Singapore Developers Anti-Money Laundering and Terrorism Financing Compliance

Overview of the New Requirements for Developers against Money Laundering and Terrorism Financing

In an effort to strengthen regulatory levers in Singapore against money laundering (“ML”) and terrorism financing (“TF”) in the real estate sector, Urban Redevelopment Authority (URA) has released a circular in March 2023 on the Implementation of New Requirements for Developers against Money Laundering and Terrorism Financing, imposing Anti-Money Laundering and Terrorism Financing (AMLTF) obligation on all licensed housing developers in Singapore.

Developers are required to comply with the requirements on the

Who needs to comply with the new Anti-Money Laundering and Terrorism Financing (“AMLTF”) requirements for Developers?

All licensed housing developers in Singapore, including the existing and newly licensed housing developers, or non-residential Developers with more than 4 units, are required to comply with the new AMLTF requirements so long as they are regulated under the Housing Developers (Control & Licensing) Act (HDCLA) and Sale of Commercial Properties Act (SCPA).

When will the new AMLTF be effective?

The new AMLTF requirements for Developers will be effective from 28 June 2023. The revised housing developer’s licence application form incorporating the AMLTF requirements will also be made available on URA’s website on the same day.

What is the penalty for non-compliance with AMLTF requirements for Developers?

Failure in compliance with the AMLTF requirements could result in a fine of up to $100,000, revocation or suspension of the developer’s license,  or disqualification of persons convicted of money laundering or terrorism financing offences from being substantial shareholders of a developer.

Step-by-Step Guide for Developers on Implementing AMLTF

1. Policies, Procedures and Controls

Developers are required to develop and implement internal policies, procedures and controls (“IPPC”) that are designed to identify and manage money laundering and terrorism financing risks.

A compliant IPPC should be specific to the organization’s unique risk profile to be effective in mitigating AMLTF risks. This includes making appropriate compliance management arrangements, appointing a compliance officer and applying screening procedures when hiring employees.

Senior Management is responsible for reviewing the IPPC periodically and providing ongoing training to employees, to ensure the effectiveness in mitigating emerging ML/TF risks and complying with the latest AML/CFT regulations.

Developers in Singapore can now fast track the development of the internal policies, procedures and controls document by purchasing a customizable IPPC Template which is about 90% complete.

2. Customer Due Diligence (“CDD”)

Customer Due Diligence refers to the process of identifying and verifying a customer’s identity using reliable, independent source documents, data or information. Developers must perform CDD before engaging in any business with purchasers, or when suspecting a purchaser is involved in ML/TF or provides fake or inadequate information previously. All the documents and information must be maintained properly for at least 5 years after the business relationship ceases.

There are three levels of customer due diligence to be applied to different levels of ML/TF risk:

Standard CDD requires developers to verify the identity of the purchaser by obtaining and verifying relevant documents and information. Developers must also assess the risk level of the purchaser based on factors such as the nature of the property, the method of payment, and the purchaser’s source of funds.

Enhanced CDD must be conducted in addition to the standard CDD measures if the purchaser is assessed as high-risk, such as if the purchaser or BO is

Foreign politically exposed person (Foreign PEP), a family member or a close associate of a foreign PEP; or
From a high-risk jurisdiction under FATF; or
Being listed by the Controller as presenting a high risk of ML/TF;
Presented high risk of ML/TF after being assessed by Developers

It involves obtaining additional information, including the identity of the true purchaser, the source of wealth (“SOW”) and source of funds (“SOF”) information of the Purchasers or BO, as well as conducting enhanced ongoing monitoring of the transactions.

Simplified CDD can only be applied to low-risk purchasers, with fewer identification requirements. Developers should also have procedures in place to record the details of the risk assessment that forms the basis for the decision, update and re-verify customer information regularly.

I. Identification and Verification of Purchasers

Developers must ascertain the identity of every purchaser and obtain the following identifying information:

Full Name
Date & Place of Birth
Address
Contact Number
Nationality/ Place of Incorporation
ID/ Corporate Registration Number, Type and Expiry Date of Documents
Occupation/ Nature of Business
Purpose of purchase

If the purchaser is an entity or legal arrangement, developers should identify and obtain the required information of each individual holding a senior management office in the purchaser and the beneficial owner (if any) of the purchaser.

II. Screening of Purchasers

After obtaining the necessary identifying information, Developers are required to screen all their purchasers against various lists, including

Inter-Ministry Committee on Terrorist Designation (“IMC-TD”) for the designation of terrorists
First Schedule of the TSOFA
United Nations Act 2001 (“UN Act”)
List(s) provided by the Controller or other relevant authorities

Using AMLFT technology solutions SentroWeb Anti-Money Laundering Software can significantly enhance the effectiveness and efficiency of the screening and CDD processes. This software can check potential and existing purchasers against international sanctions lists, watchlists, and politically exposed person (PEP) lists with consolidated and detailed profiles, enabling developers to quickly and easily identify individuals or entities prohibited from conducting business or considered high-risk. Click to learn more about the AML/CFT tool for Developers in Singapore.

III. Risk Analysis

Under the Guidelines for Developers on Anti-Money Laundering and Counter Terrorism Financing, Developers are required to perform a risk analysis on potential purchasers and their transactions, including their profile, jurisdictions which their purchasers are from or developers have operations, and their services, transactions and delivery channels, to identify, assess and mitigate any possible links to money laundering or terrorism financing.

While each individual information may not be sufficient to suggest that ML/TF is taking place, a combination of the information collected may be taken into account to assess the indication of a suspicious transaction. Risk-Based Approach is highly recommended for determining the overall level of ML/TF risks and the appropriate type and extent of risk-mitigating measures to be applied.

III. Ongoing Monitoring

Ongoing monitoring is also critical for AMLTF compliance. It involves regular review of customer transactions and activities to ensure that customer profiles remain up-to-date and that the risks associated with a customer are appropriately managed over time, and identify red flags that may indicate any unusual behaviour and suspicious ML/TF activities.

By utilizing SentroWeb advanced AMLFT automated monitoring function, ongoing monitoring reports and alerts are automatically generated and sent to the Developers. This not only allows for timely action to be taken but also helps to reduce the burden of manual monitoring and analysis. Click to learn more about SentroWeb AML/CFT Platform.

VI. Suspicious Transaction Report (“STR”)

If there are suspicions that ML/ TF activities are committed, developers are required to file a STR with STR Office (STRO) via SONAR.

Conclusion

Complying with Anti-Money Laundering and Terrorism Financing (AML/CFT) regulations is not only a legal obligation for developers but also a protection for the business from financial and reputation loss due to exposure to ML/TF risks.

It requires a comprehensive understanding of AML/CFT risks and compliance, and the implementation of effective AML/CFT measures. With the rapid development of technology and the increasing sophistication of ML/TF activities, it is essential for developers to adopt advanced AML/CFT solutions to enhance their compliance capabilities. By leveraging technology such as SentroWeb Anti-Money Laundering Software, developers can not only achieve regulatory compliance but also gain a competitive advantage in the market by demonstrating their commitment to integrity and security.

References Links:

Ensuring the New Anti-Money Laundering and Terrorism Financing Compliance: A Step-by-Step Guide for Developers in Singapore