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Need-to-Know: Regulatory impacts on Asia payments

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8 Mar 2023

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Regulatory changes in the payments space are constant, not least because technological developments in this arena keep on coming. Learn about the inevitable impacts on treasury functions.

Regulatory initiatives in the payments space are constant, not least because technological developments in this arena keep on coming. The Asia region is no exception – and change is afoot in many geographies, with inevitable impacts on treasury functions. Here, we dig down into current and forthcoming regulations, explaining where treasurers need to pay attention.

From the march towards instant payments and open banking initiatives to the frameworks being put in place around digital assets and Central Bank Digital Currencies (CBDCs), the regulatory authorities are responding to significant and ongoing changes in the Asia payments arena. There is a myriad of drivers for this change. They include:

Despite the above advances, there is still work to be done. For example, it is still the case that although supervisory frameworks in Asia often abide by common principles, domestic laws and regulatory mechanisms can also be significantly different, making understanding and compliance a challenge.

In addition, the rapid rise of e-commerce coupled with the digitalisation of payments through new mechanisms has led to increased fraudulent and anti-money laundering (AML)/counter-financing of terrorism (CFT) transactions4. This brings security, compliance and data-privacy issues to the forefront with regulators and other key stakeholders watching closely.

Snapshot of change

Against this broader backdrop of evolution in the Asia payments space, it can be useful to understand how regulations are changing in individual markets.

China mainland

Innovation in the payments space in China has been rife, with many fintechs entering the space. But regulators are keen to contain the risks. At the 26th meeting of the Central Commission for Comprehensively Deepening Reform in mid-2022, it was announced that China would strengthen payment regulations, systems and risk prevention mechanisms. Plans were also outlined to intensify whole-chain and all-field supervision, as well as insisting that platforms must hold licenses to carry out financial business5.

Elsewhere, the Chinese Communist Party (CCP) State Council has banned financial institutions and payments companies from facilitating cryptocurrency transactions, including registration, trading, clearing, and settlement. Investors are also discouraged from speculative crypto trading.

As part of its Covid-19 policy, in Q2 2022, various government agencies, including the central bank, the People’s Bank of China (PBoC), published a Notice on Further Strengthening Financial Support for Preventing and Controlling the Novel Coronavirus Pneumonia Epidemic. It included 30 measures covering monetary and credit policies and financial services. Among the aims, it targeted improved foreign exchange (FX) and cross-border renminbi (RMB) businesses processes, and the promotion of stable exports and foreign trade development.

Hong Kong SAR

There has been a great deal of change in the payment landscape in the past 12 months, with the decommissioning of Electronic Clearing (ECG) and the shift to the Faster Payment System (FPS). Banks like Standard Chartered have been migrating clients on a staged schedule, preparing them to make the most of the new landscape.

Looking more to the future, the Hong Kong Monetary Authority (HKMA) has been focusing on technology, with multiple workstreams and initiatives underway. These include FinTech 2025, which among other projects is looking at ‘Future-proofing Hong Kong for Central Bank Digital Currencies’. This has seen it working with the Bank for International Settlements (BIS) Innovation Hub Hong Kong Centre on researching retail CBDCs.

As part of Fintech 2025, in mid-2022 HKMA published its second discussion paper, ‘e-HKD: A Policy and Design Perspective’. Part one has already looked at the technical aspects of e-HKD adoption. HKMA is also collaborating with the PBoC in supporting the technical testing of e-CNY in Hong Kong. The aim is to explore its use for cross-boundary payments for both domestic and mainland residents.


The National Bank of Cambodia (NBC) and Ministry of Economy and Finance (MEF) are the regulators of Cambodia’s payments sector. These cover the two permitted payments mechanisms delivered by payments service providers (banks and financial institutions) and third-party processors working on the former’s behalf. These are obliged to report any suspicious payment transactions to NBC’s Financial Intelligence Unit, following NBC compliance requirements under its Technology Risk Management Guidelines. Currently, the country has no specific legal framework regulating the use of cryptocurrencies and crypto assets. As it seems unclear as to whether crypto trading is legal or not, the circulation, trading, and acceptance of cryptocurrencies as payment in Cambodia remains active and unchecked.


March 2022 saw the Reserve Bank of India (RBI) set out its framework for geotagging of payments system touch points. The aim is to facilitate inclusive access to digital payments and expand the acceptance infrastructure. A month later, RBI published guidelines for the establishment of digital banking units (DBUs) – specialised branches for delivering digital banking products and services. These are part of RBI’s slew of measures to boost the penetration of digital payments and banking in the country.


In recent years, Indonesia has been a hotbed of payments change. Bank Indonesia (BI) launched Bank Indonesia Fast Payment (BI-FAST) on 21 December 2021 – in line with the theme of ‘Digital Transformation of the Payment System to Accelerate Economic Recovery of the Country’. BI-FAST is a new payment system infrastructure provided Bank Indonesia which can be accessed through applications provided by the payment system industry to facilitate retail payment transactions for the public.

The implementation of BI-FAST is one of Bank Indonesia’s efforts to continue to encourage the acceleration of digitalisation of the national economy and finances through fast payment infrastructure, which will become a gamechanger in the development of digital transactions in the future, including facilitating cross-border transactions. Work here is ongoing.

Meanwhile, in April 2022, Bank Indonesia issued its policy on the use of the rupiah in international activities. Using rupiah outside Indonesia (in physical form, accounts, and digital financial instruments, which includes its use in quotations, financial transactions, and financial transaction settlements) is prohibited for residents and non-residents alike.

However, the policy notes exceptions may be provided by Bank Indonesia. Non-resident use of the rupiah must be supported by underlying economic activities, but restrictions on rupiah use for certain activities by non-residents may be imposed, with sanctions possibly imposed for policy violations.

On technological matters, Bank Indonesia currently does not allow the use of cryptocurrencies for payment, but an approved list of crypto assets can be traded.


Bank of Japan (BoJ) recently published the results of its Proof of Concept Phase I of CBDC testing. It built a public cloud environment based on a CBDC ledger. This is intended as a foundational CBDC system to test basic transactions in three different design types, based on central-bank-managed ledgers, and the assigning of unique IDs to monetary data representing a fixed value. In April 2022, the BoJ commenced Phase II, adding various CBDC functions to the experimental environment.

In early 2022, the Financial Services Agency of Japan (JFSA) reported on current activities within anti-money laundering, counter financing of terrorism, and counter proliferation financing (AML/CFT/CPF) in Japan. The report notes general systemic improvements among the country’s FIs but some were now falling behind in their efforts. It encouraged use of a transaction monitoring system based on continuous customer management and risk-based threshold values, and a system of filtering and collating transactions by sanctioned persons.


Malaysia’s central bank, Bank Negara Malaysia (BNM) is the body responsible for payment system regulation. For example, BNM approval is required by issuers of e-money that must comply with its guideline on e-money and AML/CFT and technology risk requirements.

In June 2022, BNM published its first e-money consultation paper. It outlines requirements aimed at ensuring the safety and reliability of e-money issued by electronic money institutions (EMIs) for those using or accepting e-money for the payment of goods and services.

BNM also issued its Financial Exchange Policy (FEP) notices, relating to among other elements, investment in foreign currency assets, payment and receipt, the import and export of currency, and the export of goods. The notices highlight approval requirements, restrictions and conditions for certain previously prohibited transactions using the controlled currency. As an aside, a regulatory framework is already in place for cryptocurrency trading in Malaysia.

New Zealand

New Zealand’s Retail Payment System Act 2022 was passed and came into force in May 2022. It prepares the ground for several initiatives to promote competition and economic efficiency in the country’s retail payment system. For example, it seeks to reduce merchant service fees on credit and debit transactions by capping interchange fees. It also confers power on the Commerce Commission to regulate and monitor the system and impose fines for infringements.

The Philippines

In the Philippines, the Bangko Sentral ng Pilipinas (BSP) is the regulatory authority for payment systems. It also oversees cryptocurrency activities and exchanges, even though the country currently has no regulations covering the issuance of virtual currencies. This means any person or entity may be able to convert fiat currency into a virtual currency, and vice versa, through a BSP-licensed virtual currency exchange. A parallel Financial Technology Solutions and Offshore Virtual Currency Licence was introduced by the Cagayan Economic Zone Authority in 2019.


In Singapore, the MAS is the central bank and financial services regulator. It regulates seven payment services: account issuance, domestic money transfer, cross-border money transfer, merchant acquisition, e-money issuance, digital payment token and money-changing.

In 2022, the MAS and the Association of Banks in Singapore announced a new set of anti-fraud measures, including the requirement to implement an emergency self-service ‘kill switch’ to enable customers to immediately suspend their accounts if they suspect their bank accounts have been compromised. The measures came into effect on 31 October 2022.

The use of cryptocurrencies and crypto assets is permitted but the regulations that apply are more nuanced than in many territories. They depend whether the crypto is related to a commodity, a digital payment token, or a capital market product. However, the MAS is working with the financial industry, alongside the likes of Standard Chartered Bank, on Project Guardian, which is exploring use cases for digital assets, especially around asset tokenisation and decentralised finance.

South Korea

As part of its future payment environment preparations, Bank of Korea (BoK) recently completed a 10-month experiment into a digital South Korean won. It is now aiming to facilitate cross-border remittances by linking CBDCs from other countries. During the project, the bank also tested the use of its CBDC to purchase NFTs.

Regulation of the cryptocurrency industry is expected to be strengthened in South Korea to offset concerns around volatility of crypto and the proliferation of cryptocurrencies in financial crime. To this end, BoK has established a virtual money laundering and terrorism financing monitoring system.


In Thailand, payments are managed by Bank of Thailand (BoT), which works with the Digital Government Development Agency (DGA), and private organisations such as Thai Fintech Association.

There are three main payment systems in Thailand. These are: Highly Important Payment Systems (such as the Bank of Thailand Automated High-value Transfer Network, or BAHTNET, RTGS system); Designated Payment Systems (including payment card networks); and Designated Payment Services (including credit cards, e-money services, and e-money transfer services).

Entities can either be licensed as a Designated Payment System, or a Designated Payment Service. BoT licensed and regulated players must comply with AML and customer due diligence requirements. BoT also has policies and measures on technology risk and IT security.

Crypto is regulated by Thailand’s Securities and Exchange Commission (SEC). It has banned digital asset exchanges from trading meme- or fan-based tokens, NFTs and exchange-issued tokens.

In Q2 2022, BoT published The Way Forward for Retail Central Bank Digital Currencies in Thailand. It shows the potential systemic risks posed by privately issued digital currency and highlights the key benefits and downsides of CBDCs. Of the latter, it points to possible disintermediation of financial intermediaries and the need to uphold high security standards to ensure public trust and confidence in the CBDC system. And in August 2022, the central bank extended its retail CBDC exploration into a pilot, although it remains unsure of the need for a virtual national currency6.


The State Bank of Vietnam (SBV) is the regulator of all monetary, banking, and payment activities in the country. In addition to the SBV, the Ministry of Information and Telecommunication also has some regulatory input on electronic payment services.

Payment services can be classified either as ‘payment services via payment accounts’, which are carried out by licensed banks, or ‘payment services not via payment accounts’, which consist of money transfers, receipts, and disbursements on behalf of others.

To offer services such as e-wallet and e-payment infrastructure services, payment services providers in Vietnam must have either a banking licence, or an Intermediary Payment Services (IPS) licence.

When it comes to cryptocurrencies, the issuance, distribution and use of cryptocurrencies are illegal in Vietnam. However, a new regulatory framework for cryptocurrencies is under construction.

This article was also published on Treasury Management International.

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