Singapore’s Frontline Defense Against Money Laundering and Terrorism Financing: Real Estate Agents and Salespersons
Singapore, known for its political and economic stability, is a prime destination for investments and businesses. However, the city-state’s economic openness makes it vulnerable to money laundering and terrorism financing (ML/TF) [1]. As a member of the Financial Action Task Force (FATF), Singapore is committed to implementing anti-money laundering and countering the financing of terrorism (AML/CFT) measures in line with global standards.
The Real Estate Sector: A Significant Risk
The real estate sector poses a significant risk due to the large sums of money transacted [2]. To mitigate ML/TF risks in this sector, real estate salespersons (RESs) and estate agents (EAs) play a crucial role as the first line of defense. Their responsibilities include:
Conducting Thorough Customer Due Diligence Checks
EAs and RESs are required to assess the risk of ML/TF when facilitating property transactions for clients [3]. This involves:
- Verifying clients’ identities and beneficial owners
- Identifying risk factors
- Determining their source of funds or wealth
- Screening clients and beneficial owners against UN lists, terrorist entities, and any other lists provided by authorities
Commercial AML/CFT solution providers offer comprehensive screening tailored to the real estate industry to support EAs and RESs [4]. If they encounter suspected designated individuals or entities, they must file a Suspicious Transaction Report (STR) and cease dealings unless the client has obtained an Exemption Order [5].
CEA’s CDD Checklists
CEA provides sample CDD checklists to help EAs and RESs comply with the required measures [6].
Reporting Suspicious Transactions
The Suspicious Transaction Reporting Office (STRO) collects and investigates STRs reported by EAs and RESs [7]. Common suspicious indicators include:
- Unexplained excessive cash
- Unusual patterns of transactions
- Transactions involving high-risk countries or jurisdictions
EAs and RESs who suspect ML/TF activities are required by law to report their suspicions to STRO through the STRO Online Notices And Reporting (SONAR) [8].
Establishing Risk Assessment, Internal Controls, and Compliance Procedures
EAs must develop a risk assessment to identify and manage ML/TF risks [9]. This involves:
- Documenting the risk assessment and keeping it up-to-date
- Implementing risk-based internal policies, procedures, and controls for higher risk property transactions
- Providing ongoing training for their RESs to ensure they’re aware of AML/CFT duties and procedures
- Keeping records, including risk assessments, internal policies, and compliance management arrangements, for at least five years [10].
CEA Regulations
CEA prescribes the duties of RESs and EAs under the Estate Agents (Prevention of Money Laundering and Financing of Terrorism) Regulations 2021 [11]. Failure to comply with these regulations can result in fines and imprisonment [12].
Conclusion: Singapore’s Vigilance in AML/CFT Measures
Singapore’s unwavering commitment to AML/CFT measures ensures that its financial sector remains robust and secure [13]. EAs and RESs play a crucial role in this defense by implementing rigorous checks, reporting suspicious activities, and implementing effective risk management procedures.