SINGAPORE – Commissions paid to agents for the sale or rental of property caught up in the $1 billion money laundering case could be clawed back, say lawyers.
The process would be a legally complex one and would rest on how much knowledge an agent had when a property transaction was under way.
“Whether the commissions paid can be clawed back will depend on all the circumstances, including whether the agents are complicit in any crime,” said Mr S. Suressh, chairman of the anti-money laundering committee of the Law Society of Singapore.
Ms Gazalle Mok, a partner in Rajah & Tann Singapore’s corporate real estate practice, said agents who participate in a property deal when there are “reasonable grounds” to believe that it would benefit criminal conduct could face criminal charges under the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act 1992.
Agents would have to show that they did not know or did not have any reasonable grounds to believe that the arrangement was related to crime proceeds, she added.
They must also show that they intended to file a suspicious transaction report but failed to do so because there was a “reasonable” excuse.
If the affected person is an employee, he must show that he had disclosed the matter to an appropriate person in accordance with company procedure.
About 60 real estate agents are suspected to be involved in the sale or rental of properties related to one of Singapore’s biggest money laundering cases, where 10 foreigners were arrested on Aug 15 in an islandwide raid that involved around 400 law enforcement personnel.
Orders that prohibit disposal have been placed on 105 properties, estimated to be worth $831 million. These are owned by those arrested or people wanted by the police, their spouses or related companies.
The properties include seven bungalows in Sentosa Cove, 79 condominium units, including 19 under construction, and 19 commercial or industrial spaces.
Chinese media reported that one of the 10 suspects arrested is believed to be a Chinese buyer who snapped up 20 units at Canninghill Piers in Clarke Quay for an estimated $85 million in May 2022.
CapitaLand Development and City Developments, the joint developers of the luxury residential project by the Singapore River, declined to comment.
When sale bookings started in November 2021, indicative prices started at $1.16 million for a one-bedroom unit and $5.22 million for a four-bedder, while a five-bedroom premium unit from level 25 and higher started at $8.1 million.
The “super penthouse” on level 48, with panoramic views of the city and the riverfront, had an indicative price of $50 million and was eventually sold for $48 million.
The project’s marketing agents are ERA, PropNex, Huttons, OrangeTee & Tie and Singapore Realtors.
Most of them either declined to comment or have not responded to media queries, although Huttons Asia chief executive Mark Yip noted that property agents are legally obliged to conduct a background check on customers before a deal can proceed.
“The checks include name, date of birth and nationality. There is no foolproof way as documents can be forged,” he added.
He said any deal flagged as dodgy must be reported to the firm’s legal and compliance department, which would then help file a suspicious transaction report on the agent’s behalf. Red flags include overpaying for a property or using large amounts of cash.
Property agents told The Straits Times that they have been asked for “kickbacks” from people who viewed units on behalf of actual buyers.
Some agents have also received many e-mail requests from overseas customers looking to buy properties here.
In 2018, an agent was fined $10,000 for failing to file a suspicious transaction report involving a $23.8 million bungalow in Sentosa Cove that he handled.
Mr Tan Yen Hsi, who was a senior marketing director of CBRE Realty Associates at the time, did not alert the police that the money used to buy the Lakeshore View property could have been the proceeds from crime.
The buyer, Zhang Min, the former president of China-based Yucheng International Holdings Group, was arrested in China in early 2016 over her role in a $10.8 billion “ponzi” scheme.
The Council for Estate Agencies (CEA), which regulates Singapore’s real estate agency industry, said last Friday that it is investigating property agents who might have facilitated property transactions relating to the latest money laundering case.
Since the implementation of the full requirements for due diligence kicked in on July 30, 2021, there has been one disciplinary case against a property agent here for breaches.
In July, a property agent was fined $4,000 and given a four-month suspension by a CEA disciplinary committee for failing to obtain, document and verify the accuracy of her client’s identity information. The agent also failed to do a risk assessment on whether her client engaged in money laundering or the financing of terrorism.
CEA has a list of suspicious indicators to help property agencies prevent money laundering and terrorism financing.
This checklist includes verifying a customer’s particulars and documents, including authorisation letters or documents related to power of attorney, if the customer is acting on behalf of someone else. If the latter is not provided, agents must not deal with the customer and should lodge a suspicious transaction report if there is suspicion of money laundering or terror financing activity.
If the customer is a company or trust, agents must understand the nature of the business, ownership and control structure of the entity. They must also verify the identity of each beneficial owner or owners – their names, dates of birth, nationalities and occupations, among others.
Property agents must keep records of their customer due diligence measures for a minimum of five years.
Those who fail to comply with regulations may face CEA disciplinary action, which could include fines of up to $200,000 per case for an agency and up to $100,000 per case for an agent, who could also have his registration revoked or suspended.
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