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Written by Guillaume Meyer
Published on 12.08.2025 on Paperjam

In terms of financial regulation, Singapore inspires with its modernity and agility. While following its own path, Luxembourg shares the objective of supporting innovation. This is the second part of our series on Singapore, Luxembourg’s Asian fraternal twin.

In financial regulation, Luxembourg and Singapore are regularly referred to as having a form of “twinship.” According to sources cited by Bloomberg, the Singapore-based fintech Ant International is currently seeking stablecoin licences in the city-state and Hong Kong… as well as a related authorisation in Luxembourg.

Isabelle Alvarez is well-placed to compare these two leading financial centres. The global CEO of Victor Buck Services, a subsidiary of the Post Luxembourg group, she has also headed the Singapore subsidiary since 2014 and has served on several international boards. “Having the privilege of working on both sides, in Luxembourg and Singapore, I’ve had the opportunity to closely observe two very different–yet equally robust–approaches to overseeing financial sector players,” she explains from the outset. According to her, what sets these two financial centres apart is not the level of regulatory rigour, but rather “their regulatory philosophies and implementation models.”

Singapore relies on guidelines

The example of Victor Buck Services illustrates this well. In Luxembourg, the company benefits from the PSF (professional of the financial sector) licence. This licence, granted by the Financial Sector Supervisory Commission (CSSF), places the company under direct supervision. It entails strict prudential requirements and regular reporting. In other words, “once a regulatory circular is issued, compliance is mandatory.” “This status is widely recognised in the Luxembourg market as a strong signal of trust and reliability,” Alvarez stresses.

In Singapore, the approach is quite different. The Monetary Authority of Singapore (MAS) does not directly licence service providers, at least not those who, like Victor Buck Services, do not engage in regulated financial activities. Instead, the regulator issues outsourcing guidelines directed at financial institutions. “These [financial institutions] have the responsibility to ensure that their service providers meet those expectations,” she specifies.

To meet this requirement, a practice has become widely adopted in the market: the use of an audit called Ospar (outsourced service provider audit report). “At the initiative of the Association of Banks in Singapore (ABS), critical service providers are strongly encouraged to undergo this audit,” conducted by an accredited firm–typically one of the Big Four or BDO. This document allows banks to assess the level of their partners’ compliance with MAS guidelines.

In Singapore, compliance is primarily based on individual and collective responsibility.
Isabelle Alvarez, CEO, Victor Buck Services

Regulatory responsibility remains with the bank, even when working with a service provider that has completed an Ospar audit. This logic is quite different from that in Luxembourg, where “the PSF licence transfers part of the regulatory responsibility directly to the supervised provider.”

Alvarez still remembers the early conversations between the Luxembourg and Singapore teams. “It took time for both sides to fully understand each other’s logic.” From the Luxembourg side, it seemed surprising that a simple guideline, without legal force, could be followed with such rigour. In Singapore, on the contrary, this approach was self-evident: “Compliance is primarily based on individual and collective responsibility.” A valuable lesson, which taught her that regulation is not just about texts or standards, but “it reflects deep-rooted cultural values.”

Each model has its strengths. In Luxembourg, “regulation is stable, detailed and driven by a highly involved regulator.” In Singapore, the framework is “more agile and responsive, but built on a strong expectation of alignment with established standards.”

According to the CEO, these two approaches are not opposed; they complement each other. “One ensures legal clarity and formal assurance; the other fosters adaptability and innovation.” But beyond the differences, a single objective unites them: “to protect markets, build trust and support sustainable growth.”

For me, you cannot be both in charge of promotion and consumer protection.
Claude Marx, director general, CSSF

The director general of the CSSF, Claude Marx, says he is curious about how the city-state approaches certain subjects. He is particularly interested in the MAS’s approach to blockchain, artificial intelligence and emerging technologies. What is striking, he indicates, is the modernity of the MAS, “a modern regulator in the sense that it has, a bit like us, the philosophy of accompanying supervised entities if they wish to use new technologies.”

Support, precisely, is at the heart of Luxembourg’s strategy. For about ten years, the CSSF has sought to regulate emerging technologies such as cloud, AI or blockchain. “We do not push for their adoption, but we address these subjects with supervised entities and during conferences, and we support those who wish to,” specifies Marx. In 2016, the CSSF was already guiding the market on cloud matters; in 2018, a white paper on AI anticipated current issues, long before the rise of generative AI. The same logic applies to distributed ledger technology (DLT) and DLT laws adopted in Luxembourg: neutral regulation, but open to innovation.

Another important distinction between the two models: in Singapore, the MAS combines supervision and promotion of the financial centre. A configuration that Marx does not wish to see reproduced in Luxembourg. “Our role is clearly written in the law: to ensure financial stability and protect investors as well as consumers of financial products. For me, you cannot be both in charge of promotion and consumer protection. These functions must remain clearly separated.”

The CSSF nevertheless collaborates closely with the ministry of finance, Luxembourg for Finance and professional associations. “We constantly exchange with the ecosystem: on projects, mission feedback or administrative practices that could be relaxed,” explains Marx. He also mentions the work carried out within the high committee for the financial centre to identify potential cases of “gold-plating”–these local over-transpositions of European regulation. “These exchanges are very useful. I rather believe in that model,” he concludes.