The viability of enforcement mechanisms under money laundering and anti‐terrorism offences in Malaysia. An overview
| Published date | 03 May 2013 |
| DOI | https://doi.org/10.1108/13685201311318511 |
| Date | 03 May 2013 |
| Pages | 171-192 |
| Author | Guru Dhillon,Rusniah Ahmad,Aspalela Rahman,Ng Yih Miin |
| Subject Matter | Accounting & finance |
The viability of enforcement
mechanisms under money
laundering and anti-terrorism
offences in Malaysia
An overview
Guru Dhillon
Faculty of Law, Multimedia University, Melaka, Malaysia
Rusniah Ahmad and Aspalela Rahman
College of Law, Government & International Studies, Faculty of Law,
Northern University of Malaysia, Sintok, Malaysia, and
Ng Yih Miin
Faculty of Law, Multimedia University, Melaka, Malaysia
Abstract
Purpose – The purpose of this paper is to give a better insight to the legal society, practitioners and
legislators of the working mechanisms of money laundering activities, as well as the functionalities of
the Anti-Money Laundering and Anti-terrorism Financing Act 2003 (AMLATFA) in Malaysia, in
curbing money laundering and terrorism funding activities. At the same time, the paper provides an
overview on the applicability and practicability of the enforcement mechanisms in Malaysia by
exploring legislations from different jurisdictions that are more developed.
Design/methodology/approach – The paper achieves this by having a cross-sectional analysis
onto the legislation in Malaysia such as AMLATFA and also similar legislations found in countries
such as the UK. A complete insight is further gained by having interviews with experts in the
judiciary, Bank Negara, as well as the experts from the Attorney General’s Chamber in Malaysia
regarding their insight into the subject matter. Last but not least, the authors also surveyed into the
different points of view from journal articles in Malaysia and globally.
Findings – Malaysia has a legal framework for curbing money laundering but the current
AMLATFA provisions are considered to have failed to be effectively enforced. A more comprehensive,
specific and well elaborated legal framework will have to be laid down in order to create a better
platform for the prosecutors to bring a good case against these money launderers.
Practical implications – Thispaper will give a deeper insight to the legal society ofthe capability
of AMLATFA and the lack of it, in curbing money laundering in Malaysia and, at the same time,
creating awareness among policy makers of the difficulties faced by the enforcement bureaus in
prosecuting these money launderers due to the lacunas in the current law.
Originality/value – This paper could be useful source of information for practitioners, academics,
policymakers and students and a guide for any possible future amendments to the current
insufficiency.
Keywords Malaysia, Legislation, Money laundering,Anti-terrorism, Enforcement mechanisms
Paper type Research paper
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1368-5201.htm
Journal of Money Laundering Control
Vol. 16 No. 2, 2013
pp. 171-192
qEmerald Group Publishing Limited
1368-5201
DOI 10.1108/13685201311318511
Viability of
enforcement
mechanisms
171
Introduction
The shockwave of the terrorist attacks on 11 September 2001 has entirely merged the
two distinct processes – money laundering and terrorist financin g (Munshani, 2008).
The FATF at the time of the incident with massive support from 130 states and
international organizations formulated a system of voluntary regulatory structure s
which includes amongst others, the obligations to report any suspicious financial
activities and transformed such obligations into a mandatory procedure[1]. The efforts
could then be seen in the October 2001 issue of “Anti-Money Laundering of Nine
Special Recommendations on Terrorist Finance”[2].
The changes that have changed the entire system of the international world have
concurrently caused the changes to the Malaysian legislation. In July 2001, the
government gazetted the Anti Money Laundering Act (AMLA)[3] as it was then referred
to. The Government of Malaysia did not just stop there but continued making
amendments[4] as an effort to curb with the uprising money laundering by terrorist cell
groups. Subsequently this Act was then amended with special Recommendations on
Terrorist Financing and the Act is now commonly referred to the Anti-Money
Laundering and Anti Terrorism Financing Act 2001.
Money laundering has been criminalised by the AMLATFA. The provisions in this
Act also bridged the boundaries set by the bank secrecy[5] provisions that previously
have impeded many criminal investigations involving clients of financial institution.
Such changes have been absolutely necessary in order to ensure that money launderers
be brought to justice by effective enforcement carried out with the co-operation of the
banking and financial institutions in reporting any forms of suspicious activities to the
Bank Negara.
In general, the AMLATFA contains the offences involving money laundering which
include amongst others the procedures of investigations, the mandatory obligation of
reporting and recording of evidence as well as the forfeiture of properties and assets of
the suspected individuals corporate bodies. The AMLATFA provides the power to
freeze and seize any property when there is existence of a reasonable ground to suspect
any gains or any involvement in the money laundering activities[6].
Money laundering
This paper will first focus in the discussion involving money laundering activities as
this will provide the milieu understanding of how money laundering is associated with
financing of terrorism (Morais, 2002). In this context, money laundering activities are
considered as the most adequate and probably most exploited form of activity in the
role for financing terrorism. It was once being viewed that money laundering and
terrorism funding were two different legal, financial and political issues but since late
2001 then has evolved into a merged system in our current modern society[7].
Definition of money laundering
According to the FATF[8], money laundering could be best defined as “The processing
of the proceeds of crime so as to disguise their illegal origin”. Money laundering is also
found to have its own definition in the 1988 Vienna Convention which states as any form
of activities that involve conversion or transfer of property at the state of mind of
knowing or aware of such property is derived illegal activities as stated in the
sub-paragraph (a)[9] of the said document also stated for the same convention that
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