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Combat money laundering – 3 areas to improve on!

Property agencies and agents play an important role in combating money laundering and terrorism financing threats.

The Council for Estate Agencies (CEA) has been conducting assessment and engagement sessions with property agencies to ensure that agencies and agents comply with the requirements set out in the practice circulars on anti-money laundering and countering the financing of terrorism. From these assessment sessions, we found that property agencies generally comply with the requirements, with certain areas to improve on.

Here are three key areas that all property agencies should pay attention to when they implement measures to counter money laundering and terrorism financing activities arising from property transactions.

Area 1: Identify and document the risks of money laundering and terrorism financing activities

It is important for property agencies to conduct regular risk analyses on their past property transactions to identify the types that could be more susceptible to money laundering and terrorism financing activity. They should then implement measures to mitigate potential risks posed by these transactions. CEA observed that a number of agencies that participated in the assessment sessions did not do so.

Tips for agencies:

  • Use the pointers and the “Estate Agent’s Nature of Transactions” template in Practice Circular PC 03-17 as a guide to analyse the agency’s past transactions.
  • Keep tabs on these high risk transactions that are being facilitated by agents. Key Executive Officers or designated staff members in the agency must scrutinise and monitor such transactions closely.
  • Perform risk analysis on a yearly basis to keep abreast of changes in the nature of the agency’s property transactions.

Area 2: Draw up and track training plans for agents to gain knowledge on combating money laundering and terrorism financing activities

Combating money laundering and terrorism financing requires all parties involved in property transactions to guard against such threats. It is thus important for property agencies to ensure that property agents are adequately trained and armed with the necessary knowledge and tools in this area.

Property agencies must keep training records of agents who have undergone training and come up with training plans for those who have yet to.

During our assessment sessions, we found that some agencies have not drawn up training plans with concrete completion timelines for agents who have yet to attend any training.

Tips for agencies:

  • Train agents on the agency’s internal policies, procedures, and controls on the prevention of money laundering and terrorism financing.
  • Chart out training plans for agents who have yet to undergo training to attend either in-house courses or approved Continuing Professional Development courses.
  • Work with industry associations or training providers to develop customised in-house training for property agencies that have the capacity to do so.

Area 3: Conduct compliance checks to ensure that agents comply with the anti-money laundering and countering terrorism financing requirements

Property agencies are to conduct internal audits or compliance checks to ensure that their agents comply with the anti-money laundering and countering terrorism financing requirements. For completed internal audits or compliance checks, agencies should document incidents of non-compliance and the follow-up actions taken.

During our assessment sessions, we observed that some agencies did not conduct internal audits, nor state the frequency and the number of audits that they have conducted.

Tips for agencies:

Conduct internal audits or compliance checks on a monthly or quarterly basis. If agents handle large numbers of transactions, agencies may consider conducting more regular checks. This enables agencies to spot and address any non-compliance incidents promptly.

Focus checks on transaction types that are of higher risk and agents with a poor compliance track record. Check if the agents had taken these steps:

  • Submit Salesperson’s Checklist on Customer Due Diligence (CDD) for each transaction
  • Ensure clients have filled in the Customer’s Particulars Form for each transaction
  • Undertake various CDD measures to conduct due diligence checks on clients
  • Follow procedures for CDD if CDD was done

Take prompt action against agents for non-compliance cases, e.g. issue warnings, impose penalties, or require supervision by KEO, and send a general reminder to all agents on the matter.

Note: Sole proprietors i.e. single agent property agencies do not need to conduct compliance checks.

New e-services platform to report suspicious transactions

Property agencies can now file suspicious transaction reports electronically via the Suspicious Transaction Reporting Office’s Online Notices and Reporting platform.

Property agencies can now file suspicious transaction reports (STRs) electronically with the launch of a new e-services platform by the Commercial Affairs Department’s (CAD) Suspicious Transaction Reporting Office (STRO).

The STRO Online Notices and Reporting platform (SONAR) was launched on 20 August 218 for businesses to file STRs electronically. SONAR replaces the existing Suspicious Transaction Report Online Lodging System (STROLLS) and Electronic Cash Movement Report System (Electronic 728). Do note that the Suspicious Transaction Reporting Office no longer accepts STRs via email.

Property agencies can lodge an STR electronically by using the company CorpPass account. As for property agents, they should notify their agency if they wish to report a suspicious transaction. The property agency will lodge the report on the agent’s behalf via SONAR.

For more information on e-filing of STRs on SONAR, visit the Singapore Police Force's website and access the SONAR user guide.

CEA encourages all property agencies and agents to lodge STRs promptly and proactively. Under new legislation passed on 19 November 2018, individuals and companies will face harsher penalties if they fail to report activities of money laundering and terrorism financing.

Individuals who have a high level of culpability in not reporting terrorism financing offences could face a maximum fine of S$250,000, up from S$50,000, and the maximum jail term remains at five years.

Corporations who have a high level of culpability due to their professional obligations will face a maximum fine of S$1 million or twice the value of the property involved in or services rendered for terrorism financing, whichever is higher. The fine is up from the previous ceiling of S$250,000.

Selected graphics created by Freepik