RES Fined $9,000 and Suspended 5 Months for Forgery and Failure to Perform Due Diligence to Prevent Money Laundering

October 2023 - 4 min read

Under the Estate Agents (Prevention of Money Laundering and Financing of Terrorism) Regulations 2021 (PMLFT Regulations), real estate salespersons (RESs) must conduct Customer Due Diligence (CDD) on their clients before entering into any business relationship or transaction with them, report any suspicious transaction or activities to the Suspicious Transaction Reporting Office (STRO) of the Commercial Affairs Department (CAD) in the Singapore Police Force, and keep records of their due diligence checks.

In this case study, we looked at the actions of Geraldine Teh (“Teh”), an RES registered with PropNex Realty Pte Ltd, who failed to perform the required CDD on her client and forged the signature on the Customer’s Particulars Form.

Breach of Section 44B(2)(a) of the Estate Agents Act - Failure to perform various prescribed customer due diligence measures

In April 2021, RES A asked Teh to partner him in selling a property of his client, a company (“B”). Teh proceeded to advertise the property at RES A’s request. On 13 August 2021, B granted an Option to Purchase to a buyer and the buyer exercised the option on 27 August 2021. RES A passed away unfortunately on 31 August 2021. Teh then proceeded to submit the sale transaction of the property to her estate agent (EA) on 1 September 2021 to obtain her commission for the sale of the property, but failed to perform various prescribed CDD measures.

1.      Determine the risks of money laundering or financing of terrorism in respect of her client

Under the PMLFT Regulations, Teh was required to conduct checks on her client, B, to determine the risks of money laundering or financing of terrorism. However, Teh mistook her client to be C, who is assumed by Teh to be the beneficial owner of B, and proceeded to conduct the checks on C instead.

2.      Obtain, document and verify the accuracy of the identifying information of her client

Teh was required to obtain B’s identifying information, document the information obtained, and obtain the B’s written acknowledgement that the information obtained was accurate. However, Teh failed to do so as she did not obtain sufficient identifying information in relation to B.

Prior to his demise, RES A had obtained signed documents concerning the sale of the property and handed them to Teh. However, the documents did not include a Customer’s Particulars Form. Teh proceeded to fill in the Customer’s Particulars Form on behalf of C, and forged C’s signature on the form.

3.      Verify her client’s identity using reliable and independent sources

Besides conducting checks on the wrong entity (i.e. C instead of B), Teh did not submit any evidence of reliable and independent verification of B’s identity, such as a business profile of B, to her EA.

4.      Conduct additional measures as the client was an entity

As B was an entity, Teh was required to conduct additional customer due diligence measures that included identifying and verifying B’s name, legal form, proof of existence, constitution, and address of registered office, and understanding the nature of B’s business, ownership and control structure. However, Teh did not do all of the above.

Teh was required to indicate whether B was a legal person (an entity such as a company or an association). Teh also had to identify and take reasonable measures to verify the identity of each beneficial owner of B by obtaining the identifying information of each individual (if any) who ultimately has a controlling ownership interest in B.

B had leased the property to a tenant prior to it being sold and the tenancy agreement was signed by C and the tenant. Teh relied on the fact that the tenancy agreement for the property had reflected C’s name to assume that C was the beneficial owner of B without further verification checks.

As Teh had wrongly assumed her client to be C instead of B, she indicated that her client was not an entity and also erroneously indicated “not applicable” on the customer due diligence checklist to the question on whether she was able to verify the identity of the beneficial owner.

Breach of Paragraph 7(1) read with 7(2)(a) of the CEPCC - Forgery of Signature

Teh committed an act of dishonesty when she filled in the Customer’s Particulars Form on behalf of C, and forged C’s signature on the form. She submitted both the forged Customer’s Particulars Form and an estate agency agreement that contained a signature that appeared different from C’s signature, together with other documents relating to the sale transaction of the property, to her EA in order to obtain her commission.

Other negligent actions

Through the documents that RES A had passed to her, including the estate agency agreement, Teh would have seen C’s signatures on them and should have realised that C’s signature in the estate agency agreement was different from other documents. In not raising suspicions that the signature on the estate agency agreement did not match C’s signature, Teh did not conduct her work with due diligence and care as she did not check that the estate agency agreement was in order.

During this time, Teh also continued to repost the property advertisement on a property listing portal until 30 October 2021, when she should have taken the advertisement down after the option was exercised on 27 August 2021.

Convicted on Two Charges by a CEA Disciplinary Committee

For her actions, Teh was convicted on two charges, with two other breaches of the CEPCC taken into consideration, and sentenced to a $9,000 fine and 5-month suspension by a CEA Disciplinary Committee:

1. Breach of Paragraph 7(1) read with 7(2)(a) of the CEPCC for doing an act that may bring discredit or disrepute to the estate agency trade or industry, by forging the signature of C on the Customer’s Particulars Form and submitting the forged form to her EA; and
   

2. Breach of Section 44B(2)(a) of the Estate Agents Act for failing to perform the prescribed customer due diligence measures by failing to obtain, document and verify the accuracy of the identifying information of B and to determine and document the risks of B engaging in money laundering or the financing of terrorism or both

Information accurate as at 31 October 2023