A payments company operating in one of these countries and looking at the other is looking at two regulatory systems with materially different regulatory and operating requirements. The differences decide the sequence and the budget, and often the corporate structure, so they are worth assessing early with specialist advice.
Singapore: A Central Regulatory Framework, Subject to the Business Model
Payment services in Singapore are regulated by the Monetary Authority of Singapore under the Payment Services Act. Singapore's Payment Services Act regulates specified payment activities. Whether a license is required, and the relevant license type, depends on the precise business model, the activities performed, transaction values and any applicable exemptions. Businesses should obtain Singapore legal advice early, including on governance, compliance, operational capability and the realistic timetable for any application.
The United States: Federal and State-Level Considerations
In the United States, the regulatory analysis commonly involves federal anti-money-laundering obligations and state-by-state licensing considerations. Requirements depend on the flow of funds, parties involved, services offered, contractual structure, available exemptions and the states in which the business operates. State regimes differ in application requirements, financial safeguards, reporting, examination and ongoing compliance obligations. Specialist US regulatory counsel should assess the position before launch.
The Partner Route
Some businesses enter the US market through arrangements with appropriately authorized banks or program managers. Whether such an arrangement is viable depends on the product, contractual structure, allocation of responsibilities and applicable law. A third party's authorization should not be assumed to cover another business's activities without specialist legal advice.
Which to Do First
The right entry sequence depends on the business model, products, target customers, corporate structure, capital position and regulatory analysis in each market. It should be determined with specialist local counsel before commercial commitments are made.
Two Questions to Settle Before Either
- Which entity will hold the license, and where the customer funds will sit
- Whether the product as designed is within scope of the relevant payments and anti-money-laundering requirements in each jurisdiction
Citalo Group helps clients frame the commercial and operating questions around a payments-market entry. Where legal or regulatory advice is required, we work alongside appropriately qualified local counsel from an early stage.
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