Notification about your PayPal account

I received this email from PayPal.  Im not scared about this but I am also not sure if I'm gonna reply or not.

Dear XXXX XX,

Thank you for choosing PayPal for your online payments. As our valued customer, our priority is to keep you secure when transacting with us. 

Our security measures are also in line with requirements from the Monetary Authority of Singapore (MAS) to reduce risks of money laundering and terrorist financing. The measures we've put in place include collecting and confirming additional information about our customers before their PayPal account reaches a total transaction value of SGD 7,500. 

We noticed that you're reaching this amount and would need you to provide some documents so that you can continue using your PayPal account uninterrupted. Don't worry, we'll keep your information secure and will not share it with any third party. 

Here are the documents we need: 

•    A legible copy of a government issued identification document such as NRIC, Driving Licence or Passport that is still valid

(Note: Name on identification document must match the name on your PayPal account); and

•    Proof of address document such as a copy of a utility bill, bank or credit card statement in your name. 

A few things to note: 

-    Name and address on bill/statement must match those on your PayPal account

-    Proof of address document must be dated within the last 6 months

-    Identification card cannot be used as proof of address 

Here's how to submit your documents…

Option 1: 

•    Log in to your PayPal account 

•    Go to Resolutions Centre and follow the instructions on how to upload your documents 

(Note: There is a 1.28 MB size limit for each document, and the maximum size for all documents is 5 MB)

Option 2: 

•    Fax your documents to (65) 6xxx-xxxx Attn: Compliance Department. Please state your email address and case number on each fax sheet when faxing the

documents. 

Please help us comply with this regulatory requirement and submit your documents within 14 days from the date you receive this email. If you have any problem submitting them or have questions about this requirement, you can refer to our online FAQ for details. Alternatively, you may contact our Customer Service agents at (65) 6xxx-xxxx or email us at compliance-apac@paypal.com. 

We appreciate your co-operation and thank you for your support. 

Case ID: PP-00x-xxx-xxx-xxx

Sincerely,

PayPal Compliance Department

Please do not reply to this email. This mailbox is not monitored and you will not receive a response. For assistance, log in to your PayPal account and click the Help link located in the top right corner of any page. If your inquiry is regarding a claim, log in to your PayPal account and go to the Resolution Centre.

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Copyright© 2011 PayPal Inc. All rights reserved.

And when I logon to my PayPal account, this is what's in front:

The resolution page looks like this:

As I've mentioned above, Im not so sure about replying to this notification.  Here are my concerns about this:

1)  Scam ?!?

2)  Tax Implications ?!?

3)  These people might use my account  ?!?

I dont really know...  But if you have any idea about this, please give me some piece of advice.  Thank you.