Introduction
 
Section 56 of the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001¹ (“the Act”) allows the Public Prosecutor to forfeit seized properties which are either (i) the subject-matter or evidence relating to the commission of a money-laundering offence or terrorism financing offence; (ii) terrorist property; (iii) proceeds of an unlawful activity; or (iv) the instrumentalities of an offence, even where there is no prosecution or conviction for the offence².
 
In determining whether a seized property falls within any of the aforementioned four categories, Section 56(4) of the Act expressly specifies that the court shall apply the standard of proof required in civil proceedings, i.e. on the balance of probabilities.
 
However, there were conflicting approaches to the standard of proof applicable to prove the predicate offence in forfeiture proceedings. The recent Federal Court case of JJ Power Groups Enterprise & Ors v Public Prosecutor [2025] CLJU 1554 (“JJ Power”) addresses and puts this question to rest.
 
Facts of the case
 
The case concerned an unlicensed financial scheme known as the “JJ Poor to Rich Scheme” (“JJPTR”), which promised investors a monthly return rate of 20% based on the deposits or investments made. Police investigations into the JJPTR were premised on the offence of cheating under the Penal Code and money laundering under the Act. Monies in various bank accounts, landed property and motor vehicles were seized from the Appellants.[3] The 16^th Appellant (“LCS”), the founder and mastermind of the JJPTR, was charged at the Magistrate’s Court for cheating under Section 420 of the Penal Code but the charge was subsequently withdrawn and LCS was given a discharge not amounting to an acquittal (“DNAA”).
 
The High Court, on the Public Prosecutor’s forfeiture application, was satisfied that the seized properties (except for those seized from the 17^th respondent in the forfeiture proceedings) were the subject-matter or evidence relating to the commission of a money laundering offence as provided in Section 4(1)(a) of the Act, and that there was no purchaser in good faith for valuable consideration in respect of those properties. In the premises, the High Court ordered the forfeiture in accordance with Section 56(2) of the Act and that such forfeited properties be vested with the Federal Government pursuant to Section 58 of the Act.
 
The High Court’s decision was affirmed and unanimously upheld by the Court of Appeal. The matter then came before the Federal Cout on appeal by four of the Appellants, including the 1^st Appellant and LCS.
 
The High Court and Court of Appeal’s Analysis
 
The High Court cited Sections 56(4) and 70 of the Act in ruling that the applicable standard of proof is on the balance of probabilities in determining whether the seized property relates to the offences of money laundering or terrorism financing and of any question of fact in proceedings under the Act.
 
Section 70 of the Act provides that:
 
“(1)  Any question of fact to be decided by a court in proceedings under the Act shall be decided on the balance of probabilities.
 
 (2)  Subsection (1) not apply in relation to any question of fact that is for the prosecution to prove in any proceedings for an offence under the Act or any subsidiary legislation under it.”
 
The civil standard of proof was applied in the High Court’s evaluation of the prosecution’s evidence presented in respect of the existence of the predicate offence of cheating, which comprised, amongst others, affidavits and exhibits in the form of various police reports, recorded statements under Section 32 of the Act, bank account statements and other documents related to the purchase of the landed property and motor vehicles.
 
The Court of Appeal upheld the High Court’s application of the standard of proof on the balance of probabilities. It further agreed with the High Court’s view that there was nothing in the Court of Appeal case of Public Prosecutor v Billion Nova Sdn Bhd & Ors [2016] 2 CLJ 763 (“Billion Nova”) which expressed the standard of proving predicate offence beyond reasonable doubt.
 
The Appellants’ Contention at the Federal Court
 
The Appellants relied on the Court of Appeal case of Simplex Sdn Bhd v Public Prosecutor [2021] 4 CLJ 595 (“Simplex”) and submitted that the correct standard of proof in proving the predicate offence is beyond reasonable doubt and not on the balance of probabilities, i.e. in a forfeiture proceeding pursuant to Section 56 of the Act, the prosecution must establish the existence of a predicate offence and that according to Section 70(2) of the Act, that predicate offence must be proved beyond reasonable doubt.
 
Based on Simplex, it was contended that the proving on the balance of probabilities that specific proceeds derived from a predicate offence were used in the commission of a money laundering offence (as provided by Section 56(4) of the Act) can only take place after the said predicate offence is proved beyond reasonable doubt, this link being crucial and a pre-requisite to forfeiture under Section 56 of the Act. The Appellants contended that when LCS was granted the DNAA for the offence of cheating under Section 420 of the Penal Code, the seized properties could not then be said to have been connected to the offence of money laundering.
 
The Appellants also argued that the Court of Appeal fell into error when it failed to consider Simplex according to the principle of stare decisis or judicial precedent, despite Simplex being argued and submitted on in great detail.
 
The Respondent’s Contention at the Federal Court
 
The Public Prosecutor cited two Court of Appeal decisions, namely Noor Ismahanum Mohd Ismail v Public Prosecutor [2019] 2 MLJ 536 (“Ismahanum”) and Mohd Ismail bin Syed Merah v Public Prosecutor and other appeals [2023] 3 MLJ 786 (“Syed Merah”), and submitted that it has been established clearly in these cases that the standard of proof to prove the element of “proceeds of an unlawful activity” is on the balance of probabilities as stipulated in Sections 56(4) and 70(1) of the Act. In the present case, the “unlawful activity” referred to was the offence of cheating under Section 420 of the Penal Code, which is a “serious offence” by reason of its being listed as an offence in the Second Schedule of the Act.
 
The Federal Court’s Findings 

(I)	Simplex vs Billion Nova, Ismahanum and Syed Merah

The Federal Court found that save for Syed Merah, the other three cases dealt with forfeiture of property under Section 56 of the Act.
 
The Federal Court was of the view that Syed Merah was not relevant to determining the correct standard to be applied to prove a predicate offence. First, that case was an appeal against the conviction and sentence and does not relate to a forfeiture proceeding. Second and more importantly, Syed Merah was later reviewed by a different panel of the Court of Appeal which disagreed with the earlier panel’s use of the balance of probability standard in Sections 56(4) and 70(1) to prove the element of “unlawful activity” as that case concerned the prosecution of an offence (not a forfeiture proceeding) and so the applicable standard to prove every constituent element of the offence including the element of “unlawful activity” must be beyond reasonable doubt.
 
On the other hand, Billion Nova, Ismahanum and Simplex dealt with forfeiture of property under Section 56 of the Act and the element of “proceeds of unlawful activity” to be proved on the balance of probabilities.
 
The Federal Court noted that the apex court had previously in Public Prosecutor v Awalluddin bin Sham Bokhari [2018] 2 MLJ 401 (“Awalluddin”) and Public Prosecutor v Kuala Dimensi Sdn Bhd & Ors [2021] 2 MLJ 469 (“Kuala Dimensi”) affirmatively stated that in an application for forfeiture of property under Section 56 of the Act, the civil standard of proof (i.e. on the balance of probabilities) applied in determining whether a property was obtained as a result of or in connection with a money laundering offence under Section 4(1) of the Act.
 
However, Simplex had gone further to establish a two-tier proof with two different standards of proof in a forfeiture proceeding, where the predicate offence must first be proved beyond reasonable doubt according to Section 70(2) of the Act before the element of “proceeds of an unlawful activity” can be proved on the balance of probabilities according to Sections 56(4) and 70(1) of the Act. The Federal Court did not agree with the approach taken by Court of Appeal in Simplex and observed as follows: 

In light of the foregoing, the Federal Court concluded that Court of Appeal in Simplex had fallen into error in misinterpreting Section 70(2) of the Act by imposing a standard of beyond reasonable doubt on the proving of a predicate offence in a forfeiture proceeding – a requirement which is not expressly stated within the wording of the statute nor implied by its underlying purpose. In other words, the Court of Appeal in Simplex had read an additional requirement or condition into Section 56 of the Act which was not intended by Parliament. 

(II)	Proving the Seized Properties were derived from an Unlawful Activity, viz. Cheating

The second issue of the appeal concerned the Appellants’ challenge of the High Court’s findings that the prosecution had succeeded in establishing the offence of cheating by the Appellants under Section 420 of the Penal Code. The Federal Court was of the view that every assessment of evidence and finding made by the High Court was sufficiently supported and reasonably justified by the evidence adduced. Accordingly the Federal Court held that there was no cogent reason that warrants departing from the High Court’s findings.
 
For the reasons set out above, the Federal Court rejected both grounds of appeal and dismissed the Appellants’ appeal.
 
Comments
 
The Federal Court, in its closing, reminded and emphasised the fundamental principle of statutory interpretation, i.e. the courts must apply the plain and ordinary meaning where the language of a statutory provision is clear and unambiguous.
 
Although the Federal Court’s decision in JJ Power on the application of the standard of balance of probabilities in forfeiture proceedings under Section 56 of the Act is not groundbreaking, it nevertheless affirms that principle laid down previously in Awalluddin and Kuala Dimensi. The decision in JJ Power is noteworthy in two respects. Firstly, it clarifies that the requirement under Section 70(2) to prove an offence beyond reasonable doubt only applies to criminal prosecution for offences under the Act and its subsidiary legislation and other proceedings under the Act. Secondly, the decision has categorically rejected the use of the two-tier test applied by the Court of Appeal in Simplex.
 
Indeed, the imposition of a two-tier test with two different standards of proof in a forfeiture proceeding under Section 56 of the Act would lead to an absurd result where an order for forfeiture of properties is conditioned upon the proving of a predicate offence beyond reasonable doubt when Section 56 itself expressly allows a forfeiture application to be made and granted where there is no prosecution or conviction for a money laundering offence based on a serious offence or predicate offence.
 
 
Case Commentary by Lim Koon Huan (Partner) and Siew Ka Yan (Senior Associate) of the Compliance and Investigations Practice of Skrine.
 
 

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