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Singapore’s central bank and integrated financial regulator, the Monetary Authority of Singapore (MAS), was founded in 1971. A very unusual model globally, MAS at the same time manages monetary policy, oversees the country’s official foreign reserves, and has comprehensive supervisory powers over all financial institutions in Singapore and from Singapore, including banking, insurance, capital markets, payment services, and digital assets. This integration enables MAS to be more effective in its response to systemic risk and to harmonise policy-setting with regulatory objectives and macroeconomic goals, which is one of the broadest mandates of any single-body financial regulator in the world.
MAS is Singapore’s main financial regulator, and grants and regulates licences for a broad range of financial services. The guide to MAS licensing in Singapore starts with the three laws that form the foundation of the licensing framework: the Securities and Futures Act (SFA), the Financial Advisers Act (FAA) and the Payment Services Act (PSA). Each regulates a specific type of financial activity, and identifies the amounts of capital, staff and governance criteria and conduct expectations that a firm must meet before it can be licensed. Understanding the regulatory landscape created by these laws is where you need to start when working in Singapore’s financial world.
Having the right licence is a legal requirement for anyone to engage in regulated financial activities in Singapore. A firm and its senior officials are at risk of criminal prosecution, civil fines, business closure, and public enforcement if it operates without a valid financial licence issued by the MAS. This can be detrimental to the firm and its staff’s financial sector reputation. A new market entrant (or a growing organisation) must ensure they determine which licence applies to the activities they intend to undertake before any organisation, staffing or capital is finalised; the legal ramifications of getting it wrong are too significant and non-negotiable.
In addition to legal compliance, a proper MAS licence is proof of credibility to institutional investors, counterparties and regulators in Asia. Singapore’s an attractive, stable, and commercially viable Asia-Pacific base for fund managers, fintech firms, and financial advisers, thanks to its strong regulatory environment. The Singapore MAS licence categories and the regulatory regime they embody are internationally recognised standards of good governance and operational integrity – and for companies coming to Singapore for the first time, knowing what each licence represents and what it means for the market is as commercially significant as it is legally required.
MAS plays a key role across a wide range of aspects of Singapore’s financial system — such as monetary policy, prudential supervision, market conduct regulation, and the development of the financial centre.
MAS implements Singapore’s monetary policy and official foreign reserves policy based on the exchange rate, and maintains a close linkage between financial and macroeconomic stability policies. The dual mandate enables MAS to take quick and well-coordinated action to address financial system risks at a systemic level.
MAS regulates the financial health and soundness of banks, insurers, fund managers, and payment institutions through capital adequacy requirements, stress testing, and intervention when institutions pose a threat to investors or financial stability.
MAS sets the standards of conduct for financial institutions’ interactions with clients, the handling of conflicts of interest, and compliance with disclosure requirements. It grants, varies, suspends, and revokes licences for all regulated activities and maintains a public register of all licensed entities.
MAS also actively promotes Singapore’s growth as a key global financial centre by implementing policies to attract high-quality financial institutions, establishing regulatory sandboxes to foster fintech innovation, and participating in international standard-setting bodies such as FATF, IOSCO, and the Bank for International Settlements.
The MAS licensing requirements for business types are based on the regulated business activity to which they apply, rather than on the nature of the firm. To identify the appropriate licence, you need to understand which category it falls into.
For example, activities in the management of financial funds, dealing in securities and futures, custodial services, advice in corporate finance and securities-based crowdfunding platforms are all subject to a CMS licence, which has certain endorsements under the SFA.
The FAA regulates the following activities, which require a Financial Adviser licence (unless the exception applies): giving advice on the merits of investment products; marketing collective investment schemes; making non-discretionary portfolio recommendations.
The PSA covers processing payments, issuing e-money, facilitating cross-border money transfers and offering digital payment token services. Depending on the nature and scale of the services offered, firms must have either an SPI or an MPI licence.
VCC fund vehicles are incorporated and governed by the Variable Capital Companies Act. Although not a licence, licensing is a prerequisite for VCC use, as it is managed by a fund manager who holds a licence with MAS.
There are three main types of licence for MAS, each based on one of the primary pieces of legislation. Firms must be aware of the legislation under which each licence operates.
Table 1: MAS Licensing Framework — Principal Legislation and Scope
Many companies will find that their operations cover more than one regulatory area and thus will need licences from more than one piece of legislation. A firm that offers payment services and investment advice will require both a Payment Services Association (PSA) licence and a Financial Adviser licence. Before committing to a structure and staffing plan, it is important to identify all relevant licensing requirements to prevent any regulatory “holes” after the facility is open for business.
The Securities and Futures Act confers a Capital Markets Services (CMS) licence on a firm to engage in regulated capital markets activities in Singapore. It is a corporate licence (not an individual licence) and has a limited range of regulated activities that must be specifically endorsed on the licence. Running a regulated activity without the endorsement is deemed an unlicensed activity, even if the firm is regulated under a CMS licence for another activity. The two-tiered approach is for a person to be appointed as a representative of a CMS licence holder, with the firm and the individual separately meeting MAS standards. The majority of Singapore’s institutional financial sector (such as fund managers, broker-dealers, corporate finance advisers, custodians and crowdfunding platform operators) are covered under the CMS licence. The scope of the licence must always be judged in terms of the definition of the relevant financial services technical terms in the SFA rather than a firm’s commercial description of its financial services.
A firm needs to obtain a specific endorsement for every regulated activity it undertakes. Being licensed for one activity does not justify the firm being licensed for other activities.
They include trading in securities, futures contracts and OTC derivatives on behalf of clients or as the principal. It forms the basic regulated activity of broker-dealers, market makers, and trading firms in Singapore’s capital markets.
Fund management is the discretionary management of either a collective investment scheme or an investment portfolio for clients. It is the main regulated activity of asset managers, private equity companies, hedge funds, and family office managers who manage third-party capital.
Holding or controlling securities or client money for the account of a client in the course of providing a service. It applies to all prime brokers, custodian banks and fund administrators who accept client assets as part of their business.
These include advice on capital market transactions (including IPOs, rights issues, takeovers, mergers and acquisitions involving the creation or transfer of securities). This endorsement is needed on the CMS licence for investment banks and M&A advisory companies.
This endorsement is required for the operators of platforms that enable the public to offer or sell securities, as offering investment products to a large number of investors via digital platforms is a regulated activity.
The regulatory licences for financial institutions in the capital markets space apply to any corporation engaged in financial activities regulated by the MAS in Singapore, with statutory exemptions for specific categories of financial institutions.
Any company that has a duty to provide discretionary management of client assets, whether in a pooled fund vehicle (including a unit trust, hedge fund or private equity fund) or in a separately managed account, needs a CMS licence, usually as an LFMC or under the VCFM regime.
Intermediaries and/or trading desks that are engaged in securities, futures or OTC derivatives trading, or are subject to an OTC derivatives dealing endorsement, must have the appropriate dealing endorsement on their CMS licence to carry out such activities in or from Singapore.
Some institutions (such as banks and insurance companies) are subject to some of the CMS licence requirements but not to its conduct standards or client suitability requirements, as the Banking Act or Insurance Act primarily regulates them.
In the case of capital markets transactions, firms providing advisory services will need a CMS licence with the corporate finance endorsement, or satisfy one of a few exemptions granted by the MAS, including that for legal practitioners advising only on the legal aspects of a transaction.
A firm would need to meet MAS requirements across several dimensions to be awarded a CMS licence. The requirements are a constant load and do not pose an obstacle to the application.
All key personnel – directors, CEOs and representatives – are required to meet MAS’s requirements regarding honesty and integrity, professional competence, financial soundness and disqualifying conflicts of interest. The onus of compliance is on the applicant.
In all circumstances, CMS licence holders are required to have base capital and financial resources of at least 120% of the total risk requirement, sufficient to ensure they maintain a meaningful operating margin above the regulatory minimum, irrespective of market conditions.
Must have a physical office in Singapore. There must be at least two Singapore-resident appointed representatives for each regulated activity, increasing to three for retail LFMC and REIT managers, and the CEO must be a resident and actively manage the business.
As of the date of licensing, all CMS licence holders are required to have policies and procedures in place that are appropriate for the size of the business, a named compliance officer, customer due diligence processes, transaction monitoring and suspicious transaction reporting.
Licensed Fund Management Company (LFMC): A company licensed by the CMS to carry out fund management in accordance with the SFA. In 2024, the main licensing framework for LFMC was overhauled, removing the Registered Fund Management Company (RFMC) regime and establishing two tracks: accredited/institutional LFMC and retail LFMC. The entire financial licences landscape for fund management in Singapore is now divided into these tracks, and the new applicants are required to seek CMS licence status individually. The LFMC is the main forum for private equity, hedge funds, multi-family offices and institutional asset managers. The consistent selection of the right track is essential – a formal licence variation and MAS approval must be obtained to move between categories.
The A/I LFMC is designed for a different investor base and has different material requirements than the Retail LFMC. The A/I LFMC is designed for more advanced investors, who are typically assumed to be able to evaluate an investment’s risk independently. In contrast, the Retail LFMC offers much greater protection for retail investors.
The A/I LFMC allows fund managers to manage funds for so-called “accredited investors,” defined as institutions and high-net-worth individuals and entities that meet certain financial requirements, as well as for institutional investors such as banks, insurance companies, and government bodies. The regulatory burden is materially less than that of the retail track: minimum capital is set lower, staffing standards are lower, and some SFA conduct standards are not applied due to the sophistication of the investor base. This is the most typical licensing path for private equity funds, hedge funds, family offices and institutional asset managers setting up in Singapore.
A Retail LFMC can hold funds for all types of investors – not just accredited investors. The regulations are much more stringent across the board, since retail investors are presumed to be less financially sophisticated and to have fewer resources to absorb losses. In addition to a higher base capital (twice that of A/I LFMCs), the CEO needs to have at least 10 years of relevant experience compared to 5 years for A/I, while at least 3 Singapore-resident representatives need to be employed (double the number for A/I) to meet the higher governance demands of serving retail clients at scale.
Table 2: A/I LFMC vs Retail LFMC — Key Regulatory Differences
For both LFMC tracks, the CEO must be a Singapore citizen, be actively involved in daily operations, and have at least two directors with the necessary seniority and residency, as well as a physical office in Singapore. They both fall under MAS’s AML/CFT regulations, including all requirements for regulatory reporting and fit-and-proper tests for all key personnel. It’s not just about choosing compliance costs; it’s about the firm’s intended clients and long-term business model.
Getting an LFMC licence is just the start. MAS expects compliance frameworks to be well established and effectively run throughout the licence period, and compliance to be reviewed through regular supervisory visits.
Capital requirements for A/I LFMCs are S$250,000, while they are S$1,000,000 for retail LFMCs. At all times, not just at the time of licensing, all LFMCs must maintain financial resources equal to 120% of their total risk requirement.
LFMCs need to have an effective compliance function separate from the front office. This could be an in-house team, a designated compliance officer or an external compliance provider (if permitted by MAS).
The reporting requirements under the MAS stipulate the need for adequate internal audit arrangements. All regulatory returns, including key appointment changes, AUM, investor types, and fund structures, must be completed accurately and promptly, as a key ongoing obligation.
MAS’s AML/CFT notices apply to all LFMCs and place the same obligations on customer due diligence, transaction monitoring, and reporting of suspicious transactions for all investors, irrespective of the category of investors they serve. MAS conducts periodic supervisory reviews and thematic industry assessments of these obligations.
Venture Capital Fund Manager (VCFM) is a streamlined licensing regime for VC managers interested in early-stage and growth-stage investing. Although a licence for a VCFM is required for fund management, no separate VCFM licence is required; a VCFM is exempt from certain provisions of the SFA that apply to standard LFMCs. The amounts of the firm must not be held in a way that they are “standing ready for subscription” and must not be redeemable at the investor’s option, and may only be sold to accredited or institutional investors. Restrictions also apply to the use of the funds to pursue listed equity strategies, open-ended structures, or retail participation in that they are not allowed to invest in listed securities or IPOs unless the funds already had the securities before the IPO. VCFMs are not without controls; they are subject to all of MAS’s AML/CFT obligations, MAS’s periodic regulatory reporting, and fit-and-proper standards, and institutional investors often impose further controls as a condition of their investment.
The VCFM regime’s licensing requirements for different types of businesses are designed to ensure that only truly early-stage VCs can benefit from the simplified requirements. The criteria include fund structure, investment mandate, governance and staffing.
Each of the funds must be closed – not open-ended for subscription – and must be for accredited or institutional investors only. VCFM structures cannot coexist with open-ended structures, daily liquidity, or retail investor participation.
Funds must invest mostly in businesses that are still in the early or growth stage or are unlisted. The investment in listed securities is not allowed if the fund did not hold the securities before they were listed on an exchange, so the fund is still a private-company VC vehicle.
The minimum number of directors is two (at least one of whom must be ordinarily resident in Singapore and employed full-time). The regime is accessible to executives from operating companies who are moving into fund management, since, unlike A/I LFMCs, a VCFM director need not have 5 years of prior fund management experience.
VCFM is not a get-rich scheme, as it does not require the fund manager to have an operating history. This opens the regime to first-time fund managers who can offer MAS investment expertise, professional backgrounds, and credible business plans.
The VCFM regime provides concrete relief from the standard LFMC track in areas where the closed-ended, sophisticated investment nature of venture capital lessens the need for the full range of SFA conduct requirements.
Because venture capital investing is bespoke and relationship-based, VCFMs are exempt from certain SFA provisions governing business conduct that apply to standard LFMCs, such as the requirements to record customer accounts and disclose trading information.
VCFMs are required to report quarterly to MAS on various metrics, including appointments, AUM, investor types, fund types, and investment activity by geography and sector; however, this reporting is tailored to the lower-risk profile of closed-ended venture capital structures.
VCFMs are required to report quarterly to MAS on various metrics, including appointments, AUM, investor types, fund types, and investment activity by geography and sector; however, this reporting is tailored to the lower-risk profile of closed-ended venture capital structures.
VCFMs are subject to all of MAS’s AML/CFT notices. They are required to conduct customer due diligence, transaction monitoring, and suspicious transaction reporting, regardless of the firm’s size or the sophistication of its investors. Under the simplified VCFM framework, these responsibilities remain unaffected.
Corresponding structural restrictions have been imposed on the VCFM regime, thereby reducing its viability for closed-company-focused strategies. It is important to be aware of these constraints before choosing the VCFM pathway.
The funds will not be permitted to invest in listed securities or take part in the issue of securities until the fund has held the securities before they were listed. This limitation essentially prevents managers with public equity mandates, or at least growth-stage strategies, from holding listed investments.
The funds should be closed-ended and not facultative. Managers seeking to provide liquidity that corresponds to periodic liquidity, redemption windows, or open-ended structures must go through the standard A/I LFMC pathway.
VCFM investments are only offered to accredited and institutional investors. Retail investors, regardless of investment size, would result in a fund not being covered by the VCFM regime and would have to apply for a retail LFMC licence.
VCFMs are expected by many institutional allocators to implement compliance measures beyond those currently required by the regulatory framework, including measures that meet full LFMC equivalence principles, as a contractual requirement for the investment. This can have a major impact on the efficacy of the VCFM regime when applied in its simplified form to institutional capital-seekers.
The PSA, which came into effect in January 2020, replaced two existing laws with a new ‘activity-based licensing’ system that is technology-neutral and scalable to new payment services. It introduced three key types of licence: Standard Payment Institution (SPI), Major Payment Institution (MPI), and Money-changing licence, and added regulation of digital payment token services for the first time. MAS will use the Act as the main legislation to regulate the categories of fintech licensing for payments, e-money, digital wallets, cross-border remittance and digital payment token services in and from Singapore. The Act adopts an activity-based approach and imposes licensing obligations for each activity a firm offers as a payment service. In addition, the introduction of a legal opinion from a PSA-experienced law firm confirming which proposed services can be considered regulated payment services in the future will minimise uncertainty and correct the scope of regulation from the outset for all new SPI and MPI applicants from 2024.
The Standard Payment Institution (SPI) is a payment institution licence for payment service providers whose transaction volume falls below certain thresholds. It is ideal for smaller fintech entities, payment startups, and companies looking to expand into Singapore.
For each payment service, except for e-money issuance and money-changing, the maximum monthly transaction amount allowed by an SPI is S$3 million, or S$6 million if there are two or more payment services. A licence variation to MPI status is required to exceed these thresholds.
The applicant should be a Singapore-incorporated entity or a local entity of a foreign company. Licensing will be subject to MAS’s fit-and-proper requirements for key personnel, and the firm must have an effective compliance programme and be fully operational on the day of licensing.
From 2024, all new applicants for SPI will be required to provide a legal opinion from a law firm experienced in working with PSAs, identifying the proposed services that would be considered regulated payment services. This helps make the application review process easier to understand and defines the licence’s regulatory jurisdiction.
MAS strives to process a complete application within 60 business days of receipt; however, in certain instances, additional information is needed and/or the application involves novel and complex payment business models, which can extend the processing time.
Businesses that provide payment services that exceed the SPI thresholds, or that choose not to impose volume limitations from the outset, must obtain the Major Payment Institution (MPI) licence. It is suitable for well-established payment institutions, large digital wallet operators, cross-border remittance providers and digital payment token service providers at a meaningful scale.
MPI licence holders are not subject to the volume or float limits imposed on SPI licence holders. They can run multiple regulated payment services without being affected by these limits, making them suitable for any business model that expects to generate a high volume or that already exceeds float limits.
MPI applicants are required to hold at least S$250,000 base capital and provide a security deposit of S$100,000 to S$200,000 (cash deposit with MAS or bank guarantee) before they start operating their businesses.
To address the increased systemic risk of large-scale payment operations, we require MPIs to implement necessary safeguards to protect users’ funds held in the MPI and to protect client money in the event of insolvency or institutional failure.
MAS expects to take around 120 business days from booking to a full MPI application, which is double the time taken by SPI, due to the wide range of regulatory evaluations that high-volume payment service providers must undergo.
The difference between the roles of SPI and MPI is largely shaped by the size of payment operations and the type of regulatory protection needed, as seen by MAS. Although both licences allow the provision of regulated payment services, there are significant disparities between them in capital requirements, security deposits, protection of user funds, and compliance requirements.
The SPI is designed for smaller-scale operators with monthly transaction volumes under the prescribed limits. It has lighter obligations, such as no security deposit, no requirement to safeguard user funds, and a shorter MAS review period of around 60 business days. It is suitable for fintech startups as well as niche payment operators. Still, if the volumes of future transactions are likely to be exceeded in the coming few years, the applicant should be proactive in seeking a licence variation to MPI status.
The MPI applies to firms whose payment activities exceed the thresholds of the payment services industry (SPI), or to firms that wish to obtain a higher level of licence from the outset. It must comply with all PSA requirements, such as a minimum capital of S$250,000, a security deposit, fund security, and strong audit and technology risk management standards. The MPI is suitable for payment institutions, large digital wallet providers, remittance businesses, and digital payment token service providers when operating at a meaningful scale.
Table 3: SPI vs MPI — Key Regulatory Differences
Companies need to consider not only the number of transactions they conduct but also how many more they are likely to have in the future when choosing their licence type. If the firm that has been issued with an SPI licence later breaches the thresholds, it will need to apply to MAS for a licence variation before the threshold violation occurs, which could restrict the firm’s activities.
Any corporation offering financial advisory services to clients in Singapore must be licensed as a Financial Adviser (FA) under the Financial Advisers Act, unless an exemption applies. The services covered are advice on the merits of acquiring or retaining investment products, marketing of collective investment schemes, and the provision of non-discretionary recommendations on the portfolio. A licensed financial adviser is subject to conduct-of-business regulations, such as disclosure of fees and conflicts of interest, client suitability assessments, and training for appointed representatives. The licence is especially significant for independent financial adviser firms, insurance-linked adviser firms, and wealth management boutiques advising retail clients – and for international firms who wish to expand their advisory activities in Singapore, but serve retail clients directly (as opposed to via an exempt entity arrangement).
The FAA also offers exemptions for regulated financial advisory firms or for firms that meet specific criteria, which will partially alleviate the need for a separate Financial Adviser’s licence.
Banks licensed under the Banking Act are not required to hold a Financial Adviser licence for specific advisory activities, but remain subject to the MAS Conduct Standards and Client Suitability Requirements under the Banking Act.
Direct and composite insurance companies and licensed finance companies might be exempt if the advisory services are ancillary to their underlying regulated activities under the Insurance Act.
In certain circumstances, a holder of a CMS licence may, without having a Financial Adviser licence, engage in certain financial advisory activities. The extent of this exemption depends on the type of advisory activity and its relationship to the CMS-licensed activity being offered.
Some offshore financial institution advisors to accredited or institutional investors in Singapore may be exempt, typically based on investor sophistication and the cross-border advisory relationship.
Corporate finance advisory comprises services that help companies with a range of capital markets transactions, such as going public, rights issues, takeovers, mergers, acquisitions, and securities-related restructurings. This is a regulated activity under the SFA and is accompanied by a CMS licence with a corporate finance endorsement. All investment banks, boutique M&A advisory firms and restructuring specialists that advise on such transactions will be required to have this endorsement, unless exempted by MAS. There is a distinction between corporate finance advisory and financial advisory for the FAA, and would be for corporate finance as well, so that a firm providing both services may be required to meet requirements under both laws. CMS-licensed corporate finance advisers must ensure that a qualified person provides the advice they give, material information is made available to the client and potentially to the market when required, conflicts are disclosed and addressed before advice is given, and, again importantly, the advice relates to transactions involving the issuance or transfer of securities.
MAS has created a limited exemption regime for parties who advise in corporate finance transactions as an ancillary part of their main professional activity or outside the technical nature of their regulated activity.
A solicitor, who advises only on the legal aspects of a corporate finance transaction, such as drafting transaction documents, or advising to ensure that the transaction is compliant with the regulations, may be exempt, but not if they are also advising on the merits of the investment or the financial terms of the transaction.
An exemption is available for certified public accountants who perform accounting, audit or due diligence services related to a corporate finance transaction, but not investment analysis or financial recommendations, and who adhere to the professional accounting scope.
A regulated activity framework, which applies primarily to intermediaries who provide regulatory activity services on a commercial basis to third parties, may exempt corporate treasury and M&A teams advising their employer’s securities.
Under certain conditions set by MAS, entities that introduce corporate finance clients without providing substantive advice on investments and transactions may be considered corporate finance advisers. The scope of this exemption is limited and should be considered on a case-by-case basis.
The Variable Capital Company (VCC) is a corporate structure established under the Variable Capital Companies Act (VCCA) in Singapore in January 2020 for investment funds. A VCC can change its share capital without complying with the Companies Act, allowing investors to subscribe for and redeem shares without going through traditional corporate law processes, making it suitable for both open-ended and closed-ended fund structures. A VCC may be set up as a single fund or as an umbrella fund comprising several sub-funds with different investment mandates, investor bases, and service providers, each with a separate balance sheet. Some 1,200 VCCs have been incorporated in Singapore, and approximately 600 financial institutions manage them, making the VCC the preferred Singapore-domiciled fund vehicle for a broad spectrum of asset management strategies.
The VCC has emerged as an attractive structural, regulatory, and tax solution for Singapore fund managers and has been in high demand across various MAS licences, regardless of fund size or strategy type.
The VCC can adjust its share capital as it sees fit, enabling it to create both open-ended and closed-ended funds, with the same subscribers and redemptionists, under a single legal regime and regulatory framework in Singapore.
There can be multiple sub-funds within a single umbrella VCC, with the assets and liabilities of each sub-fund legally separate. This enables fund managers to have a single entity manage several strategies, thereby minimising the costs of incorporation and administration.
VCCs managed by fund managers with a license from MAS will receive tax exemptions under Sections 13O and 13U of the Income Tax Act. Such schemes are offered only to regulated fund managers. They are therefore not open to all fund managers, with the tax benefits of VCC structures available only to those licensed as a CMS.
The VCC Act provides for the possibility for foreign investment funds, including Cayman funds, to register as a VCC in Singapore. This has enabled the VCC to become an important instrument for foreign managers to redomicile existing offshore funds into Singapore as part of their wider Asia-Pacific strategy.
A VCC will not be able to function without a Permissible Fund Manager, as defined in the Variable Capital Companies Act (VCCA), who will be responsible for managing such VCC at all times. The choice of a qualifying fund manager is required by law before the VCC’s incorporation and is not an after-the-fact selection.
Most frequently, the Permissible Fund Manager will be a CMS licence holder for fund management, either an A/I LFMC or a retail LFMC. Each can host a VCC, which may be as large as desired and include any number of sub-funds across various asset classes and strategies, subject to the terms of the applicable licence. The VCC is subject to all MAS requirements and notices and is under the LFMC’s full regulatory oversight for ongoing compliance.
Permissible Fund Managers also include those who are Fund Managers under the CMS licence regime (as per the VCFM regime). They can form VCCs for their venture capital funds, but the investment restrictions and typical VCC structures within VCFs remain at 100% for the underlying VCC funds.
Single-family offices that take advantage of the SFA Section 99 exemption and real estate fund managers that take advantage of the immovable property exemption aren’t considered Permissible Fund Managers. It is important to note that CMS must obtain full licenses for both before setting up or operating a VCC structure. This point is sometimes overlooked when first setting up a Singapore family office or real estate fund structure.
Table 4: VCC Structure — Key Regulatory Requirements
The VCC sector is subject to high expectations from VCC managers after MAS’ thematic review in 2024, which highlighted governance, sub-fund oversight and AML/CFT controls as areas for improvement.
All VCCs must have one or more Singapore resident directors who comply with the prescribed fit-and-proper criteria. Directors have fiduciary duties towards the VCC and its investors. They are responsible for ensuring that the VCC is well governed and well managed in accordance with all relevant laws and MAS supervisory expectations.
VCCs shall engage an eligible financial institution to undertake, on their behalf, the following customer due diligence, account monitoring, and suspicious transaction reporting required for AML/CFT. The VCC is solely responsible for compliance and is considered a regulated person under the relevant MAS notices.
VCCs are required to present annual financial statements to investors at the AGM, which have been audited for each sub-fund. Investors holding units in one sub-fund of an umbrella VCC will also have access to financial information of the other sub-funds; a disclosure principle that managers need to explain in good faith before investment.
VCC managers will need to continue to maintain documented governance procedures for board composition, sub-fund oversight, conflict-of-interest management, and the segregation of sub-fund assets in operation after MAS’s thematic review in 2024. The expectation of active board involvement at the level of governance committees has become a standard supervisory expectation.
MAS adopts a universal approach to applying its Fit and Proper Criteria (Guidelines FSG-G01) to all applicants for a licence and their key personnel. It is not a ‘checklist’ assessment, but rather a holistic one, with the applicant placing responsibility squarely on him- or herself to demonstrate that all relevant persons are compliant across four key dimensions. These are the MAS licensing requirements by business type and are always applicable when applying for the licence and thereafter.
MAS reviews the criminal conviction records, regulatory sanctions, civil judgments and professional disciplinary records of key individuals in all jurisdictions. One of the most frequently cited reasons for concerns raised by the MAS during the application review is material undisclosed history.
All key personnel are required to have the necessary qualifications, experience, and expertise for their roles. MAS evaluates this based on the professional background information included in the application and may request additional information or professional references for higher-level positions.
MAS checks whether there are key individuals with a good financial record, including any prior insolvency, bankruptcy, or major debt default in any jurisdiction. The inability to maintain the financial stability of critical employees is identified as a governance risk and needs to be elaborated in the application.
MAS evaluates the potential conflicts of interest of the proposed appointees with the regulated entity or its clients, and the time they have available to devote to their responsibilities in Singapore, relative to other professional demands.
The amount of capital and operating needs depends on the type of licence and the investor’s class. Applicants are required to ensure that all thresholds are met at the time of application and can be sustained throughout the licence term.
Base capital requirements are from S$250,000 for A/I LFMCs and for MPIs to S$1,000,000 for retail LFMCs that are custodians of CIS funds open to retail investors. Capital shall be available, unencumbered and not pledged for other purposes on the date of the issuance of the licence.
CMS licence holders should have financial resources of at least 120% of the total risk at all times – not just during licensing. This ratio reflects a buffer level sufficient to provide business continuity for companies, exceeding the minimum required by regulators.
There needs to be a physical office in Singapore for all the main licence categories. MAS is tough on so-called ‘virtual offices’ and does not consider setups in which most substantive decision-making occurs outside Singapore to constitute a genuine Singapore presence.
Given that major payment operations are systemic, major payment institutions must make a cash deposit with MAS or a bank guarantee of S$100,000 to S$200,000 before they start operations.
MAS believes that the governance structure and staffing arrangements should be based on the licensed entity’s actual operational needs, rather than solely on compliance with the minimum headcount requirements prescribed in the regulatory documents.
The CEO must be a Singapore resident and actively manage the firm’s operations on a full-time basis. Experience varies by licence type (5 years for A/I LFMC CEOs; 10 years for retail LFMC CEOs) and is based on verifiable professional history.
Most types of licences require at least two directors, one of whom must be an executive director who resides in Singapore. The board needs to be a relevant and useful governance body that actively reviews the firm’s strategy, risk appetite and compliance performance.
There is a minimum number of Singapore-resident appointed representatives that LFMCs must have in place for each regulated activity. The minimum entry requirements are met, and the qualifications prescribed in MAS’s Guidelines on Fit and Proper Criteria apply to these individuals.
Every regulated entity has to have a proper compliance function separate from revenue-generating functions. The compliance function should be under the direct control of senior management and the board and properly resourced to carry out its oversight duties.
Success and speed in the MAS review process depend first and foremost on a complete, high-quality application. Weighing in on the application documentation aspect of the MAS licence process helps save time and resources throughout the licensing journey.
The application should contain a substantive business plan that outlines each business activity to be undertaken and links it to the specific regulatory activity applied for, and sufficient operational detail to ensure the firm is in a position to commence regulated activities.
Individual detailed profiles of all directors, the CEO, and key representatives should be provided, including comprehensive employment histories, professional qualifications, regulatory disclosure forms, and any regulatory or legal history.
An AML/CFT compliance framework, comprising the firm’s AML/CFT policy, risk management framework, internal control procedures, and conflict of interest policy, must be submitted with the application. MAS does not require that these documents be “templates”.
For all new applications submitted by SPI, applicants must obtain a legal opinion from a law firm experienced in the PSA that verifies the nature and scope of the proposed services and identifies which services are regulated payment services and which are not.
Anti-money laundering and countering the financing of terrorism compliance is the obligation that applies to all financial services and MAS regulatory licences, and cannot be negotiated. MAS has also published a comprehensive package of notices, broken down by licence type, that outline specific AML/CFT requirements. All regulated entities are required, at a minimum, to have procedures in place to confirm the identity of their clients and beneficial owners, to have transaction monitoring procedures adequate to detect suspicious transactions, and to have procedures to report to the Suspicious Transaction Reporting Office when circumstances exist for a report to be made. An effective AML/CFT framework is regarded as one of the most serious types of regulatory failure.
In recent years, Singapore has made considerable efforts to align with FATF standards, and the AML/CFT expectations for MAS-regulated firms have increased substantially. Regulated firms are expected to keep records of risk assessments, customer risk ratings, and escalation procedures, and to update AML/CFT policies at least annually to align with MAS guidance and the firm’s evolving risk profile. The most severe supervisory action by MAS is invariably directed at firms that regard AML/CFT as merely a compliance document or process rather than a genuine risk management practice.
Limiting risk and ensuring effective internal controls are in place are key expectations for every MAS-regulated entity. These frameworks are subject to quality assessment by MAS during supervision, and any deficiencies found are expected to be addressed promptly, with evidence of genuine management engagement.
For fund managers and capital markets firms, the challenge is to ensure they have frameworks in place to identify and manage market, credit, and operational risk appropriately for the complexity of their strategies. Business continuity plans need to be documented, regularly tested and actively reviewed and approved by the board.
MAS’s Technology Risk Management Guidelines set expectations for system resilience, cybersecurity controls, incident response planning and third-party vendor oversight — all of which are closely monitored during MAS’s supervisory examinations of payment and digital asset service providers.
Each regulated entity is required to have written policies and procedures in place to identify and address conflicts of interest among the firm and its clients, among its clients and among key personnel and the firm’s obligations. Conflicts need to be managed and documented, not just written in a policy document.
Regulated entities are required to have internal policies, procedures and practices that are documented and address all material aspects of operations, such as trade surveillance, escalation procedures and business continuity. Such enforcement needs to be active and regular, with senior management and business activity changing and regulations evolving.
Regulatory reporting provides MAS with ongoing information on the financial status, ongoing operation and key developments of a regulated entity. Delayed and incorrect filings are seen as a sign of general compliance issues and may attract additional supervision from MAS.
The annual returns of most MAS-licensed entities include financial statements, key performance indicators and compliance declarations. Depending on the type of licence, certain forms and filing timetables differ and are outlined in the relevant MAS notices and guidelines.
Regulated entities are required to promptly report to MAS on defined material events: significant operational incidents (including cybersecurity incidents), significant changes in key appointments, changes in shareholding or control, and any breach of regulatory conditions or licence terms.
Reports to MAS must be submitted within time limits, and independent external audits must be conducted annually. Material weaknesses in audit findings should be reported to MAS and remediated with documented remediation plans that clearly specify the timelines and management accountability.
The fund managers are required to present regular returns for assets under management, the number and types of investors, categories, fund types, and geographic and sectoral investment exposure. VCFMs also issue an annual statement confirming that there were no misconduct reports for the previous year.
MAS carries out formal and informal supervisory reviews of regulated entities, including on-site inspections, targeted investigations when a concern is identified, document requests, and thematic questionnaires sent to regulated entities across various industry sectors. Regulated entities’ compliance documentation should be in a state of perpetual readiness — not just for review when it is scheduled. Those with material deficiencies will be issued remediation notices, required to improve reporting, be subject to financial penalties, be publicly reprimanded, and, in serious cases, have their licence suspended or revoked. Having a proactive internal monitoring programme, such as regular internal assessments against MAS licensing requirements, management information disclosure of compliance indicators, and documented actions on deficiencies identified in internal audit reports, is the best way to identify and address deficiencies before they become regulatory issues.
The first step in selecting the appropriate MAS licence is to focus on the regulated activities a business will undertake, rather than on a description of its commercial services. In the SFA, FAA, and PSA, the definition of regulated activities is precisely laid out by statute, and this precision should serve as the basis for all licensing analysis. As a rule, firms operating pooled investment vehicles or client portfolios on a discretionary basis are likely to need a CMS licence as an LFMC or VCFM. A Financial Adviser licence or an exemption is required for firms that give financial advice. Companies involved in payment processing or digital payment token services need either an SPI or an MPI licence, depending on the volume of their transactions. Perhaps more importantly, if a business model involves cross-sector operations—such as a fintech company offering payment services and investment products—then more than one licence might be necessary, and a multi-licence analysis would need to be undertaken before legal structure, staffing and capital are locked in.
It is useful for firms to recognise how common business models align with the criteria for MAS licences, to approach the licensing process more clearly and efficiently.
Table 5: Common Business Types and Likely Licence Requirements
The table below provides a guide and maps common business types to the most likely main licence application. It is indicative, not definitive — the correct licence will depend on the specific nature of the regulated activities, the investor population, the number of transactions, and the applicable exemptions. Companies that have a complex or multi-activity model are advised to undertake a formal regulatory scope assessment, preferably with the assistance of qualified MAS licensing requirements advisers, before entering into a corporate structure.
There are numerous factors to consider when deciding on the category of licence and the compliance obligations that will be imposed. Companies that conduct this analysis before structuring and staffing are much more likely to submit a well-structured, prepared application to MAS for licensing in Singapore.
The most important factor in determining the type of licence and level of compliance requirements is whether the client is a retail, accredited or institutional investor. The capital, staffing, and conduct obligations for all licence categories are significantly greater for a licensee that offers retail investment services, and such services should be offered only if there is a clear benefit to the retail investor, commensurate with the additional regulatory costs.
For payment service providers, volume is a key consideration in determining whether they are an SPI or an MPI. Before choosing a licence category and structuring their capital position, fund managers should consider the expected AUM relative to the minimum capital requirements and the financial resources ratio of 120%.
If the manager is seeking a wide range of mandates, listed securities, open-ended structures, or retail participation, then the manager is required to apply along the standard LFMC pathway. For those intent on investing in closed-ended VC in unlisted businesses, it may be possible to fit within the VCFM regime. Still, the eligibility requirements must be carefully checked against the VC’s actual mandate.
MAS demands real substance in Singapore: an actual CEO, premises, and a compliance setup. The integrity and comprehensiveness of this commitment are crucial factors in the successful application and in the satisfaction of ongoing supervision during the licence period.
The process of preparing licence applications is time-consuming, takes months of preparation and is resource-intensive. Firms need to budget realistically for the entire preparation and review process, and ensure that the people responsible for the submission have the capacity and expertise to prepare the document as MAS expects.
MAS’s published guidelines and requirements are comprehensive and publicly available, but applying them to a particular business model may be more complex than the published text suggests. In Singapore, one of the regulatory scope questions that is encountered frequently is whether a bundled financial product results in multiple regulatory activities, which are addressed in regulations, as well as the question of whether a proposed payment service falls within the scope of the PSA’s definitions, both of which will require a high level of professional judgement to answer. Firms will require legal and compliance advisers with first-hand experience making submissions to MAS to help them identify which activities require a license and which do not, detect potential structural problems early, draft the full range of application information required by MAS, and implement regulatory engagement procedures from pre-application consultation to final approval. The benefits of professional advisory support experienced by the firm before submitting an application — particularly when they are applied before the formal application — is significant, and has a consistent positive impact on the quality of the applications and the overall time to regulatory licence approval, especially for firms seeking to enter Singapore for the first time, changing licence types, seeking licence variations or responding to queries and remediation notices by MAS.
This comprehensive overview of MAS licences in Singapore has spanned the entire range of MAS licences — from the CMS licence and its sub-categories (LFMC and VCFM) to the SFA-based financial advisory framework, to the payment licences (SPI and MPI) issued by PSA, and the VCC fund vehicle structure. The following are the key principles to carry forward:
The appropriate licence is always based on the regulated activities a firm carries out, as defined by the SFA, the FAA, or the PSA, and not on the description of the firm’s services in its business. A thorough activity mapping should be done before making any structural, capital or staff decisions.
The obligations of retail investors under all types of licences are materially higher when licensed. The obligations of retail investors under all types of licences are materially higher when licensed. The importance of this is that absolute clarity on the firm’s target investor base must come before the decision on which licence category to choose and the design of the compliance infrastructure, as there is a considerable difference between A/I and retail.
MAS requires a strong presence: a resident Chief Executive, a physical office, and active day-to-day management. All applications for nominal/virtual arrangements are likely to be subject to careful consideration when applying for approval and during supervisory engagement.
Getting a licence is the first step in the regulatory process. AML/CFT, risk management, regulatory reporting, and governance obligations are constantly evolving and challenging—and have consistently been the most intensely focused areas for MAS throughout the licence lifecycle.
The MAS licensing process recognises and promotes proactive regulatory interaction and pre-preparation. Businesses that work with experienced MAS licensing consultants early in the planning process routinely achieve better results than those that seek advisory services from MAS only when they hit snags in the application process.
True institutional commitment to compliance for long-term success in Singapore’s regulated financial environment does not mean merely meeting minimum licensing requirements in a tick-box manner. MAS is an active regulator that constantly monitors the conduct of its licensees, reviews its guidelines in line with market developments and international standards, and is not afraid to take action to uphold standards when they are not consistently maintained. Compliance culture is a fundamental pillar of good compliance. Those firms that develop it, with the support of their staff, policies, technology and engagement with regulatory risk by their boards, are likely to meet MAS’s current expectations and are likely to be more resilient in the face of the inevitable changes that MAS will bring in the long term as part of its licence.
This guide offers a structured approach to all Singapore MAS financial licences, which is particularly useful for junior- to mid-level professionals navigating the MAS-explained world of financial licences. To better understand the different types of licences as your career progresses, you will find it valuable to undertake continuous professional development, and to regularly consult with MAS and participate in its guidance and consultation papers, as well as work with experienced compliance and legal advisers to ensure you have a clear understanding of Singapore’s financial sector.
