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The Association of Cryptocurrency Enterprises and Start-ups, Singapore (“ACCESS“), as part of its Standardisation of Practice In Crypto Entities initiative for the digital asset industry, has developed a Code of Practice (“Code“), and accompanying guidelines, which sets out industry standards of Anti-Money Laundering and Counter Financing of Terrorism (“AML/CFT“) measures that crypto-firms may wish to comply with on a voluntary basis.

ACCESS invites public feedback on this Code, by 10 September 2019.

Scope of the Code

The Code comprises a set of ground-up, industry-driven practices for crypto-firms which conduct one or more of the following activities or operations for or on behalf of another natural or legal person:

  • exchange between cryptocurrency and fiat currencies
  • exchange between one or more forms of cryptocurrency
  • transfer of cryptocurrency
  • safekeeping and/or administration of cryptocurrency or instruments enabling control over cryptocurrency; and
  • participation in and provision of financial services related to an issuer’s offer and/or sale of cryptocurrency.

Although SPICE is facilitated by the Monetary Authority of Singapore (“MAS“) and developed in consultation with the Association of Banks in Singapore, the Code itself will not replace any AML/CFT requirements under other legislation or guidelines, for example

  • capital market licence holders under MAS Notice SFA04-N02;
  • remittance licence holders under MAS Notice 3001; or
  • AML/CFT requirements to be imposed on digital payment token (“DPT“) services which are regulated and licensed under the Payment Services Act 2019 (when it comes into effect).

AML/CFT Standards

The Code’s risk assessment and criteria are consistent with the Financial Action Task Force’s (“FATF“) Guidance for a Risk-based Approach – Virtual Currencies and requires crypto-firms to identify, assess and understand their own enterprise AML/CFT risk assessment, as well as adopt a standardised approach to AML/CFT and Customer Due Diligence practices.

Do note that MAS intends to amend legislation and issue AML/CFT Notices to scope in and regulate the service providers that provide one or both of the following for or on behalf of customers:

  • transfer of DPTs; or
  • provision of custodian wallets.

As with the Code, MAS’s AML/CFT notices will be in line with the standards adopted by FATF in relation to virtual asset services providers. (For our previous alert Payment Services Notices 01 and 02, please refer to MAS Consults onProposed AML/CFT Notices for Licensed Payment Services Providers).

The Code also adopts the “risk industries” determination in Singapore’s National ML/TF Risk Assessment Report.

Compliance with the Code

MAS has stated that this collaborative effort by the industry will assist both regulated entities, such as banks, and unregulated entities, such as crypto blockchain startups, strengthen regulatory compliance.

As noted above, crypto-firms with DPT services which are to be licensed under the Payment Services Act must comply with all of MAS’ AML/CFT requirements for those DPT services.