Debated in Parliament on 4 Oct 2022.
Mr Yip Hon Weng asked the Prime Minister (a) what is the prevalence of cryptocurrency transactions involving privacy coins and privacy wallets in Singapore; and (b) whether the Government regulates the use of privacy coins and cryptocurrency mixers.
Privacy coins1, privacy wallets2 or cryptocurrency mixers3 can be misused by criminals since they are all designed to hide the identity of persons behind cryptocurrency transactions. The Financial Action Taskforce (FATF) has issued guidance4 to the international community to treat transactions involving such anonymity features as highly risky. This means that regulated entities that undertake such transactions for their customers must take additional measures to mitigate the associated money laundering and terrorism financing (ML/TF) risks.
In particular, they must assess the ML/TF risks posed by such tokens before dealing in them. MAS must be satisfied that they have taken adequate control measures to manage these risks5. MAS also requires DPT service providers to assess the purpose of their customers' use of privacy coins, privacy wallets or mixers and to undertake enhanced monitoring of their transactions6.
Most licensed DPT service providers in Singapore do not offer privacy coins to their customers. There is, currently, no data on the use of privacy wallets and cryptocurrency mixers in Singapore, as both are essentially open-source and non-custodial protocols created by software developers and used to transact peer-to-peer. Nonetheless, MAS is closely monitoring the business activities of licensed DPT service providers. They are required to periodically report to MAS on DPTs they hold or transact in that they have assessed to be of higher risk. MAS will take appropriate supervisory actions against regulated entities that fall short of its standards.
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