Singapore Raises Concern Over Digital Payment Token Service Providers in New Report

Singapore’s recently updated Money Laundering National Risk Assessment (NRA) has raised concerns regarding the increased vulnerabilities posed by digital payment token (DPT) service providers.

The comprehensive 126-page report, which identifies new risk sectors not covered in the previous 2014 report, also includes DPT service providers and precious stone and metal dealers as areas of concern.

Among these sectors, the banking industry, including wealth management, is identified as posing the highest money laundering risks.

Banks are more susceptible to criminal exploitation due to their role in facilitating large transaction volumes and serving high-risk customers.

Crypto Asset Service Providers Pose High Risk

Within the financial sector, DPT service providers, also known as virtual asset service providers, stand out as a high-risk category.

The NRA report highlights an increase in reported cases involving DPTs and a variety of exploitation methods.

Despite Singapore’s relatively small share of global DPT activities, authorities closely monitor the associated risks.

Other high-risk sectors in the financial industry include payment institutions offering cross-border money transfer services and external asset managers.

The NRA report, a collaborative effort involving Singapore’s supervisory and law enforcement agencies, the Financial Intelligence Unit, and feedback from private sector entities and foreign authorities, reveals that the key money laundering threats in Singapore stem from fraud (particularly cyber-enabled fraud), organized crime, corruption, tax crimes, and trade-based money laundering.

Typical money laundering methods include concealing illegal funds in Singaporean bank accounts, utilizing fictitious companies, and investing in valuable assets such as real estate or precious metals.

Singapore’s status as an international financial hub and its economic openness make it vulnerable to money laundering risks.

Criminals exploit the country’s financial and business infrastructure to launder or transfer illicit funds.

Moreover, the conversion of illicit funds into assets like real estate, digital payment tokens, or precious metals poses significant threats.

To address these concerns, the Monetary Authority of Singapore (MAS) announced in April that it would implement amendments to the country’s Payment Services Act (PS Act) to expand the scope of regulated services related to digital payment token service providers.

Spot Bitcoin ETFs Boost Crypto Adoption in Singapore

Singaporeans are increasingly viewing Bitcoin in a favorable light, thanks to the recent approval of spot Bitcoin exchange-traded funds (ETFs) in the United States.

According to a recent report from the digital currency exchange Independent Reserve, 39% of Singaporeans have expressed a more favorable view of Bitcoin following the approval of spot Bitcoin ETFs.

The study also revealed that Singaporean cryptocurrency investors are becoming more experienced.

More than half (52%) have been in the market for over three years, and their portfolios are becoming increasingly diverse, with 16% now holding six or more different cryptocurrencies.

This year, 64% of crypto owners reported making profits, a significant increase from previous years, while only 10% experienced losses.

Likewise, a separate report by Seedly and Coinbase, conducted in the fourth quarter of 2023 and encompassing over 2,000 adults, found that 57% of respondents currently hold digital assets.