Singapore\u2019s financial services regulator has issued an update on its anti-money laundering (AML) and combating the financing of terrorism (CFT) guidelines. The Monetary Authority of Singapore followed up recent regulatory changes with the comprehensive set of guidelines for all digital payment services providers. The guidelines urged all payment services providers to have in place the three lines of defence. The first is ensuring that the consumer-facing functions have robust mechanisms to detect illicit activities. The second is having in place controls to monitor the service provider\u2019s fulfillment of the AML\/CFT duties. These mechanisms should notify the superiors if there\u2019s any part of their system or staff members that are failing in their responsibilities. The third line involves an independent audit function. The watchdog stated that it has been monitoring the digital currencies industry. In its 2014 National Risk Assessment, it determined that the industry wasn\u2019t big enough to warrant regulations. However, in the last few years it has grown rapidly and will now have to adhere to AML\/CTF regulations. The MAS believes that digital currencies offer a higher risk because of \u201cthe pseudonymity (or in some cases anonymity) they offer; the convenience they provide as a near-instantaneous value transfer medium; and cross-border nature of the transactions.\u201d The watchdog is already monitoring the virtual assets space through a risk-based approach, it revealed. It uses both on-site inspections and off-site monitoring and surveillance. On-site inspection includes \u201cregular and thematic inspections to test FIs\u2019 effectiveness in key areas such as ongoing monitoring, and combating proliferation financing and terrorism financing.\u201d MAS called on all the other stakeholders to play their part in helping it to monitor the virtual assets industry, including banks. It stated, \u201cBanks should assess each VASP customer on its own merits, identifying the risks associated with the customer, communicate the risk concerns to the customer and assess if and how the risks can be adequately mitigated.\u201d The increased risk associated with virtual assets must, however, not be used to deny the industry banking services, the regulator cautioned. It stated, \u201cBanks should not deny bank accounts without cause, for entire classes of customers including VASPs. It is important for banks to adopt this balanced approach to avoid unduly affecting the banking needs of customers conducting legitimate businesses.\u201d The MAS announced a month ago that Singapore\u2019s Payment Services Act had become active and would be used to protect the consumers. The Act, which incorporated the public\u2019s input, has made Singapore one of the friendliest jurisdictions for digital currency services providers globally.