It was reported in the local media that a businesswoman was charged for structuring transactions to avoid the cash threshold reporting requirements imposed by Bank Negara Malaysia (“BNM
”) on reporting institutions that are financial institutions.1
According to the media report, it is believed that this is the first case of its kind in the country.
Section 14(1)(a) of the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (“AMLA
”) imposes an obligation on a reporting institution to promptly report to the competent authority any transaction exceeding the amount specified by such authority.
Section 4A(1) of AMLA, inter alia
, prohibits any person from structuring, or directing, assisting or participating in structuring, any transaction to evade the reporting requirement under section 14(1)(a) of AMLA.
According to another media report, the accused is believed to have instructed another person to deposit money into the bank account of a company during the period from January 2018 to May 2018 by several transactions, each for an amount not exceeding RM50,000, on the same day to avoid triggering the requirement for the reporting institution to file a cash threshold report with BNM.2
At the material time (i.e. from January 2018 to May 2018), the cash threshold reporting amount specified by BNM for each account was RM50,000 or more per day.3
On 30 June 2021, the accused was charged in the Kuala Lumpur Sessions Court with four counts of “smurfing
”, that is, structuring a transaction through the use of small, cumulative transactions to remain below the prescribed financial reporting requirements.4
In the present case, the accused was charged with transaction structuring involving more than RM230,000 by ordering another person to structure four transactions, i.e. RM60,009.50, RM67,417.30, RM50,130.20 and RM61,018.35,5
to be paid into an account belonging to a company in order to circumvent the cash threshold reporting requirements imposed on a reporting institution under section 14(1)(a) of AMLA.
A person who contravenes section 4A(1) of AMLA is liable to a fine of not more than five times the aggregate sum or value of the transaction at the time the offence was committed or to imprisonment for a term not exceeding seven years or to both.
The accused has pleaded not guilty to the charges.
Alert by Lim Koon Huan (Partner) of the Compliance Practice (Anti-Corruption and Anti-Money Laundering) and Kok Chee Kheong (Partner) of the Corporate Practice of Skrine.
This alert contains general information only. It does not constitute legal advice nor an expression of legal opinion and should not be relied upon as such.
‘Businesswoman claims trial in country’s first ‘smurfing’ case
’, Star Online
, 1 July 2021.
‘Female entrepreneur to be charged with 'smurfing', says MACC
’; theedgemarkets.com, 29 June 2021.
Prior to 1 January 2019, a reporting institution was required under the Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) – Banking and Deposit-Taking Institutions (Sector 1) document (“Sector 1 Document
”) to submit a cash threshold report to BNM if the transaction or transactions in an account was RM50,000 or more per day. The reporting threshold was reduced to RM25,000 or more per day on 1 January 2019. The Sector 1 Document has been superseded by the Anti-Money Laundering, Countering Financing of Terrorism and Targeted Financial Sanctions for Financial Institutions (AML/CFT and TFS for FIs) document from 1 January 2020.
It would appear that the four amounts stated are the total amounts transferred on each day to the company pursuant to several transactions under one account, thereby being in breach of the RM50,000 daily cash threshold limit.