Unveiling the Mystery: When Your Bank Account Gets Frozen by the Law

Esther Law Cong Jie
Final Year Law Student at University of Malaya

Imagine going for online shopping, only to discover that your bank account is suddenly frozen, leaving you unable to complete your transactions. This bewildering scenario is not just a plot from a drama; it’s a reality that can occur due to a specific law known as the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLA). Whether you’re a financial expert or an ordinary individual, let’s delve into this law to demystify the process.

Understanding the Law: Why Bank Accounts Get Frozen and What’s Legal

Under Section 50(1) of AMLA, if the Public Prosecutor believes that your funds are linked to certain criminal activities, they have the authority to issue an order to seize your assets from the bank. Alternatively, the bank might be instructed to halt transfers, transactions, or the disposal of your property until the order is modified or revoked. AMLA empowers these orders with absolute validity, meaning that procedural errors, locations, persons involved, or any other factors during the seizure won’t invalidate the legality of the action, as outlined in Section 57.

Clearing the Air: What is the Time Limit on Seizure Orders?

Don’t be alarmed by the phrase “until the order is varied or revoked” in Section 50(1). This doesn’t imply an indefinite freeze. According to Section 52A of AMLA, the maximum duration of such an order is 12 months. If you’re not charged with an offense within this time frame, the order automatically expires. The Court of Appeal in Lim Hui Jin v CIMB Bank Bhd & Ors [2018] 6 MLJ 724 clarified that Section 52A and Section 50(1) should be read together, meaning that the Public Prosecutor can only alter or revoke the order before it expires. In essence, orders issued under Section 50(1) lose their validity after 12 months.

Changing the Seizure Status: Is There a Way?

If you disagree with the order, Section 46(8) allows for the variation or revocation of any seizure order issued under AMLA, with the consent of the Public Prosecutor and potential additional instructions. Unfortunately, you will find no guideline in AMLA as to how to apply to vary or revoke such an order. You may want to refer to Section 44A, but it is a provision that exclusively applies to orders issued under Section 44, unlike Section 46(8) which applies to all orders made under AMLA.

Under Section 44A(1) and (3), you can write to the issuer of the order, specifying your grounds for applying for variation or revocation. Your application will be handled by an officer of higher rank. Under Section 44A(4), this senior officer may modify the order to allow reasonable allowances for your living expenses, your family, and your employees, or he may revoke the order. If he suspects your account is related to money laundering, terrorism financing, unlawful activities, or criminal instruments, your application might be declined. However, since these are the very grounds for property seizure under Section 50(1), your application might not serve its purpose, as the officer is likely to reject it.

In brief, AMLA seems to suggest that any cancellation of an order is only available upon consent of the Public Prosecutor or consideration of a senior officer upon your application.

Trying to Make Things Right: What if You Don’t Agree?

Knowing that the chance to revoke the order through the application is slim, so you may want to pray for judicial intervention to strike out the order. Regrettably, our courts are hesitant to reconsider your plea.

Take the case of City Growth Sdn Bhd vs. Government of Malaysia [2006] 1 MLJ 581 as an example. The High Court dismissed the application, explaining that the seizure orders couldn’t be questioned because they’re an integral part of the investigation process. Reviewing them in court would disrupt the smooth functioning of government agencies and their investigations. A similar tone was set in Protasco Bhd vs. Pt Anglo Slavic Utama & Ors [2020] MLJU 1413. This case highlighted that actions under AMLA, performed as part of investigations, are not up for judicial review.

It is also noteworthy that judicial review should not challenge ongoing criminal investigations. The court should avoid making decisions that impact the investigations, otherwise would amount to an abuse of court procedure, as reinforced in Honwords Chemicals & Machinery Sdn Bhd vs. Ketua Pengarah Kastam Malaysia, Jabatan Kastam Diraja Malaysia [2017] 8 MLJ 622. Also, in Khor Peng Chai vs. Bank Negara Malaysia & Anor [2012] 4 CLJ 987, it was decided that the court should exercise caution before getting involved in the actions of a statutory body tasked with enforcement, so as not to overstep the functions and authority of the enforcement agency, especially during the initial phases of an investigation.

Handling a Frozen Bank Account: Smart Moves During Legal Challenges

So, what can you do? First and foremost, remain composed and recall any potential illicit activities related to your accounts. Consult a lawyer experienced in AMLA matters to navigate the process. Despite the frustration, respect the order as part of a criminal investigation, and assist the investigating officers to avoid exacerbating your situation. Lastly, be cooperative with legal authorities for smoother resolution.

Conclusion

Remember the surprise frozen account while shopping online? Well, knowing the laws can turn confusion into confidence. By digging into AMLA and how it works, you’re all set to handle such situations. In a world where financial transactions intersect with legal regulations, your know-how is your armor.

This article is based on recent research conducted during my legal internship at Raj, Ong & Yudistra, assisting Partner, Mr. Ong Yu Jian in an ongoing real-life case.

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