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Financial Crimes
Mens Rea of Money Laundering
Q. Is money laundering under section 4(1) a strict liability offence?
Answer
No.
Money laundering under section 4(1) is not a strict liability offence.
Besides proving the prohibited conduct under section 4(1)(a), (b), (c) or (d) and that the property constitutes proceeds of unlawful activities or instrumentalities of an offence, the prosecution must also establish the mental element (mens rea).
The mens rea is found in section 4(2) of the AMLATFPUAA.
Q. What is the mens rea under section 4(2)?
Answer
Section 4(2) provides that the mental element may be inferred from objective factual circumstances.
The prosecution may establish mens rea by proving that the accused:
- knew that the property was proceeds of unlawful activities or instrumentalities of an offence;
- had reason to believe that the property was proceeds of unlawful activities or instrumentalities of an offence;
- had reasonable suspicion that the property was proceeds of unlawful activities or instrumentalities of an offence; or
- without reasonable excuse, failed to take reasonable steps to ascertain whether the property was proceeds of unlawful activities or instrumentalities of an offence.
Thus, actual knowledge is not the only way to prove the mental element.
Q. What does “knowledge” mean?
Answer
Knowledge exists where the accused actually knows that the property represents criminal proceeds.
Case Example
Mr A is told by his accomplice that RM5 million came from drug trafficking.
He nevertheless deposits the money into several bank accounts.
Application
Mr A has actual knowledge that the money constitutes proceeds of unlawful activities.
The mens rea is established.
Q. What does “reason to believe” mean?
Answer
A person has reason to believe where the surrounding circumstances would cause a reasonable person to conclude that the property is probably criminal proceeds.
The accused cannot deliberately ignore obvious warning signs.
Case Example
Mr B receives RM8 million from a stranger without any commercial explanation.
The money is immediately transferred through several offshore accounts.
Mr B makes no enquiries.
Application
Although Mr B denies actual knowledge, the surrounding circumstances give him reason to believe that the money represents criminal proceeds.
Q. What is “reasonable suspicion”?
Answer
Reasonable suspicion is a lower threshold than actual knowledge.
It exists where the surrounding facts would cause a reasonable person to suspect that the property originated from unlawful activities.
Case Example
Mr C agrees to receive RM2 million in cash inside a shopping mall car park from a person he has never met.
He is instructed to transfer the money overseas the same day.
Application
Even if Mr C cannot say exactly which offence generated the money, the circumstances create a reasonable suspicion that the money represents criminal proceeds.
Q. What does “failure to take reasonable steps” mean?
Answer
Section 4(2) also imposes liability where a person without reasonable excuse fails to make reasonable enquiries about suspicious property.
This addresses situations involving wilful blindness or deliberate ignorance.
A person cannot avoid liability simply by choosing not to ask questions.
Case Example
Mr D receives RM15 million into his personal account from an unknown overseas company.
Despite knowing that he has no legitimate business relationship with the company, he never asks where the money came from.
Application
Mr D has failed to take reasonable steps to ascertain the source of the money.
His deliberate ignorance is capable of satisfying the mens rea under section 4(2).
Q. Can the court infer mens rea from the surrounding circumstances?
Answer
Yes.
Section 4(2) expressly provides that knowledge or suspicion may be inferred from objective factual circumstances.
Accordingly, the prosecution does not need direct evidence, such as an admission by the accused.
The court may infer the necessary mental element from facts such as:
- unusually large cash transactions;
- the use of nominee companies;
- multiple transfers through different accounts;
- false invoices;
- secretive behaviour;
- absence of any legitimate commercial explanation; or
- deliberate avoidance of enquiries.
Case Authority
Q. How have the courts interpreted the mens rea requirement?
Answer
In Dato’ Sri Mohd Najib Hj Abd Razak v PP, the Court explained that the culpability of an accused under section 4(1) is based on being knowingly concerned with the illegal proceeds of an unlawful activity.
The Court held that the mental element is established where the accused:
- knew;
- had reason to believe;
- had reasonable suspicion; or
- without reasonable excuse failed to take reasonable steps to ascertain,
whether the property constituted proceeds of unlawful activities. The Court also emphasised that section 4(2) allows this mental element to be inferred from objective factual circumstances.
The Court further observed, relying on earlier authority, that wilful blindness or deliberate ignorance is not a defence; choosing not to inquire into suspicious circumstances may itself demonstrate the requisite criminal intent.
Exam Note
To prove a money laundering offence under section 4(1), the prosecution generally establishes three elements:
- The prohibited conduct (actus reus) under section 4(1)(a), (b), (c) or (d).
- The property is proceeds of unlawful activities or instrumentalities of an offence.
- The mens rea under section 4(2).
The mental element may be established by proving that the accused:
- knew;
- had reason to believe;
- had reasonable suspicion; or
- without reasonable excuse failed to take reasonable steps to ascertain
that the property represented proceeds of unlawful activities or instrumentalities of an offence.
Remember: Under the AMLATFPUAA, wilful blindness is not a defence. A person cannot escape criminal liability by deliberately avoiding enquiries where the surrounding circumstances clearly call for them.
