The hunt for dirty money taints our democracy
COMMENT | One of the ways to make dirty money legitimate is through money laundering, which is a process of converting dirty money to appear legal.
This money is smartly cleaned to extinguish its origin from illegal activities, such as bribery, corruption, fraud, drug trafficking, terrorism, prostitution and illegal gambling.
Money is the main reason to engage in criminal activities and the goal is to get dirty money into the financial system including cryptocurrencies, cross-border financial transactions and the underground economy.
Black money, whether we like it or not, also finances our economy. Malaysia’s underground economy accounts for 21% of the country’s gross domestic product (GDP), according to the finance minister.
There are three steps to cleaning silver.
Placement: Transfers of dirty cash that enter the financial system (through electronic transfers and transfers of funds abroad);
Layering: the process by which money is separated from the original illegal source; and,
Integration: Finally, the money re-enters the financial system and the economy through legal investments.
Anti-money laundering law
Deputy Commissioner Mohamad Zamri Zainul Abidin, Director of MACC’s Anti-Money Laundering Division, wrote an excellent article, saying that there is a lot of misunderstanding about the permitted use of compounds as an asset recovery strategy at using the Anti Money Laundering, Terrorist Financing and Proceeds of Illegal Activities Act 2001 (AMLATFPUA).
He said a person who has been charged and found guilty of money laundering should face jail time and a heavy fine, in addition to recovering all stolen assets.
However, recovering laundered money has become increasingly difficult due to criminals operating in syndicates, laundering ill-gotten gains through registered companies to hide their wealth.
Often, ill-gotten gains are used for legal or illegal purposes to generate more income.
It is also known that criminals are increasingly cleverly using digital currencies to launder money.
In Malaysia, it is an offense under Article 4(1) of the AMLATFPUAA. The person may face imprisonment not exceeding 15 years and a fine of at least five times the value of the product, or RM5 million, whichever is greater.
Zamri said the priority of this act was the recovery of assets and the return to the people.
“If the authorities were to charge an offender with breach of trust under the Penal Code, it is foreseeable that the case could take many years to prove the offender’s guilt beyond a reasonable doubt.”
The offender may get away with technicalities throughout the lengthy appeal process.
Or the offender can be jailed for a few years for the white-collar crime, and when they get out, they might be able to access their laundered money through their proxies, he said.
Asset recovery strategies
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 recovery of assets from persons on the run.
In the case of issuing a compound, the law takes the preponderance of the evidence rather than having to prove beyond a reasonable doubt to offer the accused the choice of paying the compound fine.
In this way, the main objective of asset recovery is achieved.
A compound is a punitive action, and paying the compound is an admission of guilt, Zamri said.
This saves time and legal costs by recovering part of the disputed sum without having to go through a long process. But if the accused fails to do so, he will face a full trial, he added.
Compounds are also strongly agreed to avoid lengthy trials as a conviction is not a certainty, and this could result in funds involved in corruption offenses becoming unrecoverable. The funds will be returned to the public through the Federal Consolidated Fund.
It is not fair to compare the offenses under the AMLATFPUAA and the Penal Code as the two have different burdens of proof.
Due to the enormous challenge of prosecuting and recovering assets linked to 1MDB, Malaysia has reaped the brunt of being in the midst of “one of the biggest financial scandals in the world”.
MACC has managed to achieve around 45% of asset recovery, or RM21 billion, through the establishment of the International Asset Recovery and Prosecution Task Force 1MDB.
Ready-to-use whitening methods
Many Malaysians have been investigated and charged.
Politically Exposed Persons pose a higher risk of involvement in money laundering because of the position they hold.
They think outside the box to clean up illegal money. Apart from businesses and retail businesses, political finance and elections are one of the unconventional methods used to wash and clean their dirty money.
Dirty money is a curse that dares not speak its name in the next election.
They should speak out against the money laundering epidemic in Malaysia, because money laundering poses new challenges, poisons and leaves stains on our democracy that will not easily wash away.
AKHBAR SATAR holds the professorship at the Institute of Crime and Criminology at Help University.