Anti-Money Laundering, Anti-Terrorism Financing, and Proceeds of Unlawful Activities Act 2001 (AMLA 2001)Money laundering is no longer a distant concern in Malaysia; in fact, it has always posed a threat to the country, particularly in this era of globalisation. The Anti-Money Laundering, Anti-Terrorism Financing, and Proceeds of Unlawful Activities Act 2001 (AMLA 2001) was published in the Gazette on July 5, 2001. This law, however, became effective on January 15, 2002.
Money laundering and terrorism financing, or any offences related to both, were the focus of the AMLA 2001. The Act includes provisions for preventing such crimes, and its scope is broad enough to embrace offences committed before the Act's enactment, whether relating to properties in or outside Malaysia.
This article explains the scope of the Act and how it applies in relation to Freezing and Seizure Orders in Money Laundering offences. In addition, we’re discussing how the law applies to the interests of bona fide third parties. If your property is seized as part of an enforcement action directed at someone else do you have any remedy?
The Offence of Money Laundering in MalaysiaMoney Laundering Offences are defined under Section 4(1) of the AMLA 2001. Under that section, the offence is committed when a person directly or indirectly, engages in, possesses, receives, transfers, or conceals any proceeds or dealings derived or connected with unlawful activities.
Money laundering offences can be committed if a person receives and deals with illegal money, with or without knowledge of the illegality of the funds. This is covered by Section 4(1) of the AMLA 2001.
When a person is suspected of money laundering under Section 4(1) of the Act, banks, insurance companies and similar financial institutions must file a report with the Financial Intelligence Unit (FIU) for investigation and possible enforcement action.
The enforcement agency has the authority to order any of its officers to take custody of whatever properties are implicated after carrying out an investigation and ascertaining that the circumstances require a seizure.
In summary, anyone suspected of money laundering may have their assets, such as a bank account or financial instruments, frozen by the enforcement authorities, or their physical property such as a house or vehicle may be seized.
What To Know About The Freezing Order and Seizure Order?The freezing order is an order that an enforcement agency issues in line with section 44 of the AMLA 2001. A freezing order is typically issued to maintain a person's property status quo while under investigation for money laundering or terrorism financing.
It is issued on a person's property under investigation for a criminal offence. Before a freezing order is issued on a property, the enforcement agency must have reasons to believe that the suspect is likely to commit a money laundering or terrorism financing crime or that the property is the proceeds of criminal activity.
In general, upon issuing a freezing order, the property owner is banned from handling the property in any way. This includes restrictions from selling, disposing of, charging, pledging, transferring, or transporting the property out of Malaysia, depending on the provisions of the freezing order.
In order to prevent the owner of the frozen property from leaving the country, a freezing order may force him to give his passport to the Director-General of Immigration. The enforcement agency shall provide a copy of the freezing order coupled with a list of the frozen property to the Public Prosecutor. Where a freezing order is made on cash deposited in a bank, the enforcement agency should also provide a copy of the order coupled with a list of the frozen property to the Bank Negara Malaysia appropriately.
If the person identified in the freezing order has not been charged with a crime, the order is effective for 90 days from the date of issue, then a seizure order could be replaced with the freezing order.
Please note that, according to section 44A AMLA 2001, a freezing order may be varied or revoked by the enforcement agency that issued it where:
● An officer senior to the issuing personnel is satisfied that the property should not have been seized under the Act
● An aggrieved person applies to the enforcement agency in writing
Comparably, a seizure order can be made under section 45 AMLA 2001 when movable property being investigated is determined to be the subject-matter or proceeds of money laundering or the financing of terrorism. An investigating officer may secure a seizure order from any officer senior in rank to him.
When the enforcement agency seizes property in this manner, they must compile a list of the seized property and serve this list on the Public Prosecutor and the owner of the property. But there will be no need to serve the property owner when the assets were seized in his presence.
In limited circumstances, the seized property may be returned to the owner either for temporary use or so the owner can sell the property and submit the proceeds. In the case of return for temporary use under section 46 AMLA 2001, the owner must provide collateral to guarantee that they’ll return the property whenever the agency demands.
The application for a seizure order must be filed within 12 months of the date of the earlier freezing order. A seizure order is not the same as a freezing order.
Forfeiture of Assets Under AMLA 2001Seized assets may be forfeited under section 55 AMLA 2001 when a person is being prosecuted for money laundering or financing terrorism or it could be forfeited under section 56 AMLA 2001 even though there is no prosecution or conviction against the owner of the seized assets. In this case, the Public Prosecutor may apply to a High Court for a forfeiture order if he is satisfied that they are related to offences under AMLA 2001.
If the seized property cannot be found or if it was sold by the defendant before forfeiture, the court can order the defendant to pay a sum equal to the value of the property as penalty. Notably, the standard of proof for determining whether the seized property is the subject of an offence under AMLA 2001 is the same required for a civil offence.
What Happens if Your Property is Implicated in Another Person’s Crime?
If you believe that your property was wrongly frozen or seized by the enforcement agency, you might be able to assert your ownership rights. The AMLA 2001 requires the court to respect the rights of good faith third party owners by publishing a notice in the Gazette informing these owners to come forward and establish their rights to the property.
Under section 61 AMLA, the court may return the seized property to any good faith owner if it is satisfied that:
● The claimant had a legitimate legal interest in the property
● He did not participate in or collude with regard to the offences in which the property was implicated
● He did not know about the illegal use of the property or he did not consent to such use
● He did not acquire the property in circumstances where he should know that the seller was trying to avoid forfeiture
● He did all he reasonably could to prevent illegal use of the property
Proving these facts can be challenging due to the high standard of behaviour the claimant must establish. The court will not listen to you if it is not convinced that you had nothing to do with the offence and are not colluding with the defendant in any way. However, the good news is that an experienced attorney can help build your case and convincingly establish these facts to the court.