New Requirements for Developers against Money laundering and Terrorism Financing
New Requirements for Developers against Money laundering and Terrorism Financing
Under the Developers (Anti-Money Laundering and Terrorism Financing) Act 2018 (“Act”), Singapore will implement a new Anti-Money Laundering and Terrorism Financing (“AMLTF”) regulatory and supervisory regime with effect from 28 June 2023. This Act amends both the Housing Developers (Control and Licensing) Act 1965 and Sale of Commercial Properties Act 1979, with the aim to manage and effectively mitigate Money Laundering (“ML”) and/or Terrorism Financing (“TF”) risks faced by developers.
Prior to the amended rules, ML and TF offences were primarily governed by the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act 1992 (“CDSA”). The CDSA provided a general obligation for all businesses to report to a Suspicious Transaction Reporting Officer whenever they had reasonable grounds to suspect money laundering. Under section 45 of the CDSA, failure to report may result in a fine not exceeding $250,000, imprisonment for a term not exceeding 3 years, or both. Businesses were also strictly forbidden from assisting or benefiting from money laundering, or tipping off money launderers as to possible police investigations into their activity.[1] Overall, the suspicious transaction reporting regime was a key pillar of Singapore’s anti-money laundering and counter financing of terrorism regime. While businesses were strongly recommended to set up a robust system of Customer Due Diligence (“CDD”) and internal records, no structured or standardised method was provided to do so.
However, given the growing risks of ML and/or TF faced by developers and to keep up with international standards, on 17 April 2023, the Urban Redevelopment Authority (“URA”) released the updated Guidelines for Developers on Anti-Money Laundering and Counter Terrorism Financing (“the Guidelines”). The new AMLTF will apply to all licensed housing developers.
New AMLTF requirements for developers
The Act introduces the following new requirements for developers to facilitate the detection of ML and TF activities:[2]
·??????Implement programmes and measures to prevent ML and TF, in relation to the developer’s business of undertaking property development in Singapore;
·??????Notify purchasers of the documents and information that developers must obtain to perform the CDD measures in the prescribed form, as required under the amended rule 10(4)(aa) of the Housing Developers (Amendment) Rules 2023 and rule 5(4)(c) of the Sale of Commercial Properties (Amendment) Rules 2023;
·??????**Perform appropriate CDD checks on new and existing property purchasers based on their risk profiles (summary attached below), with proper records and documentation;
·??????Keep proper records relating to a person whom CDD have been performed according to the Guidelines;
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·??????Screen property purchasers against the lists of terrorists, terrorist entities and designated individuals, as required under the Terrorism (Suppression of Financing) Act 2002 and the United Nations Act 2001; and
·??????Submit a Suspicious Transaction Report (STR) to the Suspicious Transaction Reporting Office of the Commercial Affairs Department, for suspicious ML or TF activities.
Failure to comply with any of the new requirements will be guilty of an offence and shall be liable upon conviction of a fine not exceeding $100,000.
More details can be found in the Guidelines. Overall, this implementation is done to strengthen our regulatory levers against ML and TF in the real estate sector, and play a part in countering ML and TF threats. The revised housing developer’s licence application form incorporating the AMLTF requirements will be made available on URA’s website on 28 June 2023.
[1] Extracted from <https://singaporelegaladvice.com/law-articles/anti-money-laundering-regulations-business/>.
[2] Extracted from <Implementation of New Requirements for Developers against Money Laundering and Terrorism Financing (ura.gov.sg)>.