Requirements for real estate agents and lawyers will be clarified as part of new anti-money laundering measures

SINGAPORE: When real estate agents are at work, some of the clients they deal with may represent other people.

Clients can act on behalf of the beneficial owner – the person who ultimately benefits from owning the property, even if it is under a different name.

The government will soon clarify that estate agents must identify and take “reasonable measures” to check the identity of people on whose behalf their clients may be acting.

This requirement will also apply to real estate agencies, developers, lawyers and legal practice entities when conducting client due diligence and monitoring existing clients.

Clarifying requirements for the real estate and legal sectors was among the recommendations of the inter-ministerial committee reviewing Singapore’s anti-money laundering regime, which published its report on Friday (October 4).

The report shows that when a customer is not the ultimate beneficial owner of a transaction or asset, there is a risk of fraud. Identification and verification of the identity of the ultimate beneficial owners of companies is already required.

The report makes 12 new recommendations focusing on the prevention and detection of money laundering, as well as the effective enforcement of money laundering laws. These include creating data-sharing channels between government agencies to capture suspicious activity.

The inter-ministerial commission established at the end of 2023 drew conclusions from a money laundering case worth billions of dollars.

Indranee Rajah, Second Minister for Finance, said the recommendations were carefully crafted to improve Singapore’s defense while keeping the economy open and minimizing their impact on legitimate businesses.

“As you will appreciate, it is a fine balance because every step and every action involves trade-offs,” she said.

“The system can’t be too loose, but at the same time it can’t be too strict because we don’t want to stifle real, law-abiding business. It must be just right and allow Singapore to be a free and open economy, while at the same time being inhospitable to illicit funds.”

Clarifications for the real estate and legal sectors are expected to be introduced in the next few months, said Ms Indranee, who is also a minister in the Prime Minister’s Office.

She noted that the legal sector is familiar with anti-money laundering requirements.

“The key thing for the legal sector is to examine the issue of beneficial ownership – to provide guidance on how this should be approached,” she said, adding that this would likely be achieved through regulation of the Legal Profession Act and the Law Society.

However, more needs to be done to help real estate operators understand the nature of their responsibilities and help them meet them.

“Let’s imagine you are a real estate agent and you are trying to close a sale. “It’s very difficult to look a customer in the eye and say, ‘Tell me where your money came from,'” Ms. Indranee said.

Agents must be able to do this in a way that clearly shows that the question is part of the system – that it is a professional approach, not a personal question.

HIGH VALUE GOODS AT RISK?

Banks, casinos, estate agents and dealers in precious stones and precious metals have been identified as “regulated gatekeepers” who can help detect money laundering activities.

But what about other, unregulated sectors that criminals may exploit?

The inter-ministerial committee recommended more education in unregulated sectors, including by engaging sellers of high-value goods.

“We will be engaging with car dealers next week,” said Sun Xueling, Minister of State for Home Affairs.

She said the Home Office was watching trends around the world to check whether criminals were using other high-value items such as works of art or collectibles to launder money.

“We will then turn our attention to those sectors and contact dealers in those sectors to let them know that this is a risk they should watch out for.”

She added that the obligation to report a suspicious transaction applies to everyone.

“That’s why we’re reaching out and educating these unregulated sectors,” she said.

Ms Indranee said it was difficult to determine what goods would be used, but they were typically high-value items that were expected to become increasingly valuable.

Property and cars are obvious issues, but it’s unlikely anyone would have been suspicious of Bearbrick toys five years ago, she said.

She also answered a question about whether Singapore’s penalties for money launderers are too lenient.