QUIZ- MONEY LAUNDERING

1) What is money laundering?

Money laundering is a process of converting cash or property derived from criminal
activities to give it a legitimate appearance. It is a process to clean dirty money in
order to disguise its criminal origin. Under the Malaysian anti money-laundering law,
money laundering is deemed, inter alia, as an act of a person who engages directly or
indirectly in a transaction that involves proceeds of an unlawful activity. As defined
under section 3 of the AMLA, it is any act which acquires, receives, possesses,
disguises, transfers, converts, exchanges or removes from or brings into Malaysia
proceeds of any unlawful activity

2) Briefly explain the anti-money laundering measures in Malaysia.

In Malaysia, there are few agencies have adopted the measure of the anti-money
laundering which are United Nations Initiatives, The Basle Committee on Banking
Supervision (The Basle Committee), and Financial Action Task Force.

The enactment of the Anti-Money Laundering and Anti-Terrorism Financing Act

2001 (AMLATFA) is an important reflection of the Malaysian governments
commitment to the combating of money laundering and terrorism financing. Before
the enactment of AMLATFA, Malaysia did not have any specific laws to fight money
laundering. Therefore, the term money laundering is still considered relatively new
in Malaysia. However the concept of concealing the origins of illegal funds is not new
(Norhashimah, 2004) and has been incorporated into several statutes such as the
Dangerous Drugs (Forfeiture of Property) Act 1988 (DDFP), the Anti-Corruption Act
1997, the Labuan Offshore Trust Act 1996, the Penal Code and the Customs Act
1967. AMLATFA came into force on 15 January and it is implemented by multi-law
enforcement authorities led by Bank Negara Malaysia. As at July 2010, 94 money
laundering cases are in various stages of prosecution in Malaysia with more than 3000
charges involving proceeds amounting to RM1.2 billion (Norhashimah & Mohamed
Hadi, 2011).
AMLATFA was formulated in consultation with 13 Government ministries and
agencies involved in combating money laundering. The objectives of AMLATFA are
to create the offence of money laundering and terrorism financing and criminalize any
dealings with criminal proceeds. It also aims to provide measures for the prevention
and detection of money laundering and terrorism financing, as well as to provide for
the seizure and forfeiture of property involved in or derived from money laundering
and terrorism financing activities.

More importantly, AMLATFA also imposes various obligations on reporting

institutions such as customer identification, record keeping and reporting of
suspicious transactions. Under AMLATFA, the reporting institutions refer to those
institutions carrying on the business activities listed in the First Schedule. They can be
divided into financial institutions and designated non-financial business and
professions. The former includes banks and non-bank financial institutions, while the
latter includes company secretaries, lawyers, accountants as well as the licensed
casino in Malaysia.

In fulfilling their obligations under AMLATFA, the reporting institutions are

protected by various immunities. For example, section 20 overrides any obligation as
to secrecy or other restriction on the disclosure of information imposed by written
law. In addition to this, section 24 confers protection from civil, criminal and
disciplinary proceedings in relation to the disclosure of information in a suspicious
transaction report or in connection with such report, whether at the time the report is
made or afterwards, except where the disclosure was done in bad faith.

AMLATFA is divided into eight parts: Preliminary; money laundering offences;

financial intelligence; reporting obligations; investigation; freezing, seizure and
forfeiture; suppression of terrorism financing offences, and freezing, seizure and
forfeiture of terrorist property; and miscellaneous. It must be noted that certain
provisions under AMLATFA must be read together with the relevant provisions under
the Mutual Assistance in Criminal Matters Act 2002 (MACMA). MACMA contains
specific provisions for Malaysia to provide and obtain international assistance in
criminal matters, the tracing, recovery or confiscation of property in respect of serious
offence or a foreign serious offence, assistance in locating or identifying of witnesses
and suspects, the service of process and enforcement of foreign forfeiture order.

There are altogether 93 sections and two Schedules in AMLATFA. The First
Schedule lists down the reporting institutions while the Second Schedule deals with
predicate offences. Malaysia has taken a list-based approach to the range of predicate
offences covered by the money laundering offence instead of a threshold approach.
Since 2002, the list of predicate offences in the Second Schedule has been expanded
significantly to include a broader range of offences commonly associated with money
laundering and terrorism financing. These include corruption, fraud, criminal breach
of trust, illegal gambling, credit card fraud, currency counterfeiting, robbery, forgery,
human trafficking, extortion, smuggling and drug-related crimes.

In 2007, an offence relating to piracy or the counterfeiting of non-artistic goods was

included as a predicate offence in AMLATFA. The government has, at the
recommendation of FATF, also given the approval to include environmental offences,
as predicate offences. With this inclusion, the list of offences in AMLATFA is fully
compliant with FATF Recommendations (Bank Negara Malaysia, 2007). Section 85
allows the Minister of Finance to amend the First and Second Schedules of
AMLATFA by order published in the Gazette. Clearly, AMLATFA is dynamic in
nature and its scope would be expanded from time to time to meet new challenges.
This is vital in ensuring that the legislation is consistent with the latest developments
in global standards against money laundering and terrorism financing.

Part VI of AMLATFA provides comprehensive procedures for the freezing, seizure

and forfeiture of property suspected to be involved in money laundering or terrorism
financing activities. Any limitations in the previous legislations have been addressed,
for example, AMLATFA provides mechanism to effect seizure of immovable
property, business, or property in financial institutions. AMLATFA also introduces
civil forfeiture regime where the proceeds of criminal activities can be forfeited even
no conviction is made. As such, this innovative tool provides more powerful measures
that can facilitate the recovery of illegal proceeds from money laundering and any
other serious crimes.
By using AMLATFA as a strategic approach, the law enforcement agencies can more
easily detect and confiscate the proceeds of crimes. This view has been proven correct
when it was reported in 2007 that the Anti-Corruption Agency had seized assets
procured through bribery worth RM25 million and forfeited another RM206,000 in
assets that were acquired through corruption. These actions were taken under
AMLATFA (New Straits Times, 2007). Obviously, AMLATFA provides the law
enforcement officials with more effective tools than before for confiscating criminal
proceeds from any serious crimes in Malaysia.