New requirements to prevent money laundering and terrorism financing in property transactions
In October 2019, CEA issued Practice Guidelines 01-19, with new compliance requirements on anti-money laundering and countering the financing of terrorism (AML/CFT). The Practice Guidelines will take effect on 1 January 2020.
CEA previously issued Practice Circulars 04-15 and 03-17 in 2015 and 2017 on AML/CFT. Since then, we have been regularly reviewing the guidelines to better meet requirements, and have consulted the industry for feedback on our proposed revisions.
The recently-issued Practice Guidelines 01-19 contains most of the requirements from previous Practice Circulars on AML/CFT, with feedback from the industry incorporated for implementation.
When the new requirements come into effect on 1 January 2020, property agencies and agents will have to take the following preventive measures when they facilitate property transactions:
The Suspicious Transactions Reporting Office (STRO) of the Commercial Affairs Department will implement e-filing fully by 2020. Agencies and agents should file a suspicious transaction report on the STRO Online Notices And Reporting (SONAR) platform when any of the following situations arise:
- If the client is listed under TSOFA, Practice Circular on Compliance with TSOFA, and/or UN Sanctions Lists
- If there is suspicion of money laundering or terrorist financing activities
- If there is difficulty in conducting CDD as client is uncooperative or attempting to hide information
- If there is reason to believe that conducting CDD will tip off the client
Other points to note
- If a third party (e.g. another agency/agent) has conducted CDD on a client, the agency/agent may rely on the CDD performed by the third party, provided:
- the information on CDD measures undertaken from the third party was immediately obtained;
- the relevant data/documents relating to CDD requirements was provided by the third party upon request without delay; and
- the third party is regulated/supervised for compliance with AML/CFT requirements (e.g. another agency/agent).
- Agencies and agents may conduct ongoing due diligence on their clients whom they have an ongoing business relationship with (e.g. a corporate client). The procedures and checklist for ongoing due diligence are included in Practice Guidelines 01-19.
- Agencies have to ensure that internal checks and audits are carried out properly, and rectify any non-compliance. Agencies must also retain the records of these checks for a minimum of five years.