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Financial Crimes
Section 4(1)(d) of the AMLATFPUAA
Q. What does section 4(1)(d) of the AMLATFPUAA provide?
Answer
Section 4(1)(d) provides that a person commits a money laundering offence if he or she:
“conceals, disguises or impedes the establishment of the true nature, origin, location, movement, disposition, title of, rights with respect to, or ownership of, proceeds of an unlawful activity or instrumentalities of an offence.”
This provision targets the concealment aspect of money laundering.
Unlike the earlier paragraphs, which focus on transactions, dealings, or cross-border movement, section 4(1)(d) criminalises acts that hide or obstruct the discovery of the true identity or characteristics of criminal property.
Its purpose is to prevent offenders from disguising criminal property so that law enforcement agencies cannot trace its criminal origin or identify its true owner.
Q. What are the essential elements of section 4(1)(d)?
Answer
To establish an offence under section 4(1)(d), the prosecution must prove that the accused:
- concealed;
- disguised; or
- impeded the establishment of
the:
- true nature;
- origin;
- location;
- movement;
- disposition;
- title;
- rights with respect to; or
- ownership,
of:
- proceeds of unlawful activities; or
- instrumentalities of an offence.
Unlike section 4(1)(a), no transaction is required.
Unlike section 4(1)(c), cross-border movement is irrelevant.
The emphasis is on concealing or obstructing the traceability of criminal property.
Q. What is meant by “conceals”?
Answer
To conceal means to hide criminal property or information relating to it so that it cannot easily be discovered or identified.
Concealment may involve hiding:
- the existence of the property;
- its source;
- its owner; or
- its location.
Case Example
A fraudster hides RM2 million in cash inside a secret room in his warehouse.
Application
The fraudster has concealed proceeds of unlawful activities.
Q. What is meant by “disguises”?
Answer
To disguise means to make criminal property appear legitimate or to give it a false identity.
The property itself is not hidden; instead, its true nature or origin is deliberately misrepresented.
Case Example
A corrupt public officer purchases several luxury apartments through nominee companies to conceal his ownership.
Application
The nominee companies disguise the true ownership of the proceeds of unlawful activities.
Q. What does “impedes the establishment” mean?
Answer
To impede the establishment means to obstruct, hinder or make it difficult for authorities to determine the true characteristics of criminal property.
The accused need not successfully conceal the property. It is sufficient that his conduct makes it more difficult for investigators to establish the truth.
Case Example
A suspect destroys accounting records and creates false invoices to prevent investigators from tracing illicit funds.
Application
The suspect has impeded the establishment of the true origin and movement of the proceeds of unlawful activities.
Q. What information is protected under section 4(1)(d)?
Answer
Section 4(1)(d) protects the ability of authorities to establish the following:
1. True Nature
What the property actually is.
Example
Cash is falsely recorded as legitimate business income.
2. Origin
Where the property came from.
Example
Bribe money is falsely recorded as consultancy fees.
3. Location
Where the property is kept.
Example
Gold bars are hidden in an undisclosed warehouse.
4. Movement
How the property has been transferred or moved.
Example
Money is routed through several offshore accounts.
5. Disposition
What has happened to the property.
Example
The proceeds are sold, gifted or transferred to another person.
6. Title
Who legally owns the property.
Example
A house is registered under a nominee’s name.
7. Rights with Respect to the Property
Who has legal rights or control over the property.
Example
Shares are held by a trustee for the true owner.
8. Ownership
Who is the beneficial owner.
Example
A luxury yacht is purchased through a shell company to conceal the true owner’s identity.
Q. How does section 4(1)(d) differ from sections 4(1)(a), 4(1)(b) and 4(1)(c)?
Answer
Each paragraph criminalises a different stage or aspect of money laundering.
Section 4(1)(a)
Focuses on transactions involving criminal property.
Ask:
Did the accused engage in a transaction involving the property?
Section 4(1)(b)
Focuses on dealing with criminal property.
Ask:
What did the accused do with the property?
Section 4(1)(c)
Focuses on cross-border movement.
Ask:
Did the property enter or leave Malaysia?
Section 4(1)(d)
Focuses on concealment and obstruction.
Ask:
Did the accused hide or make it difficult to identify the true nature, origin, ownership or location of the property?
Illustration
A public officer receives RM15 million in bribes.
He:
- deposits the money into several bank accounts;
- transfers part of the money to Hong Kong;
- purchases luxury apartments through nominee companies;
- creates false consultancy agreements to justify the payments; and
- registers the apartments under his relatives’ names.
Application
Section 4(1)(a)
Applies because he engaged in transactions involving proceeds of unlawful activities.
Section 4(1)(b)
Applies because he received, possessed, transferred, converted and used the proceeds.
Section 4(1)(c)
Applies because part of the proceeds was removed from Malaysia.
Section 4(1)(d)
Applies because he:
- disguised the true origin of the money;
- concealed the true ownership of the apartments;
- impeded the establishment of the beneficial ownership through nominee companies and false documents.
Accordingly, all four paragraphs may apply to different aspects of the same money laundering scheme.
Q. What is the punishment for a money laundering offence under section 4(1)?
Answer
A person convicted of a money laundering offence under section 4(1) is liable to:
- imprisonment for a term not exceeding 15 years; and
- a fine of not less than:
- five times the sum or value of the proceeds of unlawful activities or instrumentalities of an offence at the time the offence was committed; or
- RM5 million,
whichever is the higher.
Illustration
If the proceeds of unlawful activities are worth RM3 million:
- Five times the value = RM15 million.
- Since RM15 million is higher than RM5 million, the minimum fine is RM15 million.
If the proceeds are worth RM500,000:
- Five times the value = RM2.5 million.
- Since RM5 million is higher, the minimum fine is RM5 million.
Exam Note
Remember the four paragraphs of section 4(1) by their primary focus:
- Section 4(1)(a) – Transaction
- Engaging directly or indirectly in a transaction involving proceeds of unlawful activities or instrumentalities of an offence.
- Section 4(1)(b) – Dealing with the Property
- Acquiring, receiving, possessing, disguising, transferring, converting, exchanging, carrying, disposing of or using the property.
- Section 4(1)(c) – Cross-Border Movement
- Removing criminal property from Malaysia or bringing it into Malaysia.
- Section 4(1)(d) – Concealment
- Concealing, disguising or impeding the establishment of the true nature, origin, location, movement, disposition, title, rights or ownership of criminal property.
Memory Aid
Think of the money laundering process as four stages:
- Transaction → section 4(1)(a).
- Handling the property → section 4(1)(b).
- Moving it across borders → section 4(1)(c).
- Hiding its true identity → section 4(1)(d).
Together, these provisions ensure that every significant method of dealing with, moving, or concealing proceeds of unlawful activities and instrumentalities of an offence is criminalised under the AMLATFPUAA.
