Summary of Key Amendments to The Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (“AMLA 2001”)
The Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Amendment Bill (“Bill”) was passed by the House of Representatives on 11th December 2024.[1] The primary objective of the Bill is to enhance supervision and enforcement measures to combat money laundering and terrorism financing effectively. The Bill has 52 clauses with proposed new sections including the introduction of new provisions targeting the financing of restricted activities such as the proliferation of weapons of mass destructions. It also emphasizes preventive measures to protect the country’s financial system from being exploited for criminal purposes[2] while aligning to Financial Action Task Force (“FATF”) 40 Recommendations.
We have taken the opportunity to review the Bill and below is the brief summary of the amendments to the AMLA 2001;
| Subject | Existing Provisions | New/ Amended Provisions | Remarks |
A. Introduction of New Requirements/Provisions |
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| Scope of the AMLA 2001 | The Act primarily focused on combating money laundering and terrorism financing, without explicitly addressing other threats like financing for restricted activities under the Strategic Trade Act 2010 (STA 2010). | The scope of the AMLA 2001 is broadened to include financing for “Restricted Activities” under STA 2010, such as the proliferation of weapons of mass destruction. This includes:
Part VIB: Expands the AMLA 2001 to address new financial crimes.
New Terminologies: Introduces terms like “aktiviti terhad” (restricted activities) and “harta pencambah” (proliferator property) for clarity. |
This amendment aligns the AMLA 2001 with international standards, particularly the FATF recommendations, ensuring a more comprehensive framework to counter emerging financial crime risks. |
| Public Transparency | There were no specific provisions allowing authorities to publicly disclose the outcomes of enforcement actions or related proceedings. This limited transparency about ongoing efforts to combat financial crimes. | Section 83E, empowers authorities to disclose information when deemed in the public interest. This includes publishing details about enforcement actions or the results of legal proceedings under the AMLA 2001. | The provision aims to improve public awareness and trust in enforcement efforts, ensuring transparency about actions taken to safeguard the financial system. |
| Judicial Preventive Orders | The Act focused on addressing offences post-occurrence, without providing pre-emptive measures to prevent potential breaches. | Section 83D introduces judicial powers to issue preventive orders in cases where a breach of the AMLA 2001 provisions is reasonably likely. These orders can:
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These powers give courts the ability to act proactively, enhancing the legal framework to mitigate risks before they materialize, thus strengthening compliance.
The court’s power under Section 83D comes from Section 83C, which allows authorities to start civil proceedings against those suspected of breaking the law. Both sections must be read together: Section 83C gives the legal basis for action, while Section 83D lets the court take steps, like issuing orders, to prevent further harm or violations. |
| Compliance Plans | Only reporting institutions were responsible for developing compliance plans and internal controls, ensuring employee integrity, training, and audits. | Section 19 was amended to extend these obligations to include the Board, senior management, compliance officers, and employees of reporting institutions. | The revised Act expands compliance responsibilities to include the Board, senior management, compliance officers, and employees of reporting institutions. The regulatory authority can now issue directions or conditions regarding compliance.
Failure to comply with these expanded obligations may result in fines of up to one million ringgit for the institution or its personnel, holding all levels of the institution accountable for compliance. |
| Delegation of Powers | Supervisory authorities were solely responsible for oversight and could not delegate their powers to other entities. | Section 7A, allows regulatory or supervisory authorities to delegate their powers and functions to other persons, subject to consultation with the Minister of Home Affairs. | The change provides supervisory and regulatory bodies with flexibility and efficiency in carrying out their functions, ensuring effective supervision and enforcement. |
| Extended Liability | Obligations and penalties primarily applied to reporting institutions, limiting individual accountability for directors, officers, and employees. | Liability is extended to individuals, including directors, officers, and employees of reporting institutions. For example, Section 66G introduces stringent penalties for failing to cooperate with inspections, including fines up to RM3 million, imprisonment for up to five years, or both. Additionally, confidentiality laws protect professionals who comply with inspection demands.
The amended Section 83 extends liability to individuals, mandates compliance with regulatory directives (including reporting institutions and their directors, officers, and employees), and enforces penalties of up to RM1 million for violations, strengthening accountability and regulatory enforcement. |
The extension reinforces the shared responsibility of institutions and individuals in ensuring compliance with the AMLA requirements and deters non-compliance at all levels. |
| Administrative Action | Current available actions are prosecution, issuing compound and enter into agreement or direction. | Section 83C introduces administrative actions such as penalty, private and public reprimand and directive order. | This provides alternative actions to be taken by the authority depending on the types of non-compliance. |
B. Amendments/Enhancement to Existing Provisions |
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| Clarity on Record-Keeping Obligations
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Under Section 17(1), reporting institutions were required to retain transaction records for six years from either the date an account was closed or the business relationship ended. | Reporting institutions must retain records for at least six years after account closure or business relationship/ transaction termination/ completion, whichever is later | These changes provide clarity on period and standardise the documents record keeping while enhancing the traceability of financial activities. |
| Under Section 13, a reporting institution is required to maintain a record of any transaction that involves either local currency or any foreign currency exceeding an amount determined by the competent authority (threshold basis). | Section 13 was also amended, requiring all domestic and international transactions, including those involving persons acting on behalf of customers to be recorded. | ||
| Asset Seizures | Assets could be seized and retained for a maximum of 12 months under Sections 52A and 28L. | The maximum period for asset seizures and retention is extended to 18 months under Sections 52A and 28L. | This amendment allows for more thorough investigation and preparation of cases involving complex financial crimes. |
| Mandatory Sentencing | Sentencing provisions allowed discretion for imprisonment. Violators could be imprisoned for up to 15 years or fined not less than five times the proceeds of illegal activity or RM5 million, whichever was higher | The wording in Section 4(1) is amended to make imprisonment mandatory for convicted offenders. The previous discretionary phrasing (“may be imprisoned”) is replaced with mandatory terms (“shall, upon conviction, be imprisoned”). | The mandatory sentencing provision ensures that penalties are consistently enforced, demonstrating the seriousness of financial crimes and enhancing deterrence. |
| Compound Offences with Higher Fines | Competent authority or relevant enforcement agency may compound offences up to 50% of the statutory maximum fine for the offence. | The cap on compoundable offences is removed under Section 92, allowing competent authority and relevant enforcement agency to impose fines up to the maximum fine for that offence. | This increases the financial consequences of violations and aligns penalties with the severity of offences, improving compliance. |
Conclusion
The recent amendments to the AMLA 2001 underline a pivotal shift towards fostering greater accountability and transparency in combating financial crimes. By introducing more robust compliance measures, extending liability to all levels within reporting institutions, and empowering authorities with pre-emptive and administrative tools, these changes aim to safeguard the integrity of Malaysia’s financial system. Businesses must recognize that compliance is no longer a mere operational requirement; it is a strategic necessity to protect their reputation and ensure sustainability in a landscape of heightened regulatory scrutiny. Adherence to these enhanced provisions not only mitigates risks but also reinforces trust among stakeholders, creating a foundation for long-term success in an increasingly interconnected and regulated global economy.
Authors:
- Fakhrullah Fadzilah
- Wan Tasnima
- Alif Mustaqim
References:
[1] List of Bills, House of Representatives, https://www.parlimen.gov.my/bills-dewan-rakyat.html?uweb=dr&lang=en
[2] The Edge, AMLA Amendment Bill 2024 tabled in Parliament, https://theedgemalaysia.com/node/737226
Published Date: 31 December 2024