Money Laundering Offence Under Section 4 AMLA in Malaysia

What conduct does section 4 of AMLA cover?

Section 4(1) catches almost any handling of dirty money, not only elaborate schemes. A person commits money laundering if he or she does any of the following with the proceeds of an unlawful activity or the instrumentalities of an offence:

Proceeds include property wholly or partly derived from an unlawful activity, and economic gains from it, whether in Malaysia or abroad. Instrumentalities are things used in, or in connection with, the unlawful activity.

Limb (b) is the most common charge for individuals. In February 2025, for example, a former headmistress was charged in the Sessions Court in Kuala Terengganu under section 4(1)(a) and section 4(1)(b) over transfers made from, and money received into, her bank accounts.

What must the prosecution prove?

The prosecution must prove, beyond reasonable doubt, three things: the conduct, that the money or property was proceeds of an unlawful activity or instrumentalities of an offence, and the required state of mind.

1. The conduct: for example, that the accused received the money into an account he or she controlled.
2. The tainted nature of the property: section 4 provides that it need not be proved to come from any specific unlawful activity, and a conviction is possible irrespective of whether anyone has been convicted of, or prosecuted for, the original serious offence.
3. The mental element: that the accused knew, had reason to believe or had reasonable suspicion that the property was proceeds of unlawful activity, or, without reasonable excuse, failed to take reasonable steps to find out. This may be inferred from objective factual circumstances.

In Azmi bin Osman v Public Prosecutor, decided by the Court of Appeal in 2016, a police officer's bank account held money paid by illegal gambling operators. The court held it immaterial that he was not convicted of the predicate offence, and that wilful blindness did not excuse him.

The objective test matters in practice. The court looks at what a reasonable person would have made of the facts: an unusually high fee, a stranger's request, round-sum deposits, or instructions to withdraw cash quickly. Saying "I did not know" is rarely enough on its own.

What is a predicate offence after the 2026 amendments?

A predicate offence is the underlying crime that produced the money. AMLA calls it a serious offence, a foreign serious offence or an unlawful activity. Since 1 March 2026, when the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities (Amendment) Act 2025 (Act A1761) came into force, the definition is much wider.

Before the amendment, a serious offence generally meant an offence listed in the Second Schedule to the Act. The amendment adds a new paragraph (aa) to the definition in section 3(1): any offence under federal law punishable with imprisonment of one year or more. Offences in the Second Schedule still count, and offences committed abroad that would be serious offences here are foreign serious offences.

Predicate offences seen in reported Malaysian cases include:

• cheating under section 420 of the Penal Code;
• illegal deposit-taking under section 137 of the Financial Services Act 2013 (Act 758);
• corruption offences under the Malaysian Anti-Corruption Commission Act 2009 (Act 694);
• illegal gambling.

The practical effect is that money from many regulatory and commercial offences, not only fraud, drugs or corruption, can now found a money laundering charge, and the related freezing and forfeiture powers. Businesses should take this into account when receiving funds from counterparties under investigation. Our corporate fraud page explains the related civil remedies.

What is the penalty for money laundering in Malaysia?

On conviction under section 4(1), the penalty is imprisonment for a term of up to 15 years and a fine of not less than five times the sum or value of the proceeds or instrumentalities at the time of the offence, or RM5 million, whichever is higher. The 2025 amendments, in force from 1 March 2026, make imprisonment mandatory on conviction, and published commentary states that both the imprisonment and the fine are now mandatory.

The minimum fine is often misunderstood. It is the higher of the two figures, so for small amounts the RM5 million floor applies:

Each charge is a separate offence, and prosecutors often bring one charge per transaction. A conviction is usually followed by forfeiture of the property involved under section 55. If the property has been spent or cannot be traced, the court can order the offender to pay a penalty equal to its value.

Because of these consequences, an accused person should take advice on the charge, bail and any representations to the prosecution as early as possible. Our criminal litigation team can advise from the first court date.

How do mule accounts lead to money laundering charges?

A mule account is a bank account or e-wallet used to receive and move criminal proceeds, usually scam money, on behalf of someone else. Holders are often recruited through part-time job offers, loan offers or requests from friends, and paid a fee to let others use their account or to forward money.

The account holder can face two sets of charges:

• money laundering under section 4(1)(b) of AMLA for receiving or transferring the proceeds, if the mental element is proved;
• the mule account offences in sections 424A to 424C of the Penal Code, inserted by the Penal Code (Amendment) Act 2024 (Act A1721) and in force since October 2024, for giving another person control of your account or payment instrument, controlling someone else's, or transacting without a lawful purpose.

The Penal Code offences carry penalties of up to 10 years' imprisonment under section 424C, and they do not require proof that the money was proceeds of crime. Police officers of Sergeant rank or above can also stop dealings in a suspected mule account under section 116D of the Criminal Procedure Code.

If you have lent your account, bank card or online banking login to anyone, stop immediately, keep every message and record of what happened, and take legal advice before you make any statement.

What defences are possible to a section 4 charge?

The defence depends on the evidence, but most cases turn on whether the money was really proceeds of crime and what the accused knew. Possible lines of defence include:

• The property is not proven to be proceeds of an unlawful activity. The prosecution must still link the money to unlawful activity, even though it need not identify the specific crime.
• The required state of mind is absent. The accused had a genuine reason for the transaction, such as a real sale of goods at a market price, and took reasonable steps to check, so there was nothing to put a reasonable person on notice.
• The accused did not control the account or the transaction, for example because the account was opened or used without his or her knowledge.
• The evidence is incomplete or inadmissible, such as gaps in the bank records or unreliable tracing.

Each of these requires documents: invoices, delivery records, chat messages, identity checks carried out, and bank records showing the flow of funds. Where the evidence is strong, the focus may move to representations to the Public Prosecutor or mitigation.

No lawyer can predict the outcome before seeing the charge sheet and documents. NZSK advises after reviewing them at a consultation, and our corporate fraud guide explains how related civil claims are handled.