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Case Studies

Rental Scam - KEO Issued Letter of Censure and Fined $5,000 for Failing to Do Due Diligence Checks

20 December 2024

This CEAnergy case study is about a KEO who failed to conduct the requisite due diligence checks on a ‘tenant’ when facilitating a lease, resulting in rental scams.

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Rental scams involving the impersonation of real estate salespersons (RESs) registered with the Council for Estate Agencies (CEA) are on the rise, according to the Singapore Police Force (SPF).

More than 430 reports have been lodged between January and October 2024, with total losses of least $2.7million.

RESs play an important role in preventing more of such rental scams by being diligent in conducting the requisite checks on potential tenants and occupants of rental properties. Failure to do so can lead to more of such scams and other adverse consequences.

In this case study, we look at the role of Lim Yung Sing (Robert Lim), the Key Executive Officer (KEO) of Lim Real Estate (Lin Shi Di Chan), who failed to conduct the requisite due diligence checks on a ‘tenant’ when facilitating a lease.

This contributed to a rental unit, for which Lim represented the landlords, being used by scammers to harm multiple victims within weeks.

Background

Around mid-2023, Lim marketed a studio apartment in the city area for rent (“Rental Unit”).

In July that year, Lim received a text message from a person named L, who was responding to his online listing.

L claimed to be a personal assistant to A, purportedly a business director, and arranged for another individual, N, to liaise with Lim for a viewing of the Rental Unit.

In reality, L was part of a scam syndicate impersonating legitimate RESs to carry out rental scams. N, who was not an RES, had responded to a job advertisement on Telegram to work as L’s personal assistant.

L then arranged for N to view the Rental Unit with Lim.

No Face-to-Face Meeting

L negotiated the lease terms with Lim and provided a copy of A’s National Registration Identity Card (NRIC) via WhatsApp, claiming that A was overseas. Subsequently, L agreed to lease the Rental Unit on A’s behalf for 1-year term, from August 2023 to July 2024.

Lim emailed the Tenancy Agreement and a ‘Checklist for Lease of Residential Property for Compliance with the Immigration Act and Women’s Charter’ to L, for A’s digital endorsement.

Throughout the process, Lim did not meet L or A in person.

Paragraph 5(a) of the Practice Guidelines on Due Diligence Checks under the Women’s Charter 1961 and Immigration Act 1959 (PGD) states:

5.        The RES representing the landlord or tenant must conduct the following checks when facilitating residential rental transactions (both HDB and private properties):

        a) Where any tenant or occupier is an SC or SPR, to perform the following checks on each tenant and occupier:

  • Step 1: Check original NRIC(s) of the tenants and occupiers for forgery and make copies.

  • Step 2: Check photograph on the NRIC against the actual person(s) (face-to-face) to confirm identity.

  • Step 3: Verify the validity of the NRIC(s) with the Immigration and Checkpoint Authority (ICA) (through ICA’s database) and keep copies of the ICA screen capture or acknowledgment slip.

In facilitating the lease transaction, Lim failed to check A’s original NRIC for potential forgery and make copies (Step 1). He also failed to check the photograph on A’s NRIC against the actual person to confirm A’s identity (Step 2).

The Next Scam

Subsequently, N grew suspicious of her job and resigned as L’s personal assistant. L then arranged for another person, J, to collect the keys and access cards to the Rental Unit from Lim.

Once A’s ‘tenancy’ began in August 2023, L used the Rental Unit to scam multiple victims.

One such victim was a foreign student looking to rent a unit. L impersonated a registered RES and contacted the student, who did not verify L’s mobile number through CEA’s Public Register, which could have alerted the student to the impersonation.

The student requested a viewing of the Rental Unit.

J, claiming to be L’s personal assistant, facilitated the viewing and showed the student the Rental Unit and its facilities. The student later agreed to lease the Rental Unit for 2 years, commencing in September 2023.

The student signed a Tenancy Agreement with L and paid the full security deposit for the 2-year lease, only to later discover the scam. She subsequently filed a police report against J and the scammers.

The Endgame

Throughout the entire episode, Lim was unaware that he had facilitated a sham lease, and that the Rental Unit had been used by the scammers to scam others.

In early September 2023, Lim was informed by his clients, the landlords, that A had unexpectedly returned the keys and moved out of the Rental Unit. A’s security deposit was forfeited due to the premature termination of the lease.

Lim then re-listed the Rental Unit for rent, still unaware it had been used in a scam during A’s short ‘tenancy’.

It was only later in September 2023, when the SPF contacted him for investigations, that Lim learned about the scam.

After its investigations, SPF referred Lim to CEA for investigation.

Letter of Censure and Financial Penalty

For breaching Paragraph 5(a) of the PGD, CEA censured Lim and imposed a financial penalty of $5,000.

Note: RESs can refer to Industry Notice 02-24 PROPERTY RENTAL SCAM VARIANT INVOLVING IMPERSONATION OF RESs on ACEAS, for more information on rental scams and performing due diligence checks when facilitating rental transactions.

Industry Perspective

by Eddie Lim
Assistant Treasurer, Singapore Estate Agents Association (SEAA)

 
The role of RESs in maintaining the integrity of property transactions is critical, particularly in safeguarding against rental scams. This case underscores the importance of adhering to due diligence requirements as outlined in the PGD.

Key Takeaways:

1. Face-to-Face Verification is Essential

RESs must always verify a tenant or occupier’s identity through face-to-face meetings, as stipulated in the PGD. Comparing the photograph on identification documents with the individual in person is a fundamental step in preventing fraud.

2. Be Proactive in Doing Due Diligence

Beyond face-to-face verification, RESs should cross-check identification documents with ICA’s or MOM’s database to ensure validity. Maintaining clear records of the verification processes provides a safeguard for both RESs and their clients, as required under the PGD.

3. Verify the details of an RES via CEA’s Public Register

Clients are encouraged to verify the contact details, especially the mobile number of the RES reaching out to them, through the CEA Public Register. This simple step can confirm the authenticity of the RES and help mitigate risks associated with impersonation scams.

4. Be Vigilant Against Red Flags

Extra scrutiny should be exercised when there are situations involving intermediaries or the tenant gives excuses for avoiding direct interaction (e.g. the tenant claims to be overseas). RESs should communicate these risks to landlords and exercise extra caution.

5. Education and Awareness

SEAA encourages all RESs to educate their clients, landlords, and tenants about common rental scam tactics, such as the impersonation of RESs, and the importance of verifying RESs via CEA’s Public Register.

6. Accountability as Industry Leaders

KEOs must foster a culture of compliance within their agencies, ensuring that all RESs are well-versed in due diligence practices. Regular training and reinforcement of regulatory guidelines are vital to prevent lapses that can lead to serious consequences for both clients and RESs.

At SEAA, we remain committed to promoting ethical and professional standards in the real estate agency industry. This case serves as a reminder of the shared responsibility we have in protecting the trust of our clients and upholding the reputation of the profession.

Information accurate as at 20 Dec 2024

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