Singapore’s Monetary Authority, MAS, has elevated the risk level for crypto exchange platforms from medium-low to medium-high under the nation’s Countering the Financing of Terrorism (CFT) laws. The move, which came into effect on July 1, is part of Singapore’s efforts to thwart terrorist groups from exploiting the country’s economic openness for financing purposes.
The MAS updated its Terrorism Financing National Risk Assessment (NRA) and National Strategy for Countering the Financing of Terrorism to address potential vulnerabilities in the country’s financial system. The goal is to prevent terrorist financing activities, especially through Singapore’s status as a global financial, business, and transport hub.
As part of the update, crypto exchange platforms, also known as digital payment token (DPT) service providers, have been reclassified as medium-high risk, up from their previous medium-low risk rating. Additionally, cross-border online payments are still considered high risk and have been identified as a potential channel for terrorist financing.
This latest development follows a report that highlighted digital payment tokens as high-risk. According to the updated Money Laundering National Risk Assessment (MLNRA), DPT service providers pose serious risks and vulnerabilities in the context of Anti-Money Laundering (AML).
The MAS has been actively involved in regulating the digital asset market and expanded the scope of regulated payment services to include digital token services providers a few months ago. This expansion aims to strengthen user protection laws and allows the MAS to impose stricter requirements on DPT service providers regarding AML, CFT, user protection, and financial stability.
Singapore is known for its favorable stance on cryptocurrencies, with a high adoption rate of 11.2%, compared to the global average of 4.2%. Under Singapore regulations, digital currencies are referred to as digital payment tokens, and the MAS has recognized Bitcoin (BTC) and Ether (ETH) as legal cryptocurrencies in the country.