THE law will not allow you to keep stolen property or even property bought with proceeds from an unlawful activity.
In the Penal Code, there is an entire chapter listing over 40 offences against property which includes cheating, criminal breach of trust and dishonestly receiving stolen property. Likewise there are many other statutes such as the recently popular Malaysian Anti-Corruption Act and the Anti-Money laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act (“Amlatpua Act”).Under Section 3 of the Amlatpua Act, the term “proceeds of an unlawful activity” is defined as “any property derived or obtained, whether directly or indirectly, by any person as a result of any unlawful activity”. The term “unlawful activity” is further defined as any activity which constitutes any serious offence or foreign serious offence, regardless of whether such activity, in whole or in part, takes place within or outside Malaysia.
Under the Amlatpua Act, serious offences are compiled from various statutes and provisions, and are listed in the Second Schedule of the Act. The serious offences include, but are not limited to .... Hence, if you are investigated under any of the serious offences, your property may be firstly seized and your bank accounts frozen followed subsequently by an application by the Attorney General’s chamber (“AG’s Chambers”) to forfeit your property.
It surprises many lay persons that the AG’s chambers can actually apply to the court to forfeit your property even though you have not been charged in court. The AG’s chambers may proceed to court with the forfeiture application of your property under section 56 of the Act if they are satisfied that, inter alia, that your property is gained from unlawful activity or it is the subject matter of the offence. However, the burden remains on the prosecution to prove that the property was indeed proceeds from an unlawful activity.
The peculiar thing is that the standard of proving that the property is a subject matter of unlawful activities is lower than the standard of proving that you had done illegal activities to obtain the property if you are so charged. As a practising lawyer, I could never understand this distinction but that is the law as provided for under the relevant statute. Obviously, you can challenge this forfeiture application if you are able to show that you had not obtained the proceeds unlawfully or that you are an “innocent third party” who could not know of the offence so alleged.
If you had been charged in court for a serious offence and found guilty, the prosecution may proceed to apply to court under section 55 to forfeit your property. In either case (whether after prosecution or before), the law requires that when an application is made for forfeiture, the Court shall, under section 61 of the Act, cause to be issued a notice to third parties to show cause why it should not be forfeited.
This is where, with the greatest of respect, the law (or the manner in which it is interpreted) becomes comical. Some High Court Judges interpret section 61 to mean that they should hear the third-party application before they hear the forfeiture application by the prosecution. With respect, this approach appears to involve “unauthorised” judicial interference in possible contractual relationships. This is, in my humble view, an unnecessary burden taken on by the Courts. Some other High Court Judges, quite rightly in my humble opinion, had interpreted both section 56 read together with section 61 to mean that the application by the prosecution ought to be heard first to determine whether the properties are indeed forfeitable.
The second approach, in my humble view is more sensible and is in accord with the spirit and purpose of what section 56 and section 61 intended as it does not give rise to peculiar consequences such as possible unwarranted interference by the Courts into contractual relationships. Those Judges who hear the forfeiture application under section 56 first make two kinds of orders. Firstly, if the property is not forfeitable because the prosecution failed to prove its case, then the hearing of the third party should not even arise. Secondly, on the other hand, if it is forfeitable, then the Judge would make a conditional order of forfeiture subject to third party rights as allowed for under section 61 of the Act.
However, the mandatory requirement to issue a notice to third parties under section 61 seems to have caused the confusion, in my humble view, that the third party application precedes the prosecution’s forfeiture application. In other words, the prosecution does not even have to prove that the properties sought to be forfeited are from unlawful activities before the third party application I heard. This situation probably arose due to the Court of Appeal’s decision in the case of PP v. Taiko Fertiliser & Anor [2019] 4 CLJ, where it appears to suggest that section 61 application should prevail over section 56 application. Hence, some of the High Courts may feel bound by it due to the doctrine of stare decisis until the case is distinguished as not binding for being per incuriam, which in my humble view is arguably so. Hence, the air has to be cleared another day when and if the opportunity for argument arises.
For the layman, know that forfeiture of property application can be challenged especially if you had not acquired them knowingly through illegal means. Secondly, it also appears to be the odd position of the law for now (or uncertain) that third party rights may prevail over the rights of the person from whom the property was forfeited in the first place. This odd position in my humble view also puts to question the constitutional protection given to property rights.
In the Penal Code, there is an entire chapter listing over 40 offences against property which includes cheating, criminal breach of trust and dishonestly receiving stolen property. Likewise there are many other statutes such as the recently popular Malaysian Anti-Corruption Act and the Anti-Money laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act (“Amlatpua Act”).Under Section 3 of the Amlatpua Act, the term “proceeds of an unlawful activity” is defined as “any property derived or obtained, whether directly or indirectly, by any person as a result of any unlawful activity”. The term “unlawful activity” is further defined as any activity which constitutes any serious offence or foreign serious offence, regardless of whether such activity, in whole or in part, takes place within or outside Malaysia.
Under the Amlatpua Act, serious offences are compiled from various statutes and provisions, and are listed in the Second Schedule of the Act. The serious offences include, but are not limited to .... Hence, if you are investigated under any of the serious offences, your property may be firstly seized and your bank accounts frozen followed subsequently by an application by the Attorney General’s chamber (“AG’s Chambers”) to forfeit your property.
It surprises many lay persons that the AG’s chambers can actually apply to the court to forfeit your property even though you have not been charged in court. The AG’s chambers may proceed to court with the forfeiture application of your property under section 56 of the Act if they are satisfied that, inter alia, that your property is gained from unlawful activity or it is the subject matter of the offence. However, the burden remains on the prosecution to prove that the property was indeed proceeds from an unlawful activity.
The peculiar thing is that the standard of proving that the property is a subject matter of unlawful activities is lower than the standard of proving that you had done illegal activities to obtain the property if you are so charged. As a practising lawyer, I could never understand this distinction but that is the law as provided for under the relevant statute. Obviously, you can challenge this forfeiture application if you are able to show that you had not obtained the proceeds unlawfully or that you are an “innocent third party” who could not know of the offence so alleged.
If you had been charged in court for a serious offence and found guilty, the prosecution may proceed to apply to court under section 55 to forfeit your property. In either case (whether after prosecution or before), the law requires that when an application is made for forfeiture, the Court shall, under section 61 of the Act, cause to be issued a notice to third parties to show cause why it should not be forfeited.
This is where, with the greatest of respect, the law (or the manner in which it is interpreted) becomes comical. Some High Court Judges interpret section 61 to mean that they should hear the third-party application before they hear the forfeiture application by the prosecution. With respect, this approach appears to involve “unauthorised” judicial interference in possible contractual relationships. This is, in my humble view, an unnecessary burden taken on by the Courts. Some other High Court Judges, quite rightly in my humble opinion, had interpreted both section 56 read together with section 61 to mean that the application by the prosecution ought to be heard first to determine whether the properties are indeed forfeitable.
The second approach, in my humble view is more sensible and is in accord with the spirit and purpose of what section 56 and section 61 intended as it does not give rise to peculiar consequences such as possible unwarranted interference by the Courts into contractual relationships. Those Judges who hear the forfeiture application under section 56 first make two kinds of orders. Firstly, if the property is not forfeitable because the prosecution failed to prove its case, then the hearing of the third party should not even arise. Secondly, on the other hand, if it is forfeitable, then the Judge would make a conditional order of forfeiture subject to third party rights as allowed for under section 61 of the Act.
However, the mandatory requirement to issue a notice to third parties under section 61 seems to have caused the confusion, in my humble view, that the third party application precedes the prosecution’s forfeiture application. In other words, the prosecution does not even have to prove that the properties sought to be forfeited are from unlawful activities before the third party application I heard. This situation probably arose due to the Court of Appeal’s decision in the case of PP v. Taiko Fertiliser & Anor [2019] 4 CLJ, where it appears to suggest that section 61 application should prevail over section 56 application. Hence, some of the High Courts may feel bound by it due to the doctrine of stare decisis until the case is distinguished as not binding for being per incuriam, which in my humble view is arguably so. Hence, the air has to be cleared another day when and if the opportunity for argument arises.
For the layman, know that forfeiture of property application can be challenged especially if you had not acquired them knowingly through illegal means. Secondly, it also appears to be the odd position of the law for now (or uncertain) that third party rights may prevail over the rights of the person from whom the property was forfeited in the first place. This odd position in my humble view also puts to question the constitutional protection given to property rights.
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