Singapore is one of the world’s leading financial hubs and also one of the Asia-Pacific leaders. So, it makes sense that businesses all over the globe want to invest in the Singapore markets. Economic stability makes it an even better option for investors globally. Singapore for years has been following a pro-business attitude that encourages global trade.
Anyone wishing to do business or onboard Singapore customers must follow the clear and robust KYC and AML guidelines. These KYC guidelines Singapore are set by regulatory bodies in Singapore to prevent ID theft fraud and the rise of money laundering.
KYC Regulations Singapore as Set by MAS
The KYC guidelines Singapore are built and implemented by the “Monetary Authority of Singapore (MAS).” And the Singapore KYC requirements specify that digital verification is acceptable, but businesses have to take appropriate measures, these include:
- Verify phone number
- Address proof verification
- Employment status confirmation (with user consent)
- Bank statement verification (for verifying user income)
- Certification of ID Documents by lawyers or Notary
- Initial deposits using a cheque from a bank in Singapore
- Other ID verification checks
No verification is needed until a customer moves forward with the account opening process. This is only applicable if there are internal policies that limit access to financial services before customer verification is complete.
Singapore Digital Identity System
Singapore has one of the best digital identity systems. The Singapore digital identity system completely relies on mobile apps and biometric data to make the onboarding process faster.
Citizens of Singapore can use the Singpass app to sign up for a government and private sector services. Singpass is connected to Myinfo (a service that provides verified personal and corporate data) which leads to the remote signing of the documents.
There’s also a step beyond customer identification, that is the general KYC rules such as due diligence and customer monitoring.
If a customer is on the PEP list or poses a greater risk for money laundering, then an enhanced due diligence level is required. Even greater levels of due diligence are needed if:
- Transaction activities change
- The institution changes document standards
- Lack of appropriate identification information
- There’s a physical change in relations with the customer
Beneficial Ownership Verification in Singapore
The steps to verifying businesses and beneficial owners lie outside the basic KYC and CDD norms in Singapore. Any director, partner, or entity that has executive-level control over the organization’s operations is considered a beneficial owner. Identities of these beneficial owners have to be identified by businesses.
The Digital identity system in Singapore can also help in hastening this process. Myinfo Business app can automatically provide verified business information and beneficial ownership information data. The app can do this by fetching data from government sources.
An additional level of due diligence is required only if there are any changes in the ownership.
Payment Services Act in Singapore
The Payment Services Act in Singapore undertakes the Licensing and regulation for all the payment service providers. Organizations that have to follow these rules include:
- Domestic money transfer services
- International money transfer services
- Account creation services
- Merchant acquisition services
- E-money issuance services
- Digital payment token services
The biggest impact of these regulations is on entities operating the crypto and the NFT industry. Any entity that works in buying and selling digital assets, offers token exchange, or promotes these services may fall under the payment services act in Singapore.
Payment providers have to be ready to fight money laundering in advance. They should build money laundering prevention systems to combat fraud. Also, all the customers need to go through identity verification.
Low-risk customers need to go through simple due diligence, but customers with high risk have to go through enhanced due diligence. Other methods of risk prevention include Watchlist screening, transaction monitoring, and recording and reporting of transactions that seem suspicious.
There’s one more regulation that payment companies operating in Singapore have to follow. The regulation is known as Financial Services and Markets Bill also called FSM Bill.
The goal of the FSM bill is to minimize the risks by licensing the payment service providers and imposing AML/CFT requirements.
State of FinTech Industry in Singapore
Even though the population of Singapore is just 5.9 million, it has 132 banks. Plus, there’s a boom in the FinTech industry in Singapore. In 2021, the investments in the FinTech market rose by 37%. Moreover, the total amount invested in 2021 left China and India behind.
Singapore is a great platform for companies that want to gain a firm footing. Plus, it can be the perfect place to expand service globally. Singapore is working towards Crypto adoption, which will only boost the financial situation of the country. And currently, the financial environment is highly secure because of the KYC requirements in Singapore.