Financial Crime World

Title: Singapore’s Robust Approach to Anti-Money Laundering: A Focus on Real Estate and Companies

Singapore’s Ministry of Finance (MOF) reaffirmed the government’s commitment to combating money laundering and financing of terrorism (ML/FT) through its robust regime. In a recent update, the ministry provided insights into recent measures in the real estate sector and companies.

1. Real Estate Sector: Case Update and Controls

The MOF updated the House on an ongoing case involving prohibition orders on 94 residential and commercial properties:

  • Resale Units: 60 completed resale units
  • Uncompleted Units: 34 uncompleted units sold by developers
  • Landed Residential Properties: Eight of these properties were landed residential properties at Sentosa Cove

Though foreign ownership of landed residential properties is restricted in Singapore, regulations at Sentosa Cove allow foreigners to own these properties. Between 2018 and 2021, 88 applications from foreigners to purchase landed properties in Sentosa Cove were received, with all but two being approved.

To counter potential ML/FT risks, the MOF has:

  • Enacted legislation for property agents and developers
  • Conducted public education campaigns

2. Regulations and Enforcement Measures in Real Estate

The MOF outlined measures to prevent and detect ML/FT activities within the real estate sector:

Property Agents, Agencies, and Developers

Property agents, agencies, and developers serve as the first line of defense against ML/FT. Regular checks are a necessity:

  • CEA Guidelines: The CEA, the regulatory body for property agencies and agents, has developed a guide to help agents understand their anti-money laundering obligations and common suspicious indicators.
  • URA Requirements: Developers, overseen by URA, are required to periodically review information about their purchasers and maintain updated records.

Regulatory Bodies

The Monetary Authority of Singapore (MAS) and the Urban Redevelopment Authority (URA) have strengthened their regulatory requirements:

  • MAS: MAS has intensified its efforts to combat ML/FT and has increased its supervisory presence and intensified examination of financial institutions’ anti-money laundering and countering financing of terrorism measures.
  • URA: URA introduced the Building and Construction Authority’s (BCA) Real Estate Developers (Developers’ Obligations) Regulations to require developers to take steps to assess and mitigate money laundering risks, as well as maintain an up-to-date register of their purchasers and tenants.

3. Strengthening Regulations for Companies

The MOF addressed Members’ queries regarding the government’s efforts to detect and deter illicit activities conducted through Singapore-incorporated companies:

Measures Taken by ACRA

The Accounting and Corporate Regulatory Authority (ACRA) has implemented various measures:

  • Pre-incorporation and Post-incorporation Checks: ACRA carries out extensive checks to prevent the incorporation of shell companies and companies intended for illicit activities.
  • Striking Off Inactive or Non-compliant Companies: ACRA strikes off inactive or non-compliant companies to prevent their misuse.

Role of Registered Filing Agents (RFAs)

To mitigate risks posed by foreign-owned or controlled companies, ACRA requires non-residents to engage local RFAs:

  • Customer Due Diligence: RFAs are required to carry out customer due diligence and enhanced due diligence.
  • Inquiring Into the Purpose and Legitimacy of Company Usage: RFAs must inquire into the purpose and legitimacy of a company structure.

4. Further Measures and Review

The MOF stated that these measures will continue to be reviewed and improved to counter emerging ML/FT threats:

  • Penalties for Errant Service Providers: The government is considering enhancing the penalties for errant service providers.
  • Restrictions on the Number of Directorships: The government is studying restrictions on the number of directorships an individual can hold.
  • Inter-Ministerial Committee: An Inter-Ministerial Committee, chaired by the Minister, will be established to review the regime, focusing on areas such as how to better prevent corporate structures from being abused, enhancing financial institutions’ controls, and strengthening monitoring and sense-making capabilities.

5. Conclusion

The Minister emphasized the importance of Singapore’s zero-tolerance approach towards ML/FT and its commitment to ensuring Singapore’s reputation as a clean and trusted business hub. The focus will be on collaborating with international partners, enhancing regulatory measures, and strengthening collaboration between relevant agencies.

6. Open Floor for Questions

The Minister welcomed questions on specific aspects of the regime, such as financial systems, real estate, and companies.