Singapore signals end to lighter-touch regulation for payments firms

For much of the last decade, the payments industry has grown on the basis that non-bank firms could provide faster, more flexible and more commercially efficient alternatives to traditional banking infrastructure.

Part of that model depended on lighter regulatory frameworks. Singapore’s Major Payment Institution (MPI) regime, alongside equivalent frameworks in the UK, EU and Hong Kong, was designed to encourage innovation by allowing non-bank firms to move money without the high capital and compliance requirements associated with full banking licences.

However, the 2026 FATF Mutual Evaluation of Singapore* - published in May to a broadly positive reception - suggests this gap is closing.

What MAS now expects, in plain terms, is that payment firms know their customers the way a bank would have to know its customers. Not just who they are on paper, but who actually owns the business behind the business, where the money comes from, where it is going, and whether any of that touches a sanctioned country, a contested trade route or a high-risk industry. The monitoring has to be continuous rather than occasional, the questions have to be asked early, and the answers have to be documented well enough to satisfy a regulator looking over the firm's shoulder months later.

None of this is new in principle - APA is used to working through this level of scrutiny for many of our clients. What is new is the level of expectation, which appears to be converging with those of a tier-one bank.

What does this mean for payments firms? Some business models that made sense in 2019 will not make sense in 2026. Strong compliance apparatus is costly, and no longer discretionary. It involves senior compliance hires who can defend a programme to MAS. Transaction monitoring systems that are not just for show, but produce genuinely useful alerts. Onboarding processes built to handle complex cases properly. For firms running on thin margins and high volume, these are not items that can be deferred to a later funding round.

Firms that built strong compliance infrastructure early, APA among them, are starting from a position the rest of the market now has to reach. That is less a competitive boast than an observation about where the new baseline sits.

What does it mean for clients? Overall, the heightened requirements are a good thing for client safety, but those with offshore structures, nominee arrangements or complex trade flows should expect more questions. Given APA’s specialism in complexity, where heightened compliance requirements are already normal, APA is well-equipped to meet expectations without disrupting client experience. However, firms that built their workflows around speed alone will find the same requirements harder to integrate.

The lighter-touch era was always going to end. What replaces it looks like banking in everything but the balance sheet: lower capital requirements, but steadily converging expectations around compliance, governance and supervisory intensity. APA has always seen compliance as a competitive advantage and built our business around that. The firms treating compliance as a tax on growth will find it has become the cost of staying in business.

_{*The Financial Action Task Force (FATF) is an independent inter-governmental body that develops and promotes policies to protect the global financial system against money laundering, terrorist financing and the financing of proliferation of weapons of mass destruction. The FATF Recommendations are recognised as the global anti-money laundering (AML) and counter-terrorist financing (CFT) standard.}

_{The 2026 FATF Mutual Evaluation of Singapore (MER) provides a summary of the AML and CFT measures in place in Singapore as of 18 July 2025. The report analyses the level of compliance with previous FATF recommendations and the effectiveness of Singapore’s AML/CFT system, and provides recommendations on how this system could be improved.}