According to Moody's, by strengthening controls and protecting the assets of DPT service providers' clients, these regulatory amendments seek to reduce the danger of money laundering inside the industry.

Digital payment tokens are made up of a variety of assets, such as cryptocurrencies, which are frequently protected by blockchain technology.

In Singapore, DPT service providers are presently governed under the Payment Services Act. The Act was amended in April 2024 to add safeguards for financial stability and user safety. There is a transition period between April 2024 and January 2025 as part of these revisions. In order to continue functioning after January 2025, DPT service providers will need to resubmit their licensing applications, make sure the new AML/CFT procedures are followed, and go through external audits.

The range of activities that are subject to regulation has increased with the latest modifications to the Payment Services Act. These currently include cross-border money transfers between nations, DPT exchange facilitation, transmission of DPTs between accounts, and custodial services provided by DPT service providers. Additionally, MAS retains the right to compel DPT service providers to adhere to extra regulations pertaining to user security, AML/CFT controls, and financial stability.

The world of bitcoin transactions has played a major role in enabling financial crime. According to Chainalysis' 2023 research, there was $22.2 billion in cryptocurrency-related crime worldwide in the year prior. Notable developments include an increase in money transferred from ransomware to online gambling sites and the introduction of new money-laundering techniques like mixers and bridges.

A certain amount of transactional anonymity is provided to users via digital payment tokens and cryptocurrency. This, together with relatively lax regulatory control, leaves them open to misuse for financial crimes such as funding of terrorism and money laundering (ML/TF). Global regulatory organizations have responded to this by tightening up licensing and AML rules.

Smaller fintech, DPT, or cryptocurrency companies could not have the resources to put in place strong compliance procedures, but bigger firms might. A more thorough compliance framework for service providers is nonetheless required due to Singapore's increased regulatory scrutiny, with a particular emphasis on a risk-based approach to evaluate and reduce AML/CFT risks.

Businesses in the fintech and cryptocurrency industries must evaluate their compliance frameworks and consider important issues. These include being aware of the firms they are doing business with, keeping an eye on how AML/CFT risks are changing over time, and spotting hidden dangers like those connected to shell corporations.

The global trend toward more stringent AML/CFT compliance regulations in the fintech and cryptocurrency industries is in line with MAS' heightened regulatory scrutiny. To safeguard customers and maintain compliance, businesses in this industry need to be aware of changing legislation and adjust accordingly.