Acquitted of Cheating, but Still Lose the Money?

Why winning the criminal case does not always mean getting your money back, how the lower civil standard of proof works in forfeiture, and what the Federal Court has said in JJ Power and Kuala Dimensi

The Scenario

You are charged with cheating under Section 420 of the Penal Code. After months, or even years, the charge is withdrawn, or the court acquits you. You walk out of court relieved. But your bank accounts, frozen since the investigation began, remain frozen. Then you receive papers from the Public Prosecutor applying to the High Court to forfeit the money to the Government.

How can the State take your money if you have been cleared? The answer lies in how the Anti-Money Laundering Act separates the fate of a person from the fate of property. This article explains that separation, the cases that have shaped it, and what someone in this position can do.

Two Separate Battles

The BIG AMLA BOOK describes AMLA as a hybrid law. Criminal charges are governed by the criminal standard of proof, while asset recovery, forfeiture and related matters generally proceed on the civil standard. Section 70(1) provides that any question of fact in proceedings under the Act is decided on the balance of probabilities, but Section 70(2) excludes facts that the prosecution must prove in proceedings for an offence under the Act.

	Criminal prosecution for money laundering (Section 4)	Forfeiture after a prosecution (Section 55)	Forfeiture without prosecution or conviction (Section 56)
What it targets	The person	The property, as part of the criminal case	The property only
Standard of proof	Beyond reasonable doubt for every element	Balance of probabilities on whether the property is tainted	Balance of probabilities for every element
Effect of acquittal	The accused walks free	Forfeiture is still possible if the accused is not the true and lawful owner and there is no good faith purchaser	Section 56A: acquittal does not affect the power to forfeit
Who applies	Public Prosecutor	Court in the criminal case, with the Public Prosecutor	Public Prosecutor, to the High Court

The central idea, repeated by the courts, is that forfeiture is concerned with the legal status of the property, not the guilt of its owner. The Court of Appeal put it this way in Noor Ismahanum Mohd Ismail v PP [2018] 10 CLJ 597, as quoted by the High Court in the UMNO Kedah case: the judge’s primary concern in a Section 56 application is the legal status of the property, not the guilt or otherwise of any person, and the civil standard of proof must not be mistaken for proof beyond reasonable doubt.

The Legal Tools That Survive an Acquittal

Section 56A: acquittal does not cleanse the property

Section 56A provides that the fact that a person has been acquitted of a serious offence or a foreign serious offence shall not affect the power of the court to issue a forfeiture order. The BIG AMLA BOOK explains that this separates asset recovery from criminal guilt, so that evidential failures in a criminal trial, caused for example by witness problems or cross-border difficulties, do not shield illicit wealth. At the same time, the book stresses that the court’s ordinary safeguards of proof and procedure still apply.

Section 55(1)(bb): forfeiture in the criminal case even without a conviction

Under Section 55(1), in a prosecution for money laundering, the court must forfeit property proved to be tainted where the offence is proved against the accused, or where the offence is not proved but the court is satisfied that the accused is not the true and lawful owner of the property and no one else is entitled to it as a good faith purchaser for value. The Small AMLA book notes that this means that even if the accused is not convicted, the court may still order forfeiture.

Section 56(1)(b): a three-month window after no conviction

Where property has been seized and there is no prosecution or conviction, Section 56(1) allows the Public Prosecutor to apply for forfeiture. In a case of no conviction, the application must be made within three months from the date of no conviction. The BIG AMLA BOOK notes that it is not yet settled whether “no conviction” covers every outcome, such as an acquittal, a discharge not amounting to an acquittal, or a withdrawal, and when exactly the three months start to run. That uncertainty matters, because missing the window closes this route to forfeiture.

Section 76: the acquittal is evidence, but not conclusive

Under Section 76, a conviction or acquittal is admissible in AMLA proceedings to prove that a person did or did not commit an offence. A conviction must generally be accepted as conclusive. An acquittal, however, is only admissible. The BIG AMLA BOOK notes that Parliament deliberately withheld the label “conclusive” from acquittals, preserving room for forfeiture on the civil standard even where the criminal case failed.

The Federal Court Settles the Standard of Proof

For some years, there was confusion about whether the prosecution in a Section 56 application had to prove the underlying crime, such as cheating, beyond reasonable doubt. That confusion has now been resolved.

Case Spotlight: JJ Power Groups Enterprise & Ors v Public Prosecutor [2025] 5 MLJ 197 (Federal Court)

Facts: About 20 investors lodged police reports about the “JJ Poor to Rich” scheme, which promised monthly returns of 20% and presented itself as a licensed foreign currency trading business. It had no licence from Bank Negara Malaysia. The police investigated cheating under Section 420 of the Penal Code and money laundering, froze the appellants’ bank accounts and seized property bought with investors’ money, including a property in Perak, a Volkswagen Beetle and a Honda Accord.

The cheating charge fell away: The scheme’s founder was charged with cheating in the Magistrate’s Court, but the charge was withdrawn and he was given a discharge not amounting to an acquittal. The Public Prosecutor then applied for forfeiture without prosecution, and the High Court forfeited almost all the property.

The argument: Relying on the Court of Appeal’s decision in Simplex, the appellants argued that since cheating had never been proved beyond reasonable doubt, there was no basis for forfeiture.

Decision: The Federal Court unanimously dismissed the appeal and overruled Simplex on this point. It held that Section 70(2) only applies to offences under AMLA itself, such as money laundering. Cheating under Section 420 is an offence under the Penal Code, not under AMLA, so it is not covered. Sections 56(4) and 70(1) require every element of a Section 56 application, including the existence of the cheating, to be proved on the balance of probabilities. There is no two-tier standard.

The evidence that worked: The High Court had relied on the investors’ police reports, statements recorded under AMLA, bank statements, property and vehicle records, and confirmation from Bank Negara Malaysia and the Securities Commission. It found deceit, wrongful loss to investors and wrongful gain to those behind the scheme. The Federal Court saw no reason to disturb those findings.

Not everything was forfeited: Money seized from one respondent, which came from customers of gambling excursion packages to Genting Highlands, was ordered to be returned because it was not shown to be proceeds of the scheme. Claims by two law firms to be paid their fees from the seized property were dismissed.

The overruled view: Simplex Sdn Bhd & Ors v Public Prosecutor [2021] MLJU 32 (Court of Appeal)

The Court of Appeal had held that the predicate offence, in that case evasion of customs duty, had to be proved beyond reasonable doubt before forfeiture. The Federal Court in JJ Power held that this was a misreading of Section 70(2).

The facts of Simplex still carry a useful lesson. The alleged under-declaration of customs duty related to imports in 2010 and 2011, but the RM390,932.70 seized in 2014 was shown by invoices and bank records to be the balance from a 2014 sale of non-dutiable kitchen equipment to a fast food company. The prosecution did not challenge that evidence. The court also noted that RM55,000 had earlier been released from the frozen account to pay the company’s staff salaries. Whatever the standard of proof, a respondent who can show where the money actually came from has a strong answer.

Acquittals That Did Not Save the Property

The BIG AMLA BOOK summarises several decisions where property was forfeited despite the owner not being convicted.

Case (as summarised in the BIG AMLA BOOK)	What happened
PP v Mokbul Hossain & Anor [2023] MLRAU 14 (Court of Appeal)	The respondent was acquitted of a human smuggling charge. The Court of Appeal described Section 56A as a clarifying provision and held that the acquittal was legally irrelevant to forfeiture of his bank balances and real estate. Once the property is proved on the balance of probabilities to be proceeds of an unlawful activity, the court must order forfeiture
Kavindra Suppiah v PP [2025] MLRAU 305 (Court of Appeal)	Forfeiture of a Honda CRZ and RM90,000 in cash was upheld although the appellant was not convicted of drug trafficking. The court held that the acquittal did not cleanse the property, and that the car was an instrumentality used in connection with unlawful activity
Pendakwa Raya lwn Mohd Ismail Syed Merah [2020] MLRHU 1416 (High Court)	The court explained that Section 55(1)(bb) and Section 56A work together as a forfeiture regime that does not depend on conviction. Even after an acquittal, forfeiture may follow if the accused is not the true and lawful owner and no other person has a good faith claim
PP v Ong Keh Keong [2026] MLRHU 535 (High Court)	A forfeiture order under Section 55(1)(b) was maintained even though the money laundering convictions were later set aside on appeal. The prosecution showed on the balance of probabilities that the respondent was not the true and lawful owner of the funds, which he held as a stakeholder

Case Spotlight: Liew Ket Boh & Anor v Public Prosecutor [2024] 2 MLJ 73 (Court of Appeal)

Investors in the “Grow Asia” scheme, supposedly exporting durians to China, lodged 30 police reports and the case was investigated as cheating under Section 420. No one was charged. The Public Prosecutor instead applied for forfeiture of money traced through several accounts into the appellants’ accounts.

The Court of Appeal upheld the forfeiture. The victims’ statements proved on the balance of probabilities that cheating had taken place, and it was immaterial that no one had been convicted, as that is not a pre-condition under Section 56(1). The appellants’ explanations that the money came from property commissions and family businesses were rejected because they were not supported by any documents.

The Limits: The Prosecution Must Still Prove Its Case

The civil standard makes forfeiture easier, but it does not make it automatic. The BIG AMLA BOOK stresses that the Public Prosecutor bears the initial burden and must present admissible, reliable and cogent evidence of a real link between the property and the unlawful activity. Freezing or seizure is not proof that property is illicit.

Case Spotlight: Public Prosecutor v Kuala Dimensi Sdn Bhd & Ors [2021] 2 MLJ 469 (Federal Court)

Facts: This case arose from the Port Klang Free Zone project. Police seized more than RM30 million in bank balances, bankers’ cheques and several pieces of land, alleging they were bought with the proceeds of criminal breach of trust under Section 409 and cheating under Section 420 of the Penal Code. The charge against one accused was withdrawn, and the other three were acquitted without their defence being called. None of the respondents was charged with money laundering.

Decision: The Public Prosecutor lost at every level. The Federal Court held that even on the balance of probabilities, the prosecution must prove the existence of the unlawful activity and the basis for it, identify the proceeds, and show how the respondents took part. The affidavits here merely described the money trail. They contained hearsay, serious gaps and factual errors, did not name the sources of information, and showed no link between the property and any crime.

Why the respondents won: The respondents explained in detail, with documents, how the properties were acquired. The payments had been made under contracts entered into on legal advice, supported by architects’ certificates and paid over several years without complaint. The court held that merely stating facts with scanty documentary evidence is not enough, and that there must be cogent evidence showing that all the facts needed for forfeiture are probably true.

A note on context: The BIG AMLA BOOK notes that Kuala Dimensi was decided on the law as it stood before the 2014 amendments, and that its reference to proving the “predicate offence” must now be read in light of JJ Power, which confirmed the civil standard. But the Federal Court in JJ Power itself cited Kuala Dimensi on the need for cogent evidence.

Other cases discussed earlier in this series point the same way. In PP v Billion Nova Sdn Bhd & Ors [2016] MLJU 1823, cash deposits from outside Labuan were not enough to prove that duty-free cigarettes had been smuggled. In Pendakwa Raya v Badan Perhubungan UMNO Negeri Kedah [2020] MLJU 896, affidavits that merely traced money movements did not establish the alleged offence, and the balance left in the account could not be shown to be the tainted money.

So When Does an Acquittal Help?

An acquittal is not a shield against forfeiture, but it is not irrelevant either. Under Section 76, it is admissible as evidence that the person did not commit the offence, and the court will weigh it with everything else. In Kuala Dimensi, the Court of Appeal observed that the withdrawal of the charge against one of the accused suggested that no predicate offence had been established, and the Federal Court went on to dismiss the prosecution’s appeal.

What usually decides the outcome, however, is not the acquittal itself but the evidence about the property. The comparison below shows the pattern.

	Property forfeited	Property returned
Cases	JJ Power, Liew Ket Boh, Mokbul Hossain, Kavindra Suppiah	Kuala Dimensi, Simplex, Billion Nova, UMNO Kedah, and the Genting excursion money in JJ Power
Prosecution evidence	Victims’ police reports and statements, bank records tracing the money, regulator confirmation	Money trail only, hearsay affidavits, no link between the property and any offence
Respondent’s explanation	Unsupported claims of commissions or business income	Contracts, invoices, certificates and bank records showing a lawful source

Practical Steps After an Acquittal or Withdrawal

Do not assume your money will be released automatically. Ask the investigating officer and the Deputy Public Prosecutor in writing about the status of every freezing and seizure order.
Diarise the three-month window from the date of acquittal, discharge or withdrawal, and the seizure time limits under Sections 52A and 56.
If time limits have passed with no application, write to request release, and seek legal advice on going to court if it is refused.
Prepare documentary proof of the lawful source of your money now, including contracts, invoices, payslips, tax returns, sale records and bank statements. This was decisive in Kuala Dimensi and Simplex.
Be ready to challenge the link, not just the crime. Ask whether the prosecution can show that the specific money or property is connected to the alleged cheating.
Obtain a certificate of acquittal from the court registrar, as Section 76 allows it to be used in evidence.
Remember that tainted money cannot be used to pay legal fees. In JJ Power, lawyers’ claims to be paid from seized property failed.
Get legal advice early, since forfeiture proceedings are usually decided on affidavit evidence and deadlines are strict.

Conclusion

Being acquitted of cheating means the prosecution could not prove your guilt beyond reasonable doubt. It does not mean the court has found that your money is clean. Under AMLA, the property faces a separate test on a lower standard, and Section 56A makes clear that an acquittal does not stand in the way. The Federal Court in JJ Power has confirmed that even the underlying cheating need only be shown on the balance of probabilities.

But the lower standard is still a standard. Kuala Dimensi shows that the prosecution must link the property to a real unlawful activity with cogent evidence, and that owners who can document the lawful source of their assets can keep them. For anyone in this position, the most important work is not celebrating the acquittal but gathering the records that prove where the money came from.

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