Errant real estate agencies and property agents will face higher maximum fines of $200,000 and $100,000 respectively for each case of breaching industry guidelines, under a Bill passed in Parliament yesterday.
The maximum fine was previously capped at $75,000 a case.
The increase for real estate agencies will now correspond better to the higher commissions that they can potentially earn, compared with individual property agents, said Minister of State for National Development Zaqy Mohamad.
The same principle applies to the new maximum fine for property agents, who generally earn lower commissions than real estate agencies, he added during the second reading of the Estate Agents (Amendment) Bill yesterday.
The Bill also legally obliges real estate agencies and property agents to prevent money laundering and terrorism financing through the sale of properties, as recommended by the Financial Action Task Force, an inter-governmental body.
This development comes after more than $27 million in criminal proceeds from one of China's biggest Ponzi schemes was seized by the Singapore Police Force (SPF) in 2016, before a planned purchase of a $23.8 million Sentosa Cove bungalow.
"While investigations did not reveal any local parties being involved, the SPF successfully prosecuted the real estate salesperson and conveyancing lawyer involved in the planned property purchase," said Mr Zaqy yesterday.
"Both of them knew that their client, the bungalow buyer, had been arrested in China for involvement in the Ponzi scheme. Clearly, both did not fulfil their obligations to lodge suspicious transaction reports with the police."
The Bill also requires the real estate industry to conduct due diligence checks on its customers and report any dubious transactions to the Suspicious Transaction Reporting Office.
Real estate companies will also have to keep records of these due diligence checks, which may be inspected by the Council for Estate Agencies (CEA).
The Bill also empowers the CEA to fine errant real estate agencies and property agents up to $5,000 without having to refer them to a disciplinary committee, as well as censure the offending agencies and agents and publish it on the public register.
Maximum fine per case of errant property agents breaching industry guidelines. The maximum fine was previously capped at $75,000 a case.
Previously, the CEA could either issue a letter of advice or, in more serious cases, refer the agency or agent to a disciplinary committee that could fine the offender and revoke, suspend or impose conditions on an agency's licence or a property agent's registration.
However, such disciplinary proceedings can be resource-intensive, said Mr Zaqy.
The other option of issuing a letter of advice also has "limited deterrent and punitive effect", he added.
The Bill will also enhance the investigative powers of the CEA, such as requiring a person to give statements and provide documents to a CEA inspector.
It will also be an offence to give false or misleading information to the inspector or to refuse to comply with the requirements.
Mr Saktiandi Supaat (Bishan-Toa Payoh GRC) asked if real estate agencies will be able to ensure that their property agents meet the legal requirements to prevent money laundering and terrorism financing, while Mr Melvin Yong (Tanjong Pagar GRC) asked if the new laws would change the way due diligence checks and suspicious transaction reporting are conducted.
In response, Mr Zaqy said the Bill does not introduce new duties for the industry and does not significantly change the way due diligence checks and reporting are done.