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With Great Power Comes Great Responsibility

WITH GREAT POWER COMES GREAT RESPONSIBILITY

Yeong Hui examines the powers conferred on enforcement agencies under the Anti-Money Laundering and Anti-Terrorism Financing Act 2001

 

Enforcement agencies in Malaysia are increasingly relying on the Anti-Money Laundering and Anti-Terrorism Financing Act 2001 ("AMLATFA") as the basis for starting or augmenting their investigations into various suspected criminal activities due to the wide coverage of, and extensive powers conferred by, that legislation.

Originally named the Anti-Money Laundering Act 2001 when it came into operation on 15 January 2002, the AMLATFA was amended on 6 March 2007 to include provisions to combat terrorism financing after the 9/11 tragedy in the United States of America.

In addition to conferring wide powers on enforcement agencies to achieve the objective of fighting the scourge of money laundering and terrorism financing, the AMLATFA also imposes obligations on various industries and professions, such as the financial services sector and the legal and accounting professions, to monitor the activities of their clients and report suspicious transactions.

This article examines the powers conferred by the AMLATFA on the enforcement agencies where a person is suspected of engaging in money laundering activities.

OFFENCE OF MONEY LAUNDERING

Section 4(1) of the AMLATFA makes it an offence for a person to engage in, or attempt to engage in, or abet the commission of money laundering.

The term "money laundering" is widely defined and refers to the act of a person who (a) engages in a transaction that involves proceeds of any unlawful activity; or (b) receives, disguises, transfers, disposes, uses, removes from or brings into Malaysia proceeds of any unlawful activity; or (c) conceals, disguises or impedes the establishment of the true nature, origin, location, movement, or ownership of proceeds of any unlawful activity.

The common element in the various activities that constitute "money laundering" is that the person concerned must have participated in an "unlawful activity".

According to the AMLATFA, "unlawful activity" is one that is related, directly or indirectly, to a "serious offence" or "foreign serious offence".

The Second Schedule of the AMLATFA lists more than 250 offences drawn from about 40 Acts of Parliament as "serious offences", which include various offences such as criminal breach of trust, misappropriation and theft under the Penal Code, accepting or giving gratification under the Malaysian Anti-Corruption Commission Act 2009, illegal deposit taking and carrying on unlicensed financial services under the Banking and Financial Institutions Act 1989 (replaced by the Financial Service Act 2013) and insider trading or market rigging under the Securities Industry Act 1983 (replaced by the Capital Market and Services Act 2007).

Making incorrect declarations, falsifying documents, smuggling, and offering and receiving bribes under the Customs Act 1967 and the failure to furnish returns, filing of incorrect returns and tax evasion under the Income Tax Act 1967 are also deemed to be "serious offences" under the AMLATFA, as is the infringement of copyright under the Copyright Act 1967.

A "foreign serious offence" is an offence (a) against the law of a foreign State stated in a certificate issued by the government of that foreign State; and (b) consists of or includes an act which, if it had occurred in Malaysia, would constitute a serious offence.

Section 4(2) of the AMLATFA further provides that a person may be convicted of an offence of money laundering irrespective of whether he is convicted of, or prosecuted for, committing a serious offence or foreign serious offence. Thus a person who is alleged to have committed a serious offence, such as tax evasion, may be convicted of the offence of money laundering notwithstanding that he is not prosecuted or convicted for tax evasion.

POWERS DURING INVESTIGATION

Under Section 44(1) of the AMLATFA, an enforcement agency may freeze any property of a person when the agency has reasonable grounds to suspect that a money laundering offence has been, or is about to be, committed. The freezing order may, among other things, prevent the relevant property from being dealt with by any person or his nominee (except in the manner specified in the order), or authorise an officer of the agency to take such property into his custody and control.

An order issued under Section 44(1) is valid for a period of 90 days if the person against whom the order was made is not charged in court with an offence under the ALMLATFA. The Section implies that if the person is charged, the freezing order will remain in force until the conclusion of the trial.

Section 44(6) of the AMLATFA protects enforcement agencies against claims for damages or cost arising from the issue of the freezing order unless it is proved that the order was not made in good faith.

Where the property consists of 'monetary instruments', such as domestic or foreign currency or cheques and such property is in the control or custody of a financial institution, the Public Prosecutor may issue a freezing order under Section 50(1) of the AMLATFA after consultation with Bank Negara Malaysia, the Securities Commission or the Labuan Financial Services Authority, as the case may be.

Before exercising the powers under Section 50(1), the Public Prosecutor must be satisfied that the relevant monetary instrument is in the custody or possession of a financial institution. It has been held in City Growth Sdn Bhd v Government of Malaysia [2006] 1 MLJ 581 that an order issued under Section 50(1) is not subject to judicial review because it was issued to assist with the investigations into money laundering and forms part and parcel of such investigations.

POWERS OF FORFEITURE

Where an offence of money laundering has been proven against an accused, Section 55(1) of the AMLATFA requires the court to order property to be forfeited if it has also been proven that such property is the subject matter of the offence or has been used in the commission of the offence. This provision is consistent with the objectives of the AMLATFA.

However, the powers conferred on the court under Section 55(1) go beyond that as it empowers the court to forfeit the property even where the offence of money laundering is not proven when the court is satisfied that the accused is not the true and lawful owner of the property and that no other person is entitled to the property as a purchaser in good faith for valuable consideration.

Section 56 of the AMLATFA pushes the envelope even further by setting out a forfeiture mechanism for property which is subject to a freezing or seizing order even where a person is not prosecuted or convicted for the offence of money laundering. This section permits the Public Prosecutor to apply to the High Court within 12 months of the freezing or seizing order for an order to forfeit the frozen or seized property.

The High Court judge hearing an application under Section 56 of the AMLATFA may issue a forfeiture order if he is satisfied that (a) the property is the subject matter of, or was used in, the commission of the offence of money laundering; and (b) there is no purchaser in good faith for valuable consideration in respect of the property.

In Public Prosecutor v Thong Kian Oon [2012] 10 MLJ 140, Ghazali Cha J observed that a forfeiture application is a serious matter and requires the applicant to set out clearly the case which the respondent has to answer. The learned Judge held that the evidence produced by the applicant in this case was insufficient to satisfy the court that the subject properties were the subject matter of a money laundering offence and dismissed the applicant's application. This decision is significant as it illustrates how the courts balance the rights of an individual as against the aims and acts of the lawful authorities.

CLAIMS BY BONA FIDE THIRD PARTIES

The AMLATFA is not devoid of protection for bona fide third parties. Section 61 of the AMLATFA stipulates that before an order for forfeiture of property is made under Section 55 or 56, the court must publish a notice in the Gazette to inform any third party who claims to have any interest in the said property to attend court on a specified date to convince the court why the said property should not be forfeited.

Section 61(5) lays down five conditions that have to be satisfied by a third party to succeed in his claim for the property. In essence, the claimant must satisfy the court that he did not participate in any manner in the illegal activity and had not been wilfully ignorant that the property was being used for illegal purposes or did not willingly consent to same. If the five conditions are satisfied, the property will not be forfeited but be returned to the claimant.

OTHER SPECIAL PROVISIONS

Unlike other criminal provisions which usually abate upon the death of the accused, Section 65 of the AMLATFA permits forfeiture proceedings to be instituted or continued against the personal representative or beneficiaries of a deceased person's estate if investigations had been commenced against a person but he dies before proceedings are instituted or a conviction is obtained against him.

Other significant departures that the AMLAFTA makes from the usual realm of the criminal justice system are with regard to the issue of the standard of proof, documentary evidence and admissibility of statements made by an accused person.

In criminal matters, it is trite that the prosecution has to prove its case beyond reasonable doubt. Under Section 70(2) of the AMLATFA, the prosecution remains bound by this standard insofar as it has to prove that an offence has been committed under the AMLATFA or any subsidiary legislation thereunder. However, in relation to any other facts, Section 70(1) of the AMLATFA requires that they be decided only on the balance of probabilities, which is the test applicable to civil matters.

The AMLATFA also makes an exception to the requirements of the Evidence Act 1950 in relation to the admissibility of documentary evidence. Section 71 allows any document or copy of a document or other evidence obtained by the Public Prosecutor or an enforcement agency in the exercise of his powers under the AMLATFA to be admitted in evidence in any proceedings under the AMLATFA, notwithstanding anything to the contrary in any written law. This section allows the prosecution to produce copies of documents as evidence even if the usual requirements for producing such secondary evidence stipulated in the Evidence Act 1950 have not been satisfied.

Finally, statements made by an accused to or in the hearing of an officer of any enforcement agency are admissible under Section 72(1) of the AMLATFA unless the court is satisfied that the statement was caused by inducement, threat or promise sufficient to give the accused reasonable grounds for supposing that by making the statement, he would gain an advantage or avoid any evil of a temporal nature.

CONCLUSION

The AMLATFA confers far-reaching powers on enforcement agencies in their fight against the scourge of money laundering and financial terrorism. As some of these powers depart from the conventional rules that govern the administration of criminal justice, the courts as the last bastion of justice must exercise care to ensure that the enforcement agencies in Malaysia exercise these great powers with great responsibility.

Writer's email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Yeong Hui extends his appreciation to C. Vignesh Kumar, a former colleague, for his contribution to this article.

SUBJECT MATTER: CRIMINAL LAW

WRITER'S NAME: YAP YEONG HUI

WRITER'S PROFILE

Yeong Hui is a Senior Associate in the Dispute Resolution Division of SKRINE. His main practice areas are employment law, shipping law and compliance advisory work.

 

 
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