Background

 

The director of Singapore Precious Metals Exchange (“SPME”), Victor Foo, faces charges for allegedly operating unlicensed payment services involving US$81 million between 2020 and 2022. This case highlights MAS’s rigorous enforcement of the Payment Services Act 2019. It underscores the critical need for strict adherence to licensing requirements and robust compliance frameworks to prevent illicit financial activities and maintain market integrity.

 

 

Key Observations

 

The charges against SPME and its director reveal significant lapses in regulatory compliance and corporate oversight.

 

 

Compliance gaps:

 

• Unlicensed Payment Operations: SPME allegedly conducted payment services without the requisite license under the Payment Services Act 2019, a fundamental breach of regulatory requirements.
• Circumvention of Oversight: The use of gold bar transactions as a purported justification for significant cross-border money flows suggests an attempt to bypass regulatory scrutiny and financial transparency.
• Director Accountability Failure: The director’s alleged consent to these unlicensed activities points to a critical breakdown in corporate governance and individual responsibility at the leadership level.
• Cross-Border Risk Management: The involvement of overseas payer and payee entities highlights the inherent complexities and heightened risks associated with international financial transactions, demanding stringent controls.

 

 

MAS expectations:

 

• Mandatory Licensing: MAS unequivocally expects all entities providing payment services to obtain the necessary licenses or qualify for explicit exemptions under the Payment Services Act.
• Enhanced Due Diligence: Financial institutions must implement robust due diligence processes, particularly for complex cross-border transactions, to identify and mitigate potential illicit activities.
• Strong Corporate Governance: Directors and senior management are held personally accountable for ensuring their organizations operate strictly within legal and regulatory frameworks.
• Vigilant AML/CFT Controls: The nature of the alleged transactions necessitates rigorous Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) measures to detect and prevent financial crime.

 

 

What’s next?

 

This case could result in increased scrutiny of the precious metals industry and other sectors which are exposed to cross-border flows. The outcome will reinforce the strict licensing regime in Singapore for all financial services. In addition, it highlights the need for a culture of individual accountability for corporate misconduct, failing which companies can suffer serious regulatory penalties and reputational damage.

 

 

How can we help?

 

Capital Governance assists firms by:

• Licensing & Regulatory Advisory: Guiding through payment services licensing requirements and compliance.
• Corporate Governance Audits: Assessing director oversight and internal control effectiveness.

 

… and more