Anti-money Laundering and Countering The Financing of Terrorism Policy
1. INTRODUCTION
1.1 It is the overarching policy of CapitaLand Investment Limited (“CLI or “Company”) to comply fully with anti-money laundering (“AML”) and counter-financing of terrorism (“CFT”) laws and regulations (“AML/CFT Laws”). This policy (“Policy”) sets out the guidelines and requirements of CLI relating to compliance with AML/CFT Laws.
1.2 Singapore is a member of the Financial Action Task Force (“FATF”) and is obliged to implement FATF’s recommendations regarding measures to combat money laundering, terrorist financing and other related threats to the integrity of the international financial systems (“FATF Recommendations”). To the extent applicable to CLI Group’s businesses, this Policy takes into account the FATF Recommendations relating to the financial sector and designated non-financial businesses and professions.
1.3 This Policy applies to all entities within the CLI Group (i.e., entities which are controlled or managed by CLI), regardless of their geographic locations.
1.4 In addition to this Policy, certain entities within the CLI Group are required to comply with specific requirements under AML Laws applicable to their respective businesses and/or countries.
1.5 The Company depends upon the conduct and diligence of its directors, officers and employees to ensure full compliance with this Policy. All directors, officers and employees are therefore required to act in a manner consistent with this Policy.
2. KEY CONCEPTS
Money Laundering
2.1 Money laundering may simply be defined as a process to make ‘dirty’ money (proceeds from criminal activities) look ‘clean’ (or legitimate). The process is intended to mask the benefits derived from criminal conduct so that they appear to have originated from a legitimate source. It is thus a predicate offence, i.e., an offence to use funds (even for otherwise legitimate purposes) which are derived from criminal or illegitimate means.
2.2 The objective of anti-money laundering laws is traditionally to weed out the movement of funds that were illegally obtained rather than the underlying offences that generated the illicit proceeds.
2.3 Generally, the process of money laundering comprises three stages:
(a) Placement – physical or financial disposal of the benefits derived from criminal conduct;
(b) Layering – separation of these benefits from their original source by creating layers of financial transactions designed to disguise the ultimate source and transfer of these benefits; and
(c) Integration – provision of apparent legitimacy to the benefits derived from criminal conduct. If the layering process succeeds, the integration schemes place the laundered (or ‘cleansed’) funds back into the economy so that they re-enter the financial system appearing to be legitimate (or ‘clean’) funds.
Terrorism Financing
2.4 Acts of terrorism seek to influence or compel governments into a particular course of action or to intimidate the public or a section of the public. Terrorists require funds to carry out acts of terrorism and terrorism financing is the act of providing these funds. Such funds may be derived from criminal activities such as robbery, drug-trafficking, kidnapping, extortion, fraud or hacking of online accounts. In such cases, there may be an element of money laundering to disguise the source of funds.
2.5 Terrorist acts and organisations may also be financed from legitimate sources such as donations from charities, legitimate business operations, self-funding by individuals, etc. Terrorism financing need not involve large sums of money and as a result, it can be hard to detect.
3. LAWS AND REGULATIONS
CDSA and TSOFA
3.1 Singapore has put in place strong laws and regulations to punish crimes and protect its financial system. Generally, the laws are focused on detection, prevention and reporting of suspicious transactions to deter money laundering.
3.2 Singapore’s primary legislation to combat money laundering is the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act 1992 (“CDSA”). The primary Singapore legislation to combat terrorism financing is Terrorism (Suppression of Financing) Act 2002 (“TSOFA”). In addition, there are regulations that are relevant to the conduct of CLI Group’s businesses.
4. RISK-BASED APPROACH
4.1 In line with the FATF recommendations, CLI Group adopts a risk-based approach in complying with AML/CFT Laws and determines the appropriate type and extent of mitigation to be applied after considering relevant risk factors, such as the following:
(a) nature of business or operations conducted by the relevant CLI Group entity (“Business”), including products, services, transactions and delivery channels;
(b) country or jurisdiction where the Business is conducted; and
(c) country or jurisdiction of the Counterparty with which the Business is conducted.
5. OBLIGATIONS UNDER THIS POLICY
5.1 The main obligations under this Policy are:
(1) Counterparty Due Diligence
(2) Suspicious Transaction Reporting
(3) Record Keeping
(4) Training
5.2 Apart from the above main obligations:
(a) an entity within the CLI Group that is a Licensed REIT Manager or a Licensed Fund Manager has additional obligations under notices and guidelines issued by the MAS or equivalent regulatory requirements in local jurisdictions; and
(b) an entity within the CLI Group that is a Licensed Estate Agent has additional obligations under the guidelines issued by the CEA.
(1) Counterparty Due Diligence (“CDD”)
5.3 The term “Counterparty” refers to any counterparty which a CLI Group entity comes into contact within the course of its Business, including the following:
(a) a “Customer” of a CLI Group entity that is a Licensed REIT Manager, Licensed Fund Manager, or Licensed Agent:
(b) tenants, licensees, serviced residence occupants of buildings which are owned or managed by a CLI Group entity;
(c) providers of services or goods to a CLI Group entity;
(d) counterparties to transactions with a CLI Group entity that involve the payment or receipt of substantial sums of money, such as (i) the sale or purchase of a property; or (ii) entry into a joint venture for the acquisition or development of a project.
5.4 Prior to establishing a business relationship or entering into a transaction with a Counterparty, CDD measures must be undertaken to obtain knowledge regarding the Counterparty so as to guard against establishing any business relationship or entering into any transaction which is or may be connected with or may facilitate money laundering or terrorism financing.
5.5 Employees undertaking the CDD measures must be vigilant to any suspicious circumstances in the proposed transaction with a Counterparty (“Red Flags”).
5.6 If there is any Red Flag, the relevant Head of Department or his or her authorised delegate or representative (collectively, “HOD”) shall adopt a risk-based approach in determining whether to undertake enhanced due diligence measures (“Enhanced KYC”) and/or the extent of Enhanced KYC to be undertaken. Where Enhanced KYC is assessed to be required, screening of the Counterparty shall be undertaken.
5.8 Following the completion of Enhanced KYC, the relevant HOD shall assess if there are further or other Red Flags and determine whether to proceed with the transaction with the Counterparty.
5.9 Ongoing monitoring: On an ongoing basis, employees must be alert to changes in a Counterparty’s circumstances that may require updates to or review of CDD conducted prior to the commencement of the business relationship with or prior to the transaction with the Counterparty. When there is a change of circumstances, the relevant HOD shall perform a targeted review of the relationship and make a recommendation to the relevant BU CEO on the future management of the relationship with the Counterparty.
5.10 Third party services: A third party may be engaged to undertake CDD measures (including KYC and/or Enhanced KYC) on behalf of any CLI Group entity provided that the CLI Group entity or the relevant HOD is satisfied that the third party is reputable and has adequate AML/CFT measures in place to comply with AML/CFT requirements consistent with FATF Recommendations. Notwithstanding the engagement of the third party, CLI Group remains responsible for its AML/CFT obligations.
(2) Suspicious Transaction Reporting
(i) Singapore
5.11 Under the CDSA, there is an obligation to report any knowledge or suspicion of Relevant Circumstances (as defined below) to the Singapore Police Force Commercial Affairs Department (“CAD”). A report to the CAD is made by filing a “Suspicious Transaction Report” (“STR”) to the Suspicious Transactions Reporting Office (“STRO”) via the STRO Online Notices & Reporting (SONAR) platform.
5.12 If, as a result of the CDD measures undertaken on a Counterparty for a business transaction to be entered into in Singapore or other business activity in Singapore, any employee:
(a) becomes aware that; or
(b) has reasonable grounds to believe that,
a property1 represents the proceeds of or was used or is intended to be used in connection with drug dealing or criminal conduct or is terrorist property or is to be used for terrorist purposes (“Relevant Circumstances”), the requisite work shall be carried out to determine whether there is actual knowledge of or there are reasonable grounds to believe that there are Relevant Circumstances to be reported as a suspicious transaction (“Suspicious Transaction” or “ST”) by filing a STR to the STRO. .
5.13 During this period of time, the employee should not abruptly cease all communications with the Counterparty so as not to run the risk of tipping off the Counterparty. The employee should continue communications as usual. However, the employee should not complete the transaction with the Counterparty.
5.14 If and after filing a STR, the relevant CLI Group entity will comply with any instructions from CAD as regards how to proceed with the transaction with the Counterparty. In proceeding with the transaction, the relevant employee shall act according to the instructions of his or her HOD.
5.15 Ongoing monitoring: On an ongoing basis, employees must be alert to changes in a Counterparty’s business activity that may give rise to Relevant Circumstances.
(ii) Other countries
5.16 In respect of business activities carried out in any country other than Singapore, the relevant CLI Group entities shall comply with any laws or regulation of that country which require suspicious transaction reporting to any authorities. To the extent applicable, the Suspicious Transaction Reporting process for Singapore may be adopted with any necessary adaptations.
(3) Record Keeping
5.21 Employees conducting CDD shall prepare, maintain and retain records of any data, documents and information obtained (including any analysis performed) to comply with this Policy. Such records may be retained as originals or copies, in paper or electronic form, and shall be retained for a period of at least 5 years after entry into the business relationship with the Counterparty or the completion of the transaction with the Counterparty, or any longer period required under applicable local laws.
5.22 The CDD documents and records shall be maintained in a manner that would facilitate the timely retrieval of and access to such documents and records in response to requests by government authorities or otherwise.
5.23 Records of data, documents and information pertaining to a transaction or matter which is under investigation or which has been the subject of an STR shall be retained for as long as requested or ordered by CAD or other relevant authorities.
(4) Training
5.24 All employees have access to and are encouraged to complete CLI Group’s AML/CFT eLearning module to improve or refresh their understanding of this Policy.
6. REPORTING OF NON-COMPLIANCE
6.1 Any person may report any instance of non-compliance with this Policy to the Head of Compliance.
6.2 Any non-compliance with this Policy may potentially attracting criminal and civil liabilities on the part of the relevant employees under applicable laws and may also expose the CLI Group to the same. Any CLI Group entity which finds that its employee has not complied with this Policy may institute disciplinary action and have reasonable basis to terminate his or her employment. The employer is not obliged to wait for the outcome of any civil or criminal action against the employee before taking any disciplinary action or terminating his or her employment.
1 The term “property” includes cash and other forms of funds, interest in or title to real estate, and interest in or title to shares.