Payment service providers under the radar: MAS imposes composition penalties on five major payment institutions for AML/CFT Breaches

Overview

On 27 June 2025, the Monetary Authority of Singapore (“MAS”) announced the imposition of composition penalties totalling S$960,000 on five major payment institutions (“MPIs”) licensed to provide cross-border money transfer services (“MAS Announcement”). This enforcement action stems from breaches of MAS’ anti-money laundering and countering the financing of terrorism (“AML/CFT”) requirements, as outlined in MAS Notice PSN01 on the Prevention of Money Laundering and Countering the Financing of Terrorism – Specified Payment Services. The breaches, identified during MAS examinations, occurred between March 2020 and August 2023 and involved inadequate AML/CFT controls, including failures to screen customers and beneficial owners against relevant money laundering/terrorism financing (“ML/TF”) information sources and to inquire into beneficial ownership structures.

Key Details of the enforcement actions

We observed that the penalties, ranging from S$110,000 to S$260,000 per payment service provider, reflect the severity and duration of the non-compliance. The breaches include:

• Failure to screen customers, connected parties, and beneficial owners against ML/TF information sources when establishing business relationships or conducting transactions.
• Inadequate inquiry into the beneficial ownership of customers, which we recognise as critical for identifying ML/TF risks.
• Weaknesses in internal AML/CFT policies, procedures, and controls, leading to systemic compliance failures.

MAS has confirmed:

• These payment service providers have taken remedial actions to address the identified deficiencies; and
• It will release an information paper outlining common issues, supervisory expectations, and areas for improvement based on these examinations. 

This reinforces our view of MAS’ commitment to enhancing compliance standards within the payments sector.

Significance of the current development

This enforcement action marks the first publicly reported instance of MAS imposing composition penalties specifically on payment service providers under the Payment Services Act 2019 (“PS Act”) for AML/CFT breaches. While we have seen MAS target banks, insurers, and wealth management firms in the past, this action extends its enforcement reach to the rapidly growing payments sector, which is regulated under the PS Act’s modular framework. We see this as a trend that is set to continue.

We view this development as MAS’ response to the evolving risk landscape in the payments sector, particularly as cross-border money transfer services grow. The breaches, spanning several years, indicate to us systemic gaps in compliance frameworks, likely due to the rapid growth and complexity of payment services. We consider the penalties, while significant, to be lower than those imposed on capital markets services licensees (e.g. S$4.4 million in financial penalties and compositions against two capital markets services licensees from July 2023 to December 2024), suggesting MAS’ calibrated approach that accounts for the scale and nature of the payments sector.

Our observations and insights

• Heightened regulatory scrutiny: We see this action as underscoring MAS’ commitment to strengthening AML/CFT compliance in the payments sector, particularly for payment service providers handling cross-border transactions. We expect the forthcoming information paper to provide clearer guidance, potentially increasing compliance costs for payment service providers.
• Senior leadership accountability: Consistent with past actions (e.g. 2024 wealth management case), we note that MAS emphasises the role of senior management in ensuring compliance. While no individual reprimands were issued in this present MAS Announcement, payment service providers should demonstrate proactive governance improvements, and it is our view that MAS will increase its scrutiny on the senior management of payment service providers.
• Sector-specific focus: We observe that the payments sector’s inclusion in MAS’ enforcement actions aligns with its broader regulatory priorities, including digital asset ecosystems and wealth management. We view the PS Act’s expanded scope as a forward-looking approach to regulating emerging financial services.
• Global trend: We see Singapore’s actions as aligning with global trends in AML/CFT enforcement, particularly the Financial Action Task Force’s (FATF) revised standards for virtual asset service providers. 

Our recommendations

• Review AML/CFT frameworks: We recommend that payment service providers conduct comprehensive audits of their AML/CFT policies, focusing on customer due diligence, beneficial ownership identification, and transaction screening. We view regular internal audits as critical to ensuring compliance with MAS Notice PSN01.
• Enhance governance: We recommend boards and senior management to actively oversee AML/CFT controls, ensuring they evolve with business growth and regulatory expectations.
• Stay informed: We advise clients to monitor MAS’ forthcoming information paper for specific guidance on addressing common compliance gaps. We encourage engaging with legal advisors to align with best practices.
• Invest in technology: We recommend leveraging advanced screening tools and data analytics to strengthen ML/TF risk detection, particularly for cross-border transactions.

Assistance we can provide

We see this enforcement action as a clear signal of MAS’ heightened focus on the payments sector as a critical component of Singapore’s financial ecosystem. In this regard, we have been assisting clients with navigating MAS’ AML/CFT requirements. We assist clients to review and strengthen AML/CFT compliance frameworks to align with MAS Notice PSN01 and provide tailored advice on governance and risk management. Our team can also guide clients in implementing robust screening processes and beneficial ownership inquiries, while keeping them informed of MAS’ regulatory developments. This ensures payment service providers keep pace with evolving compliance and regulatory expectations. 

Do reach out to us should you require assistance. 

This article is produced by our Singapore office, Bird & Bird ATMD LLP. It does not constitute legal advice and is intended to provide general information only. Information in this article is accurate as of 30 June 2025.