Singapore: licensing of financial institutions. Part 1

According to the local legislation, entities that provide financial services and targeting of customers in Singapore must obtain a license from the Monetary Authority of Singapore (MAS). The type of the license further depends on the activity that is conducted by the financial institution. We will now explore the most popular kinds of financial services that require a license in Singapore.

Make sure to read our next post where we will focus on licensing requirements in Singapore.

Overview of common “licensed” services

This list aims at highlighting the most common activities, yet there are also others that did not make it to the list.

Storing and lending money

In Singapore, a financial institution must have a banking license or be licensed as a finance company to be allowed to accept deposits. As an alternative, a business that has a license for account issuance services under the Payment Services Act is allowed to create accounts. Nevertheless, such accounts have several restrictions: the any-time holding cannot exceed SGD 5,000 and the total sum of transactions should be less or equal to SGD 30,000 within a year.

The Moneylenders Act governs the activity of lending money to individuals.

Money transfer services

According to the Payment Services Act, Singapore requires a license for all the following services: processing domestic payments, cross-border payments, remittances. Moreover, if the payment institution keeps a balance of customers, it may also need to get a license for account issuance and/or e-money issuance service.

Dealing in digital tokens and cryptocurrencies

Trading and exchanging digital payment tokens requires a license as well which is again dictated by the PSA. The category of the tokens should be taken into consideration because tokens representing a security or an entitlement to a product can require a different license type or no license.

Trading in securities

A capital markets services (CMS) license is required for purchasing and selling securities. This license type is also needed for other capital markets products, for ex. derivatives contracts, units in collective investment schemes. In addition, this license is a must for crowdfunding platforms.

Fund and asset management

The management of investment or mutual funds in Singapore also requires a CMS license.

Financial advice

Financial institutions that provide advice on investment products and assist in arranging life insurance policies need to obtain a financial adviser’s license in Singapore.

Does your financial activity fall under any of the mentioned categories and you seek advice on this topic? Contact COREDO to arrange a personal consultation and discuss this issue.