Billion-dollar money laundering case: CEA investigating agents over property transactions

The Council for Estate Agencies (CEA) is investigating property agents who might have facilitated property transactions relating to the recent money laundering case that involved about $1 billion in assets.

Those who fail to comply with anti-money laundering rules can face disciplinary action, said CEA, which regulates Singapore’s real estate agency industry.

Sources told The Straits Times that following the police blitz on Aug 15, at least two real estate agencies reported transactions or activities to the Suspicious Transaction Reporting Office (STRO) of the Commercial Affairs Department (CAD).

Police said they are unable to comment on the reports filed as investigations are ongoing.

At least 105 properties estimated to be worth $831 million had been issued with prohibition of disposal orders, police said last week.

These include seven detached bungalows at Sentosa Cove and 79 condominium units, 19 of which are under construction. Another 19 commercial or industrial spaces were also issued with the prohibition of disposal orders.

The properties are owned by individuals under investigation. Some of the properties were owned by the spouses or companies linked to the suspects.

At least 10 foreigners have been arrested and charged in what has been one of Singapore’s largest anti-money laundering operations.

Police have seized about $1 billion in assets, including properties, vehicles, luxury goods and gold bars.

A CEA spokesman told ST property agencies and property agents are required to conduct due diligence checks on their clients when they are engaged to facilitate property transactions.

“Agents are required to identify and verify the identity of their clients, as well as assess the risk of their clients being involved in money laundering activities,” said the spokesman.

CEA did not reply to queries about how many property agents might have facilitated the property transactions linked to the money-laundering case.

In July 2023, a property agent pleaded guilty to failing to perform customer due diligence measures, which are required under Singapore’s laws against money laundering and financing of terrorism.

The property agent had failed to obtain, document and verify the accuracy of her client’s identity information, and also failed to determine and document the risk assessment of her client engaging in money laundering or the financing of terrorism. She was suspended for four months and had to pay a financial penalty of $4,000, the CEA spokesman said.

By law, property agents have to report any suspicious transactions or activities to the STRO.

They also have to keep records of their customer due diligence measures, including any documents or information obtained during the process, for at least five years.

Property agencies must also implement internal policies, procedures and controls to prevent money laundering or financing of terrorism activities, CEA said.

Breaching these regulations could entail a fine of up to $100,000 per case for property agents, and up to $200,000 per case for property agencies, and the suspension or revocation of a property agency’s licence or an agent’s registration.

Property agencies often collaborate with third-party firms specialising in due diligence and background checks. These firms utilize various tools and databases to verify the legitimacy of clients, PropNex key executive officer Lim Yong Hock told ST.

Even rigorous checks may not surface anomalies, making it daunting for agents to discern suspicious clients on their own, said Mr Lim.

CEA has circulated a list of “suspicious indicators” to assist property agencies and property agents in conducting their due diligence checks.

For instance, clients who attempt to hide the identity of the true buyer or requests that the transaction be structured to hide the identity of the true buyer, could be a potential red flag.

But the complexities of the process cannot be understated, said Mr Lim. He noted the intricacies involved, especially when discerning the origin of a client’s funds.

While agents can raise concerns over dubious behaviours of clients or their sources of payment, gleaning precise details becomes a hurdle if the clients or their lawyers withhold information, explained Mr Lim.

Furthermore, once clients sign the option to purchase, the remaining procedures shift to legal firms, which limits the agents’ access to further information including the clients’ funds, he explained. 

Developments in the billion-dollar money laundering case have been sending ripples of concern through the property sector recently.

Names of several agents across various agencies allegedly associated with the questionable transactions are now echoing within industry circles.

Addressing the growing concerns, Mr Lim cautioned agents against premature judgment, and urged them to avoid speculation and to allow the authorities to complete their investigations.