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Money Laundering under Malaysian Law (AMLA 2001) – Notes
1. Malaysian Definition of Money Laundering
Position under Malaysian Law
- Malaysia does not provide a simple dictionary definition of “money laundering.”
- Instead, the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLA) defines money laundering by describing the acts that constitute the offence.
- The principal provision is section 4(1) AMLA.
2. Simplified Definition
Money laundering is:
Any dealing with property that represents the proceeds of unlawful activity, where the person knows or has reason to believe that the property is derived from unlawful activity.
3. What Acts Constitute Money Laundering?
Under section 4 AMLA, money laundering includes:
- Acquiring criminal proceeds.
- Receiving criminal proceeds.
- Possessing criminal proceeds.
- Using criminal proceeds.
- Transferring criminal proceeds.
- Converting criminal proceeds into another asset.
- Exchanging criminal proceeds.
- Moving or disposing of criminal proceeds.
- Disguising or concealing:
- the source,
- origin,
- nature,
- ownership,
- movement,
- location, or
- rights relating to the property.
- Assisting another person to deal with criminal proceeds.
4. Key Element
The property must be:
- Proceeds of unlawful activity, and
- The accused knows or has reason to believe that the property represents proceeds of unlawful activity.
5. Important Difference from Academic Definitions
Traditional (Academic) Model
Money laundering normally involves:
- Placement
- Layering
- Integration
These explain how criminals commonly launder money.
Malaysian Position
AMLA does not require proof of:
- Placement
- Layering
- Integration
These are not legal elements of the offence.
The prosecution only needs to prove that the accused dealt with criminal proceeds in one of the prohibited ways under section 4, together with the required mental element.
6. Examples
Example 1 – Buying an iPhone
Facts
- Ali scams RM6,000.
- Ali immediately purchases an iPhone.
Under the Traditional Model
- No placement.
- No layering.
- No integration.
Some commentators may simply describe this as spending criminal proceeds.
Under Malaysian AMLA
Potentially money laundering because Ali has:
- used criminal proceeds; and
- converted criminal proceeds into another asset.
Example 2 – Buying a House
Facts
- Ali receives RM2 million from corruption.
- He purchases a bungalow.
Under AMLA
Potentially money laundering because he has:
- acquired property using criminal proceeds; and
- converted criminal proceeds into real property.
Example 3 – Fake Consultancy Income
Facts
- RM1 million obtained from fraud.
- Deposited into a consulting company.
- Recorded as:
Consultancy Income
Why Money Laundering?
Because the criminal has:
- concealed the true source of the money;
- created a legitimate explanation; and
- disguised criminal proceeds as lawful business income.
Example 4 – Cash Deposited into Restaurant
Facts
Restaurant genuinely earns:
RM40,000 monthly.
Owner secretly adds:
RM160,000 drug money.
Accounts now show:
Restaurant Revenue
RM200,000.
Why Money Laundering?
Illegal money is disguised as legitimate business income.
Example 5 – Overseas Transfer
Facts
Drug proceeds are transferred from Malaysia to another country before being deposited into a foreign bank.
Why Money Laundering?
The transfer may:
- distance the money from the original crime;
- complicate tracing; and
- conceal the movement of criminal proceeds.
7. Why is AMLA So Broad?
Parliament recognised that criminals may deal with criminal proceeds in many different ways.
Accordingly, AMLA criminalises:
- simple dealings;
- sophisticated laundering schemes;
- direct use of criminal proceeds; and
- concealment of criminal proceeds.
The law therefore extends beyond the traditional placement-layering-integration model.
8. Traditional Model vs Malaysian Law
Traditional Model
Malaysian AMLA
Explains how money is usually laundered.
Defines what conduct constitutes the offence.
Placement → Layering → Integration.
No requirement to prove these stages.
Focus on concealment.
Covers acquisition, possession, use, transfer, conversion, concealment and other dealings.
Academic and criminological model.
Statutory legal definition.
9. Key Examination Points
✔ Malaysia does not define money laundering by reference to the three stages.
✔ Placement, layering and integration are criminological concepts, not legal requirements.
✔ AMLA adopts a much broader approach.
✔ A person may commit money laundering by:
- acquiring,
- receiving,
- possessing,
- using,
- transferring,
- converting,
- exchanging,
- disguising, or
- otherwise dealing
with property that represents the proceeds of unlawful activity.
✔ The prosecution must establish that:
- the property is the proceeds of unlawful activity; and
- the accused knew or had reason to believe that the property represented such proceeds.
Statutory Reference
Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (Act 613)
- Section 3 – Interpretation (including “proceeds of an unlawful activity”).
- Section 4(1) – Offence of money laundering.
Revision Tip: Remember that the three-stage model explains the laundering process, whereas section 4 AMLA defines the legal offence. A person may therefore commit money laundering under Malaysian law even without evidence of placement, layering, or integration, provided the statutory elements of section 4 are satisfied.
