Financial Crimes

Q. What are “instrumentalities of an offence” under the AMLATFPUAA?

Answer

An instrumentality of an offence refers to any property that is used, or intended to be used, in the commission or facilitation of an offence.

The property itself is not the profit of the crime. Instead, it is the means or tool used to commit or facilitate the offence.

Section 4(1) of the AMLATFPUAA expressly criminalises transactions involving proceeds of unlawful activities or instrumentalities of an offence. This allows the authorities to trace, freeze, seize and forfeit not only criminal profits but also the property used to carry out the criminal activity.

Q. Must the instrumentality be linked to money laundering or terrorism financing?

Answer

Not necessarily.

The phrase “instrumentalities of an offence” is not confined to money laundering or terrorism financing offences.

An instrumentality may relate to any serious offence under the AMLATFPUAA, provided the property was used or intended to be used in committing or facilitating that offence.

Therefore, the instrumentality may be connected with offences such as:

• corruption;
• drug trafficking;
• fraud;
• human trafficking;
• smuggling;
• terrorism financing;
• money laundering; or
• any other serious offence listed in the Second Schedule.

Money laundering and terrorism financing are merely two examples of offences for which property may constitute an instrumentality.

Q. Does the same principle apply to proceeds of unlawful activities?

Answer

Yes.

The concept of proceeds of unlawful activities is also not limited to money laundering or terrorism financing.

The proceeds may originate from any unlawful activity, which means any serious offence or foreign serious offence recognised under the AMLATFPUAA.

Therefore, the proceeds may arise from:

• corruption;
• criminal breach of trust;
• fraud;
• robbery;
• illegal gambling;
• human trafficking;
• drug trafficking;
• terrorism financing; or
• any other serious offence listed in the Second Schedule.

The important distinction is that proceeds are what the offender gains, whereas instrumentalities are what the offender uses.

Q. What is the difference between proceeds of unlawful activities and instrumentalities of an offence?

Answer

The distinction can be summarised as follows:

Instrumentalities of an offence

• Property used or intended to be used to commit or facilitate an offence.
• It represents the means or tools of the crime.
• It exists before or during the commission of the offence.

Proceeds of unlawful activities

• Property derived directly or indirectly from an unlawful activity.
• It represents the benefit or profit obtained from the crime.
• It arises after the offence has generated criminal gains.

A simple way to remember the distinction is:

Instrumentality = What the offender USED.

Proceeds = What the offender GOT.

Examples of Instrumentalities of an Offence

Example 1 – Drug Trafficking

A syndicate uses a lorry to transport heroin across the border.

Instrumentality: The lorry.

Example 2 – Online Fraud

A scammer uses a laptop and several mobile phones to deceive victims into transferring money.

Instrumentalities: The laptop and mobile phones.

Example 3 – Money Laundering

A money launderer uses a bank account and a shell company to layer and conceal the origin of illicit funds.

Instrumentalities: The bank account and shell company.

Example 4 – Terrorism Financing

A terrorist financier uses a charitable organisation’s bank account to collect and transfer funds to a terrorist group.

Instrumentality: The bank account used to channel the funds.

Example 5 – Human Trafficking

A syndicate uses a boat and a warehouse to transport and conceal trafficked persons.

Instrumentalities: The boat and the warehouse.

Examples of Proceeds of Unlawful Activities

Example 1 – Corruption

A public officer receives RM500,000 in bribes.

Proceeds: RM500,000.

Example 2 – Criminal Breach of Trust

A company director misappropriates RM3 million belonging to the company and purchases a luxury condominium.

Proceeds: The RM3 million and the condominium purchased with it.

Example 3 – Drug Trafficking

A trafficker earns RM10 million from selling dangerous drugs.

Proceeds: The RM10 million and any assets purchased using those funds.

Example 4 – Illegal Gambling

An illegal gambling syndicate earns profits from unlawful betting operations and invests them in commercial buildings.

Proceeds: The gambling profits and the commercial buildings acquired with those profits.

Example 5 – Human Trafficking

A trafficking syndicate receives payments from victims and deposits the money into several bank accounts before purchasing luxury vehicles.

Proceeds: The payments received, the bank balances and the luxury vehicles purchased with those funds.

Exam Tip

The easiest way to distinguish the two concepts is to ask:

• What was used to commit or facilitate the offence? → Instrumentality of an offence.
• What was obtained from the offence? → Proceeds of unlawful activities.

Both instrumentalities of an offence and proceeds of unlawful activities may be the subject of freezing, seizure and forfeiture under the AMLATFPUAA. The key requirement is that they must be connected to an underlying serious offence (or foreign serious offence) recognised by the Act—not only to money laundering or terrorism financing offences themselves.