedures to safeguard information assets, information security controls, and the management of information security.
6. Your board of directors should include either:

• at least 1 executive director who is a Singapore Citizen or Singapore Permanent Resident or
• at least 1 non-executive director who is a Singapore Citizen or Singapore Permanent Resident and at least 1 executive director who is a Singapore Employment Pass Holder.

Major Payment Institution License

1. If your business exceeds the above-mentioned threshold, you will be required to apply for a Major Payment Institution License. You will be subject to additional requirements such as a minimum paid-up capital of S$250,000 and a security deposit up to S$200,000.
2. If the monthly average of payment transactions for any one payment service does not exceed S$6 million, the security deposit will be S$100,000. If your business exceeds this threshold, the security deposit will be increased to S$200,000. You can choose to maintain the security deposit as a cash deposit with MAS or as a bank guarantee.
3. MAS also requires companies with Major Payment Institution License to safeguard funds in the form of guarantee or trust accounts.

Admission criteria

Monetary Authority of Singapore (MAS) has stated that they will consider the below criteria while assessing the issuance of the Standard Payment Institution License.

• Fitness and propriety of the controllers and directors.
• Governance structure.
• Qualifications and experience, particularly in operating a payment services business and compliance with regulatory requirements.
• Financial condition and track record.
• Business plan and model, including operational readiness.
• Ability to comply with obligations under the PS Act, including compliance, technology risk management and audit arrangements.
• Regulatory status in other jurisdictions, where applicable.
• For applicants with a holding company, commitment to operations in Singapore.
• Whether the public interest will be served by granting a license.

Timelines

MAS stated that there is no definite timeline for approving each license application. Each application will be reviewed individually, and they may revert asking for additional supporting documents or information. Only after receiving completeness of information, they will provide feedback regarding the license application.

Ongoing requirements for Singapore Standard Payment Institution License

• An entity once granted the respective license of operating a standard payment institution in Singapore is obligated to consistently abide by all applicable rules and regulations outlined in the Payment Services Act of Singapore and other pertinent laws. Licensees are required to set up systems, rules, and processes to make sure they fulfill their continuing requirements, including applications and notifications to the MAS when needed. The following is a summary of some of these criteria.
• Anti-money laundering and Countering the Financing of Terrorism (“AML/CFT”) requirements: A licensed entity is required to abide by the guidelines set out in the MAS Notices on Prevention of Money Laundering and Countering the Financing of Terrorism and Reporting of Suspicious Activities & Incidents of Fraud. To do this, processes must be in place for customer due diligence, record-keeping, and risk assessment and mitigation.
• Requirement to file for periodic returns: According to the Payment Services Regulations of Singapore, a licensed entity is required to file periodic regulatory returns pertaining to its payment service operations.
• Requirements for suitable business conduct: A licensed entity is required to abide by rules governing the conduct of businesses, including securing clients’ funds, keeping track of transactions, issuing receipts, and clearly displaying fees and currency rates. The licensed entities must also make sure they abide by all limits and prohibitions, including those pertaining to personal payment account stock and flow as well as unlawful commercial operations.
• Cyber hygiene: A licensed entity must put in place the necessary protections to secure customer information and adhere to the cyber hygiene criteria outlined in the Notice on Cyber Hygiene [PSN06].
• Disclosure and communications: A licensed entity must accurately portray the license’s scope and give disclosures where those disclosures are pertinent to the licensee’s business. Additionally, a licensee must make sure that clients are promptly informed of any significant alterations to the disclosures.
• Annual audit requirements: A licensed entity is required to choose an auditor each year to conduct an audit of its books and transactions as well as its compliance with rules and standards. The licensee is responsible for ensuring that the auditor submits MAS a report in Form 4.
• It is crucial to keep track of these ongoing requirements as well as any regulatory updates and MAS’s published guidance. Please be aware that MAS may cancel or suspend your Standard Payment Institution License if you do not follow the rules that apply to your business. Therefore, it is important to engage N5Bank’ team of licensing experts to keep you updated on the new regulatory requirements.

How to apply?

N5Bank will assist our international clients to register a Singapore company by providing a local company address, local nominee director and local company secretary. This process will take approximately 1 week. 

After the company is registered, N5Bank will proceed to open a corporate bank account with a reputable Singapore bank. This bank account will be used to deposit the minimum paid up capital required to secure Standard Payment Institution License from Monetary Authority of Singapore. In 4 weeks, N5Bank will secure the bank account and internet banking token for our international clients.

At the same time, N5Bank will assist our international clients to prepare a comprehensive business plan and AML/CFT (anti money laundering and countering financing of terrorism) policies required for the license application.

Some of these required documents include technology risk management, cyber hygiene, regulatory reporting, penetration testing and other policies. This is to ensure the company adheres to the compliance, technology risk and audit requirements regulated by the Monetary Authority of Singapore.

N5Bank will source a physical office for our international clients. Our legal team will prepare a lease agreement as per local Singapore real estate regulations, to be signed by all parties. Thereafter, our international clients are required to pay monthly rental directly to the landlord.

N5Bank will assist in the recruitment of a local executive director for your company. Our services include conducting initial screening and interviews as well as preparing employment contracts as per Singapore employment regulations. Our international clients are only required to attend the final interview to pick the preferred candidate. Thereafter, monthly salaries are to be paid directly to your employee.

If required, N5Bank will assist with the recruitment of a Compliance Officer, Chief Technology Officer and Chief Information Security Officer for you.

In the event our international clients decide to be the executive director of the company, N5Bank will secure Employment Pass from Ministry of Manpower. This process will take approximately 6 weeks for approval and thereafter, you will be appointed the executive director. On the other hand if required, N5Bank can provide a nominee non-executive director to meet the mandatory requirements.

Once above is completed, N5Bank will submit the license application to Monetary Authority of Singapore for approval. All going well, we expect to receive feedback within 10 weeks upon submission. In the event additional documents are required, N5Bank will immediately prepare the same for submission so as to prevent any engagement delay.

In total, N5Bank expects to register your Singapore company, open local corporate bank account and secure Standard Payment Institution License from MAS.

What are the discretionary criteria for evaluating a Singapore Standard Payment Institution License?

1. An application for a major payment institution license may be approved or rejected at the discretion of MAS. Therefore, it is crucial to be aware of the aspects that MAS considers while evaluating your application for a license, including the following:

• If the company’s controllers and directors, such as the sole owner, partners, directors, CEO, shareholders, and staff, meet the MAS Guidelines on Fit and Proper Criteria.
• if the company’s controllers and directors have the necessary training and expertise, particularly in managing a firm that offers payment services and adhering to legal obligations.
• The business’s financial standing and track record.
• If the entity is capable of having in place compliance, safeguarding, technology risk management, and audit arrangements, as well as being able to adhere to regulatory requirements under the PSA.

Validity period of Singapore Standard Payment Institution License

A Singapore Standard Payment Institution license is granted for an indefinite period unless any of the following situations occur:

• The license is revoked by MAS in case of any fraud or failure of public interest is discovered; or
• The license is considered to have lapsed in case of expiry of license as per the terms defined, failure to adhere to the regulatory requirements, laws, and regulations concerning the payment system of Singapore; or
• The licensee surrenders the authorization on its own.

In case the entity no longer possesses the Singapore Standard Payment Institution License (whether it has lapsed, been revoked, or been surrendered), the entity will be taken off the Financial Institutions Directory, and you must stop offering any kind of payment service right once.

Further, Please take note that continuing to offer payment services without a license in good standing is illegal. If you do, you might face a monetary penalty of up to S$100,000 upon conviction and an additional penalty of up to S$10,000 each day if the offense continues.

Our services

Applying for a payment license can be a daunting process if you are unaware of the laws and regulations governing such licenses in the jurisdiction of your choice. N5Bank provide a seamless experience of applying for a payment license so that you can channel your energy into other important aspects of your business.

Our licensing consultants are experts in the field and ensure a high level of professionalism throughout the whole course of engagements from the formation of an entity in the proposed jurisdiction to the ultimate negotiation and liaison with the regulatory and governmental authorities in order to successfully secure the license.

Technical compliance:

Professional IT analysis to ensure that the software meets regulatory standards. There are proven software solutions such as BAAS or SAAS. We significantly often work with such platforms as SoftexLab, which is ready-made technical solutions for your future fintech business, which are audited by various regulators within the jurisdiction.

Card issuance:

We recommend a White Label solution with partners such as XBANKSY, which is aggregator of more than 30 different cards and BIN- sponsorship around the World. This is a faster and, most importantly, more profitable way than direct VISA or MasterCard membership

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