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Financial Crimes
Section 4(1)(a) and Section 4(1)(b) of the AMLATFPUAA
Q. What is the difference between section 4(1)(a) and section 4(1)(b) of the AMLATFPUAA?
Answer
Although both provisions criminalise money laundering, they target different forms of conduct.
- Section 4(1)(a) focuses on participating in a transaction involving proceeds of unlawful activities or instrumentalities of an offence.
- Section 4(1)(b) focuses on dealing with the criminal property itself, whether or not there is a transaction.
In other words:
- Section 4(1)(a) is transaction-centred.
- Section 4(1)(b) is property-centred.
Thus, a person may commit an offence under section 4(1)(b) simply by possessing or using criminal property, even if no transaction has taken place.
Q. What is the scope of section 4(1)(a)?
Answer
Section 4(1)(a) provides that a person commits a money laundering offence if he or she:
“engages, directly or indirectly, in a transaction that involves proceeds of an unlawful activity or instrumentalities of an offence.”
The essential element is a transaction.
The prosecution must prove that:
- the accused engaged directly or indirectly;
- in a transaction; and
- the transaction involved:
- proceeds of unlawful activities; or
- instrumentalities of an offence.
The emphasis is on the movement or processing of criminal property through a transaction.
Examples of transactions include:
- transferring money;
- paying another person;
- purchasing property;
- depositing money into a bank account;
- investing criminal proceeds; or
- selling an asset.
The accused need not personally conduct the transaction. Indirect participation through nominees, agents or shell companies is sufficient.
Case Example
Mr A transfers RM2 million derived from corruption from his personal account into a company’s account before investing it in shares.
Application
Mr A has engaged in a transaction involving proceeds of unlawful activities. His conduct falls within section 4(1)(a).
Q. What is the scope of section 4(1)(b)?
Answer
Section 4(1)(b) provides that a person commits a money laundering offence if he or she:
“acquires, receives, possesses, disguises, transfers, converts, exchanges, carries, disposes of or uses proceeds of an unlawful activity or instrumentalities of an offence.”
Unlike section 4(1)(a), section 4(1)(b) does not require proof of a transaction.
Instead, it criminalises virtually every form of dealing with criminal property.
The prohibited acts include:
- acquiring;
- receiving;
- possessing;
- disguising;
- transferring;
- converting;
- exchanging;
- carrying;
- disposing of; and
- using,
criminal proceeds or instrumentalities.
Accordingly, even if criminal property remains in the offender’s possession without being transferred or exchanged, liability may still arise under section 4(1)(b).
Case Example
Mr B receives RM500,000 obtained through fraud and stores the cash in a safe at his home for six months.
Application
Although Mr B has not conducted any transaction, he has received and possessed proceeds of unlawful activities. His conduct falls within section 4(1)(b).
Q. Why did Parliament enact both section 4(1)(a) and section 4(1)(b)?
Answer
The two provisions complement each other and ensure that every stage of handling criminal property is criminalised.
Section 4(1)(a) targets the movement of criminal property through transactions, while section 4(1)(b) targets the actual handling or control of the property.
Without section 4(1)(b), a person who merely keeps or uses criminal proceeds without entering into a transaction might escape liability.
Conversely, without section 4(1)(a), persons who facilitate laundering transactions through intermediaries could avoid responsibility.
Together, the provisions ensure comprehensive coverage of money laundering activities.
Illustration
Scenario 1
A drug trafficker deposits RM5 million into a bank account.
Applicable provision
- Section 4(1)(a) – depositing money is a transaction.
Scenario 2
The trafficker keeps RM5 million hidden in a safe at home.
Applicable provision
- Section 4(1)(b) – possessing proceeds of unlawful activities.
Scenario 3
The trafficker uses RM1 million to purchase a luxury condominium.
Applicable provision
- Section 4(1)(a) – purchasing the property is a transaction.
- Section 4(1)(b) – using and converting the proceeds into real property.
The same conduct may therefore satisfy both provisions.
Scenario 4
A nominee accepts criminal proceeds on behalf of the offender and keeps the money in his bank account.
Applicable provision
- Section 4(1)(a) – receiving the transfer into the account is a transaction.
- Section 4(1)(b) – receiving and possessing the criminal proceeds.
Q. Can the same conduct amount to an offence under both section 4(1)(a) and section 4(1)(b)?
Answer
Yes.
The two provisions are not mutually exclusive. A single course of conduct may satisfy both paragraphs because they address different aspects of the same criminal activity.
For example:
- transferring illicit funds is a transaction under section 4(1)(a); and
- the same act may also constitute transferring, using, or converting proceeds under section 4(1)(b).
Accordingly, prosecutors may rely on either or both provisions, depending on the facts of the case.
Case Example
A corrupt public officer transfers RM10 million in bribe money to an offshore account before purchasing luxury properties overseas.
Application
The officer:
- engages in transactions involving proceeds of unlawful activities (section 4(1)(a)); and
- transfers, converts, and uses those proceeds (section 4(1)(b)).
Exam Note
The distinction between the two provisions can be remembered as follows:
Section 4(1)(a)
Section 4(1)(b)
Focuses on transactions involving criminal property.
Focuses on dealing with criminal property itself.
Requires a transaction.
Does not require a transaction.
Targets participation in financial or commercial dealings.
Targets possession, control, use and other forms of handling criminal property.
Example: depositing, investing or selling criminal proceeds.
Example: possessing, receiving, carrying or using criminal proceeds.
Key Examination Point
Think of the provisions as covering different stages of money laundering:
- Section 4(1)(a) asks: “Did the accused engage in a transaction involving criminal property?”
- Section 4(1)(b) asks: “Did the accused deal with criminal property in any prohibited manner?”
Together, they ensure that both the movement of criminal property and the possession or handling of criminal property are captured under the AMLATFPUAA.
