Financial Crime World

Singapore Combats Financing of Terrorism with Tough Guidelines

Preventing Money Laundering and Financing of Terrorism

In a bid to prevent money laundering and financing of terrorism, Singapore has implemented stringent guidelines for real estate salespersons and estate agents (RESs/EAs) in the country’s leading international financial centre.

Compliance with Global Recommendations

According to the Financial Action Task Force (FATF), an intergovernmental task force that leads global action to tackle money laundering, terrorism, and proliferation financing, Singapore is committed to implementing its recommendations to combat money laundering and terrorism financing (ML/TF).

Real Estate Sector: A Prime Target for Criminals

The real estate sector is a prime target for criminals and terrorist groups seeking to perpetuate criminal deeds and launder tainted funds. As RESs/EAs facilitate property transactions involving large sums of money, they are on the frontlines in combating ML/TF.

Responsibilities of RESs/EAs

To combat this threat, RESs/EAs must:

  • Conduct customer due diligence checks
  • Report suspicious transactions to the Suspicious Transaction Reporting Office (STRO) through the STRO Online Notices And Reporting (SONAR) system
  • Establish risk assessment, internal controls, and compliance procedures

Customer Due Diligence Measures

The Customer Due Diligence (CDD) measures involve:

  • Verifying the identity of clients and beneficial owners
  • Identifying risk factors such as nature and purpose of the transaction
  • Establishing the source of wealth or source of funds of clients and beneficial owners
  • Subscribing to commercial AML/CFT solution providers for comprehensive screening

Reporting Suspicious Transactions

RESs/EAs must report suspicious transactions to STRO through SONAR. Failure to file a suspicious transaction report if there are reasonable grounds to suspect that any property may be connected to a criminal activity is an offence punishable by a fine and/or imprisonment.

Risk Assessment, Internal Controls, and Compliance Procedures

To ensure compliance, RESs/EAs must:

  • Establish risk assessment, internal controls, and compliance procedures
  • 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
  • Keep all records relating to risk assessment, internal controls, and compliance management arrangements for at least five years

Guidance from CAAS

The Civil Aviation Authority of Singapore (CAAS) has provided guidance in the Guide on Estate Agents (Prevention of Money Laundering and Financing of Terrorism) Regulations 2021 to help RESs/EAs comply with these requirements.

Conclusion

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By implementing these guidelines, Singapore is demonstrating its commitment to combating financing of terrorism and preventing money laundering in the real estate sector.