Dato’ Sri Akhbar Satar 

Director and Holds the Professorial Chair with HELP University's Institute of Crime and Criminology (ICC).

One of the ways of making dirty money legitimate is money laundering, which is a process of converting dirty money so it appears legal. This money is smartly cleaned to extinguish its origin from illegal activities, such as bribery, corruption, fraud, drug trafficking, terrorism, prostitution and illegal gaming.

Money is the prime reason for engaging in criminal activities and the goal is to get the dirty money into the financial system, including cryptocurrencies and cross-border financial transactions and underground economy.

The Black Money like it or not is also funding our economy. Malaysia’s shadow economy consists 21 % of the country’s GDP, according to Finance Minister. There are three steps to clean the money.

Placement: Dirty cash transfers that enter the financial system (by wire transfers and transfers of funds offshore);

Layering: The process where the money is separated from the original illegal source; and,

Integration: Finally, money re-enters the financial system and economy through legal investments.

The spirit of ant-money laundering law

Malaysian Anti-Corruption Commission (MACC) Anti-Money Laundering Division director Deputy Commissioner Mohamad Zamri Zainul Abidin has written an excellent article, saying there is much misunderstanding about the entitled use of compounds as a strategy to recover assets using the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLATFPUAA).

He said a person who has been charged and found guilty of money laundering must be punished with a jail sentence and a large fine, in addition to recovering all the stolen assets.

However, the recovery of laundered money has become increasingly more challenging due to criminals operating in syndicates, laundering ill-gotten gains through registered companies to hide their wealth.

Oftentimes, the ill-gotten gains are used for legal or illegal purposes to generate more income. It is also a known fact that criminals are getting smarter in the use of digital currencies to launder money.

In Malaysia, it is an offence under Section 4(1) of AMLATFPUAA. If convicted, the person may face imprisonment not exceeding 15 years and a fine of not less than five times the value of the proceeds, or RM5 million, whichever is higher.

Zamri said paramount to the act was the recovery of assets and return to the people. Here we need to understand why the essence or spirit of the Act is rather different from other Acts.

It is quite different in spirit from the Penal Code which is to charge and mete out harsh punishments to deter would-be criminals.

 

While that element is also just as important in AMLA, it takes a more practical route from the understanding that if you recover the stolen assets, you paralyse the operations which benefited from ill-gotten gains.

 

"If the authorities were to charge an offender for criminal breach of trust under the Penal Code, it is foreseeable that the case may take many years to prove beyond reasonable doubt the guilt of the offender." The offender may get off due to technicalities through the lengthy appeal process.

Or the offender may be jailed for a few years for the white collar crime, and when he gets out, he might be able to access his laundered money via his proxies, he said.

Strategies to recover assets

There are a number of strategies that can be taken to recover assets using AMLATFPUAA, for example, criminal prosecution, civil forfeiture, compound fines, return of assets to bona fide owners and asset recovery from absconded persons.

In the case of issuing a compound, the act takes the preponderance of evidence rather than having to prove beyond reasonable doubt to offer the accused a choice to pay the compound fine.

In that way, the primary goal of asset recovery is achieved.

A compound is a punitive action, and paying the compound is an admission of guilt, said Zamri. This saves the court's cost and time by recovering a portion of the disputed sum without having to go through a lengthy process. But if the accused fails to do so, he would be prosecuted in a full trial, he said.

It is strongly agreed that compounds also avoid lengthy trials as a guilty sentence is not a certainty, and this could result in the funds involved in corrupt offences becoming irreclaimable. Monies will be returned to public through the Federal Consolidated Fund.

It is not right to compare offences under AMLATFPUAA and the Penal Code as both have different burdens of proof.

Due to the huge challenge to prosecute and to recover assets linked to 1Malaysia Development Bhd (1MDB), Malaysia has garnered bouquets and brickbats for being in the middle of "one of the world's greatest financial scandals".

MACC success in asset recovery

MACC has managed to achieve about 45 per cent of asset recovery, or RM 21 billion, with the establishment of the International Task Force on 1MDB asset recovery and prosecution.

 

Out-of-box laundering methods

Many Malaysians have been investigated and charged. Politically-exposed people present a higher risk of involvement in money laundering because of the position they hold.

They are thinking out of box to clean the illegal money. Besides business and retails, political funding, election and setingt up charity organizations is one of the unconventional methods being used to wash and clean their dirty money.

Money changers are the operatives using hard cash. It is alleged that private jets in many cases were deployed to bring hard cases of hard cash in boxes.

Dirty cash is a curse that dares not speak its name in the upcoming election.

They should be calling out Malaysia's money laundering epidemic as money laundering poses new challenges, poisoning and leaving stains on our democracy that will not easily come out in the wash.