Money launderers hide behind legit businesses, charities

KUALA LUMPUR - Criminal syndicates hide behind legitimate businesses, including carrying out charity activities as a tactic to launder money from the proceeds of illegal activities.

Federal police Anti-Money Laundering (AMLA) Criminal Investigation Department Assistant Director Senior Assistant Commissioner Fazlisyam Abd Majid said launderers used three processes to make the illicit money legitimate: placement, layering and integration.

He said the process involved the exchange of cash or property gained from criminal activities to obscure the authorities from tracing the source of the activities involved.

“For the first stage (placement), the money obtained from illegal activities will be invested through a legal financial system or kept as cash in house or premises. Criminals will deposit a small amount of cash into different bank accounts.

“The second stage (layering) is a multi-level round process, where they will separate the illegal money from its source.

“At this stage, criminals will withdraw their savings repeatedly through several different banks,” he told Sinar Harian recently.

Fazlisyam added that in the final stage (integration), they absorbed the illicit money into legitimate financial and economic systems, such as buying assets like houses or vehicles.

As an example, he said, a suspect might receive RM500,000 from illicit activities and it would be hidden through the layering process, and the amount would be distributed into proxy accounts, accounts of contacts and family members or purchase of vehicles.

“Next, the integration process plays a role where the segregated money enters the economy so that it can be seen as legal money where the cash is handed over to another individual before the money is put back into the suspect’s account.

“Some would use the excuse of paying debts, even though the money was originally from an illegal source,” he said.

Clearly, this is the modus operandi used by criminals to hide illegal activities by using legit services and businesses including charity.

Commenting further, Fazlisyam said to date there were 424 types of serious offences listed under the Second Schedule of the AMLA out of 51 relevant acts.

He said AMLA investigations were made for criminal cases which were listed as serious offences in the Second Schedule such as gambling, smuggling, prostitution, kidnapping, collusion, fraud or scam, robbery and other syndicated crimes.

“AMLA will start an investigation when it finds any element of money laundering.

“Every day, AMLA Division will review and monitor cases that occur throughout the country, whether they are under criminal, commercial or special branches.

“We would ensure that the cases charged gave an impact to the community by eliminating the motivation of the perpetrators, “he said.

He added that when the AMLA takes action against the crime, it can have a big impact, including crippling their financial resources.

He said, in terms of investigation procedures, suspects would be called for the process of recording and gathering evidence.

“AMLA permits freezing suspect’s property under Section 44 of the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activity Act 2001 (AMLATFPUA) where the officers can conduct the investigation for 90 days.

“If there is further evidence showing that each property relates to money laundering, the deputy public prosecutor (DPP) and senior investigation officer have the power to confiscate the property with an extension of 12 months,” he said.

He also said the DPP has the power to seize bank accounts and immovable property such as real estate and houses, but for movable assets such as vehicles and jewellery, it would fall under the senior investigating officer’s jurisdiction.

“The final action is either accusation and trial, civil forfeiture or no further action (NFA),” he said.

Fazlisyam added the statistics from 2020 to May this year recorded more than RM147 million forfeited, which does not include the value of foreign currencies and share units.

"This is the result of 406 investigation papers opened for various assets involving more than RM850 million assets frozen and RM956 million worth of assets seized," he said.

He explained that money laundering does not mean the perpetrators just committed crimes and enjoyed illegal proceeds but also those who helped transfer, hid and change the income status.

“The police always work hand in hand with Bank Negara Malaysia (BNM) and other agencies to ensure the compliance of all parties stipulated in this act.

"In ensuring the actions taken are on the best track, our country is subjected to the will of the world where efforts to combat money laundering and terrorist financing are monitored by the Financial Action Task Force (FATF) and the Asia Pacific Group (APG).

"At the domestic level, the fight against crime is also coordinated by several other agencies such as BNM, the National Financial Crime Centre (NFCC) and several secretariats comprising all authorities involved," he explained.