SINGAPORE: There will be tougher financial penalties to combat money laundering in the property sector after a new Bill was passed on Tuesday (Apr 8).
The Anti-Money Laundering and Other Matters (Estate Agents and Developers) Bill will, among other things, impose financial penalties on property agencies and their agents on a “per contravention”, instead of a “per case” basis.
This is if they contravene any legislation or provision of a code of practice, ethics and conduct relating to money laundering, terrorism financing or proliferation financing.
The strengthening of penalty frameworks will strengthen the deterrent effect of the current regime, said Second Minister for National Development and Finance Indranee Rajah.
"In the real estate sector, estate agents, salespersons, and developers play an important role in detecting and deterring illicit activities, alongside financial institutions, lawyers, and law practice entities," she said.
"This Bill is part of our continuing efforts to bolster our ability to detect and deter such illicit activities within the real estate sector, thereby reinforcing our commitment to stamp out the laundering of criminal proceeds and financing of illicit activities through Singapore," she added.
While Singapore has developed a robust risk management framework for the real estate sector, Ms Indranee said that the current penalty framework, which allows fines to be imposed on a “per case” basis does not provide “sufficient deterrence”.
This is because the potential monetary benefits that property agencies and agents might get for facilitating illicit transactions could be significantly higher than the maximum financial penalty of S$200,000 (US$148,000) for agencies, or S$100,000 for agents, she said.
Under the new measures, errant property agencies and agents will now be subjected to a maximum penalty of up to S$5,000 per contravention under the Council for Estate Agencies' (CEA) Letter of Censure regime.
Estate agents and salespersons who commit more serious breaches may face disciplinary action before a Disciplinary Committee, which is an independent tribunal comprising members from CEA’s disciplinary panel.
Currently, the committee may impose a financial penalty of up to S$200,000 per case on property agencies or S$100,000 "per case" on agents. Under the amendments, these limits will now be used on a "per contravention" basis.
Other measures as part of the Bill include the mandating of real estate agencies and their salespersons to conduct due diligence measures on “unrepresented counterparties”, not just on their clients.
Real estate agencies, salespersons and developers must also consider proliferation financing risk moving forward.
This will further align Singapore’s regulatory regime with Financial Action Task Force (FATF) standards, said Ms Indranee. The FATF sets international standards to tackle money laundering, terrorism financing, and proliferation financing.
In 2024, an inter-ministerial committee that reviewed Singapore’s anti-money laundering regime had recommended clarifying the requirements for the real estate sector.
The committee, chaired by Ms Indranee, was formed after Singapore’s biggest money laundering scandal which saw the arrest and sentencing of 10 foreigners and seizure of more than S$3 billion in assets.
MPs supported the Bill, but raised questions about whether real estate agencies and their agents are equipped to conduct due diligence and if the new requirements will translate into higher operating costs.
MP Vikram Nair (PAP-Sembawang) said real estate agents have limited resources to conduct due diligence compared with banks and law firms.
MP Yip Hon Weng (PAP-Yio Chu Kang) also raised concerns that the amendments may create an “unintended burden” on small estate agencies and independent agents, which operate on “tight margins” and may lack the resources of larger firms.
“The additional compliance cost imposed by this Bill … could prove disproportionately challenging,” he said.
“If these smaller players are overburdened, it could stifle their growth or even drive them out of business entirely. This would reduce competition and reduce consumer choice within the already big-company dominated real estate market.”
In response, Ms Indranee said that requirements “strike a balance” between building a robust regime to uphold Singapore’s reputation as an attractive and trusted financial centre, while minimising the regulatory burden on the industry.
To support smaller players, one of the industry associations - the Singapore Estate Agents Association - provides subsidised access to commercial screening services, which its members can subscribe to, she added.
Nominated MP Neil Parekh wanted to know how the inclusion of proliferation financing in the Bill would apply to real estate agents and property developers, as well as the support that might be given to the sector in meeting the additional requirements.
In her reply, Ms Indranee said the required due diligence measures are “not new”.
“All estate agents, salespersons and developers are familiar with how these checks should be done as they are already required to conduct such measures on their own clients or purchases,” she said.
The additional requirement for the industry to screen necessary parties for proliferation financing risks against the relevant designated or sanctioned list is also part of what is being done to counter terrorism financing, she added.
As part of supporting the industry, Ms Indranee said courses on anti-money laundering, as well as countering terrorism financing and proliferation financing, will be made mandatory for property agents.
15:07 Min
Singapore is setting out requirements for the real estate sector to act on suspected money laundering activities. Currently, estate agents and salespersons are only required to conduct due diligence measures on their own clients. Under proposed changes, they will have to do so on unrepresented counter-parties as well. This is one measure to further align Singapore’s regulatory regime with global standards set by the Financial Action Task Force (FATF), said Second Minister for National Development Indranee Rajah. In parliament on Tuesday (Apr 8), she also outlined steps to strengthen the existing penalty framework by prescribing maximum financial penalties on a "per contravention" instead of "per case" basis. Ms Indranee explained that the current "per case" framework does not provide sufficient deterrence, as the potential monetary benefits that estate agents and salespersons might obtain from facilitating illicit transactions could be significantly higher than the maximum financial penalties.
MP Jamus Lim (WP-Sengkang) noted that “the proposed amendments did not appear to be all that extensive”.
He described the amendments, such as the rise in the financial penalties and having errant estate agents and salespersons be penalised on a “per contravention” basis, as “somewhat fairly mild”.
Associate Professor Lim added: “Perhaps the underlying reason for the seemingly limited slate of amendments to the law is because there is already a robust set of laws in place to ensure the proper due diligence of real estate transactions.”
“So the relevant question, beyond whether these changes proposed in today's Bill are only marginal, is whether more substantive legislation is actually required to bring the industry to the frontier of (anti money laundering) best practices,” he said.
In her reply, Ms Indranee noted that while Singapore has a robust regime in place to tackle money laundering, “it is clearly not perfect”.
This was why the Bill was moved to strengthen the current penalty framework, as recommended by the inter-ministerial committee, and also included the mitigation of proliferation financing risks to be in line with FATF standards, she added.
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The Anti-Money Laundering and Other Matters (Estate Agents and Developers) Bill will, among other things, impose financial penalties on property agencies and their agents on a “per contravention”, instead of a “per case” basis.
This is if they contravene any legislation or provision of a code of practice, ethics and conduct relating to money laundering, terrorism financing or proliferation financing.
The strengthening of penalty frameworks will strengthen the deterrent effect of the current regime, said Second Minister for National Development and Finance Indranee Rajah.
"In the real estate sector, estate agents, salespersons, and developers play an important role in detecting and deterring illicit activities, alongside financial institutions, lawyers, and law practice entities," she said.
"This Bill is part of our continuing efforts to bolster our ability to detect and deter such illicit activities within the real estate sector, thereby reinforcing our commitment to stamp out the laundering of criminal proceeds and financing of illicit activities through Singapore," she added.
THE NEED FOR MORE DETERRENCE
While Singapore has developed a robust risk management framework for the real estate sector, Ms Indranee said that the current penalty framework, which allows fines to be imposed on a “per case” basis does not provide “sufficient deterrence”.
This is because the potential monetary benefits that property agencies and agents might get for facilitating illicit transactions could be significantly higher than the maximum financial penalty of S$200,000 (US$148,000) for agencies, or S$100,000 for agents, she said.
Under the new measures, errant property agencies and agents will now be subjected to a maximum penalty of up to S$5,000 per contravention under the Council for Estate Agencies' (CEA) Letter of Censure regime.
Estate agents and salespersons who commit more serious breaches may face disciplinary action before a Disciplinary Committee, which is an independent tribunal comprising members from CEA’s disciplinary panel.
Currently, the committee may impose a financial penalty of up to S$200,000 per case on property agencies or S$100,000 "per case" on agents. Under the amendments, these limits will now be used on a "per contravention" basis.
Other measures as part of the Bill include the mandating of real estate agencies and their salespersons to conduct due diligence measures on “unrepresented counterparties”, not just on their clients.
Real estate agencies, salespersons and developers must also consider proliferation financing risk moving forward.
This will further align Singapore’s regulatory regime with Financial Action Task Force (FATF) standards, said Ms Indranee. The FATF sets international standards to tackle money laundering, terrorism financing, and proliferation financing.
In 2024, an inter-ministerial committee that reviewed Singapore’s anti-money laundering regime had recommended clarifying the requirements for the real estate sector.
The committee, chaired by Ms Indranee, was formed after Singapore’s biggest money laundering scandal which saw the arrest and sentencing of 10 foreigners and seizure of more than S$3 billion in assets.
Related:
IMPACT ON SMALLER PLAYERS?
MPs supported the Bill, but raised questions about whether real estate agencies and their agents are equipped to conduct due diligence and if the new requirements will translate into higher operating costs.
MP Vikram Nair (PAP-Sembawang) said real estate agents have limited resources to conduct due diligence compared with banks and law firms.
MP Yip Hon Weng (PAP-Yio Chu Kang) also raised concerns that the amendments may create an “unintended burden” on small estate agencies and independent agents, which operate on “tight margins” and may lack the resources of larger firms.
“The additional compliance cost imposed by this Bill … could prove disproportionately challenging,” he said.
“If these smaller players are overburdened, it could stifle their growth or even drive them out of business entirely. This would reduce competition and reduce consumer choice within the already big-company dominated real estate market.”
In response, Ms Indranee said that requirements “strike a balance” between building a robust regime to uphold Singapore’s reputation as an attractive and trusted financial centre, while minimising the regulatory burden on the industry.
To support smaller players, one of the industry associations - the Singapore Estate Agents Association - provides subsidised access to commercial screening services, which its members can subscribe to, she added.
Nominated MP Neil Parekh wanted to know how the inclusion of proliferation financing in the Bill would apply to real estate agents and property developers, as well as the support that might be given to the sector in meeting the additional requirements.
In her reply, Ms Indranee said the required due diligence measures are “not new”.
“All estate agents, salespersons and developers are familiar with how these checks should be done as they are already required to conduct such measures on their own clients or purchases,” she said.
The additional requirement for the industry to screen necessary parties for proliferation financing risks against the relevant designated or sanctioned list is also part of what is being done to counter terrorism financing, she added.
As part of supporting the industry, Ms Indranee said courses on anti-money laundering, as well as countering terrorism financing and proliferation financing, will be made mandatory for property agents.
15:07 Min
Singapore is setting out requirements for the real estate sector to act on suspected money laundering activities. Currently, estate agents and salespersons are only required to conduct due diligence measures on their own clients. Under proposed changes, they will have to do so on unrepresented counter-parties as well. This is one measure to further align Singapore’s regulatory regime with global standards set by the Financial Action Task Force (FATF), said Second Minister for National Development Indranee Rajah. In parliament on Tuesday (Apr 8), she also outlined steps to strengthen the existing penalty framework by prescribing maximum financial penalties on a "per contravention" instead of "per case" basis. Ms Indranee explained that the current "per case" framework does not provide sufficient deterrence, as the potential monetary benefits that estate agents and salespersons might obtain from facilitating illicit transactions could be significantly higher than the maximum financial penalties.
MP Jamus Lim (WP-Sengkang) noted that “the proposed amendments did not appear to be all that extensive”.
He described the amendments, such as the rise in the financial penalties and having errant estate agents and salespersons be penalised on a “per contravention” basis, as “somewhat fairly mild”.
Associate Professor Lim added: “Perhaps the underlying reason for the seemingly limited slate of amendments to the law is because there is already a robust set of laws in place to ensure the proper due diligence of real estate transactions.”
“So the relevant question, beyond whether these changes proposed in today's Bill are only marginal, is whether more substantive legislation is actually required to bring the industry to the frontier of (anti money laundering) best practices,” he said.
In her reply, Ms Indranee noted that while Singapore has a robust regime in place to tackle money laundering, “it is clearly not perfect”.
This was why the Bill was moved to strengthen the current penalty framework, as recommended by the inter-ministerial committee, and also included the mitigation of proliferation financing risks to be in line with FATF standards, she added.
Continue reading...