Cheating, Criminal Breach of Trust or Money Laundering? How One Police Report Becomes Three Charges

Why a single fraud can lead to charges for the original crime, separate money laundering charges for every use of the money, and a claim against the property itself, with lessons from James Kolandaisamy, Nor Badli, Aisyah, Hamimah and Syed Saddiq

One Police Report, Many Charges

A company discovers that money has gone missing. A property buyer realises the deal was fake. A police report is lodged. Many people expect the result to be a single charge for cheating or criminal breach of trust. In practice, Malaysian prosecutors frequently bring several sets of charges from the same facts.

The reason lies in how AMLA works. Cheating under Section 420 and CBT under Sections 406 and 409 of the Penal Code are serious offences listed in the Second Schedule to AMLA, as the Court of Appeal confirmed in Aisyah and Liew Ket Boh. Money obtained through them is therefore “proceeds of an unlawful activity”, and receiving, transferring, using or hiding that money can each be a separate money laundering offence under Section 4 of AMLA.

Track	What it covers	Law	Standard of proof
1. The original crime (the “predicate”)	How the money was obtained, such as by deception or by misusing entrusted property	Penal Code, for example Sections 403, 406, 409, 420 and 468	Beyond reasonable doubt
2. Money laundering	What was done with the proceeds afterwards	AMLA Section 4	Beyond reasonable doubt for every element
3. The property	Freezing, seizure, forfeiture and pecuniary penalties	AMLA Part VI, including Sections 44, 50, 55 and 56	Mostly balance of probabilities

Track One: The Original Crime

The judgments explain the key elements of the offences that most often start the chain.

Offence	What must be shown	Points from the cases
Cheating (Sections 415 and 420 of the Penal Code)	Deceiving someone and thereby dishonestly inducing them to hand over property	In James Kolandaisamy, the deception was a non-existent joint venture with the Malaysian Rubber Board. The offence was complete once the victim’s RM3.4 million was received into the lawyer’s client account
Criminal breach of trust (Sections 405, 406 and 409)	Being entrusted with property, or having dominion over it, and dishonestly misappropriating or misusing it. Section 409 applies to public servants and agents	In Aisyah, entrustment can be indirect, and no actual loss is needed. In Nor Badli, company cheques were property, and once misuse was shown, dishonesty was presumed under Section 409B unless the accused proved otherwise
Criminal misappropriation (Section 403)	Dishonestly misappropriating or converting property belonging to someone else	In Syed Saddiq, the Federal Court held the charge failed because the money was found to belong to the accused himself
Forgery for the purpose of cheating (Section 468)	Making a false document intending it to be used to cheat	In Hamimah, signing another person’s name on promissory notes without authority was forgery

“Dishonestly” has a specific meaning under Section 24 of the Penal Code. It means doing something with the intention of causing wrongful gain to one person or wrongful loss to another, whether or not any actual gain or loss results. As the Court of Appeal in Aisyah pointed out, CBT is complete on dishonest misappropriation, even if no one ends up out of pocket.

Track Two: Money Laundering

A money laundering charge is not a charge for committing the original crime. The Small AMLA book explains that the accused is charged with an act involving the proceeds, so the charge need not state which unlawful activity produced them. That activity may have been committed by someone else, or the proceeds may come from more than one activity, and the prosecution proves it through evidence at trial.

Because each dealing with the money is a separate act, prosecutors often bring a charge for each significant receipt, transfer or payment. Section 4(2) of AMLA, as it read at the time of these cases, also made clear that a person can be convicted of money laundering even without a conviction for the original offence.

Case Spotlight: James a/l Kolandaisamy lwn Pendakwa Raya [2024] 5 MLJ 543 (Court of Appeal)

Facts: A lawyer and a legal adviser told a listed company, through brokers, that they represented the Malaysian Rubber Board on a joint venture to develop its land, and that a RM3.4 million “commitment” payment was required. The company’s lawyers paid RM3.4 million into the first accused’s law firm client account in September 2015, to be held as stakeholder and returned if no agreement was signed by the end of October. The Rubber Board had never set such a condition, and the land had already been awarded to another developer. The money was never returned.

The charges: Both accused faced one joint cheating charge under Section 420. The lawyer also faced 22 money laundering charges for using the money from the client account over the following months, including to buy a Mercedes-Benz, pay her credit card bills, pay stamp duty, repay loans and pay property purchase balances. The legal adviser faced one money laundering charge for using RM43,000 to buy another Mercedes-Benz.

Decision: The Court of Appeal upheld all the convictions. On the cheating charge, the offence was complete when the RM3.4 million was received, even though the victim’s chief executive had not met the accused before the payment. On the money laundering charges, knowledge could be inferred from their personal involvement in the deception, and the lawyer’s claim that the money was her “professional fees” was rejected. The two accused had also contradicted each other on what the money was for.

Sentence: Four years’ jail and a RM100,000 fine for cheating. For money laundering, two years’ jail and a RM5 million fine on each count. The Sessions Court had ordered the money laundering terms to start after the cheating sentence, but the Court of Appeal ordered them to run concurrently.

Case Spotlight: Nor Badli Munawir bin Mohamad Alias Lafti v Public Prosecutor [2024] 3 MLJ 572 (Court of Appeal)

Facts: The chief executive of TH Heavy Engineering Bhd instructed his finance team to issue company cheques to three contractors, described as “advance payment” or “consultancy”, without any claims from the contractors. The contractors were told to cash the cheques and hand the money to him, and some prepared sham invoices. He said the money was for “the Murphy guys”, referring to people at the client oil company.

The charges: Five counts of CBT under Section 409 for the cheques, and five money laundering counts for receiving the cash.

How each pair fared: One money laundering charge was dismissed at the close of the prosecution case, but the matching CBT conviction was upheld. For the third pair, the Court of Appeal accepted his alibi and set aside both convictions. For the fifth pair, the prosecution conceded that the payment was for genuine work, so both were set aside. The convictions on three CBT charges and two money laundering charges were upheld.

Key points: The court rejected the argument that the “property” in the CBT charges was only the cheques and not the company’s money. It held that his explanation that these were genuine advance payments, prompted by problems with a new accounting system, did not rebut the presumption of dishonesty. The contractors, who went along for fear of losing business, were found to be credible and corroborated.

Sentence: The High Court had imposed five years for each CBT count and three years for each money laundering count, with the two sets ordered to run consecutively. The Court of Appeal affirmed the sentences on the charges that stood.

Case Spotlight: Aisyah bt Mohd Rose & Anor v Public Prosecutor [2016] 1 MLJ 840 (Court of Appeal)

Facts: A bank’s head of customer service processed 27 bankers’ cheques meant for payment of customs duties, contrary to bank rules, and credited them into the client account of a law firm administered by her husband. He withdrew the money and kept 10% to 15% before passing the balance to intermediaries.

The charges: She was charged with CBT under Section 409 and he with abetting her, each on a single charge covering all 27 transactions totalling RM1,578,191. Each also faced one money laundering charge for a cheque of RM183,702.63 in the client account.

Decision: The convictions were upheld. The single CBT charge was valid because Section 153(2) of the Criminal Procedure Code allows a gross sum to be stated for CBT committed within one year. Entrustment can be indirect, as she received the cheques by virtue of her position. It did not matter that the customs duties were eventually paid, because CBT does not require actual loss. On money laundering, the court noted that a conviction does not depend on a conviction for the predicate, and in any case the CBT had been proved.

Sentence: The Sessions Court had imposed ten years for CBT and five years, the maximum at the time, for money laundering. The Court of Appeal reduced these to five and three years, running concurrently, because mitigation had been ignored and the maximum should be kept for the worst cases.

Track Three: The Property

Alongside the criminal charges, the proceeds themselves can be frozen, seized and forfeited, as discussed in earlier articles in this series. Where the accused is convicted but the tainted money has been spent or cannot be traced, Section 55(2) of AMLA requires the court to order a pecuniary penalty equal to its value.

Case Spotlight: Hamimah bt Idruss v Public Prosecutor [2020] 5 MLJ 161 (Court of Appeal)

Facts: To raise funds for her struggling pharmaceutical company, a doctor directed her marketing manager to prepare ten promissory notes, supposedly guaranteed by Pharmaniaga and the Ministry of Health, and to forge a Pharmaniaga executive’s signature. A foreign financial services company bought the notes for USD12 million. The money came to Malaysia through a Hong Kong company into eight accounts, including those of a company she controlled and of herself and her daughter, and was largely used to pay the company’s debts.

The charges: Ten charges of abetting forgery for the purpose of cheating under Sections 109 and 468 of the Penal Code, and eight money laundering charges for receiving the proceeds.

Decision: The Court of Appeal upheld all 18 convictions. It followed Aisyah in holding that an abetment charge need not specify which form of abetment was involved, as long as the accused was not misled. Because the funds were obtained using the forged notes, they were proceeds of an unlawful activity, and it did not matter that some of the receiving accounts were controlled by someone else.

Pecuniary penalty: The eight money laundering charges covered about RM41.34 million, of which about RM34.99 million was recovered. The court ordered a pecuniary penalty of RM6.35 million for the difference, on top of three years’ jail.

How the Charges Are Framed and Tried

Rule	What it allows	Source
Public Prosecutor’s consent (AMLA Section 93)	No AMLA prosecution may be started without the Public Prosecutor’s written consent	Small AMLA book, Bab 16
Gross sum for CBT (Criminal Procedure Code Section 153(2))	A CBT charge may state a gross sum and date range, without listing each item, if the period is no more than one year	Aisyah (27 transactions in one charge)
Gross sum for AMLA offences (AMLA Section 91A)	An AMLA charge may state a gross sum and date range, within twelve months, and is treated as one offence	BIG AMLA BOOK Topic 7.7, Bab 16
Joinder of AMLA offences (AMLA Section 91)	Any number of AMLA offences committed over any length of time may be tried together	BIG AMLA BOOK Topic 7.7
Joint trial with predicate charges	Predicate and money laundering charges may be tried together where the facts show proximity of time or place, continuity of action or continuity of purpose	Small AMLA book, Bab 16
General abetment charge	An abetment charge need not state whether it was by instigation, conspiracy or aid, unless the accused is misled	Aisyah, Hamimah

The BIG AMLA BOOK stresses that joining charges is a procedural convenience only. It lets the court see the whole financial story, but each charge must still be proved on its own evidence. As the book notes of PP v Pathmarajah a/l Mylvaganam [2024] MLJU 1942, where a lawyer’s client account received a deposit obtained through forgery, the lawyer was acquitted of both abetting the forgery and money laundering. The prosecution had tied its money laundering case to the forgery and could not show he was involved in it or knew the money was tainted.

When One Charge Falls, Do the Others?

The relationship between the charges is not always straightforward. The cases show three different outcomes.

Outcome	Example	Why
Predicate stands, money laundering falls	Nor Badli, first pair of charges	The CBT was proved through the cheque, but the handover of the RM400,000 cash that formed the money laundering charge was not proved
Both fall together	Nor Badli, third and fifth pairs	Both depended on the same facts, which were undermined by the alibi or by proof that the payment was genuine
Predicate falls, so money laundering falls	Syed Saddiq (Federal Court)	The money laundering charges relied entirely on the misappropriation charge

Case Spotlight: Public Prosecutor v Syed Saddiq bin Syed Abdul Rahman and other appeals [2026] MLJU 3034 (Federal Court)

The charges: The former head of a political party’s youth wing faced four charges: abetting CBT of RM1 million of the wing’s funds, criminal misappropriation under Section 403 of RM120,000 raised at two fundraising dinners, and two money laundering charges for transferring RM50,000 twice from his bank account into his ASB account. The High Court convicted him on all four, and the Court of Appeal acquitted him on all four.

Decision: The Federal Court dismissed the prosecution’s appeals. On the CBT charge, the party’s constitution only required approval for “perbelanjaan” (expenses) above RM500,000, not for a withdrawal, and the evidence showed the money was used for the wing’s programmes. On the misappropriation charge, the RM120,000 had been raised for his own election campaign, on which he spent about RM171,675, so the money belonged to him and could not have been misappropriated.

The money laundering charges: Because the Section 403 offence on which they were built was not proven, the money laundering charges could not stand either. The court also agreed that evidence of pressure on witnesses during the investigation cast doubt on a key prosecution witness.

Lesson: Where the prosecution makes a particular predicate offence the sole foundation of a money laundering charge, the money laundering charge usually falls with it.

The BIG AMLA BOOK explains that this is consistent with the principle that a money laundering conviction does not always need a specific predicate offence to be proved. The prosecution must prove that the money is the proceeds of an unlawful activity, but not necessarily its precise source. Where the prosecution chooses to rely on one named offence, however, failing to prove that offence is usually fatal.

Sentences Can Add Up

Because the charges are separate, so are the sentences. The courts have taken different approaches to whether they run concurrently or consecutively.

Case	Predicate sentence	Money laundering sentence	Effect
Aisyah	Five years for CBT (reduced from ten)	Three years (reduced from five)	Concurrent
Nor Badli	Five years for each CBT count, concurrent	Three years for each money laundering count, concurrent	The two sets were ordered to run consecutively
James Kolandaisamy	Four years and RM100,000 fine for cheating	Two years and RM5 million fine on each count	Ordered concurrent on appeal
Hamimah	Three years for each forgery abetment count	One year for each count, plus RM6.35 million pecuniary penalty	Concurrent

Penalties have increased

The money laundering sentences in these cases were imposed under earlier versions of AMLA. At the time of Aisyah, the maximum was five years’ jail. The BIG AMLA BOOK sets out the current penalty as up to 15 years’ jail and a fine of at least RM5 million or five times the value of the proceeds, whichever is higher. The consequences of a money laundering conviction today are therefore considerably more serious.

Lessons for Companies, Professionals and Individuals

For companies

Nor Badli shows the warning signs of internal misappropriation: payments without claims or invoices, vague descriptions such as “consultancy” or “advance payment”, urgent instructions from senior management, sham invoices prepared after the event and contractors asked to return cash. Strong approval controls and independent checks on payments without supporting documents are the best protection.

For lawyers and others who hold client money

Three of these cases involved a law firm’s client account. In James Kolandaisamy, stakeholder money was spent on personal items. In Aisyah, a client account was used to receive misdirected customs cheques. In Pathmarajah, a lawyer whose client account received a forged sale deposit was acquitted because there was no evidence he knew of the forgery. Holding client money carries real risk, and proper records and inquiries about the source and purpose of funds are essential.

For individuals

Do not treat money you hold for others as your own, even temporarily. Using stakeholder or trust money for personal expenses can lead to both CBT or cheating charges and money laundering charges.
Every transfer counts. Moving money into an ASB account, paying a credit card or buying a car can each become a separate charge if the money is tainted.
Keep documents that show where your money came from, such as campaign expense declarations, contracts and invoices. In Syed Saddiq, evidence of campaign spending helped show the money was his own.
Explanations must be consistent and supported. Claims of “professional fees” or “advance payments” failed in James Kolandaisamy and Nor Badli because they were unsupported or contradicted.
Get legal advice early if you are questioned about money received or handled for others.

Conclusion

A single police report about cheating or misappropriation can grow into many charges: one for the original crime, one for each use of the money, and action against the property itself. The law allows prosecutors to bundle these charges and try them together, and courts can order the sentences to run consecutively and impose pecuniary penalties for money that has disappeared.

At the same time, each charge must be proved on its own. The Federal Court in Syed Saddiq shows that when the original offence is not established, money laundering charges built on it will not survive. For anyone caught up in such a case, the question is not only whether the original act was a crime, but also what happened to every ringgit afterwards.

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