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MAS Consultation Paper: Draft Notice to Holders of Stored Value Facilities - Prevention of Money Laundering and Countering the Financing of Terrorism 
Posted on Friday, August 31, 2007 - 10:00 PM

Money laundering is a concern of all the world’s financial centres, including Singapore. Since 1991, Singapore has been a member of the Financial Action Task Force (“FATF”), the inter-government body established in 1989 to develop and promote policies to combat money laundering. Towards this end, the FATF developed and issued its Forty Recommendations on Money Laundering and Nine Special Recommendations on Terrorist Financing. These two sets of recommendations collectively known within the international financial community as the FATF 40+9 Recommendations, constitute the international standard against money laundering and terrorist financing.

2. In 13 October 2006, the FATF issued a Typologies Report on New Payment Methods, which analysed new payment methods (stored value facilities, Internet payment systems, etc) and assessed the actual money laundering and terrorist financing risks. A key area that surfaced was that while stored value facilities (“SVF”) have been designed to provide transacting parties with immediate and convenient means to make payments for goods and services, the convenience and anonymity of such transactions make them possible vehicles for money laundering and terrorist financing. Unlike traditional bank accounts, persons who purchase, reload or refund money using SVF are often not required to provide any identifying information, and this can potentially offer anonymous modes of entry into the banking and payment systems.

3. Given this risk, the Monetary Authority of Singapore (“MAS”) plans to issue directions on the preventive measures to be taken to limit the risk of SVF being used for illegitimate purposes. The draft Notice to Holders of Stored Value Facilities (“draft Notice”) is set out in Annex 1. The AML/CFT requirements in this draft Notice are only applicable to holders of SVF that issue SVF with a load limit1 in excess of S$1,000. Load limits can reduce the effectiveness of SVF as a money-laundering and terrorism financing tool, as well as limit the maximum loss to the SVF user.

4. MAS invites interested parties to provide in writing their feedback on the draft Notice. Electronic submission is encouraged. Please submit your comments by 30 September 2007 to:
Specialist Risk Supervision Department
Monetary Authority of Singapore
10 Shenton Way, MAS Building
Singapore 079117
Email: paymentsystems@mas.gov.sg
Fax: (65) 6229 9659

5. All respondents should note that submissions received by MAS may be made public unless confidentiality is specifically requested for whole or a part of the submission.