Clamping down on mule accounts

PROPOSED amendments to the law were tabled in Dewan Rakyat with the aim of clamping down on the use of mule accounts for illegal activities.

The move is seen as a measure to address the alarming rise in online financial fraud cases.

Those convicted under the new offences could face fines of up to RM150,000 and 10 years in jail.

The Penal Code (Amendment) Bill 2024 and Criminal Procedure Code (Amendment) Bill 2024, which were tabled for the first reading by Minister in the Prime Minister’s Department (Law and Institutional Reforms) Datuk Seri Azalina Othman Said, will also see stiff penalties being imposed against those involved in such activities.

Under the amendments, several new sections – 424A, 424B, 424C and 424D – were included under the Penal Code for offences related to payment instruments or accounts at financial institutions.

“The proposed new section 424A seeks to provide for the offence and penalty for possession or control of any payment instrument of another person or any account of another person at a financial institution without lawful authority or lawful purpose,” the Bill read.

Those found guilty could face a fine of between RM5,000 and RM50,000, imprisonment of between six months and five years, or both upon conviction.

The proposed new section 424B states the offence and penalty for allowing another person to control or possess payment instruments or an account at a financial institution without lawful authority or purpose.

This offences is punishable by a fine of between RM10,000 and RM100,000, a prison term of one to seven years, or both upon conviction.

Under subsection 424C(1), individuals who directly or indirectly engage in transactions using their payment instruments or accounts for unlawful purposes can be punished with a prison term of three to 10 years or a fine of between RM10,000 and RM150,000 or both.

As for unlawful transactions conducted using another person’s payment instruments or account, Section 424C(1) states that those guilty could be fined between RM10,000 and RM150,000 or face a prison term of between three and 10 years or both.

The financial institutions under the proposed laws refer to licensed banks under the Financial Services Act, licensed Islamic Banks under the Islamic Financial Services Act and the institutions prescribed under the Development Financial Institutions Act with payment instruments also designated by the respective Acts.

A new section, 116D, was also proposed under the Criminal Procedure Code, which would empower a police officer not below the rank of sergeant to seize or prohibit dealings involving money held or suspected to be held in any payment instrument or account at financial institutions.

The police officer can act if they have reasonable cause to suspect that an offence has been committed if the money has been used or is intended to be used to commit an offence or if the money constitutes evidence of an offence.

The second reading is scheduled for the current Dewan Rakyat meeting.

According to data from the Legal Affairs Division, there were a total of 266,230 reports on mule accounts while 146,772 bank accounts were identified as mule accounts.

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