Singapore Real Estate Sector Scrutinized for Possible Connections to Money Laundering

After a series of high-end property raids in August recovered close to $1 billion in laundered assets, Singapore’s Council for Estate Agents (CEA) is investigating several property agents for potential involvement in illicit transactions.

The CEA responded to the raids by reminding real estate firms of their obligations under the Estate Agents Act 2010 (EAA). “Those who fail to comply with the EAA and its subsidiary legislation could be subjected to disciplinary action by CEA’s Disciplinary Committee, such as the imposition of financial penalties…and/or revocation or suspension of…licence and…registration.”

Laundering Investigation Focuses on Non-Financial Sectors

The nationwide raids were initiated after suspicious transaction reports (STRs) from several financial institutions prompted the Monetary Authority of Singapore (MAS) and Commercial Affairs Department (CAD) to facilitate an investigation.

Assets recovered included cash and non-financial assets, including luxury properties. Prohibition of disposal orders – preventing their resale – were issued against at least 105 total properties worth around $831 million.

There has also been a focus on other sectors involved in the laundering scheme, including precious stones and metals traders and the international gambling industry.

Money Laundering Regulations in Singapore Real Estate 

The CEA’s notice to the real estate sector included a reminder of essential anti-money laundering and counter-terrorist financing (AML/CFT) obligations. According to the agency, firms in the industry must:

• Conduct customer due diligence (CDD) before entering into a business relationship. This includes verifying client identity, screening them against regulatory lists and anti-terrorism requirements, and conducting due diligence for individual transactions.
• Report suspicious transactions and activity to the Singapore Police Force.
• Maintain CDD records – including collected documentation – for at least five years.
• For estate agents: Implement internal AML/CFT controls and policies.

Key Takeaways

In its 2016 Mutual Evaluation Report (MER), the Financial Action Task Force (FATF) highlighted room for improvement in Singapore’s designated non-financial businesses and professions (DNFBP) AML framework. Singapore, has made clear that it intends to pursue an increasingly robust AML/CFT framework and continue serving as a global leader in the fight against financial crime. 

As such, firms in the sector should review their obligations under Singapore law, beginning with the CEA’s recent notice. 

They should also familiarize themselves with key red flags outlined in the CEA’s Guide on Estate Agents (Prevention of Money Laundering and Financing of Terrorism) Regulations 2021. Red flags for terrorist financing or money laundering in real estate include:

• Negative news on the client.
• The client does not want to connect their name with the property being sold or purchased.
• The client does not appear interested in the property’s actual value.
• The transaction does not match the client’s known business purpose and activity.
• The client wants to pay mostly in cash or other anonymous payment.