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Financial Crimes
Structure of the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001
Q1. How is the AMLATFPUAA structured?
Answer
The Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLATFPUAA) is divided into eight Parts, namely:
- Preliminary
- Money laundering offences
- Financial intelligence
- Reporting obligations
- Investigation
- Freezing, seizure and forfeiture
- Suppression of terrorism financing offences, and freezing, seizure and forfeiture of terrorist property
- Miscellaneous
The Act contains 93 sections and two Schedules, providing a comprehensive legal framework to combat money laundering, terrorism financing and the recovery of criminal proceeds.
Case Example
A bank reports a suspicious transaction involving RM5 million. The authorities rely on the reporting obligations under the Act to obtain financial intelligence, investigate the transaction and subsequently freeze the suspected proceeds of unlawful activities.
Application
This demonstrates how the different Parts of the AMLATFPUAA work together, from reporting and investigation to asset recovery.
Q2. What are the two Schedules under the AMLATFPUAA?
Answer
The AMLATFPUAA contains two Schedules.
The First Schedule lists the Reporting Institutions (RIs) that are subject to the obligations imposed under the Act. These include financial institutions and designated non-financial businesses and professions that must comply with customer due diligence, record-keeping and suspicious transaction reporting requirements.
The Second Schedule specifies the serious offences (previously referred to as predicate offences) that constitute the underlying criminal activities capable of generating proceeds of unlawful activities.
Case Example
A licensed bank is listed as a reporting institution under the First Schedule. It detects suspicious transfers linked to corruption, which is a serious offence under the Second Schedule.
Application
The First Schedule determines who has reporting obligations, while the Second Schedule identifies which underlying offences may give rise to money laundering.
Q3. What is the relationship between AMLATFPUAA and the Mutual Assistance in Criminal Matters Act 2002 (MACMA)?
Answer
Certain provisions of the AMLATFPUAA must be read together with the Mutual Assistance in Criminal Matters Act 2002 (MACMA).
MACMA enables Malaysia to cooperate with foreign jurisdictions in criminal matters by providing and obtaining international assistance.
Such assistance includes:
- tracing criminal property;
- recovering or confiscating proceeds of crime;
- enforcing foreign forfeiture orders;
- locating or identifying suspects and witnesses; and
- serving legal process in criminal proceedings.
MACMA is particularly important where money laundering involves assets or transactions across multiple jurisdictions.
Case Example
A fraud syndicate transfers RM20 million from Malaysia to bank accounts in Singapore and Hong Kong. Malaysian authorities request assistance from the foreign jurisdictions to identify the accounts and recover the criminal proceeds.
Application
MACMA facilitates international cooperation, enabling Malaysia to trace, freeze, recover and confiscate criminal assets located outside Malaysia.
Q4. Does Malaysia adopt a list-based approach or a threshold approach to predicate offences?
Answer
Malaysia adopts a list-based approach rather than a threshold approach in determining the underlying offences that may give rise to money laundering.
Under the list-based approach, only offences specifically listed in the Second Schedule (now referred to as serious offences) constitute the underlying offences for money laundering purposes.
In contrast, a threshold approach generally applies to all offences that satisfy a prescribed level of seriousness, such as offences punishable by a minimum term of imprisonment.
Malaysia has therefore chosen to identify the relevant offences expressly through legislation rather than by reference to a general sentencing threshold.
Case Example
An individual commits corruption, which is listed in the Second Schedule. The money obtained from the corruption constitutes proceeds of unlawful activities capable of supporting a money laundering charge.
Application
Because Malaysia follows a list-based approach, the underlying offence must fall within the Second Schedule before the proceeds can be treated as proceeds of unlawful activities under the AMLATFPUAA.
Q5. What are examples of serious offences under the Second Schedule?
Answer
Since the AMLATFPUAA came into force in 2002, the Second Schedule has been expanded significantly to include a broad range of serious offences commonly associated with money laundering and terrorism financing.
Examples include:
- corruption;
- fraud;
- criminal breach of trust;
- illegal gambling;
- credit card fraud;
- currency counterfeiting;
- robbery;
- forgery;
- human trafficking;
- extortion;
- smuggling; and
- drug-related offences.
These offences are capable of generating proceeds of unlawful activities that may subsequently be laundered.
Case Example
A human trafficking syndicate earns RM10 million through illegal activities and uses shell companies to purchase commercial properties.
Application
Human trafficking is a serious offence under the Second Schedule. Accordingly, the RM10 million and the properties acquired with those funds constitute proceeds of unlawful activities and may be frozen, seized and forfeited under the AMLATFPUAA.
Exam Note
AMLATFPUAA
- 8 Parts
- 93 sections
- 2 Schedules
First Schedule
- Lists Reporting Institutions (RIs).
Second Schedule
- Lists serious offences (formerly referred to as predicate offences).
Malaysia’s approach
- List-based approach: only offences listed in the Second Schedule qualify as underlying offences for money laundering.
- Threshold approach: offences qualify based on the severity of the prescribed punishment rather than being specifically listed.
This distinction between the list-based and threshold approaches is frequently tested in Financial Crimes examinations.
