On Feb. 13, 2018, the Monetary Authority of Singapore (MAS) issued a Consultation Paper on the Proposed EPayments User Protection Guidelines (Consultation Paper). Under the Consultation Paper, the MAS proposes to issue a set of guidelines (Guidelines) to standardize the protection offered to individuals or micro-enterprises from losses arising from unauthorized or mistaken payment transactions. The Guidelines are part of MAS's ongoing review of Singapore's regulatory framework for payment services. They are meant to provide general guidance and are not intended to be comprehensive or to replace or override any legislation.
Scope and Application of the Guidelines
The Guidelines will apply to banks and non-bank credit card issuers under the Banking Act, Chapter 19 of Singapore, finance companies under the Finance Companies Act, Chapter 108 of Singapore, and widely accepted stored value facility holders under the Payment Systems (Oversight) Act, Chapter 222A of Singapore. When the Payment Services Bill1 comes into effect, MAS intends to make the Guidelines applicable to payment services licensees that issue payment accounts. The Guidelines will apply only to "protected accounts", which means any payment account2 that
(i) is held in the name of one or more persons, all of whom are either individuals or micro-enterprises3 (ii) is capable of having a balance of more than S$500 at any one time, or is a credit facility, and (iii)is capable of being used for electronic payment transactions.
1 On Nov. 21, 2017, the MAS issued a consultation on the proposed Payment Services Bill, which sets out two parallel regulatory frameworks: (i) a new licensing framework for payment service providers and (ii) the designation framework for payment systems. A copy of this consultation is available here. 2 "Payment account" means
(a) any account held in the name of, or any account with a unique identifier of, one or more persons or (b) any personalized device or personalized facility used by any person for the initiation, execution or both of payment transactions and
includes a bank account, debit card, credit card and charge card. 3 "Micro-enterprise" means any business employing fewer than 10 persons or with annual turnover of no more than S$1 million.
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The Guidelines will not apply to payment transactions arising from scams4, which will be addressed through other means such as police investigations and separate specialized guidelines that MAS may issue where suitable.
Summary of Key Proposals in the Guidelines
(For a more detailed summary of the key proposals, please refer to Annex 1 below)
Liability for losses arising from unauthorized transactions The Guidelines provide guidance on situations that would determine the party liable for loss arising from the unauthorized transactions. For example, where there is fraud or negligence by the responsible financial institution (FI)5, its employee, its agent or any third party engaged by the responsible FI, the account holder6 will be exempted from liability for the loss arising from the unauthorized transaction. On the flipside, where the account holder's recklessness was the primary cause of the loss, the account holder will be liable for the actual loss arising from the unauthorized transaction. Where the responsible FI is unable to show that an account user's7 recklessness was the primary cause of loss arising from any unauthorized transaction (e.g. where the account user was simply negligent), the account holder will be liable for no more than S$100.
Duties of account holders and account users The Guidelines also provide guidance on the duties of account holders and account users. The non-compliance of these duties will be a factor in determining whether the account holder or the responsible FI is found to be liable for the loss arising from an unauthorized transaction. These duties of account holders and account users include the duty to provide contact information and monitor notifications sent from the responsible FI, the duty to protect access codes, the duty to protect access to the protected account, the duty to report unauthorized transactions, and the duty to provide information on unauthorized transactions.
4 Scams generally involve an intention to deceive and cheat, and where the authorized and intended payment is incidental to consummating the scam. 5 "Responsible FI" in relation to any protected account, means any bank, non-bank credit card issuer, finance company or approved holder that issued the protected account. 6 "Account holder" means any person in whose name a payment account has been opened or to whom a payment account has been issued, and includes a supplementary credit card holder and a joint account holder. 7 "Account user" means
(a) any account holder; or (b) any person who is authorized in a manner in accordance with the account agreement, by the responsible FI and any account holder of a
protected account to initiate, execute or both initiate and execute payment transactions using the protected account.
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Duties of the responsible FI The Guidelines also provide guidance on the duties of the responsible FI. The responsible FI will be liable for any loss arising from an unauthorized transaction if the loss is caused by the responsible FI's non-compliance of its duties.
These duties of the responsible FI include the duty to clearly inform account holders of user protection duties, the duty to provide transaction notifications, the duty to provide recipient credential information before the account user confirms a payment transaction, the duty to provide an appropriate reporting channel, and the duty to complete claims investigation within the specified time period.
Specific duties of the responsible FI and account holder in relation to erroneous transactions Where an account holder has informed the responsible FI that he/she or an account user has initiated a payment transaction from a protected account such that money has been transferred to the wrong recipient (erroneous transaction), and the account holder's responsible FI has informed the wrong recipient's responsible FI for the erroneous transaction, the responsible FI of both the account holder and of the wrong recipient should make reasonable efforts to recover the sum sent in error.
The account holder should also provide the responsible FI with the relevant information in order to assist the responsible FI to recover the sums sent in error.
Invitation for Comments
Please refer to the Consultation Paper for the complete set of proposals. The deadline for comments and feedback to be submitted to the MAS is March 16, 2018. We are collating comments from clients and industry participants for submission to the MAS. If you have comments on the proposals that you would like us to submit on your behalf, please contact any of the lawyers listed below.
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Part A: Liability for Losses Arising from Unauthorized Transactions
1. Account holder to be
The account holder will not be liable for any loss arising from an
exempted from liability for
unauthorized transaction if the loss arises from any of these
losses in certain situations
situations (no-liability situations):
(a) Fraud or negligence by the responsible financial institution (FI), its employee, its agent or any third party engaged by the responsible FI;
(b) Fraud or negligence by a merchant from whom any account user purchases or has previously purchased goods or services, or that merchant's employee or agent;
(c) A device including an authentication device8, access code9, unique identifier, application or system that is not valid, including one that is compromised, forged, faulty, expired or terminated, but not by reason of any account user's action;
(d) A payment transaction requiring the use of an authentication device, access code or unique identifier, that is initiated or executed before any account user received the authentication device, access code or unique identifier10;
(e) A payment transaction that was initiated or executed after the responsible FI was informed by any account holder that there has been a breach or loss of the protected account or any authentication device or access code for that protected account;
8 "Authentication device" means any device issued by the responsible FI to the account user for the purposes of authenticating any payment transaction initiated from a payment account, including a device that is used to generate, receive or input any access code.
9 "Access code" means a password, code or any other arrangement that the account user must keep secret, that may be required to authenticate any payment transaction or account user, and may include any of the following:
(a) personal identification number, password or code;
(b) internet banking authentication code;
(c) telephone banking authentication code;
(d) code generated by an authentication device;
(e) code sent by the responsible FI by phone text message such as SMS,
but does not include a number printed on a payment account (e.g. a security number printed on a credit card or debit card.
10 The account user is presumed not to have received the authentication device, access code or unique identifier unless the responsible FI has an acknowledgement of receipt from the account user.
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(f) The account holder shows that the account user has not contributed to the loss. Where the account user has complied with its duties under Part B below, that fact will be one factor the account holder may rely on to show that the account user has not contributed to the loss; or
(g) The responsible FI did not comply with any duty set out in Part C below, and such non-compliance caused the loss.
2. Account holder to be liable
The account holder is liable for actual loss arising from an
for actual loss where account
unauthorized transaction where the responsible FI shows that the
user's recklessness was
account user's recklessness was the primary cause of the loss
primary cause of loss
(actual loss situations).
Recklessness includes the situation where any account user deliberately did not comply with his/her duties under Part B below.
The account user is expected to provide the responsible FI with information that is reasonably required to determine whether the account user was reckless.
The actual loss that the account holder is liable for may be capped at any applicable transaction limit or daily payment limit that the account holder and responsible FI have agreed to.
3. Account holder to be liable
Where the responsible FI is unable to show that an account user's
for maximum of S$100 where
recklessness was the primary cause of loss arising from any
account holder's recklessness
unauthorized transaction (limited liability situations), the
was not primary cause of loss
account holder is liable for an amount of no more than S$100.
This liability cap of S$100 may apply where an account user's negligence contributed to the loss, for example:
(a) misplacement of the protected account or authentication device or access code for that protected account, and
(b) where any account holder reported the unauthorized transaction to the responsible FI outside the timeline set out in Part B, Proposal 4, below but within a period acceptable to the responsible FI.
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If the account holder is making a report of unauthorized transactions to the responsible FI for the third or more time in any calendar year, the responsible FI may require that the account holder furnish a police report in respect of any of the situations in subparagraphs (a) and (b) above before the responsible FI begins the claims resolution process under Part C, Proposal 5, below.
Upon inquiry by the account holder, the responsible FI will be expected to provide the account holder with relevant information on the unauthorized transactions, including transaction dates, transaction timestamps and parties to the transaction, if available.
4. Account holder and
The account agreement11 or payment account scheme rules may
responsible FI may agree to a
specify an amount for the account holder's liability in an actual loss
lower liability cap
or limited liability situation that is lower than the applicable
amount or liability cap set out in the Guidelines.
The responsible FI may also offer to reduce the liability caps on a case-by-case basis where the responsible FI deems appropriate.
5. Application of Part A to joint Where the protected account is a joint account, the liability for
losses set out in this Part A will apply jointly to each account
holder in the joint account.
11 "Account agreement" means the terms and conditions that the responsible FI and account holder have agreed to that govern the use of a payment account issued by the responsible FI to the account holder.
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Part B: Duties of Account Holders and Account Users
1. Account holder to provide contact information and monitor notifications
2. Account user to protect access codes
The account holder should provide the responsible FI with contact details (account contact) in order for the responsible FI to send the account holder transaction notifications in accordance with Part C below.
Where the protected account is a joint account, the account holders should jointly instruct the responsible FI on whether the responsible FI should send transaction notifications under Part C, Proposal 2, below to any or all of the account holders.
The duties of the account holders in this Part B will apply to all the account holders whom the responsible FI has been instructed to send transaction notifications to (each, a notifiable account holder).
The account holder should at a minimum provide the following contact information, which must be complete and accurate, to the responsible FI:
(a) where the account holder has opted to receive transaction notifications by SMS, his/her Singapore mobile phone number, or
(b) where the account holder has opted to receive transaction notifications by email, his/her email address.
The account holder is responsible for monitoring the transaction notifications sent to the account contact that s/he provided. The responsible FI may assume that the account holder will monitor such transaction notifications without further reminders or repeat notifications.
An account user should not do any of the following:
(a) voluntarily disclose any access code to any third party, except as instructed by the responsible FI for any purpose including to initiate or execute any payment transaction involving the protected account;
(b) disclose the access code in a recognizable way on any payment account, authentication device or container for the payment account;
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3. Account user to protect access to protected account
4. Account holder to report unauthorized transactions
(c) keep a record of any access code in a way that allows any third party to easily misuse the access code;
If the account user keeps a record of any access code, s/he should make reasonable efforts to secure the record, including
(a) keeping the record in a secure electronic or physical location accessible or known only to the account user, or
(b) keeping the record in a place where the record is unlikely to be found by a third party.
The account user should at the minimum do all of the following where a device is used to access the protected account:
(a) update the device's browser to the latest version available;
(b) patch the device's operating systems with regular security updates;
(c) install and maintain the latest antivirus software on the device;
(d) use strong passwords, such as a mixture of letters, numbers and symbols;
(e) enable notification alerts on transactions initiated by or executed using the protected account .
The account holder should also, where possible, follow security instructions or advice provided by the responsible FI to the account holder.
The account holder should report any unauthorized transactions to the responsible FI by the next business day from receipt of any transaction notification for any unauthorized transactions, or as soon as practicable if the responsible FI agrees.
The account holder should report these unauthorized transactions by
(a) reporting the unauthorized transaction in any communications channel for such purpose as set out in the account agreement, or
(b) reporting the unauthorized transaction to the responsible FI in any other way and where the responsible FI acknowledges receipt of such a report.
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5. Account holder to provide
The account holder should provide the responsible FI with all the
information on unauthorized
following information, as requested by the responsible FI, within
five business days from receipt of any transaction notification
for any unauthorized transaction:
(a) the protected account affected;
(b) the account holder's identification information;
(c) the type of authentication device, access code and device used to perform the payment transaction;
(d) the name or identity of any account user for the protected account;
(e) whether a protected account, authentication device, or access code was lost, stolen or misused, and if so;
6. Account holder to make police report
o the date and time of the loss or misuse.
o the date and time that the loss or misuse was reported to the responsible FI.
o the date, time and method that the loss or misuse was reported to the police.
(f) where any access code is applicable to the protected account,
o how the account holder or any account user recorded the access code.
o whether the account holder or any account user had disclosed the access code to anyone.
(g) any other information about the unauthorized transaction that is known to the account holder.
The account user should make a police report if the responsible FI requests such a report to be made in accordance with Part A, Proposal 3, above.
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Proposal 1. Responsible FI to clearly
inform account holder of user protection duties
2. Responsible FI to provide transaction notifications
Part C: Duties of the Responsible FI
The responsible FI should inform every account holder of the relevant user protection duties, i.e., the duties of the account holder and account user as set out in Part B above, and the duties of the responsible FI as set out in the rest of this Part C.
The responsible FI may inform the account holder of these user protection duties by
(a) setting out the user protection duties in the account agreement or
(b) obtaining the account holder's written acknowledgement of the user protection duties.
A responsible FI should provide transaction notifications to each notifiable account holder in respect of all transactions made to or from the account holder's protected account (notifiable transaction).
The transaction notification should fulfill the following criteria:
(a) The transaction notification should be sent to the account holder's account contact. If the account holder has provided more than one account contact to the responsible FI, the transaction notification should be sent to the account contact selected by the account holder to receive such notifications;
(b) The transaction notification should be sent at least once every 24 hours, during which any notifiable transaction is made. In at least one of the transaction notifications for any given day, the responsible FI must consolidate every notifiable transaction made in the past 24 hours;
(c) The transaction notification should be conveyed to the account holder by way of SMS or email. An in-app notification must be accompanied by an SMS or email notification that meets the deadline in sub-paragraph (b) above;
(d) The transaction notification should contain
o information that allows the account holder to identify the protected account such as the protected account number and to identify the recipient whether by name or by other credentials such as the recipient's account number;
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3. Responsible FI to provide recipient credential information before account user confirms payment transaction
4. Responsible FI to provide reporting channel
o information that allows the responsible FI to later identify the account holder, the protected account, and the recipient account such as each account number or name of the account holder;
o transaction amount, time, date and type and
o if the transaction is for goods and services provided by a business, the trading name of the merchant and, where possible, the merchant's reference number for the transaction.
Where transactions are made by way of internet banking, any mobile phone application or any device arranged by a responsible FI for payment transactions (including a payment kiosk), the responsible FI should provide an on-screen opportunity for any account user to confirm the payment transaction and recipient credentials before the payment transaction is executed.
The on-screen opportunity should contain the following information:
(a) information that allows the account user to identify the protected account to be debited;
(b) the intended transaction amount
(c) credentials of the intended recipient sufficient for the account user to identify the recipient, which at minimum should be the recipient's phone number, identification number and account number or name as registered for the purpose of receiving such payments;
(d) a warning to ask the account user to check the information before executing the payment transaction;
The responsible FI should provide account holders with a reporting channel for the purposes of reporting unauthorized or erroneous payment transactions.
The reporting channel should have all these characteristics:
(a) The reporting channel may be a manned phone line, phone number to receive text messages, online portal to receive text messages or a monitored email address;
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5. Responsible FI to complete claims investigation within the specified time period
6. Responsible FI to credit protected account
(b) Any person who makes a report through the reporting channel should receive a written acknowledgement of his/her report through SMS or email;
(c) The responsible FI should not charge a fee to any person who makes a report through the reporting channel for the report or any service to facilitate the report;
(d) The reporting channel should be available at any time every calendar day, unless it is a manned phone line, in which case that reporting channel should be available during business hours every business day.
The responsible FI should complete an investigation of any claim of an unauthorized transaction made by an account holder within 21 business days or, in exceptional circumstances, within 45 business days of the account holder's report of the transaction as per Part B, Proposal 4, above (investigation periods).
The responsible FI should within the appropriate investigation period give each notifiable account holder a written or oral report of the investigation outcome. The responsible FI should obtain an acknowledgement (which need not be an agreement) from that account holder.
The responsible FI should generally credit the account holder's protected account with the total loss arising from any unauthorized transaction, regardless of whether the investigation of any claim is still underway.
However, the responsible FI need not do so where the responsible FI has good reason to believe that the account holder (or in the case of a joint account, any account holder) is primarily responsible for the loss arising from the unauthorized transaction, and has communicated these reasons to the account holder. This includes the situation where within that calendar year the account holder has made at least two previous reports of unauthorized transactions.
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Part D: Specific Duties of Responsible FI and Account Holder in Relation to Erroneous Transactions
1. Responsible FI to make
reasonable efforts to recover sums sent in error
(a) an account holder has informed the responsible FI in accordance with this Part D that s/he or an account user has
initiated a payment transaction from a protected account such
that money has been placed with or transferred to the wrong
recipient (erroneous transaction) and
(b) the account holder's responsible FI has informed the wrongful recipient's responsible FI of the erroneous transaction;
the responsible FI of both the account holder and of the wrong recipient should make reasonable efforts to recover the sum sent in error.
Such reasonable efforts refer to
(a) in respect of the responsible FI of the account holder:
o Within two business days of receiving the necessary information from the account holder under this Part D, the responsible FI should inform the recipient FI of the erroneous transaction.
o Within seven business days of informing the recipient FI, the responsible FI should ask the recipient FI for the recipient's response and provide its account holder with any new relevant information to allow its account holder to assess if s/he should make a police report about the erroneous transaction.
(b) in respect of the responsible FI of the wrong recipient:
o Within two business days of receiving the necessary information from the account holder's FI about any erroneous transaction, the responsible FI should;
(i) inform the recipient of the erroneous transaction and all necessary information that would allow the recipient to determine if the transaction was indeed erroneous.
(ii) ask the recipient for instructions on whether to send the sum sent in error back to the account holder and
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(iii)inform the recipient that his/her retention or use of sums transferred to him/her erroneously where s/he has had notice of the erroneous transaction is an offense under the Penal Code, Chapter 224 of Singapore.
o Within five business days of receiving the necessary information from the account holder's FI about any erroneous transaction, the responsible FI should
(i) ask the recipient for instructions whether to send the sum sent in error back to the account holder and;
(ii) inform the account holder's FI about the recipient's response, including nil responses.
The same timelines are to apply where the responsible FI is both the sending FI and the recipient FI.
2. Account holder to make
For the purposes of assisting the responsible FI to recover sums
reasonable efforts to recover
sent in error, the account holder should provide the responsible FI
sums sent in error
with any of the following information as requested by the
(a) all the information set out in Part B, Proposal 5, above except sub-paragraphs (e), (f) and (g)
(b) the recipient's unique identifier, including account number, identification number, name or other credentials entered by the account user;
(c) the date, time, amount and purpose of the erroneous transaction insofar as such information is known to the account user.
If you have any questions regarding this update, please contact the Sidley lawyer with whom you usually work or
Han Ming Ho Partner
firstname.lastname@example.org +65 6230 3966
Yuet Ming Tham Partner
email@example.com +65 6230 3969 / +852 2509 7645
Josephine Law Counsel
firstname.lastname@example.org +65 6230 3916
John Casanova Partner
email@example.com +44 20 7360 3739
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