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Money Laundering – Evolution of Malaysia’s Anti-Money Laundering Legislation
Q: How has Malaysia’s anti-money laundering legislation evolved over time?
A: Malaysia’s anti-money laundering legislation has undergone several amendments to strengthen its ability to combat money laundering, terrorism financing, and other serious crimes.
Q: What changes were introduced by the 2003 amendment to AMLA?
A: In response to the global fight against terrorism, the Anti-Money Laundering (Amendment) Act 2003 expanded the scope of AMLA by:
- Extending the anti-money laundering framework to include terrorism financing.
- Introducing measures to suppress and prevent the financing of terrorist activities.
- Expanding the list of predicate offences (offences that generate proceeds capable of being laundered).
Q: Why was AMLA renamed in 2007?
A: On 6 March 2007, the Anti-Money Laundering Act 2001 (AMLA) was renamed the:
Anti-Money Laundering and Anti-Terrorism Financing Act 2001 (AMLATFA).
The new name better reflected the Act’s expanded scope, which now covered both money laundering and terrorism financing.
Q: What changes were introduced by the 2014 amendment?
A: In 2014, the Act was amended again to strengthen Malaysia’s legal framework against financial crime. The amendment:
- Expanded the law to target persons dealing with proceeds derived through unlawful activities.
- Strengthened enforcement powers relating to criminal proceeds.
- Broadened the scope of offences connected with unlawful property.
Following this amendment, the legislation was renamed:
Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLATFPUAA).
This remains the current title of the Act.
Money Laundering – Structure of AMLATFPUAA
Q: How is AMLATFPUAA structured?
A: AMLATFPUAA is divided into eight Parts:
- 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.
Q: What are the First and Second Schedules of AMLATFPUAA?
A: The two Schedules serve different purposes:
- First Schedule – Lists the Reporting Institutions (RIs) that are subject to AMLATFPUAA.
- Second Schedule – Lists the predicate offences that may give rise to money laundering offences.
Q: What is a predicate offence?
A: A predicate offence is an underlying criminal offence that generates proceeds capable of being laundered.
In other words, money laundering cannot exist without property originating from an unlawful activity. The crime that produces the illegal proceeds is known as the predicate offence.
Examples of predicate offences include:
- Corruption
- Fraud
- Criminal breach of trust (CBT)
- Drug trafficking
- Human trafficking
- Illegal gambling
- Credit card fraud
- Currency counterfeiting
- Robbery
- Forgery
- Extortion
- Smuggling
Q: What approach does Malaysia adopt in identifying predicate offences?
A: Malaysia adopts a list-based approach rather than a threshold approach.
This means that only offences specifically listed in the Second Schedule qualify as predicate offences for the purpose of money laundering.
Since 2002, the list has been expanded significantly to include a broader range of offences commonly associated with money laundering and terrorism financing.
Q: What is the difference between a list-based approach and a threshold approach?
A: The two approaches determine which offences can become predicate offences.
List-Based Approach
- Only offences specifically listed in the legislation qualify as predicate offences.
- If an offence is not listed, it generally cannot serve as the basis for a money laundering charge.
- Malaysia adopts this approach.
Threshold Approach
- Any offence that satisfies a specified seriousness threshold (for example, offences punishable by imprisonment exceeding a certain number of years) automatically qualifies as a predicate offence.
- There is no need to list every individual offence.
Illustration
Suppose a person launders RM5 million obtained through corruption.
- Because corruption is listed in the Second Schedule, it is a predicate offence.
- The person may therefore be prosecuted not only for corruption but also for money laundering.
Now suppose the proceeds originated from an offence not included in the Second Schedule.
- Under Malaysia’s list-based approach, that offence may not qualify as a predicate offence for a money laundering charge (unless it has since been added to the Schedule).
Money Laundering – Mutual Assistance in Criminal Matters Act 2002 (MACMA)
Q: What is the Mutual Assistance in Criminal Matters Act 2002 (MACMA)?
A: The Mutual Assistance in Criminal Matters Act 2002 (MACMA) complements AMLATFPUAA by providing the legal framework for international cooperation in criminal matters.
Certain provisions of AMLATFPUAA are intended to be read together with the relevant provisions of MACMA.
Q: What assistance does MACMA provide?
A: MACMA enables Malaysia to provide and obtain international assistance in matters such as:
- Tracing criminal proceeds.
- Recovering or confiscating property derived from serious offences.
- Locating suspects and witnesses.
- Serving legal documents (service of process).
- Enforcing foreign forfeiture orders.
- Cooperating with foreign authorities in criminal investigations and prosecutions.
This international cooperation is particularly important because money laundering often involves the movement of funds across multiple countries.
Key Timeline
- 2001 – Anti-Money Laundering Act 2001 (AMLA) enacted.
- 15 January 2002 – AMLA came into force.
- 2003 – Amended to include terrorism financing and expand predicate offences.
- 6 March 2007 – Renamed the Anti-Money Laundering and Anti-Terrorism Financing Act 2001 (AMLATFA).
- 2014 – Further amended to strengthen laws relating to proceeds of unlawful activities and renamed the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLATFPUAA), which remains the current legislation.
