Money Laundering – Application of the AMLATFPUAA

Q: Does the AMLATFPUAA have retrospective and extra-territorial application?

A: Yes. 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.

Accordingly, the AMLATFPUAA has:

• Retrospective effect – It may apply to unlawful activities committed before the Act came into force.
• Extra-territorial effect – It may apply to certain offences committed outside Malaysia, particularly foreign serious offences, provided the requirements of the Act are satisfied.

Q: What is retrospective application?

A: A law has retrospective application when it applies to acts or conduct that occurred before the law came into force.

Normally, criminal laws are not retrospective, because individuals should only be punished for conduct that was an offence at the time it was committed.

Q: Why is the retrospective application of AMLATFPUAA controversial?

A: The retrospective effect of AMLATFPUAA has attracted criticism because it appears to conflict with a fundamental principle of criminal law—that legislation should generally operate prospectively, not retrospectively.

This concern is reflected in Article 7(1) of the Federal Constitution, which provides that:

“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.”

The principle protects individuals from being punished under laws enacted after the relevant conduct occurred.

Q: Was the retrospective application of AMLATFPUAA challenged in court?

A: Yes.

The issue arose in Datuk Haji Wasli bin Mohd Said v Federal Attorney General of Malaysia.

The applicant argued that charging him under AMLATFPUAA for conduct occurring before the Act came into force would violate Article 7(1) of the Federal Constitution.

However, the court held that this constitutional issue should be determined by the trial court, rather than during the judicial review proceedings.

The court also noted that the charges against the applicant appeared to relate to conduct occurring after the Act had come into force. Therefore, on the facts of that case, there was no apparent violation of Article 7.

Q: Can AMLATFPUAA be challenged as unconstitutional because of its retrospective effect?

A: In theory, yes, because Article 7(1) prohibits retrospective criminal laws.

However, successful constitutional challenges are unlikely.

The Malaysian courts have not declared the AMLATFPUAA unconstitutional on this ground, and courts in other jurisdictions have generally upheld similar anti-money laundering legislation.

Q: How have courts in other jurisdictions approached similar challenges?

A: Similar constitutional challenges have been unsuccessful.

For example, in Leask v The Commonwealth (Australia), the plaintiff challenged the constitutional validity of provisions of the Financial Transactions Reports Act 1988 (FTRA).

The High Court of Australia rejected the challenge and held that the legislation was constitutionally valid.

This case demonstrates the willingness of courts to uphold anti-money laundering legislation where it serves a legitimate public interest.

Q: Why is the retrospective application of AMLATFPUAA considered important?

A: Money laundering often involves proceeds generated from criminal activities committed over many years.

If the law applied only to offences committed after the Act came into force:

• Criminals could retain substantial amounts of previously acquired illicit wealth.
• Law enforcement agencies would face significant difficulties recovering criminal proceeds.
• Organised crime groups could continue using historical criminal profits to finance future offences.

Retrospective application enables authorities to investigate, restrain, confiscate, and recover proceeds derived from earlier unlawful activities, thereby preventing criminals from benefiting from long-term criminal enterprises.

Q: What is extra-territorial application?

A: A law has extra-territorial application when it applies to conduct occurring outside the territorial boundaries of the country.

Under AMLATFPUAA, certain foreign serious offences and money laundering activities involving overseas transactions may still fall within the scope of the Act.

This is particularly important because money laundering frequently involves:

• International bank transfers.
• Offshore accounts.
• Shell companies incorporated overseas.
• Cross-border movement of criminal proceeds.

Illustrative Scenarios

Scenario 1 – Retrospective Application

A businessman obtained RM15 million through fraud in 2000, before AMLA came into force.

In 2004, authorities discover that he still possesses and conceals the proceeds through several bank accounts.

Application:

• Although the predicate offence occurred before the Act came into force, AMLATFPUAA may still apply to the proceeds and subsequent money laundering activities, subject to constitutional considerations.

Scenario 2 – Foreign Serious Offence

A Malaysian citizen commits large-scale fraud in another country and transfers the proceeds into Malaysian bank accounts.

Application:

• Because the fraud constitutes a foreign serious offence, Malaysian authorities may investigate the laundering of those proceeds under AMLATFPUAA.

Scenario 3 – International Money Laundering

A criminal organisation moves illicit funds through Singapore, Hong Kong, and Switzerland before transferring the money into Malaysia.

Application:

• Even though part of the laundering process occurred overseas, AMLATFPUAA may apply because the criminal proceeds entered Malaysia and involved foreign serious offences.

Scenario 4 – Long-Term Criminal Enterprise

A drug trafficking syndicate has been laundering money continuously since the late 1990s.

After AMLATFPUAA came into force, investigators uncover bank accounts, businesses, and properties purchased with those criminal proceeds.

Application:

• Authorities may trace, freeze, seize, and seek forfeiture of the assets, preventing the syndicate from continuing to benefit from its long-term criminal activities.

Scenario 5 – Constitutional Challenge

An accused person argues that he cannot be prosecuted because the underlying offence occurred before AMLATFPUAA came into force.

Application:

• The accused may rely on Article 7(1) of the Federal Constitution to challenge the prosecution.
• However, the court will examine the specific facts, including when the money laundering conduct occurred, and whether applying the Act would genuinely offend Article 7(1).

Key Takeaway

The AMLATFPUAA is unusual because it has both retrospective and extra-territorial application, allowing Malaysian authorities to address money laundering involving past unlawful activities and cross-border crimes. Although its retrospective effect has raised constitutional concerns under Article 7(1) of the Federal Constitution, Malaysian courts have not declared the Act unconstitutional, recognising that such powers are important in depriving criminals of the proceeds of crime and preventing organised crime from financing future unlawful activities.