INTRODUCTION

In December 2024, Malaysia introduced significant amendments to the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (“AMLATFPUAA 2001”). Among the most important aspects of these reforms is the expansion of powers granted to competent authority under the new Section 7A. [1]

To strengthen efforts against restricted activity financing, the Act now grants broader authority to key officials, including the Minister, competent authority, regulatory and supervisory bodies, and enforcement agencies. These expanded powers cover more extensive investigations.

New regulations enable competent, regulatory, and supervisory authorities to conduct ongoing reviews and oversight of institutions to verify that they are meeting the requirements set out in Part VIA, which addresses the prevention of terrorism financing, and Part VIB, which targets the financing of restricted activities. Additionally, these authorities can mandate that reporting institutions establish and carry out specific action plans to ensure full compliance with the duties outlined in these sections of the Act.

POWERS OF COMPETENT AUTHORITY

Pursuant to Section 7A of the Amendment Act 2024, the Minister of Finance may, upon the recommendation of the competent authority (i.e. Bank Negara) and after consultation with the Minister of Home Affairs for the purposes of Part VIA, by order published in the Gazette, appoint any person to be a regulatory or supervisory authority and such person shall have all the functions conferred on a regulatory or supervisory authority under this Act as specified by the Minister of Finance. In connection to this, Section 7A also allows regulatory or supervisory authorities to delegate their powers and functions to other persons, subject to consultation with the Minister of Home Affairs.

Opening of Account or Conducting Business Relationship, Transaction or Activity in Fictitious, False or Incorrect Name

Next, Section 18 (5A) of the amendment act, the competent authority is empowered to issue any form of directive including instructions, guidelines, circulars, standards, notices, or requirements or impose conditions on reporting institutions and their directors, officers, or employees. These powers specifically apply to situations involving the opening of accounts or the conduct of business relationships, transactions, or activities under fictitious, false, or incorrect names.

Clarity on Record-Keeping Obligations

Another major change is Section 13 of the Amendment Act 2024 introduced new subsection 3A requiring all domestic and international transactions, including those involving persons acting on behalf of customers to be recorded. Under this, the competent authority is empowered to issue any direction, instruction, guideline, circular, standard, notice, or requirement or to impose any condition on a reporting institution or its directors, officers, or employees, as it deems necessary.

In January 2024, Bank Negara Malaysia imposed a compound of RM96,250 on Habib Jewels Sdn Bhd for failing to promptly submit Suspicious Transaction Reports on a series of transactions flagged by its own internal systems. The case reflects how delayed reporting even in a single year can expose the system to risks of abuse and erode confidence in Malaysia’s AML safeguards.[2]

Compliance of obligation

The new provision Section 83A[3] was also introduced to empower the competent authority enabling them to instruct or enter into agreements with reporting institutions or any entity, as well as its directors, officers, or employees, found to be involved in terrorism financing or the funding of restricted activities under Parts VIA and VIB. This provision allows authorities to require these parties to implement specific action plans, ensuring they meet all compliance obligations set out in the Principal Act.

Administrative actions

Section 83B[4] gives regulatory and supervisory authorities the power to take a range of administrative actions in response to violations of key compliance areas. This includes breaches of reporting obligations (Part IV), rules on countering terrorism financing and handling terrorist property (Part VIA, except for dealings with Specified Entities under subsection 66B(3)), and regulations related to restricted activity financing (Part VIB, except for the offence outlined in section 66H). The section also covers failures to follow specific directions, guidelines, circulars, or the requirements set out in Section 83A of the Act.

Commencement of civil action & Power of Court to make orders.

In the circumstances, the competent authority or the regulatory or supervisory now have the power to commence civil action against any person for contravention of Parts IV, VIA or VIB or directions, requirements issued under Part IV, VIA VIB or VII whether or not such person has been charged or a contravention proven in prosecution. his provides alternative actions to be taken by the authority depending on the types of non-compliance. Under the Principal Act, current available actions are prosecution, issuing compound and enter into agreement or direction. [5]

Previously, the Principal Act focused mainly on responding to offenses after they occurred. With the introduction of Section 83D, courts now have the authority to issue a wide range of proactive orders including injunctions and the removal or suspension of key personnel to prevent potential violations before they happen. These interim orders can be made without the usual requirement for an undertaking as to damages. Under Section 83C, authorities are empowered to initiate civil proceedings against suspected offenders, allowing the legal system to address risks early and strengthen overall compliance.[6]

BENEFITS OF STRENGTHENING ENFORCEMENT

The amendments strengthen the ability of competent authorities to monitor and investigate financial transactions more effectively. They also introduce proactive measures aimed at safeguarding the financial system from being misused for criminal activities, thereby reducing the risk of Malaysia being exploited by money launderers and terrorism financiers.

From a positive perspective, these powers can significantly improve the speed and effectiveness of investigations. Criminals who previously exploited legal delays or bureaucratic loopholes may now find it harder to launder money or hide their assets. Malaysia also moves closer to meeting the recommendations of the Financial Action Task Force (FATF), which has urged member countries to close enforcement gaps and improve coordination among regulatory bodies.

RISKING OVERREACH: CONCERNS AND POTENTIAL PITFALLS

While the 2024 amendments aim to bolster enforcement capabilities, the expanded powers also introduce risks that warrant scrutiny and vigilance. Allowing enforcement officers to freeze bank accounts or demand sensitive information without prior judicial oversight may potentially lead to abuse if not carefully monitored. Innocent individuals and businesses risk being locked out of their own funds based solely on suspicion, without any opportunity to defend themselves in court.

Moreover, not all competent authorities have the same level of training or experience to use these new powers responsibly. Without clear guidelines, internal checks, and transparency mechanisms, there is a real risk that enforcement decisions could be made arbitrarily or even be politically motivated.

CONCLUSION

The 2024 AMLA amendments are a major step in Malaysia’s journey toward stronger financial integrity, but with greater power comes greater responsibility. Enforcement must be fast, but also fair. Data must be accessible, but also protected. Above all, legal powers must always serve the interests of justice not mere convenience.

To strike the right balance, several steps are necessary:

  • Strict internal procedures must be established by all enforcement agencies to ensure that every decision to exercise these powers is properly recorded, reviewed, and independently audited.
  • Judicial oversight should remain a key safeguard, especially in cases involving asset seizures and data privacy concerns.
  • Public transparency must be strengthened by requiring authorities to publish annual reports showing how often these powers are used and under what circumstances.
  • Training and capacity building should accompany enforcement reforms to ensure that officers are well-versed not only in legal procedures but also in ethics, technology, and human rights.

[1] Section 7A of the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities (Amendment) Act 2024 [Act 613]

[2] https://www.bnm.gov.my/-/ea-hjsb24

[3] Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities (Amendment) Act 2024 [Act 613]

[4] Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities (Amendment) Act 2024 [Act 613]

[5] Section 83C of the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities (Amendment) Act 2024 [Act 613]

[6] Section 83D of the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities (Amendment) Act 2024 [Act 613]