My Business Account Was Frozen Because of a Customer’s Scam

What merchants, traders and service providers can do when scam money passes through their accounts, how to keep the business running, and how the courts separate clean business income from tainted fundsHow It Happens

A customer buys goods from your shop, pays a deposit for a car, or settles an invoice for your services. The payment looks normal. Weeks later, your bank tells you that your business account has been frozen on the instructions of the police. It turns out the money your customer paid you came from a scam victim, and the victim has lodged a police report for cheating.

Suddenly, you cannot pay suppliers, rent or salaries. The frozen balance includes months of legitimate takings from other customers. This situation is increasingly common for online sellers, car dealers, gold and jewellery traders, money changers and other businesses that receive payments from the public.

An earlier article in this series, “Scammed, and the Money Is Frozen in Someone Else’s Account”, looked at the scam victim’s position. This article looks at the position of the business in the middle.

Why the Whole Account Is Frozen

Cheating under Section 420 of the Penal Code is a serious offence under AMLA, so money obtained by cheating is “proceeds of an unlawful activity”. Two powers are commonly used against accounts that receive such money.

	Freezing order	Seizure order in a bank
Provision	Section 44	Section 50
Issued by	The enforcement agency, such as the police or the MACC	The Public Prosecutor, on information from an investigating officer
Basis	An investigation has started and there are reasonable grounds to suspect a money laundering offence, or that the property is proceeds of an unlawful activity	The Public Prosecutor is satisfied that the money is, among other things, the subject matter of a money laundering offence or proceeds of an unlawful activity
Time limit	90 days unless a charge is brought	12 months, or 18 months from an earlier freezing order, unless a charge or prosecution is brought
How to change it	Written application to the agency under Section 44A	Variation by the Public Prosecutor, who can order that only part of the money stays seized
Penalty for breaching it	A fine of up to five times the frozen value or RM5 million, whichever is higher, jail of up to seven years, or both	The same maximum fine and jail term, plus a daily fine for continuing offences

Orders are often framed to cover the whole account because money is interchangeable once it lands in a bank. The definition of “proceeds” in Section 3 of AMLA is also wide. It includes property that is only partly derived from crime, and property that can reasonably be believed to be proceeds because of its proximity to tainted funds. For a business, this means the risk is not limited to the amount the customer paid.

Do not try to move the money

Moving, withdrawing or otherwise dealing with frozen or seized money is a serious offence. Banks are bound by the order and are protected from claims for complying with it. Under Section 50(2), a bank cannot be sued by its customer for obeying a Section 50 order. The right response is to use the legal routes described below, not to look for a way around the order.

Step One: Ask for the Order to Be Varied

The most practical tool for a business is Section 44A. It allows a freezing order to be varied or revoked in two ways: by a senior officer on his own initiative if he is satisfied the property is not liable to seizure, or on a written application by the person named in the order.

What the senior officer can do on your application	What it means for a business
Vary the duration of the order	Shorten the period the account is frozen
Allow payment of debts incurred in good faith and due to a creditor before the order was made	Pay suppliers, landlords and lenders for obligations that existed before the freeze
Allow reasonable subsistence and other expenses for the person, his family or employees	Pay salaries and essential running costs
Revoke the order	Release the account entirely
Refuse the application	Only if there is reasonable suspicion that the property is tainted, for example proceeds of an unlawful activity

The application must be in writing, must specify the grounds, and is decided by an officer senior in rank to the one who issued the order. If the order is varied or revoked, the relevant property must be released, and the officer must record the reasons and send a copy to the Public Prosecutor. The BIG AMLA BOOK notes that release does not stop the Public Prosecutor from seizing the property later if he is satisfied it is tainted.

Where the money has already been seized under Section 50, the Small AMLA book explains that the Public Prosecutor can vary the order on information from the investigating officer. It gives the example of RM1,000,000 seized, where the Public Prosecutor agrees to release RM200,000 and issues a variation order so that only RM800,000 remains seized. Section 60 also allows seized property that is not liable to forfeiture or needed for any proceedings to be released before forfeiture.

Case Spotlight: I-Serve Online Mall Sdn Bhd & Ors v Bank Negara Malaysia & Ors [2022] MLJU 2952 (High Court)

As summarised in the BIG AMLA BOOK, Bank Negara Malaysia froze the bank accounts of a group of companies and individuals in November 2021 and imposed travel bans on their associates. The applicants complained that the orders did not say who was being investigated, what the alleged unlawful activity was, or which limb of Section 44(1) was relied on, which made it impossible to prepare a proper Section 44A application.

Their Section 44A application took nearly three months to be decided. When it was, only salary payments for two months were allowed. Requests to pay third party creditors and personal subsistence were rejected.

The High Court granted leave for judicial review. It held that the applicants had raised serious arguable grounds about the legality of the orders and the handling of the Section 44A application, and that the right to seek relief under Section 44A depends on receiving adequate and timely information about the basis of the freeze. The issue was not academic even though the 90 days had passed, because damages might be claimed.

Lesson for businesses: Section 44A can help keep payroll going, but decisions may be slow and partial. Apply early, give full details, and keep a record of the dates.

The book also summarises Rosli bin Dahlan v IG Tan Sri Razarudin bin Husain & Ors [2024] 11 MLJ 381, where the High Court found prima facie evidence of a “freeze first, investigate later” approach. It observed that the applicant was entitled under Section 44A(4)(a) to use frozen accounts for reasonable expenses, including debt payments and subsistence, and that this had been wrongly denied.

Your Employees Must Still Be Paid

Case Spotlight: Victor Peh Suan Ean v Trillion Cove Holdings Berhad & Ors [2026] 2 MELR 791 (Industrial Court)

As summarised in the BIG AMLA BOOK, the Industrial Court held that a company cannot rely on the financial hardship caused by AMLA freezing and seizure orders as a valid excuse for failing to pay salaries and statutory contributions. The obligation to employees remains fundamental, especially where the freezing orders had been lifted before the dispute arose.

Lesson for businesses: A freeze does not suspend employment obligations. Asking for a payroll allowance under Section 44A is not just helpful, it may be necessary to avoid claims from staff.

Can You Challenge the Freeze in Court?

Many business owners’ first instinct is to go to court. The cases show that this is difficult. Freezing orders under Section 44 and seizure orders under Section 50 are generally treated as part of the criminal investigation, and not as administrative decisions that can be reviewed, unless the applicant can show bad faith.

Case (as summarised in the BIG AMLA BOOK)	What happened
City Growth Sdn Bhd & Anor v Government of Malaysia [2006] 1 MLJ 581	An order under Section 50(1) directing banks not to deal with funds was held to be an investigative function, not a decision open to judicial review
Aman Palestin Bhd v Tan Sri Dato’ Sri Haji Azam bin Baki & Ors [2024] MLJU 1653	An organisation whose accounts were frozen by the MACC sought to quash the orders and compel a variation under Section 44A to release RM11 million for operational use. The application was dismissed because there was no pleading or evidence of bad faith
Chip In Sdn Bhd v Inspektor Nur Haidy Omar & Ors [2025] MLRHU 2308	A company’s judicial review challenge to freezing and seizure orders was dismissed. The court held that failing to respond to a Section 44A request does not, by itself, amount to bad faith. Specific particulars of an ulterior purpose are needed

The practical message is that a well-documented application to the agency or the Public Prosecutor is usually a better first step than litigation. Court proceedings are more realistic where there is clear evidence of bad faith, where the order is defective on its face, as the applicants argued in I-Serve, or where a time limit has expired.

Clean Money and Dirty Money in the Same Account

For a business, the most important question is often whether the money being held is really the tainted money. The courts have looked closely at the account records to answer it.

Case Spotlight: Pendakwa Raya v Badan Perhubungan UMNO Negeri Kedah & 4 Lagi [2020] MLJU 896 (High Court)

Facts: The Public Prosecutor sought to forfeit RM1,054,019.22 in the current account of UMNO Kedah, claiming it was part of RM15 million paid by six cheques from the then Prime Minister in 2012 and 2013, allegedly the proceeds of an offence under Section 23 of the MACC Act. The account was frozen and seized in 2018.

What the bank statements showed: By the end of June 2013, the balance was only about RM1.4 million, so most of the RM15 million had already left the account. The balance fell to just RM58,000 in January 2017. In the first four months of 2018 alone, more than RM27 million from other sources came into the account in 44 transactions, and about RM26 million went out in 203 transactions.

Decision: Justice Mohd Nazlan dismissed the application. The affidavits only traced the movement of money and did not establish the predicate offence. In any event, the court found it very likely that the RM1.05 million left in the account came from other sources, and the prosecution had not identified it as proceeds of the alleged unlawful activity.

No substitute recovery: The court explained that forfeiture without prosecution under Section 56 is directed at the property itself. If the tainted money has been spent or has left the account, the recipient, whether innocent or not, cannot be ordered under Section 56 to make up the amount from other funds. Such recovery is only available under Section 55, following a prosecution.

Case Spotlight: Public Prosecutor v Billion Nova Sdn Bhd & Ors [2016] MLJU 1823 (Court of Appeal)

Facts: A Labuan company selling duty-free cigarettes and liquor had RM1,340,737.10 in 24 bank accounts of the company and its directors seized. The prosecution alleged the company had sold duty-free cigarettes outside Labuan, relying mainly on 82 cash deposits totalling about RM2.68 million made into its Labuan account from bank branches in Miri and Kota Kinabalu.

Decision: The Court of Appeal upheld the refusal to forfeit. It agreed that in the modern business world, payments may be made from anywhere for sales made elsewhere, so deposits from outside Labuan did not prove that sales took place outside Labuan. Transfers to the directors were explained as dividends, supported by the company’s own balance sheets, which the prosecution did not dispute. The court also noted that the company’s account contained deposits from legitimate sources mixed with the questioned deposits, and that the seizure orders did not specify the sums to be seized.

Lesson for businesses: Proper accounts, ledgers and explanations for each flow of money can defeat a forfeiture application. The prosecution must prove its case with evidence, not assumptions.

The BIG AMLA BOOK summarises PP v Sim Sai Hoon [2020] 6 MLRH 58, where the court observed that if the original dirty money has been used up before an account is frozen, the remaining legitimate balance cannot be forfeited as the subject matter of the offence.

The other side of the coin

Mixed accounts do not always protect the account holder. In Liew Ket Boh & Anor v Public Prosecutor [2024] 2 MLJ 73, the Court of Appeal held that the prosecution did not need to link every transaction to a cheating scheme, and that money mixed with scam proceeds could be forfeited. The accounts there had been opened shortly before millions of ringgit of investors’ money arrived, and the explanations given, such as property commissions and family business income, were unsupported by documents.

The BIG AMLA BOOK also notes that in Syarikat Semut-semut (M) Sdn Bhd & Ors v Public Prosecutor [2021] 5 MLJ 687, the Court of Appeal held that where an account is used to collect money through an unlicensed deposit-taking scheme, the credit balances themselves can be the subject matter of the offence.

The difference lies in the evidence. A genuine business that can show where its money came from stands in a very different position from an account used as a collection point for a scheme.

Your Bank Must Hold the Money, Even If Your Company Is Wound Up

Case Spotlight: Hong Leong Bank Bhd v Ten Jing Enterprise Sdn Bhd & Ors and another appeal [2025] 4 MLJ 725 (Court of Appeal)

Facts: In January 2013, Customs froze the current account of a company, TS Steel, during an investigation into customs duty evasion. In April 2013, the Public Prosecutor issued a Section 50 seizure order directing the bank not to deal with the money. Forfeiture proceedings began in March 2014. Another company, Ten Jing, came forward after the Gazette notice and proved that it was entitled to RM1,270,262.15 in the account. This was upheld by the Court of Appeal in October 2018.

What went wrong: When Ten Jing tried to collect the money, it learned that the bank had closed the account and released the funds to the Insolvency Department in November 2014, after TS Steel was wound up. The bank had not told anyone.

Decision: The Court of Appeal held the bank liable. The seizure order was still in force when the money was released. Section 52A did not apply because both orders were made before it came into force in September 2014, and the forfeiture application had been filed in time. Because Section 54 bars civil proceedings over seized property while a seizure is in force, the winding up order was void from the start. Seized money does not form part of a company’s assets for distribution to creditors until the court decides who owns it.

Liability: The bank had no standard operating procedure for accounts under AMLA orders, and did not notify the official receiver or the investigators. The court held that the preservation duty under AMLA protects both the Government and genuine third party claimants, so Ten Jing had a private right of action for breach of statutory duty. The bank was ordered to pay the RM1.27 million with interest, plus RM300,000 in costs.

Lessons for businesses: First, a business with a genuine claim to seized money can recover it through the Section 61 process, as Ten Jing did. Second, creditors and liquidators cannot reach money while it is under seizure. Third, banks must have proper systems to preserve seized funds.

The BIG AMLA BOOK also notes that questions about interest on frozen funds are usually treated as contractual matters between the customer and the bank. In Tan Hoo Eng v PP [2026] MLRHU 827, the High Court held that once a seizure is revoked, the Public Prosecutor’s statutory role ends, and any dispute about accrued interest is between the customer and the bank.

The Worst Case: Seizure of the Business Itself

Section 52 goes further than freezing an account. It allows an enforcement agency to seize an entire business where it has reason to believe the business is carried on by or on behalf of a person against whom a money laundering prosecution is intended, or by that person’s relative or associate, or where such a person has at least a 30% interest in it or has management or effective control over it.

Under a Section 52 order, the agency may direct how the business is run, appoint a person to supervise or run it, including its accounts, require profits to be paid to the Accountant General, bar directors or employees from involvement, or close the premises. The person running the business under the order is responsible for employees’ wages, paid from the business’s profits or assets. Breaching the order can lead to a fine of up to RM5 million, jail of up to seven years, or both.

Section 52 is aimed at businesses connected to the suspected wrongdoer. A merchant who simply received a customer’s payment in good faith is far more likely to face an account freeze than a seizure of the business, but owners should be aware that the power exists.

Time Limits Still Apply

A freezing order lasts a maximum of 90 days unless a charge is brought. A seizure order lapses after 12 months, or 18 months from an earlier freezing order under the current wording, if no charge or prosecution is brought in time. If no forfeiture application is made within the time allowed, seized property must be released to the person from whom it was seized. These rules are explained in the earlier article “How Long Can the Authorities Hold My Assets?” in this series. Businesses should diarise every date.

Practical Checklist for Businesses

Before anything goes wrong

Check that the payer matches the customer, and be cautious about payments from third parties with no clear connection to the sale.
Keep invoices, delivery records and customer communications for every transaction, so you can show exactly what each payment was for.
Keep proper books, as they were decisive in Billion Nova and UMNO Kedah.
Train staff to spot red flags, such as customers who overpay and ask for refunds to a different account, or who pay from several unrelated accounts.

If your account is frozen

Get copies of every order and find out the agency, the investigating officer, the provision used and the date.
Identify the suspect transaction and gather everything showing it was a genuine sale.
Separate the suspect amount from the rest of your balance, using bank statements and your ledger.
Apply in writing under Section 44A, specifying your grounds and asking for payroll, pre-freeze debts, essential expenses or partial release.
If the money has been seized under Section 50, ask for the Public Prosecutor to vary the order so that only the suspect amount stays seized.
Keep paying your employees, and ask for a payroll allowance if needed.
Do not move or deal with the frozen money.
Diarise the time limits, and watch for any Gazette notice under Section 61 if you have a claim to seized money.
Get legal advice early, especially before considering judicial review.

Conclusion

A customer’s scam can freeze a legitimate business overnight, and the law gives the authorities wide powers to act first and ask questions later. But AMLA also gives businesses tools to limit the damage. Section 44A allows payroll and essential expenses to be released, Section 50 orders can be varied to cover only the suspect money, and the courts have refused to forfeit balances that cannot be traced to crime.

The businesses that fare best are those that can quickly show where their money came from. Good records, prompt and detailed applications, and early legal advice are the most effective protection when a customer’s scam lands in your account.

Settling Instead of Being Charged: How Compounding Works for Money Laundering Offences

Picture this. A letter arrives from an enforcement agency stating that you are reasonably suspected of committing an offence under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLA). The letter then offers a way out. Pay a stated sum within a fixed number of days,…