Our broad and powerful anti-money laundering law deserves more scrutiny


  • Business
  • Saturday, 12 Apr 2014

OPTIMISTICALLY CAUTIOUS BY ERROL OH

WHEN the latest meeting of the Dewan Rakyat ended on Thursday, among the matters postponed are the second and third readings of a bill that seeks to amend the Anti-Money Laundering and Anti-Terrorism Financing Act 2001 (AMLATFA).

This pause is an opportunity to look at how the legislation has been enforced, how it’s set to change (if the bill is passed) and other developments surrounding the country’s anti-money laundering law.

The first thing to note is that when the legislation came into force in January 2002, it was known as the Anti-Money Laundering Act. In March 2007, the title was amended to what it is today because the Act was expanded to cover the offence of terrorist financing.

The Anti-Money Laundering and Anti-Terrorism Financing Bill 2013 now proposes to again lengthen the title, this time to the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act.

The Bill’s explanatory statement says the change in the title is to reflect the extension of the Act’s scope “to deal with the proceeds of an unlawful activity and instrumentalities of an offence in addition to property involved in or derived from money laundering and terrorism financing offences and terrorist property.”

This suggests that at present, the AMLATFA only looks at a narrow range of activities. But this is not the case.

For one thing, the Act’s definition of money laundering seems broad when compared with that of the Financial Action Task Force (FATF), an inter-governmental body that sets standards and promotes effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.

Dirty money

Here’s how the FATF explains money laundering: “The goal of a large number of criminal acts is to generate a profit for the individual or group that carries out the act. Money laundering is the processing of these criminal proceeds to disguise their illegal origin. This process is of critical importance, as it enables the criminal to enjoy these profits without jeopardising their source.”

The AMLATFA says money laundering is the act of a person who:

·Engages, directly or indirectly, in a transaction that involves proceeds of any unlawful activity;

·Acquires, receives, possesses, disguises, transfers, converts, exchanges, carries, disposes, uses, removes from or brings into Malaysia proceeds of any unlawful activity; or

·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 any unlawful activity.

The key phrase here is “proceeds of any unlawful activity.” The Act has a definition for that too – “any property derived or obtained, directly or indirectly, by any person as a result of any unlawful activity.”

In the context of the AMLATFA, an unlawful activity is synonymous with a serious offence, and the Second Schedule of the Act lists almost 290 serious offences that come under more than 40 statutes.

Most of us may see money laundering as the underworld feeding dirty money through legitimate businesses and investments so as to disconnect the funds from their illegal sources.

That’s why it’s not surprising to see that among these statutes in the Second Schedule are the Penal Code, Dangerous Drugs Act, Kidnapping Act, Anti-Trafficking in Persons and Anti-Smuggling of Migrants Act, Banking and Financial Institutions Act, Companies Act, Insurance Act and Securities Industry Act.

We are familiar with the blue-collar and white-collar crimes that can be prosecuted under these Acts.

What’s unexpected though is that the AMLATFA can also be used to act against those who handle money connected with offences such as copyright infringement; failure to submit income tax returns; operating an unregistered timber business; carrying on a money-changing, moneylending or pawnbroking business without licence; and giving false trade descriptions.

Going by the Act, somebody you know may well be a money launderer.

Unlawful activities

There may be, of course, connections between money laundering and these seemingly minor offences. For example, money from the black economy is never reported to the taxmen, and this is tax evasion. Money-changers, moneylenders and pawnbrokers are known to use their businesses to cleanse ill-gotten gains. And intellectual property piracy is often driven by gangsters.

Nevertheless, it’s scary to think that, on paper, missing the deadline for filing your tax returns can get you in AMLATFA trouble. It’s definitely not the kind of situation you want to get caught in, although it’s likely that the AMLTFA will only be used for offences that involve loads of money.

The Act carries a lot of weight in allowing the authorities to investigate and recover proceeds of unlawful activities. For example, it provides the power for freezing, seizure and forfeiture of those proceeds. Under Section 58 of the Act, the forfeited property goes to the Federal Government.

It’s telling that a seminar on money laundering this week that was organised by the Attorney General’s Chambers has this theme: “Anti-Money Laundering Laws in Malaysia: Taking the Profit Out of Crime and Filling Government Coffers.”

Already, money and other assets amounting to millions of ringgit have been forfeited under the Act.

The AMLATFA is wide-ranging and powerful, which means it should be wielded with care and fairness. Does the tabling of the Bill mean the Act will have more wattage or is it to refine the Act and to remove any rough edges?

Hopefully, when the current session of the Dewan Rakyat resumes on June 9, the legislators will have a firm understanding of the policy behind the AMLATFA and the proposed amendments, and their votes will show that the Act balances the various interests of the people and businesses in Malaysia.

Executive editor Errol Oh is convinced that many of us don’t pay enough attention to the laws of the land.

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