SINGAPORE (EDGEPROP) - URA has announced new requirements for developers to detect and deter money laundering (ML) and terrorism financing (TL). In a Mar 10 circular, the statutory board announced that it would implement the Developers (Anti-Money Laundering and Terrorism Financing) Act 2018.

The bill requires licensed developers to institute measures to help detect ML and TL activities. It includes carrying out customer due diligence (CDD) on buyers, such as checking their identification, ascertaining whether the purchaser is an entity or legal arrangement, and understanding the purpose of buying the property.

For a purchaser that is an entity or legal arrangement, developers must determine and identify the beneficial owner, as well as understand the control structure of the purchaser and the nature of its business. Developers must also screen purchasers against lists of identified terrorists, terrorist entities and designated individuals tracked by relevant authorities.

Developers must perform additional CDD requirements on select buyers, namely those that are prominent public figures in a foreign country (such as senior government leaders or military officials); those from countries considered high-risk by the anti-money laundering organisation Financial Action Task Force (FATF); or persons identified by authorities as those with high ML or TF risk.

The additional CDD requirements include obtaining approval for the sale from a senior manager or executive of the developer, ascertaining the source of funds of the purchaser, and ascertaining the identity of the actual purchaser if the purchaser is not acting on their behalf.

Developers must perform the CDD checks before granting an option to purchase a unit, entering into a sale and purchase agreement, or before accepting any sum of money (including booking fees) from a purchaser concerning the intended purchase, whichever is earlier. "All these new requirements will slow down the sales process and increase developers' costs," says Lee Liat Yeang, senior partner at Dentons Rodyk's corporate real estate practice.

According to URA, the new requirements will take effect from June 28. Penalties for failure to comply with the requirements may include fines of up to $100,000 and the revocation or suspension of the developer's license. Persons convicted of money laundering or terrorism financing offences may also be disqualified from engaging in real estate development activities.