Financial Crimes

Retrospective Application of the AMLATFPUAA

Q1. Why is the retrospective application of the AMLATFPUAA controversial?

Answer

The retrospective application of the AMLATFPUAA is controversial because it departs from the long-established legal principle that legislation should generally not operate retrospectively.

The presumption against retrospective legislation is based on the principle that Parliament is not presumed to intend an unjust result. Generally, individuals should only be punished according to the law that existed at the time their conduct occurred.

This concern arises because section 2(1) of the AMLATFPUAA provides that the Act applies to any serious offence, foreign serious offence or unlawful activity, whether committed before or after the commencement of the Act.

Case Example

Mr A committed fraud in 1999 and retained the proceeds after the AMLATFPUAA came into force in 2002.

Application

Although the unlawful activity occurred before the Act commenced, section 2(1) permits the authorities to apply the AMLATFPUAA to the proceeds of that unlawful activity, giving rise to concerns regarding retrospective operation.

Q2. How does the retrospective application of the AMLATFPUAA relate to Article 7(1) of the Federal Constitution?

Answer

The retrospective application of the AMLATFPUAA has been questioned because it appears to conflict with Article 7(1) of the Federal Constitution, which provides:

“No person shall be punished for an act or omission which was not punishable by law when it was done or made, and no person shall suffer greater punishment for an offence than was prescribed by law at the time it was committed.”

Article 7(1) embodies the constitutional principle against retrospective criminal laws, ensuring that a person cannot be punished for conduct that was not an offence when it occurred or receive a heavier punishment than was applicable at that time.

Accordingly, a question arises as to whether section 2(1) of the AMLATFPUAA is inconsistent with this constitutional protection.

Case Example

An accused argues that he cannot be prosecuted under the AMLATFPUAA because the underlying unlawful activity occurred before the Act came into force.

Application

The accused relies on Article 7(1) to contend that retrospective criminal liability is unconstitutional.

Q3. How did the court deal with this issue in Datuk Haji Wasli bin Mohd Said v Federal Attorney General of Malaysia?

Answer

In Datuk Haji Wasli bin Mohd Said v Federal Attorney General of Malaysia, the applicant sought leave for judicial review of the Attorney General’s decision to charge him under the AMLATFPUAA.

One of the applicant’s arguments was that the retrospective operation of the Act violated Article 7(1) of the Federal Constitution.

The court, however, did not determine the constitutional issue. Instead, it held that the appropriate forum to raise the constitutional challenge was the trial court, where the evidence could be fully examined.

Justice Ian HC Chin further observed that:

• if the offences had in fact been committed before the Act came into force, serious constitutional issues under Article 7 might arise; but
• in the case before the court, the charges alleged that the offences were committed after the commencement of the Act. Accordingly, it could not be said at that stage that Article 7 had been violated.

Case Example

An accused person challenges his prosecution before the commencement of his criminal trial, arguing that the Act operates retrospectively.

Application

The court may decline to determine the constitutional issue at the judicial review stage and instead leave the matter to be decided during the criminal trial after considering the facts.

Q4. Can the constitutionality of the AMLATFPUAA be challenged on the ground of retrospectivity?

Answer

In principle, a constitutional challenge may be raised because Article 7(1) prohibits retrospective criminal laws.

However, such a challenge is unlikely to succeed.

The textbook notes that constitutional challenges to comparable money laundering legislation in other jurisdictions have generally failed. For example, the High Court of Australia upheld the validity of provisions under the Financial Transaction Reports Act 1988, rejecting arguments that the legislation was constitutionally invalid.

Similarly, there is no Malaysian authority declaring section 2(1) of the AMLATFPUAA unconstitutional.

Accordingly, it would be surprising if a Malaysian court were to invalidate the AMLATFPUAA solely because of its retrospective application.

Case Example

A defendant argues that section 2(1) is unconstitutional because it applies to unlawful activities committed before the Act commenced.

Application

Although the constitutional argument may be raised, Malaysian courts are likely to interpret the Act consistently with constitutional principles unless there is a clear violation of Article 7(1).

Q5. Why is the retrospective application of the AMLATFPUAA considered necessary?

Answer

The retrospective application of the AMLATFPUAA is regarded as an important enforcement mechanism because many profit-driven crimes, such as corruption, organised crime and drug trafficking, are conducted over long periods.

If the Act applied only prospectively, criminals could continue enjoying illicit wealth accumulated before the legislation came into force.

Retrospective application enables law enforcement authorities to:

• investigate historical unlawful activities;
• trace and recover criminal proceeds;
• freeze, seize and forfeit illicit assets; and
• prevent criminals from financing further unlawful activities.

Ultimately, the objective is to ensure that crime does not pay by depriving offenders of the economic benefits of their criminal conduct.

Case Example

An organised crime syndicate accumulated millions of ringgit through illegal gambling before 2002 and continued investing the proceeds in legitimate businesses after the Act came into force.

Application

The retrospective application of the AMLATFPUAA enables the authorities to investigate the criminal proceeds, recover the assets and disrupt the syndicate’s ability to finance further criminal operations.

Exam Note

Issue: Does section 2(1) of the AMLATFPUAA conflict with Article 7(1) of the Federal Constitution?

Arguments against retrospectivity:

• Criminal laws should not ordinarily operate retrospectively.
• Article 7(1) prohibits retrospective punishment.

Judicial position:

• In Datuk Haji Wasli bin Mohd Said v Federal Attorney General of Malaysia, the court did not decide the constitutional issue and held that it should be determined by the trial court on the facts.

Policy justification:

• Retrospective application is considered necessary to trace, recover and confiscate historical proceeds of crime and to prevent organised criminals from continuing to benefit from their illicit gains.