MAS Licensing Guide: Which Licence Do You Need?
Table of Contents
- 01 Introduction
- 02 Understanding the MAS Regulatory Framework
- 03Capital Markets Services (CMS) Licence
- 04 Licensed Fund Management Company (LFMC) Licences
- 05 Venture Capital Fund Manager (VCFM) Regime
- 06 Payment Institution Licences Under the Payment Services Act
- 07 Financial Adviser and Corporate Finance Adviser Licences
- 08Variable Capital Company (VCC) Related Structures
- 09Licensing Requirements and Application Process
- 10 Ongoing Compliance and Regulatory Obligations
- 11 Choosing the Right MAS Licence
- 12 Conclusion
01 Introduction
Overview of the Monetary Authority of Singapore (MAS)
Singapore’s central bank and integrated financial regulator, the Monetary Authority of Singapore (MAS), was created in 1971. In a unique model not found anywhere else in the world, MAS is responsible for conducting monetary policy and managing the country’s foreign reserves. It has a wide supervisory role over all financial institutions in or from Singapore, including banks, insurance companies, capital markets firms, payment system providers, and digital asset firms. The integration enables MAS to address systemic risks coherently and harmonise regulatory policy in line with a broader macroeconomic agenda, making it one of the most comprehensive mandates of any single-bodied financial regulator in the world.
The MAS is Singapore’s main financial regulator and provides licensing, supervision, and enforcement of licenses for a broad range of financial services. The MAS licensing framework is based on the Securities and Futures Act (SFA), the Financial Advisers Act (FAA) and the Payment Services Act (PSA). The statutes specify the type of financial activity they regulate and lay out the conditions, including capital requirements, staffing, governance, and conduct, which must be met for a firm to be licensed. The first step in determining the appropriate licence is to familiarise oneself with MAS’s structure and the functions of its regulatory framework.
Why MAS Licensing Matters for Financial Businesses
A good licence is a legal requirement to run financial operations in Singapore. By doing so, a firm and its key personnel risk criminal prosecution, civil fines, cessation of operations, and public enforcement action, which can have a lasting impact on a firm’s and its key personnel’s institutional and individual reputations. Whether they are newcomers to the market or expanding businesses, the right licence is one of the first things that needs to be secured before any organisational structure is defined, a staffing plan is put in place, or any capital investment is made. In addition to legal requirements, the correct MAS licence conditions convey credibility to institutional investors and counterparties in Asia. Singapore’s financial licence advisory landscape has expanded greatly to cater to the needs of the local financial industry, and, coupled with Singapore’s strong regulatory regime, has made the city the first choice of fund managers, fintech firms and financial advisers looking to establish a footing in the Asia-Pacific region as a regulated base.
02 Understanding the MAS Regulatory Framework
Role of MAS in Singapore's Financial Sector
From financial centre development to prudential supervision to financial centre market conduct to monetary policy, MAS is a key foundational player across various aspects of Singapore’s financial system.
- Central Bank and Monetary Authority
MAS also implements Singapore’s monetary policy and maintains a foreign reserves policy by managing the Singapore dollar exchange rate, while ensuring that monetary policies are closely linked to the objectives of macroeconomic stability. The dual mandate enables MAS to act promptly and logically on systems in response to risks.
- Prudential Regulator
The financial soundness of banks, insurers, fund managers and payment institutions is supervised by MAS through the setting of minimum capital requirements, stress testing and intervention if institutions pose a systemic risk to investors or financial markets.
- Market Conduct and Licensing Authority
MAS sets standards of conduct for financial institutions regarding their relationships with clients, conflicts of interest and disclosure obligations. It grants, amends, suspends, and revokes licenses for all regulated activities and maintains a public register of all licensed entities.
- Financial Centre Development
MAS actively supports Singapore as a premier international financial centre through policies designed to attract high-quality institutions, provide regulatory sandboxes for new and innovative solutions, and engage with international standard-setting bodies such as FATF, IOSCO, and the Bank for International Settlements (BIS).
Key Financial Services Regulated by MAS
MAS is responsible for supervising a wide variety of financial services, all of which are covered by separate laws. The key to determining the appropriate licence is knowing which activities are covered by each statute.
- Capital Markets Services (SFA)
Fund management, dealing in capital markets products, custodial services, corporate finance advisory and securities-based crowdfunding are regulated by the Securities and Futures Act, which requires a CMS licence with specific activity endorsements.
- Financial Advisory Services (FAA)
The Financial Advisers Act applies to the provision of financial advice relating to investment products and the marketing of collective investment schemes. Companies undertaking these activities must hold a Financial Adviser licence or be exempt from it.
- Payment Services (PSA)
The Payment Services Act applies to the issuance of accounts, domestic and cross-border money transfers, the issuance of e-money, and digital payment token services. Depending on the size of their business, firms may be required to have an SPI or MPI licence.
- Banking and Insurance (BA / IA)
The Banking Act and Insurance Act provide regulations for banks and insurers, respectively. These institutions are not part of the SFA and FAA, but may carry out some financial advisory and/or capital markets activities pursuant to statutory exemptions, and subject to the MAS conduct standards.
Table 1: MAS Licensing Framework — Principal Legislation and Scope
It is expected that many firms will have operations that involve more than one regulatory function. Both the SFA and the FAA could license a company that handles investments and offers financial guidance. As the interaction among these frameworks comes into play early in the planning process, expensive structural changes are avoided once operations have begun.
How Licensing Supports Compliance and Investor Protection
The MAS licensing requirements framework helps ensure that only fit, capable, and well-resourced institutions operate in Singapore’s financial markets, while also providing investors and counterparties with a solid indicator of an institution’s regulatory status. There are strict conditions for entry (capital, governance, staffing and conduct) which each licence must meet before the firm can carry on regulated activities. These criteria are reviewed and updated from time to time based on developments in the market and international regulatory requirements, so that they are both robust and flexible.
Licensed companies must have sufficient capital, local staff, AML/CFT measures in place, and be subject to regular supervision as an investor protection measure. These specifications meet the requirements of the Financial Action Task Force (FATF) and the International Organisation of Securities Commissions (IOSCO) and support Singapore’s status as the premier well-regulated financial centre in Asia.
03 Capital Markets Services (CMS) Licence
What Is a CMS Licence
The Securities and Futures Act (SFA) provides for a Capital Markets Services (CMS) licence for regulated capital markets activities. It is a corporate licence, which will only be granted to a company and for a limited number of regulated activities, each of which requires an endorsement on the licence. If the firm cannot hold a CMS licence for the regulated activity, then conducting the regulated activity without the endorsement is deemed unlicensed activity, even if the firm holds a CMS licence for another regulated activity. Individuals carrying on regulated activities on behalf of a CMS licence holder are also required to be appointed as representatives under the SFA, so that the two form a two-tier structure, with the firm and the individual both having to comply with MAS’ standards. The answer to the question of whether a licence is required will always depend on the SFA’s technical definitions, not a company’s business description of its services, and the CMS licence applies to the bulk of the Singapore financial sector, including fund managers, broker-dealers, corporate finance advisers, custodians, and operators of crowdfunding platforms.
Activities Covered Under the CMS Licence
The CMS licence is for a limited range of regulated activities. Each activity that a firm wants to carry out requires an endorsement, and a firm’s license for one activity does not extend to other activities.
- Dealing in Capital Markets Products
Purchasing and selling of securities, futures and OTC derivatives contracts as principal or agent. It is the basic regulated activity of firms involved in capital markets in Singapore, including broker-dealers, market makers and trading firms.
- Fund Management
The management of a collective investment scheme or an investment portfolio on behalf of the client is referred to as fund management. It’s the primary regulated activity for private equity firms, asset managers, hedge funds, and family office managers that manage third-party capital.
- Providing Custodial Services
This includes the use of securities or client funds belonging to others that are held or controlled for their benefit. It applies to prime brokers, custodian banks, and fund administrators that take custody of client assets as part of their services.
- Advising on Corporate Finance
This includes advice on capital markets transactions (such as IPOs, rights issues, takeovers, mergers, and acquisitions). This endorsement is compulsory for investment banks and boutique M&A advisory firms on their CMS licence.
- Securities-Based Crowdfunding
Issuing or trading securities via a digital platform to a large investor is a regulated activity and therefore requires endorsement from the platform operators.
Activities Covered Under the CMS Licence
A CMS firm must meet MAS requirements in multiple key areas to be eligible for a CMS licence. These are activities that must be performed, not “one-off” application hurdles.
- Fit and Proper Standards
All key persons including directors, CEOs and representatives should meet the criteria that MAS has laid down on honesty and integrity, professional competence, financial soundness and disqualifying conflicts of interest. Entirely up to the applicant to prove compliance.
- Capital Adequacy
CMS licence holders will have a minimum base capital and financial resources of 120 per cent of their total risk at all times, providing a meaningful operating cushion over the regulatory minimum in any conditions.
- Singapore Presence and Staffing
Although a physical office in Singapore is needed. Two full time Singapore-resident appointed representatives are required per regulated activity (three for retail LFMCs and REIT managers) with the CEO actively managing operations and living in Singapore.
- Compliance and Risk Framework
Compliance and Risk Management frameworks must be proportionate to the size of the business, and involve the implementation of documented policies, a designated compliance function and the identification and management of regulatory or operational risks.
- AML/CFT Controls
From the date of receiving the CMS licence, all licence holders must comply with MAS AML/CFT notices and implement AML/CFT Customer Due Diligence, Suspicious Transaction reports and transaction monitoring.
Activities Covered Under the CMS Licence
A CMS firm must meet MAS requirements in multiple key areas to be eligible for a CMS licence. These are activities that must be performed, not “one-off” application hurdles.
- Fund Managers and Asset Managers
Any corporation handling client assets in a discretionary manner, using pooled vehicles or through separately managed accounts will need a CMS licence for fund management, usually as an LFMC or under the VCFM regime.
- Broker-Dealers and Trading Firms
Any firm that carries on activities as an intermediary or on behalf of clients involving securities, futures or OTC derivative securities must obtain the necessary dealing endorsement to do so from Singapore.
- Banks and Insurance Companies
Some institutions licensed under the Banking Act or the Insurance Act are not subject to certain of the CMS licence requirements, but are still subject to the conduct standards of MAS under their respective primary regulatory regimes.
- Corporate Finance Advisers
Unless firms meet one of the specific MAS exemptions, like that for legal practitioners who advise just on legal matters, they must be licensed as CMS firms under a CMS licence with a corporate finance endorsement.
04 Licensed Fund Management Company (LFMC) Licences
Overview of LFMC Licensing
A Licensed Fund Management Company (LFMC) is a CMS licence holder who is given permission to engage in fund management activities under the SFA. In 2024, the key licensing model for LFMC was radically reshaped after MAS abolished the Registered Fund Management Company (RFMC) regime and merged it into two classes: accredited/institutional and retail LFMC. All new applicants for CMS licence status are now required to apply on one of these two tracks, and hence the entire landscape of fund management licensing in Singapore is now defined by these two. The LFMC is the main forum for private equity, hedge funds, multi-family offices and institutional asset managers in Singapore. The difference between tracks can have material implications on the capital needed, staffing, compliance requirements, and the range of investors allowed to participate — and the decision on the right track to choose at the outset is important as changing between tracks requires a licence variation and approval by the Monetary Authority of Singapore.
Differences Between Accredited/Institutional and Retail LFMCs
Both categories of LFMC are addressing two distinct markets and have distinctively different regulatory needs. The A/I LFMC are intended for sophisticated investors who can evaluate investment risks on their own, whereas the retail LFMC regime offers much greater protection for members of the general public who invest through publicly available funds.
- Accredited/Institutional LFMC (A/I LFMC)
A/I LFMC enables fund managers to invest in assets for the benefit of high-net-worth individuals and entities (accredited investors) and institutional investors, including banks, insurers and government entities. The regulatory requirements are significantly less than on the retail side (lower minimum capital, lower staffing requirements, and some conduct requirements are not in effect, due to the more sophisticated investor base). This is the most typical path for private equity firms, hedge funds, family offices and institutional asset managers setting up operations in Singapore.
- Retail LFMC
A retail LFMC can hold funds for all investor classes (even for investors who fall below the accredited investor thresholds). Requirements are much stricter on all dimensions because retail investors are presumed to be less financially sophisticated and less well resourced to absorb losses. The minimum base capital is four times more, the Chief Executive requires at least 10 years of experience (compared to 5 years for A/I) and a minimum of three Singapore-resident representatives employed, which more closely matches the governance requirements of retail at scale.
Table 2: A/I LFMC vs Retail LFMC — Key Regulatory Differences
For both LFMC tracks, the CEO must be a Singapore resident, the directors must have the required seniority and residency while the track must have a physical office in Singapore. They are both required to comply with both the AML/CFT requirements and regulatory reporting obligations of MAS and fit and proper criteria of all key personnel of MAS. So it’s not just a question of compliance costs, but of the firm’s desired clientele and future business plan.
Capital and Staffing Requirements
One of the more practical planning issues for applicants seeking an LFMC licence is capital and staffing requirements. MAS imposes minimum thresholds on both dimensions, and applicants have to show that they are met at application and then continued.
- Minimum Base Capital
The requirements range from S$250,000 for A/I LFMCs handling CIS funds for sophisticated investors to S$1,000,000 for retail LFMCs. For non-CIS fund managers, serving accredited investors, the minimum requirement is S$500,000, which is lower than the requirement when the fund is a pooled fund.
- Financial Resources Ratio
At all times all LFMCs must hold at least 120% of their total risk requirement in financial resources, and not just have financial resources at the time of their licence. This buffer is intended to help ensure the continuity of operations and investor confidence in all market scenarios.
- CEO and Director Qualifications
The CEO should be a Singapore resident, full-time, and actively involved in operations. A minimum of two Directors are required, one of whom is an Executive Director who is ordinarily resident in Singapore. Experience requirements vary by licence category (see the comparison table above).
- Representative Headcount
LFMCs are required to appoint the necessary number of representatives to be based in Singapore for each regulated activity. Such persons are required to possess the qualifications and meet the minimum entry criteria prescribed by MAS’s Guidelines on Fit and Proper Criteria, which form the minimum standards.
Ongoing Compliance Expectations
Getting a licence from the LFMC is the first step. MAS looks for well-designed and effective compliance procedures to be sustained throughout the licensing period and evaluates compliance through periodic inspections.
- Compliance Function
LFMCs need an effective compliance function separate from the front office. This could involve an internal team, a compliance officer or, if MAS allows, an external compliance provider of good standing.
- Internal Audit and Reporting
The annual reporting requirements of the MAS include adequate internal audit arrangements. Findings need to be tracked and rectified within agreed timelines, and all regulatory returns need to be sent on time and in the proper format, including changes to key appointments, AUM, investor type, fund structure, etc.
- AML/CFT Controls
This applies to all LFMCs and applies to both the customer due diligence and transaction monitoring aspects as well as the reporting of suspicious transactions, irrespective of the investor class served. MAS conducts periodic supervisory reviews and thematic assessments of the industry regarding these obligations.
05 Venture Capital Fund Manager (VCFM) Regime
What Qualifies as a VCFM
Venture Capital Fund Managers (VCFM) is a streamlined licensing framework for managers that specialize in investing in early-stage and growth-stage VC funds. Although a VCFM licence does not cover a VCFM, a VCFM must have a CMS licence for fund management, and is exempt from some of the SFA provisions that apply to standard LFMCs. The funds must not be freely available for subscription, must not be redeemable at investor’s discretion and must be available only to accredited or institutional investors. Most importantly, the money cannot be used to invest in listed equities or IPOs unless they had already bought them before the listing — ruling out money managers who might want to take part in listed equity strategies, open-ended funds, or retail investments. VCFMs cannot be taken as a foregone conclusion that there is no regulation; VCFMs are subject to MAS’s AML/CFT obligations, periodic regulatory reporting, and fit-and-proper standards, and contractual requirements by institutional investors for increased safeguards are common conditions for investment.
Eligibility Criteria for VCFM Status
MAS licensing requirements for the VCFM regime are designed to make sure that only true early-stage VCMs are granted the pathway. The criteria relate to fund structure, investment mandate, governance, and staffing.
- Fund Structure and Investor Base
All funds are closed-ended and cannot be open-ended for subscription, and all funds must be closed to all but accredited and institutional investors. CFM cannot be achieved in an open-ended structure, with daily liquidity, or with retail investors’ involvement.
- Investment Mandate Restrictions
Funds are required to invest in the majority of unlisted, growth-stage, or early-stage businesses. An investment in listed securities is not allowed unless the securities were already in the investor’s portfolio before they were listed, thereby ensuring that the fund remains a genuine venture capital fund for investments in private companies.
- Director and Staffing Requirements
At least 2 directors, one of whom must be ordinarily resident in Singapore and work full-time at the company. The two full-time relevant officers and the two appointed officers must be Singapore residents, and unlike A/I LFMCs, directors do not require 5 years of prior fund management experience.
- No Minimum Track Record
VCFM will not require a minimum operating history in fund management and can be applied to fund managers with no prior experience in fund management.
Compliance Obligations for VCFMs
Although VCFMs have a minimal regulatory burden, they have substantive ongoing compliance requirements that must be managed and documented throughout the licence life cycle.
- AML/CFT Requirements
VCFMs are subject to all AML/CFT notices issued by MAS. They are required to implement customer due diligence, transaction monitoring, and suspicious transaction reporting procedures, irrespective of the firm’s size or the sophistication of its clients.
- Periodic Regulatory Returns
VCFMs are required to file returns with MAS on changes to key appointments, assets under management, investor categories and numbers, fund types and investment by geography and sector. One of the fundamental duties that cannot be compromised is to file the documents at the right time and in the proper manner.
- Annual Misconduct Declaration
A VCFM-specific requirement that offers MAS an annual self-assessment point for the regime is that each VCFM must make an annual declaration that no misconduct report was filed for the previous year.
- Investor Contractual Expectations
VCFMs are expected to implement compliance safeguards in excess of regulatory requirements as a precondition for investment by institutional investors and fund-of-fund allocators. VCFMs are required to ensure that they can both document and operationalise these requirements in the fund’s constitutional documents and investor side letters.
06 Payment Institution Licences Under the Payment Services Act
Overview of the Payment Services Act
The PSA replaced two existing laws with a single licensing frameworactivity-based k based on activity,ally neutral and scalable to accommodate new payment models, as they will become. It created three types of licences – Standard Payment Institution (SPI), Major Payment Institution (MPI), and money-changing licence – and, for the first time, opened up regulation of digital payment token services. The Act is activity-based, so a company must be licensed for each regulated payment service. It is the main law that applies to any business making payments, issuing e-money, operating digital wallets, remitting or even providing digital payment token services in or from Singapore. In addition, since 2024, all new applicants for SPI or MPI licences have been required to include a legal opinion from a law firm with experience in insolvency law, to identify the proposed payment services as regulated.To clarify, and increase the quality of MAS licences applications, MAS has introduced a compulsory requirement for applicants to include a legal opinion from a law firm with experience in law indicating which proposed payment services are regulated.
Standard Payment Institution (SPI) Licence
The Standard Payment Institution (SPI) licence is intended for payment service providers that do not meet the thresholds for the definition of a Payment Institution and is suitable for smaller payment service providers, payment startups, and businesses that wish to enter Singapore for the first time.
- Transaction Volume Thresholds
For all payment services other than e-money issuance and money-changing, the monthly transaction value of an SPI is capped at S$3 million, or the combined value of two or more payment services at S$6 million per month. Any breaches of these thresholds will result in a timely application for a licence variation to become a MPI.
- Eligibility and Application Requirements
The applicant must be a Singapore-incorporated company or a foreign company with a local branch here. Key personnel are required to meet the MAS’ set fit and proper criteria and the firm is required to be ready to operate and have an effective compliance regime from the license date.
- Legal Opinion Requirement
All new applicants for SPI must provide a legal opinion dated 2024 indicating which of the proposed services are considered regulated payment services under the PSA — this will help clarify the process and improve application quality.
- Review Timeline
Although dates may vary based on the need for additional information or a new business model with complex or novel payment structures, MAS will aim for 60 days from receipt of a complete application.
Major Payment Institution (MPI) Licence
Businesses that have payment services that are below SPI thresholds and wish to operate with no volume limits are not eligible for the Major Payment Institution (MPI) licence. It can be used by established payment institutions, large digital wallet operators, cross-border remittance businesses and digital payment token service providers at scale.
- No Transaction Volume Cap
If a firm’s business model includes a wide range of regulated payment services, or if the firm is expecting to process high volumes of such services, or if the firm is already operating in excess of the SPI thresholds, then MPI licence will be needed, and can be used to run more than one payment service.
- Capital and Security Requirements
Before starting their business, MPI applicants will need to have a security deposit of either a cash deposit with MAS or a bank guarantee of minimum S$100,000 to S$200,000 and a minimum base capital of S$250,000.
- User Fund Safeguarding
Due to the increased systemic risk of large-scale payment operations, measures are required to protect user funds held by the MPI, including in the event of insolvency or the institution’s failure, to ensure the client’s funds are safeguarded.
- Review Timeline
The timeframe for MAS is approximately 120 business days from receipt of a complete MPI application, which is twice the timeframe for the SPI. This is because high-volume payment service providers will require a broader scope of regulatory assessment.
Key Differences Between SPI and MPI
The difference between the two is mainly based on the size of payment transactions and the level of protection the MAS deems necessary. Both licences allow the provision of regulated payment services. Still, there are significant differences between them in capital obligations, security deposit requirements, the protection of user funds, and compliance.
- Standard Payment Institution (SPI)
The SPI is designed for smaller operators with fewer transactions per month than thresholds are set for. It has fewer requirements than the MPI: no security deposit, no safeguarding of users’ funds, and a shorter review time. It is suitable for fintech start-ups and for niche payment operators, but applicants should make plans in advance to become MPIs in the event that growth projections indicate that thresholds might be breached in the near future.
- Major Payment Institution (MPI)
Companies with payment activities above the SPI limits or those that wish to obtain a licence in a higher category from the beginning must hold a license under the MPI. It’s subject to all the PSA requirements—such as, but not limited to, a minimum of S$250,000 in capital, a mandatory security deposit, user funds safeguarding requirements, and a stronger audit and technology risk management requirement. The MPI would be suitable for payment institutions that are already operating, digital wallet operators of scale, major remittance providers, and digital payment token service providers of scale.
Table 3: SPI vs MPI — Key Regulatory Differences
When deciding which licence to apply for, firms should not only consider their current volumes of transactions but also the future paths of their transactions. If a firm does not do so carefully, it could end up breaching either or both of the applicable thresholds once it is licensed as an SPI and then have to undergo a licence variation application to MAS, which involves regulatory approval and could limit business operations if not handled proactively.
07 Financial Adviser and Corporate Finance Adviser Licences
Financial Adviser Licence Overview
Under the Financial Advisers Act, any corporation providing financial advisory services to clients in Singapore, with the exception of certain exemptions, is required to be a Financial Adviser. Covered services encompass investment product purchase or retention advice, collective investment scheme marketing and non-discretionary investment portfolio suggestions. A licensed financial adviser will need to meet conduct-of-business standards such as mandatory fee disclosures, conflict of interest disclosures, client suitability assessments, which involve the proper consideration of client financial circumstances and risk appetite, and training for appointed representatives. The licence is significant for independent financial adviser firms, insurance-linked advisory firms, wealth management boutiques that service retail clients and for international firms expanding their advisory operations to Singapore, that would like to provide services directly to clients instead of through an exempt entity arrangement.
Exempt Financial Adviser Framework
The FAA also offers exemptions to some entities that engage in financial advisory activities but are subject to regulation under other MSAS or fall under certain criteria that lessen the requirement for a separate licence.
- Banks and Merchant Banks
For certain types of advisory activity, banks licensed under the Banking Act are not required to obtain a Financial Adviser licence, but are still subject to equivalent conduct standards under the Banking Act.
- Insurers and Finance Companies
Direct and composite insurers, and licensed finance companies, might be exempt for advisory activities that are part of the activities in which they are licensed, but are not regulatory activities.
- CMS Licence Holders
Certain financial advisory services can be provided without a separate Financial Adviser licence to a holder of a CMS licence in certain circumstances. The extent of this exemption will vary by type of advisory activity and its relationship to the CMS licensed activity.
- Overseas Entities under Specific Conditions
Some overseas financial institutions that provide services to an accredited investor or institutional investor in Singapore may be exempt, often with investor sophistication or cross-border aspects of the advisories relationship.
Corporate Finance Advisory Activities
The corporate finance advisory relates to the services provided in relation to capital markets transactions, such as IPOs, rights issues, takeovers, mergers, acquisitions and restructurings of securities. This is a regulated activity under the SFA and requires a CMS licence with a corporate finance endorsement. Companies that provide advice on such transactions, whether investment banks, boutique M&A advisory companies or restructurers, are required to have this endorsement, unless they are exempted by MAS. Corporate finance advisory is separate from financial advisory under the FAA and companies that offer both may be required to meet the requirements of both laws. CMS-licensed corporate finance advisers will be required to ensure that advice is provided by qualified persons, that material information is provided to clients and the market when necessary, and that conflicts of interest are identified and managed prior to providing advice. The crux of the issue is whether the proposed advisory services are connected with an issue, transfer or restructuring of securities, in which case a likelihood of the need for a CMS licence with the corporate finance endorsement is almost always present.
Exempt Corporate Finance Adviser Arrangements
MAS has created a narrow exemption regime for parties who are not primarily engaged in finance advice for companies, but who provide such advice as part of other activities that are not a core part of the regulated activities.
- Legal Practitioners
Where advice is given on the legal aspects of a corporate finance transaction (such as drafting documents, or advising on regulatory approvals) only, and not on the investment merits of the transaction, the solicitor may be exempt.
- Accountants and Auditors
If accountants perform accounting, audit or due diligence work as part of a transaction they may be exempt provided the work is restricted to the professional scope of accounting, and they do not give investment advice.
- In-House Advisory Functions
The regulatory activity framework is likely to exclude, for instance, corporate treasury and M&A teams advising their own employer in respect of transactions involving their employer’s securities undertaken in a commercial capacity.
- Registered Business Introducers
Some entities that are bringing corporate finance clients and are not giving any substance to the advice may fall under certain conditions of the MAS. The scope of this exception is restricted, and care must be taken before it is relied upon.
08 Variable Capital Company (VCC) Related Structures
Introduction to the VCC Framework
Since January 2020, there exists a company structure in Singapore that is specifically geared towards investment funds, called a Variable Capital Company (VCC). In contrast to a Singapore company, a VCC can raise or reduce its share capital without the need for the same corporate law requirements as a company, enabling investors to subscribe or redeem shares without the need for the same corporate law processes as a company — which is particularly suitable for open ended fund structures. A VCC can take the form of a single fund, or an umbrella fund comprising several sub-funds, each having a different investment mandate, a different group of investors, different service providers and a separate balance sheet. To date, some 1200 VCCs have been incorporated in Singapore, managed by about 600 financial institutions — and as a result, Singapore is a commercially very attractive jurisdiction: flexible operational framework, local domicile, access to an extensive double taxation treaty network and tax exemptions under Sections 13O and 13U of the Income Tax Act (available solely to MAS-licensed fund managers of funds that meet the qualifying criteria).
Relationship Between VCCs and Fund Managers
A VCC can never exist on its own and must always be governed by a Permissible Fund Manager, as stipulated by the Variable Capital Companies Act. The choice of a qualifying fund manager is a legal condition for incorporation of a VCC, and does not happen after incorporation.
- Permissible Fund Manager — CMS Licence Holder
The most common Permissible Fund Manager will be a CMS licence holder for fund management (either an A/I LFMC or retail LFMC). Each can operate a VCC for any number of sub-funds, using one or more asset classes and strategies, with the number of asset classes and strategies subject to the terms of the applicable CMS licence. The LFMC takes on the full responsibility for the VCC’s continuous compliance with MAS requirements.
- Permissible Fund Manager — VCFM Regime
VCFM fund managers are also Permissible Fund Managers and can set up VCCs for their venture capital funds. Beyond the investment and structural limitations of the VCFM regime, which remain on the underlying VCC funds, the fund itself must have a closed-ended fund structure and listed securities are prohibited.
- Entities That Do Not Qualify
Single family offices that are relying on exemption under SFA Section 99 and real estate fund managers relying on exemption under the immovable property exemption are not considered Permissible Fund Managers. They will need full CMS licensing both before and after they set up a VCC — something some family offices may fail to consider when first structuring their Singapore entity.
Table 4: VCC Structure — Key Regulatory Requirements at a Glance
The requirements are at VCC entity level and are in addition to — not in place of — regulatory requirements for the fund manager as a CMS licence holder. All VCCs must ensure that their compliance frameworks cover their AML/CFT obligations and those of individual VCCs they manage, which may include obligations imposed directly on the VCC as a regulated legal person under relevant MAS notices.
Regulatory Requirements for VCC Structures
In 2024, the thematic review by MAS highlighted governance, sub-fund management and AML/CFT compliance as areas for improvement for VCC managers.
- Director Governance
All VCCs must have at least one director who is a Singapore resident and who fulfills the specified fit and proper requirements. Directors have fiduciary duties towards the VCC and its investors, and are accountable for compliance with all relevant laws and MAS supervisory expectations.
- AML/CFT Framework
The VCCs are required to designate an eligible financial institution (EFI) to perform the VCC’s customer due diligence (CDD), account monitoring, and suspicious transaction reporting (STR) requirements for the VCC. The VCC is a regulated person for the purposes of the relevant AML/CFT notices and is responsible for compliance.
- Financial Reporting and Audit
VCCs are required to make annual audited financial statements for each sub-fund and put them on the table for investors at the AGM. The investment information of each and every sub-fund will be available to investors in one sub-fund of an umbrella VCC — which should be made clear to investors in advance.
- Governance Policies
VCC managers will need to keep documented governance policies in place, following the 2024 review by MAS, that address the composition of the board, the oversight of sub-funds, the management of conflicts of interest and segregation of sub-fund assets. It is expected that engagement with the governance of VCC is on board level.
Common Use Cases for VCCs
A large number of different fund managers are using the VCC framework, and each one has their own strategy. It is flexible, Singapore-domiciled and provides tax exemptions, making it a choice across asset management disciplines, both alternative and traditional.
- Hedge Funds and Alternative Strategies
VCC’s ability to provide open-ended structures with a high number of subscriptions and redemptions makes it ideal for hedge fund and liquid alternatives strategies. Several strategies can be implemented as discrete sub-funds under one ‘umbrella’, which will minimise overheads and make governance easier.
- Private Equity and Venture Capital
Closed-ended PE and VC managers have taken to VCC as an alternative domiciled in Singapore to Cayman Islands limited partnerships. This flexibility in the sub-funds enables vintage-year and/or strategy-specific vehicles to share a common legal entity and management structure.
- Family Offices Seeking Tax Efficiency
VCCs are also often utilized by family offices licensed by MAS to avail the exemption under Section 13O and 13U of the Income Tax Act, which are only applicable to regulated fund managers who are managing qualifying Singapore-domiciled funds.
- Fund Redomiciliation
Foreign managers holding established offshore structures, such as Cayman funds, have taken advantage of the VCC’s transfer of registration process to Singapore, where they have now obtained registration and access to Singapore’s expanding institutional investor base, as well as double taxation treaties.
09 Licensing Requirements and Application Process
Fit and Proper Criteria
All applicants for licences and all key personnel of applicants are subject to the MAS’s Fit and Proper Criteria (Guidelines FSG-G01). The assessment is holistic – it is not a tick list – and it is up to the applicant to convince the assessors that all the relevant persons fulfil the standards. These terms are non-negotiable and shall become binding when the application for a license is made, and shall continue to be binding thereafter.
- Honesty, Integrity, and Reputation
MAS checks for any criminal conviction, regulatory sanction, civil judgment or professional disciplinary action against key individuals in any jurisdiction. One of the most frequent reasons for raising concerns to MAS during review is material undisclosed history.
- Competence and Capability
All key staff members are required to have relevant qualifications, experience and expertise for their roles. MAS evaluates this based on the professional background documented in the application and may ask for additional information and/or references for senior positions.
- Financial Soundness
MAS will take into account the financial history of key individuals, such as any previous insolvency, bankruptcy or major debt default in any jurisdiction. Financial instability is addressed as a governance risk indicator and explained.
- Conflicts of Interest and Time Commitment
MAS considers the conflict issues of proposed appointees and the time they can allocate to their Singapore duties if they are also engaged in other professional duties.
Capital, Staffing, and Governance Requirements
Along with meeting the fit and proper criteria, applicants for licences have to show that at the time of application and throughout the licence period, capital, staffing and governance requirements that apply to the licence category have been met.
- Minimum Base Capital
There are fixed minimum base capital bases for each licence category — from S$250,000 for A/I LFMCs and MPIs to S$1,000,000 for retail LFMCs. Capital should be available and not committed to other uses at the time of licensing.
- Singapore-Resident Management
There is a requirement for a physical Singapore office, and a CEO who resides in Singapore for all major licences. MAS has a strict interpretation of the concept of Singapore presence, and will not approve arrangements that involve the main substantive decisions being made outside Singapore.
- Board Composition
Directors are to be appointed who have the necessary experience and at least one Executive Director who is ordinarily resident in Singapore. The board should give effective governance oversight, as well as just a token compliance role.
- Compliance and Risk Infrastructure
A credible compliance framework (written policies, compliance function and structured risk management) should be in place or in a position to be put in place at application. MAS will require the frameworks to be sincere and not just stated in a business plan.
MAS Application and Review Process
All applications submitted electronically via MAS’s online licensing portal are accompanied by a detailed business plan, governance structure, key personnel profiles, capital position, compliance framework and, in the case of an applicant for a PSA, by a legal opinion. The degree of completeness and quality of the application is the most important determining factor influencing the speed and outcome of the review. Applications that are missing or not complete are returned or await missing information, which can add months to the overall timeline. MAS encourages pre-application consultation of complex or novel business models, though this adds time to the submission process, it also enhances quality and minimizes queries during the review process.
The period from the date of receipt to the date that a decision was made on an application varied according to licence type: SPI applications (PSA) were considered on average within 60 business days, while MPI applications (PSA) were considered on average within 120 business days. Generally, the time for a CMS licence application is three to six months, depending on the complexity of model business and key personnel profiles. Applicants are expected to be comprehensive in their answers to the questions raised by MAS throughout the review period and be ready to submit additional information in a hurry. Having the right, trusted, experienced consultant from MAS at the planning phase (before structure and staffing are considered) greatly enhances the quality of submissions and the overall timeline to approval.
Common Challenges During Licensing
There are several common issues that are encountered in the MAS licence application process. Being able to spot these early and correct them has a positive impact on both the quality of the application and the timeliness of the application.
- Incomplete or Insufficiently Detailed Applications
The most frequent reason for delay is missing documents from the business plan or a lack of business plan narratives that prove that the business is ready to be launched. All application materials must include substantive and specific detail — not a high level commercial overview — in all applications.
- Demonstrating Singapore Residency of Key Personnel
MAS has laid down a high bar for what constitutes genuine Singapore residency and active management. In general, applicants who are proposing to make key appointments that will be a significant part of their professional life outside the United States, or who have a less than convincing residency plan with clear time commitments, typically encounter major resistance during the review process.
- Capital Adequacy at Point of Application
Capital must be available and unpledged at the time of application — not depend on future fundraising or investor pledges. Capital to be raised after being approved is not part of the conditions for a licence being granted by MAS.
- Undisclosed Regulatory History
Disclosure of previous regulatory sanctions, investigations or enforcement actions is very serious and can lead to rejection of the application. The truth is the best policy, both in cases where a decision has been made without formal rule-making and in other cases.
- Compliance Framework Credibility
Compliant applicants who outline a compliance program without providing evidence of its actual implementation or credible plan come under withering scrutiny for a MAS. Having MAS regulatory licensing consultants review documentation prior to submission greatly minimizes this risk.
10 Ongoing Compliance and Regulatory Obligations
AML/CFT Compliance Requirements
For all MAS-licensed entities, the duty to comply with anti-money laundering and countering the financing of terrorism (AML/CFT) is the most broad based and non-negotiable continuing requirement. MAS has sent out detailed communications, such as for CMS licence holders (CMG-N02) and payment service providers (PSN01), outlining the specific requirements for each licence category. All regulated entities shall conduct customer due diligence procedures to verify the identity of client and beneficial owner, have transaction monitoring systems in place to identify suspicious transactions and report suspicious transactions to the Suspicious Transaction Reporting Office when appropriate. Failure of an effective AML/CFT framework is considered one of the worst forms of a regulatory failure.
Singapore’s expectations on firms subject to AML/CFT regulation have also grown tremendously in recent years as the country strives to achieve the next round of FATF expectations and uphold its status as a clean international financial centre. The MAS expects regulated firms to have documented risk assessments, risk ratings for their customers and escalation procedures, and to update their AML/CFT policies at least once a year, in order to keep them current with changes in MAS guidance, regulatory expectations, and their own evolving risk profile. Compliance is viewed as top priority by firms that are constantly subject to supervisory attention, and that fail to take AML/CFT seriously as a risk management responsibility.
Risk Management and Internal Controls
An expectation of all MAS regulated entities is for the effective management of risk and internal controls. MAS evaluates the quality of these frameworks through supervisory activities and recognises any weaknesses which should be addressed in a timely manner with evidence of real commitment to management.
- Market, Credit, and Operational Risk
The more complex the capital markets and fund strategy, the more important it is for fund managers to have the processes in place to identify and manage market, credit, and operational risk in a manner commensurate with the risk. This includes having documented business continuity plans on a regular basis and reviewed by the board.
- Technology Risk Management
MAS’s Technology Risk Management Guidelines establish expectations for system resilience, cybersecurity controls, incident response planning, and monitoring and oversight of third-party service providers, which are key areas that are carefully reviewed during supervisory examinations of payment service providers.
- Conflicts of Interest
All regulated entities are required to have policies in place which identify and give instructions on how to deal with conflicts of interest between the firm and client, different client groups and key personnel and firm obligations. Conflicts should be resolved as well as documented; not just talked about in a policy document.
- Internal Policy Documentation
Material operational aspects, such as trade surveillance, business continuity and escalation procedures, should be well covered by documented internal policies to be developed by regulated entities. These need to be actively maintained by senior management and reviewed regularly to keep them up to date in the light of changing business activities and regulatory needs.
Regulatory Reporting and Filing Obligations
Regulatory reporting provides MAS with up-to-date information about a regulated entity’s operations, financial status and significant developments. Late or incorrect filings are assumed to be a sign of lack of compliance overall and are likely to attract more supervisory scrutiny.
- Annual Regulatory Returns
All MAS licensed entities are required to make an annual return including financial statements, key performance indicators and compliance statements. The specific forms and timeline are dependent on the type of licence and outlined in the relevant MAS notices.
- Event-Driven Notifications
Regulated entities are required to report to MAS immediately after any of the following “defined material events”: changes to their shareholding/control, changes to key appointments, significant operational events (including cyber security incidents), and any failure to comply with regulatory conditions or licence terms.
- External Audit Submissions
The audits are to be carried out annually by an independent external auditor, and reports are to be made to MAS within the specified time limits. Any material weaknesses that are found in audit results should be reported to MAS and remedied by a documented plan with timelines.
- AUM and Investor Reporting
The fund managers have to submit periodic returns on AUM, investor count, investor type, fund type, geographic exposure and sectoral exposure of the funds. VCFMs also make annual statements that there is no evidence of misconduct for the previous year.
Compliance Audits and Monitoring
Supervisory reviews are regularly performed by MAS, and they can be scheduled or conducted without notice, and they can be either document requests or thematic questionnaires or even an on-site inspection or targeted investigation. Regulated entities should keep compliance documentation in order at all times so as to be able to respond to MAS enquiries in a timely and efficient manner, not just when it is time for a review. Any entity identified as having significant deficiencies may receive a remediation notice, additional reporting obligations, financial penalties, public reproof or in severe cases, suspension or revocation of licence. A proactive internal monitoring programme, such as a self-assessment against MAS guidelines, management information reporting on compliance metrics and documented follow-up on internal audit findings, is the best way to ensure compliance deficiencies are addressed before they become a regulatory issue.
11 Choosing the Right MAS Licence
Matching Licences to Business Activities
The selection of the appropriate licence for MAS depends on a technically appropriate identification of the regulated business activities to be performed, rather than merely a commercial description of the work activities carried out. There is statutory precision in the definition of regulated activities, and the starting point of a licensing analysis is to determine what that is. When a firm runs a pooled investment vehicle, or a client portfolio on a discretionary basis, they will typically need a fund manager or vehicle manager (CMS licence) as a LFMC or VCFM. Financial advice will require a Financial Adviser licence or be carried out under a licence exemption. Under certain circumstances, depending on the volume projected, a SPI or MPI licence is required for firms that process payments or provide digital payment token services. Importantly, where the business falls into more than one regulatory classification, such as a fintech also giving payment services, and a fund manager giving financial planning services, more than one regulation concurrent licence may be necessary. All licences and the impact of any exemption on the number of licences that are needed should be determined before legal structure, licensing staffing and capital should be invested.
Key Factors to Consider Before Applying
There are a number of factors that will dictate which category of licence is most suitable and the compliance costs involved. Companies that have done this analysis prior to deciding on structure and staffing have a much better chance of presenting a well-prepared application for MAS licence.
- Investor Base and Eligibility
The most important factor distinguishing the type of licence and compliance burden is whether the investors are retail, accredited or institutional investors. Retail investor licence obligations in all types are significantly harder on capital, staffing and conduct and should be considered only where the added value from the commercial opportunity is commensurate with the added value from the licensing obligations.
- Business Scale and Transaction Volumes
Payment service providers’ monthly volumes directly affect their SPI/MPI status. The same should be done for fund managers when choosing a licence category, to ensure that minimum capital thresholds and the 120% financial resources ratio requirement are not breached.
- Fund Strategy and Asset Class
The managers who seek to have wide-ranging mandates, or listed securities, or open-ended structures, or retail participation, must apply the path of the standard LFMC. The VCFM regime may be a suitable option for those truly interested in closed-ended VC investments in unlisted enterprises, but the eligibility requirements should be carefully checked.
- Singapore Presence and Resource Commitment
True substance in Singapore, a resident CEO, office, and compliance infrastructure are expected by MAS. This pledge is crucial for the success of applications and for the satisfaction of the supervisors throughout the implementation process.
- Timeline and Application Resources
The preparation of applications takes months and requires a lot of resources. Firms should be realistic about the entire timeline and make sure that the individual(s) responsible for the submission have the capacity and expertise to submit the types of documents MAS expects.
Common Licensing Pathways for Financial Firms
The best way to select a licence is to assign specific regulated activities to a licence in a specific category, then select the right licence in that category depending on investor class, scale of transaction, and governance capacity.
Table 5: Common Business Types and Likely Licence Requirements
The table below gives a guide to the most likely primary types of licences, based on common business types.A guide to the most likely primary types of licences based on common business types is provided above. It is indicative, not definitive — the right licence will depend on the precise nature of the regulated activities, investors, the number of transactions and the exemptions that apply. For firms whose business activities have been more complex or multi-activity, it is strongly encouraged to do a formal regulatory scope assessment, preferably with the help of qualified MAS licensing consultants, prior to entering into a corporate structure.
When to Seek Professional Advisory Support
MAS’s guidelines and admission criteria are clearly and openly stated in a published document, but its interpretation to specific business models is not always apparent on the surface of the published document. MAS regulatory licensing consultants, who have direct MAS submission experience and are qualified legal/compliance experts, contribute much value at several stages of the licensing journey.
- First-Time Singapore Market Entrants
The value of foreign companies coming to Singapore for the first time with no experience in MAS licensing is maximised with the guidance and assistance provided in mapping of activities to the appropriate licence, early identification of structural challenges and the facilitation of the process of engaging with MAS from application to approval.
- Complex or Multi-Activity Business Models
Companies that operate under several regulatory categories (e.g., under SFA and FAA, or both SFA and PSA) can access coordinated support that takes a holistic approach to all their regulatory licences, while avoiding inconsistencies in their applications for concurrent licences.
- Licence Variations and Upgrades
When companies are applying for a variation of their regulated and/or their additional activities, or when they are changing from SPI to MPI, they should ensure they receive advisory services in order to complete the application for the variation and ensure their compliance framework is strengthened to reflect the increased regulatory scope.
- Regulatory Remediation
Companies that MAS has contacted with queries, remediation notices, or enforcement actions can benefit from the expertise of firms to prepare regulatory responses, implement remediation plans, and manage the supervisory relationship during the remediation period.
12 Conclusion
Key Takeaways on MAS Licensing
Singapore’s MAS licensing requirements guide is one of the most thorough and world-leading regulatory frameworks in the Asia region. The following are the key takeaways from this guide for financial institutions and professionals wanting to do business in or from Singapore:
- Activity-Based Licence Identification
A firm’s licence will always be based on its regulated activities, rather than its commercial description. To undertake an accurate activity mapping activity process with the technical definitions in the SFA, FAA and PSA is a critical first step before any activity, capital or staffing decision is made.
- Investor Class Drives Regulatory Burden
Retail investors have higher obligations under all licence categories when serving retail investors. It is crucial that firms have a clear understanding of their audience of investors before choosing a licence and structuring their compliance and capital systems around it.
- Singapore Substance Is Non-Negotiable
MAS requires a true operational presence, with a CEO in Singapore, and a real day-to-day management team and office. Nominal or virtual arrangements will be a particular focus of supervisory attention during application and periodic reviews, and are inconsistent with MAS’s licensing principles.
- Ongoing Compliance Is the Real Work
Having a licence is just the first step in the regulation process; it is not the end. The obligations of AML/CFT, risk management, reporting and governance are complex, intense, persistent and ongoing — and are the most focused and consistent area of MAS supervision.
- Seek Advisory Support Early
Early preparation, and proactive engagement is rewarded in the MAS licensing process. Companies that involve trusted MAS licensing consultants early in the process, before structure and staffing decisions are made, can consistently see higher success rates than those that enroll consultants as a solution to problems during the application process.
Preparing for Long-Term Regulatory Compliance
For long-term success in Singapore’s regulated financial market, it is important to have a genuine institutional commitment to compliance, rather than simply the tick-box approach of complying with minimum licensing requirements. MAS is an active regulator, continually monitoring the conduct of its licensees, adapting its guidelines to meet market developments and international standards, and taking no hesitation in taking enforcement measures where there is a lack of standards being maintained. Companies with a robust compliance culture supported by competent staff, formal and periodically updated policies, effective technology systems, and a good expertise on compliance risk matters from the board level are likely to be better prepared to respond to MAS’s expectations and are likely to be more resilient in the face of the changes in regulatory practices that will likely occur over a longer period of a licensed relationship.
This guide has offered a framework for all MAS licence types for junior to mid-level professionals planning to undertake the Singapore fintech licensing guide and the overall MAS licensing requirements landscape. As you progress in your career and start managing businesses with increasing regulatory obligations, you will find that strengthening your knowledge of the various regulatory frameworks – through continued professional development, involvement in MAS consultation papers and working with experienced compliance and legal advisers – will be an invaluable investment for your career in the financial services industry in Singapore.
