Time’s Up!

Kwan Will Sen and Elizabeth Goh explain a recent decision on the lifespan of freezing and seizure orders under Malaysia’s anti-money laundering laws
 
The Court of Appeal’s ruling in Lim Hui Jin v CIMB Bank Bhd & Ors [2018] 6 MLJ 724 has provided some clarity on the limits and scope of freezing and seizure orders made under Part VI of the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (“Act”).
 
SALIENT FACTS
 
The appellant’s mother was investigated for money laundering offences under section 4(1) of the Act. In the course of investigations, the appellant’s bank account was frozen on 24 June 2014 (“Freezing Order”) under section 44(1) of the Act.
 
The Act was amended pursuant to the Anti-Money Laundering, Anti-Terrorism Financing (Amendment) Act 2014 (“Amendment Act”) and assumed its present name as from 1 September 2014. On 11 September 2014 (ten days after the coming into force of the Amendment Act), a seizure order was issued under section 50(1) of the Act against the appellant’s bank account (“Seizure Order”).
 
Subsequently, the appellant’s mother, but not the appellant, was charged with offences under the Act. On 5 May 2016, the appellant commenced proceedings seeking the release of the monies and all the accrued interest in his bank account. The High Court dismissed his action. Hence, the present appeal.
 
THE COURT OF APPEAL’S DECISION
 
The Court of Appeal allowed the appeal and ordered the appellant’s bank account to be released. The reasons for the Court of Appeal’s decision are discussed below.
 
Computation of lifespan of a seizure order
 
Under Section 52A (a provision introduced under the Amendment Act) of the Act, a seizure order issued under section 50(1) ceases to have effect upon:
 
(a)  the expiration of 12 months from the date of seizure order; or
 
(b)  where there is a prior freezing order, the expiration of 12 months from the date of the freezing order,
 
if the person from whom the property was seized has not been charged with an offence under the Act. 
 
As the Freezing Order had been issued against the appellant’s account on 24 June 2014 before the Seizure Order was issued on 11 September 2014, the Seizure Order ceased to have effect on 23 June 2015 (i.e. 12 months from the date of the Freezing Order). By the time the appellant’s action was filed in May 2016, the Freezing Order and the Seizure Order had expired by effluxion of time.  
 
The Court of Appeal also considered section 44(5) of the Act which stipulates, inter alia, that a freezing order shall cease to have effect after 90 days from the date of the order if the person against whom the order was made had not been charged with an offence under the Act. The Court noted that on the face of it, there may be a contradiction between section 44(5), which limits the lifespan of a freezing order to 90 days, and section 52A, which prescribes longer lifespan of 12 months from the date of a “prior freezing order”. In this regard, the Court clarified that section 52A was to be read purely for the purpose of computing the lifespan of a seizure order, and that the lifespan of a freezing order is 90 days as provided for under section 44(5).
 
In the Court’s opinion, the appellant’s account should have been released on 21 September 2014, that is 90 days after the issuance of the Freezing Order on 24 June 2014 by virtue of section 44(5) of the Act as the appellant had not been charged within 90-day period stipulated in that provision.
 
The respondents further argued that the Seizure Order was issued pursuant to the Freezing Order dated 24 June 2014, before section 52A came into force upon the enforcement of the Amendment Act on 1 September 2014. As such, the respondents contended that section 52A did not apply retrospectively to the Seizure Order. The contention was rejected by the Court. According to the Court, the Seizure Order was subject to the 12-month limitation period prescribed by section 52A as it was issued on 11 September 2014, which was well after section 52A came into force on 1 September 2014.
 
As the Seizure Order had expired by virtue of section 52A and the appellant had not been charged with an offence under the Act, the appellant’s bank account should have been released upon expiration of the Seizure Order.  
 
No perpetuity under section 50(1)
 
The respondents also relied on section 50(1) of the Act to justify the continued seizure of the appellant’s bank account. This provision is specific to seizure of movable property in financial institutions. It empowers the Public Prosecutor “… notwithstanding any other written law, (to) by order direct that such movable property or any accretion to it in the financial institution be seized by the investigating officer … in whole or in part, until the order is varied or revoked.” The respondents contended that the Seizure Order had neither been varied nor revoked by the Public Prosecutor.
 
The Court of Appeal held that section 50(1) must be read together with Section 52A in that the Public Prosecutor’s power to vary or revoke the seizure order could only be exercised before the expiration of the seizure order and not thereafter. Once a seizure order has expired, there is nothing for the Public Prosecutor to vary or revoke. To hold otherwise would be to violate Article 13(1) of the Federal Constitution which safeguards a person from being deprived of property save in accordance with law.
 
Bar to civil suits only if seizure remains in force
 
Another ground raised by the respondents was that the Freezing Order and Seizure Order could not be reviewed by the Court in a civil proceeding by virtue of section 54(3) of the Act, which reads as follows:
 
“(3) For so long as a seizure of any property under this Act remains in force, no action, suit or other proceedings of a civil nature shall be instituted … be maintained or continued in any court or before any other authority in respect of the property which has been so seized … except with the prior consent in writing of the Public Prosecutor.”
 
The Court ruled that section 54(3) did not apply to the present case because the condition in the operative words “For so long as a seizure of any property under this Act remains in force” was not satisfied. The Seizure Order was no longer in force as it had expired by the time the appellant commenced proceedings in the High Court for the release of his bank account.
 
No application for forfeiture
 
While the Court noted that the present proceedings were not proceedings to forfeit the monies in the appellant’s account, the Court went on to elucidate the two scenarios where seized property could be forfeited under the Act:
 
(1)  If there is any prosecution for an offence under the Act, section 55 allows the Court to make an order for the forfeiture of property if the offence is proved against the accused, or if the offence is not proved against the accused, where the Court is satisfied that the accused is not the true and lawful owner of the property and that no other person is entitled to the property as a purchaser in good faith and for valuable consideration; or
 
(2)  If there is no prosecution for an offence under the Act, the Court may order seized property to be forfeited upon the application of the Public Prosecutor under section 56 before the expiration of 12 months from the date of the freezing order or seizure order. This provision also expressly provides for the release of the property to the person from whom it was seized upon the expiration of 12 months from the date of the seizure.
 
In both the above instances, the conditions set out in the respective sections have to be satisfied before the Court issues an order for forfeiture.
 
The Court noted that no application had been made for forfeiture under section 56 in the present case.
 
Prosecuted person under section 55(1)
 
In relation to the forfeiture powers under section 55(1), the Court of Appeal also said that the prosecuted person under that section must necessarily refer to the person from whom the property was seized under section 50(1). According to the Court, it stands to reason that the property cannot be forfeited by way of a criminal prosecution against some other person for an offence under the Act.
 
As the appellant had not been prosecuted under the Act, the Court held that the fact that the appellant’s bank account was the subject matter of a criminal proceeding against his mother was of no consequence as the Freezing Order and Seizure Order relate to the appellant’s, and not his mother’s, bank account.
 
OBSERVATIONS
 
This decision suggests that in order for property to be forfeited under section 55(1), the person who is accused of the offence must be the person from whom the property was seized and not a third party.
 
The Court of Appeal’s ruling provides an important safeguard for an individual’s right to property enshrined in Article 13(1) of the Federal Constitution. This decision makes it clear that a person’s properties cannot be held indefinitely if he is not charged with an offence under the Act within the time limits of a freezing order or seizure order. Upon the expiration of such orders, the relevant properties are to be released to the person from whom they were seized.
 
Lim Hui Jin has far-reaching implications on the conduct of investigations under the Act where properties of a person have been frozen or seized, as is often the case. In such event, enforcement agencies must endeavour to complete their investigations and proffer charges against the accused within 12 months from the date of a seizure order, or of a freezing order if one has been issued. Failure to do so could result in the properties being returned to the person concerned, unless an application has been made to forfeit the property under section 56 of the Act within the lifespan of the relevant order. It remains to be seen whether the 12-months’ time frame imposed on enforcement agencies is realistic and practicable especially in cases of large scale or complex investigations that involve multiple parties or jurisdictions.