Ninety-four residential properties have been issued with prohibition orders to date, including eight landed homes in Sentosa Cove. PHOTO: ST FILE
SINGAPORE – The property transactions involved in Singapore’s biggest money laundering case are likely to have had minimal impact on prices, said Second Minister for National Development Indranee Rajah.
She told Parliament on Tuesday that while it is hard to pinpoint the exact effect on the property market, the transactions made up an insignificant share of residential, commercial and industrial sales.
The authorities have issued prohibition of disposal orders against 152 properties and 62 vehicles, totalling an estimated value of more than $1.24 billion. The orders mean they cannot be sold. In all, the total value of assets linked to the case has risen to more than $2.8 billion.
Giving an update on the case in a ministerial statement, Ms Indranee said 94 residential properties have been issued with prohibition orders to date, including eight landed homes in Sentosa Cove. Of these, 60 were completed resale units and 34 were uncompleted units sold by developers.
Fifty-three commercial properties and five industrial properties have also been issued with prohibition orders.
Investigations are ongoing into the property agencies and agents who facilitated the transactions involved in the money laundering probe, Ms Indranee added.
“We will fully investigate the incident and, if any breaches are found, take the necessary regulatory action.”
On Workers’ Party MP He Ting Ru’s (Sengkang GRC) question on the Government’s considerations in allowing foreigners to buy landed homes in Singapore, Ms Indranee noted that there are two approval regimes when it comes to landed property.
One is for homes on mainland Singapore, which is much stricter. The other is for residential property on Sentosa Cove, which are developed specifically to market to international clientele, she said.
The number of approvals granted under the Residential Property Act remains low, she said. In 2022, 34 approvals were granted to permanent residents (PRs) to own landed residential property on the mainland. In 2021, 51 approvals were granted, and 24 in 2020.
In contrast, an average of 2,700 landed property transactions were recorded annually on the mainland over the same period, she added. There are more than 73,000 landed homes in Singapore.
Ms He had also asked about the “exceptional economic contribution” criteria that foreign nationals have to fulfil.
The Government takes a very strict approach when granting such approvals, said Ms Indranee, who is also Second Minister for Finance. Applicants must have been a Singapore PR for at least five years and made exceptional economic contributions to Singapore, such as through income tax contributions.
Another consideration is whether applicants have a “strong Singapore nexus”, she added. For example, this would include PRs with children who have served national service and those who have demonstrated strong commitment to Singapore.
“These factors point towards an applicant’s connection to Singapore, and their long-term commitment and contribution to Singapore,” she said.
Ms Indranee said the Singapore Land Authority received 88 applications from foreigners to buy landed properties in Sentosa Cove in the past three years. “All but two have been approved,” she said in response to Nominated MP Neil Parekh. Approvals are generally granted to foreigners who are not PRs as the island’s development was aimed at an international clientele, she added.
Ms Indranee reiterated that the eight landed homes issued with prohibition of disposal orders are Sentosa Cove properties, while the rest are non-landed units.
None of them are landed homes on the mainland, she said.
She noted that there are no restrictions on foreign ownership of non-landed residential homes, since landed residential properties on the mainland have been set aside primarily for Singaporeans.
Overall, the proportion of foreign property purchases remains low at about 2 per cent, she said, noting that additional buyer’s stamp duty rates for foreigners were raised from 30 per cent to 60 per cent in April to dampen local and foreign investment and prioritise Singaporean owner-occupation.
Ms Indranee also outlined the measures in place in the property sector to tackle money laundering, noting that they have been progressively strengthened.
For instance, the prescribed duties of property agents were legislated in 2021, and anti-money laundering requirements were extended to developers of residential, commercial and industrial properties in 2023.
Property agents, agencies and developers are the first line of defence against money laundering in the real estate sector and, as gatekeepers, they have a duty to perform customer due diligence checks on clients, she said.
These include verifying the identity of the client or the beneficial owner, screening these parties, assessing their level of risk and maintaining records.
Any person who knows or has reasonable grounds to suspect any property’s connection to criminal conduct is required to file a suspicious transaction report, she said.
This includes property agents, agencies, developers, landlords and professionals such as conveyancing lawyers, accountants and financial institutions.
Conveyancing lawyers and accountants also have to perform customer due diligence checks when carrying out any acquisition, divestment or any other dealing of any interest in real estate, she added.
Developers are not allowed to accept cash payment for sales of uncompleted properties, she said.
Ms Indranee noted that there are several layers of defence in the real estate sector to mitigate risks of money laundering and protect the system from abuse.
The vast majority of transactions are subject to checks of some form and at various stages, she said. Gatekeepers who fall short of their duties will face penalties.
In terms of enforcement, the Council for Estate Agencies (CEA) oversees property agents and agencies, while the Urban Redevelopment Authority regulates developers, Ms Indranee said. The agencies play an important role in ensuring that gatekeepers carry out their responsibilities properly, she added.
Ms He asked how many property agents, developers and owners have been investigated in the last three years for failing to exercise customer due diligence checks.
Ms Indranee said that since 2021, the CEA has taken action against two property agents who were found guilty of breaching the Estate Agents Act and prevention of money laundering and financing of terrorism rules.
They had failed to comply with regulations relating to obtaining, documenting and verifying the accuracy of their clients’ identity information. They also failed to assess the risk of clients engaging in money laundering or terrorism financing, she added.
In the latest case in July 2023 – unrelated to the money laundering scandal – the agent was fined $4,000 and suspended for four months.
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