20 July 2018
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National effort to fight financial crime

Straits Times
29 Jun 2018
Ng Jun Sen

While buying a resale flat earlier this year, Mr J. Thiran was asked a string of questions by his real estate agent.

What was his job? How does he earn his money? Is he involved in politics? What about his family members?

Though puzzled, Mr Thiran laughed it off as small talk. "I didn't think much of it, I thought he was just being inquisitive," said the 55-year-old who is currently between jobs.

Increasingly, property buyers will experience what Mr Thiran encountered, because of a push by industry regulator Council for Estate Agencies (CEA) to get property agents to inform the authorities of suspected money laundering activities.

Last December, the council came up with a checklist of questions real estate agents are duty-bound to go through with a buyer. The queries give further impetus to the national effort to tackle money laundering and terrorism financing. This move is spurred by Singapore joining the Financial Action Task Force (FATF), a global watchdog against international financial crime, in 1992.

The council's effort also complements a little-known, 11-year-old rule that requires lawyers to ask all property buyers similar questions and inform the authorities should they suspect illegal activities.

But not every real estate agent or lawyer complies. Earlier this month, Tan Yen Hsi, 37, a former senior marketing director at CBRE Realty Associates, was fined $10,000 for flouting the rule, in a 2015 sale of a Sentosa Cove property to a client linked to a high-profile Ponzi scheme in China. The lawyer who handled the sale, Kang Bee Leng, 56, a former managing director of Sterling Law Corporation, was also fined $10,000 in April for the same offence.

Tan lost his licence while Kang is no longer practising law.

Doing background checks on their clients is vital, said a CEA spokesman, because property purchases are a potential avenue for financial crime as they involve large sums of money that can be transferred across national boundaries.

Among the questions the CEA wants agents to ask some clients is whether they are "politically exposed persons" or related to one.

The CEA defines such persons as locals or foreigners "entrusted with prominent public functions". They include heads of state, government ministers, senior civil servants, senior officials of political parties and members of Parliament.

Gibson Dunn law firm partner Robson Lee noted that FATF's reports have cited studies that show politically-exposed persons have a high risk of committing money laundering, corruption and bribery.

ERA Realty key executive officer Eugene Lim, whose firm has flagged several suspicious transaction since last December, said foreigners and permanent residents are typically subject to more checks. Mr Thiran, for example, is a permanent resident from Malaysia.

Non-citizens form around 20 per cent of total property deals here.

Some buyers, like a 50-year-old Singaporean educator, said more care should be placed on how professionals quizzed their clients, to avoid misunderstanding.

But lawyers, realtors and other property experts said such misunderstandings are not common. "Nowadays, most clients are familiar with the need for professionals to do their customer due diligence and they will cooperate," said the anti-money laundering committee chairman of the Singapore Law Society, Mr Surenthiraraj Saunthararajah.

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.