Preventing Money Laundering and Financing of Terrorism

Preventing Money Laundering and Financing of Terrorism 

Singapore is an attractive destination for investments and businesses due to its political and economic stability, rule of law, and transparency. However, this economic openness also poses a risk of money laundering and terrorism financing.

Singapore is committed to its responsibilities on anti-money laundering and countering the financing of terrorism (AML/CFT) in accordance with the standards set out by the Financial Action Task Force (FATF), an intergovernmental task force that leads global action to tackle money laundering, terrorism, and proliferation financing. As a leading international financial centre, Singapore relies on various stakeholders such as financial institutions, property agents, lawyers, and corporate service providers, to combat money laundering and terrorism financing (ML/TF).

Roles of Real Estate Salespersons and Estate Agents

As a member of FATF, Singapore is committed to implementing its recommendations to combat ML/TF.

For the real estate sector, property transactions involving large sums of money can be an attractive means for criminals and terrorist groups to perpetuate criminal deeds and launder tainted funds. As real estate salespersons (RESs) and estate agents (EAs) are involved in the facilitation of property transactions, they serve as the first line of defence to counter the threat of ML/TF.

Infographic on Preventing Money Laundering and Financing of Terrorism

More information on the 3 key roles of RESs/EAs:

1. Conduct Customer Due Diligence Checks

RESs/EAs must assess the risk of ML/TF when you conduct property transactions for your clients. This involves verifying the identity of the client and beneficial owner, identifying risk factors such as nature and purpose of the transaction; and for higher risk transactions, to establish the source of wealth or source of funds of your client and the beneficial owner.

Besides using RESs/EAs’ own databases (internal or external) for screening of your clients and the beneficial owners, you must also screen your clients and the beneficial owners against:

RESs/EAs are encouraged to subscribe to commercial AML/CFT solution providers to help with the screening. Such companies are equipped with the expertise and resources to offer more comprehensive screening tailored to the specific needs of the real estate industry.

If RESs/EAs suspect that you are dealing with designated individuals or entities in the UN Sanctions List of the First Schedule of TSOFA, you must file a Suspicious Transaction Report (STR), and cease any dealing for the client in the property transaction, unless the client has obtained an Exemption Order under the TSOFA.

To help RESs/EAs comply with the required Customer Due Diligence (CDD) measures, CEA has provided sample CDD checklists in the Guide on Estate Agents (Prevention of Money Laundering and Financing of Terrorism) Regulations 2021 to provide a step-by-step guide for RESs/EAs to conduct CDD checks.

2. Report Suspicious Transactions

The Suspicious Transaction Reporting Office (STRO) is responsible for receiving STRs. Filing of STRs provides the authorities with information so that investigation and appropriate enforcement actions can be taken.

A list of common suspicious indicators can be found in the Guide on Estate Agents (Prevention of Money Laundering and Financing of Terrorism) Regulations 2021. RESs/EAs who suspect that you are working with persons or properties connected to ML/TF are required by law to report the suspicion to STRO through the STRO Online Notices And Reporting (SONAR). RES will need to file an STR through your EA. RES/EAs are only required to file an STR and are not expected to conduct investigations.

The RES/EA’s identity is confidential and protected by law, and any information disclosed by you will not be admitted as evidence in any civil or criminal proceedings.

Failure to file an STR if there are reasonable grounds to suspect that any property may be connected to a criminal activity is an offence under the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act 1992, and may be punishable by a fine and/or imprisonment.

3. Establish Risk Assessment, Internal Controls, and Compliance Procedures

EAs must take appropriate steps to identify ML/TF risks based on past transactions; assess and mitigate the ML/TF risks; document the risk assessment and keep it up to date. In addition, EAs must develop and implement appropriate risk-based internal policies, procedures, and controls (IPPC) to manage and mitigate higher risk property transactions, and have an ongoing programme to train its RESs on AML/CFT duties and the IPPC.

EAs must also develop and implement internal checks and audits on their RESs and promptly address any non-compliance discovered (e.g., RESs did not comply with CDD measures and procedures where required).

All records relating to risk assessment, IPPC, and compliance management arrangements must be kept in its original form or as a copy (may be in electronic form) for at least five years.

More details on the guidance for EAs can be found in the Guide on Estate Agents (Prevention of Money Laundering and Financing of Terrorism) Regulations 2021.

CEA has prescribed the duties of RESs/EAs on the prevention of ML/TF under the Estate Agents (Prevention of Money Laundering and Financing of Terrorism) Regulations 2021 for RESs/EAs’ compliance.

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Frequently Asked Questions

RESs/EAs can refer to the list of frequently asked questions and answers relating to the prevention of ML/FT.

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