Real estate sector to face stricter compliance, tougher penalties to tackle money laundering

Estate agents, salespersons and developers are set to face stricter compliance requirements and more deterrent penalties.

The Anti-Money Laundering and Other Matters (Estate Agents and Developers) Bill was read in Parliament for the second time on April 8.

The Bill targets the real estate sector with the aim of tackling money laundering, terrorism financing and proliferation financing.

To do this, it will strengthen penalty frameworks, align regulations with the Financial Action Task Force (FATF) standards and clarify restrictions against convicted persons.

Currently, errant estate agents and salespersons face the maximum fine on a per-case basis when it comes to breaches relating to money laundering and terrorism financing activities.

For example, they may be fined up to $5,000 per case for minor breaches.

For more serious breaches heard before a disciplinary committee, estate agents face up to $200,000 per case, while salespersons face a maximum fine of $100,000 per case.

The committee comprises members of the Council for Estate Agencies’ (CEA) disciplinary panel, which includes practising solicitors, architects and engineers.

However, the per-case basis does not provide sufficient deterrence as the potential monetary benefits of facilitating illicit transactions could be significantly higher than the maximum fine, said Second Minister for National Development Indranee Rajah.

In her speech on April 8, she said that in the recent $3 billion money laundering case, the properties seized from the 10 convicted offenders were valued at more than $370 million.

It is Singapore’s largest case of money laundering and saw more than 200 properties seized.

The CEA had previously said it was investigating property agents who might have facilitated property transactions relating to the case.

Ms Indranee said that assuming a salesperson facilitates the sale of one such property valued at $10 million, a 2 per cent commission for such a transaction would amount to $200,000.

This is double the current maximum penalty they can be slapped with if found in breach of their due diligence obligations.

Ms Indranee said: “With such financial gains far exceeding the current maximum penalties for these offences, there is a clear need to raise the penalties for stronger deterrence.”

As such, the laws will be amended to impose the maximum penalties on a per-contravention basis rather than a per-case basis.

Maximum penalties for other disciplinary breaches, however, will remain on a per-case basis.

To illustrate this, Ms Indranee gave the hypothetical example of an errant salesperson who has committed two breaches relating to anti-money laundering obligations and another two breaches relating to their negligence in handling the transaction.

The current penalty framework would allow only for a maximum fine totalling $100,000 for all four breaches.

But under the new framework, the errant salesperson may be fined up to $200,000 for the two anti-money laundering breaches and another $100,000 for the two breaches relating to their professional misconduct.

For developers, there is currently a maximum fine of $5,000 for less serious offences.

The changes will make it such that the maximum fine will be increased to $50,000 for some of these offences.

Other changes in the Bill include further aligning with updated FATF standards on identifying, assessing and mitigating risks associated with proliferation financing.

It also makes clear that those convicted of money laundering, terrorism financing or proliferation financing offences, whether committed in Singapore or overseas, are not deemed fit and proper to hold an estate agent licence or a salesperson registration.

There are more than 36,000 property agents in Singapore as at January.

Ms Indranee said: “As criminals get more sophisticated over time, we will continue to remain vigilant and will not hesitate to tighten our regime further where necessary.

“Countering money laundering, terrorism financing and proliferation financing in the real estate sector requires a concerted effort by not just the government, but all stakeholders, such as businesses and individuals.”

Source: The Straits Times © SPH Media Limited. Permission required for reproduction.

Trump's reciprocal tariffs have dealt a heavy blow to the prospects for regional mergers and acquisitions No plans to amend presumptions under Misuse of Drugs Act for possession: Shanmugam