Scammed, and the Money Is Frozen in Someone Else’s Account: Can Victims Get It Back?

What happens to scam money once the police freeze the account it went into, why it does not automatically come back to the victim, and the steps victims must take to claim it

The Scenario

You transfer money for what you believe is an investment, a property deposit or an online purchase. It turns out to be a scam. You lodge a police report for cheating under Section 420 of the Penal Code. A few weeks later, you hear that the police have frozen the bank account your money went into. Relief sets in. Surely the money will now come back to you?

Not necessarily. Once scam money is frozen under AMLA, it enters a legal process with its own rules. At the end of that process, the money may be returned to victims, but it may also be forfeited to the Government or even released back to the account holder. This article explains how that process works and what victims can do to improve their chances of recovery.

An earlier article in this series, “Scammed and Frozen”, explained how a cheating report can lead to an account being frozen. This article looks at the same situation from the victim’s side.

Why Scam Money Is Frozen Under AMLA

Cheating under Section 420 of the Penal Code is listed as a serious offence in the Second Schedule to AMLA, as the Court of Appeal noted in Liew Ket Boh (discussed below). That makes money obtained by cheating “proceeds of an unlawful activity”. Anyone who receives, moves or keeps it may be committing money laundering, and the account holding it can be frozen under Section 44 or seized under Section 50.

The freeze is designed to stop the money from disappearing while the investigation continues. It is a tool of the criminal process. It is not, by itself, a mechanism for paying victims back.

Where the Money Can End Up

Outcome	How it happens	What it means for the victim
Released to a person lawfully entitled (Section 60)	An investigating officer, with the Public Prosecutor’s involvement, releases seized property that is not liable to forfeiture or needed for proceedings to the person determined to be lawfully entitled	A possible route for victims, but the account holder must be heard if ownership is disputed
Returned to a third party claimant (Section 61)	In forfeiture proceedings, the court returns property to a claimant who proves all five conditions in Section 61(4)	The main legal route for victims to recover their money
Forfeited to the Federal Government (Sections 55, 56 and 58)	The court orders forfeiture, and the property vests in the Federal Government free from most other claims	Lost to the victim unless they successfully claimed before forfeiture
Released back to the account holder (Sections 52A and 56(3))	No charge and no forfeiture application within the time limits, so the order lapses	The money may go back to the very account it was frozen in

The hard truth about forfeiture

Section 58 of AMLA provides that forfeited property vests in the Federal Government free from any right, interest or encumbrance of any person, except that of a purchaser in good faith for valuable consideration. Section 62 then allows the court or enforcement agency to keep it for official use, transfer it to the Government, or sell it and pay the proceeds to the Government.

In other words, a successful forfeiture is a win for the State, not automatically for the victim. Victims who want their money back need to act before the forfeiture order is made.

Route One: Release Under Section 60

Under Section 60, an investigating officer, other than the one who carried out the seizure, may release seized property before it is forfeited to the person he determines to be lawfully entitled, if satisfied that it is not liable to forfeiture and not needed for any proceedings. The Small AMLA book explains that this is done with the Public Prosecutor’s permission, and that there are standard forms for releasing property either to the person named in the seizure order or to any other person.

For a victim, this may seem the simplest route. But the BIG AMLA BOOK notes that the courts have set clear limits on it.

Case Spotlight: Rosalind Tan Kheng Suan v Peguam Negara Malaysia & Ors [2026] 1 MLRA 877 (Court of Appeal)

As summarised in the BIG AMLA BOOK, the Court of Appeal, reversing the High Court, held that while seizing property is an investigative act, releasing it under Section 60 is an administrative act that can be challenged by judicial review.

The Public Prosecutor cannot decide on his own that a third party, such as a rival claimant, is lawfully entitled to seized money without first giving the account holder a chance to be heard. The book explains the court’s view that the Public Prosecutor is not a judge of ownership. Where ownership is genuinely disputed, the property should go back to the person from whom it was seized, and the competing claimants should resolve the matter in a civil court. The court also held that Section 60 cannot be used to get around Section 56(3), which requires seized property to be released to the person from whom it was seized if no forfeiture application is made in time.

What this means for victims: A Section 60 release is most realistic where the facts are clear and the account holder does not dispute the claim. Where the account holder contests it, victims should expect to prove their case in court.

The BIG AMLA BOOK also notes the High Court decision in Chan Eng Leong & Anor v Albany Hamzah, DSP & Ors [2026] MLRHU 1242, which held that a judicial review challenge to a Section 60 release must name the Public Prosecutor, or the Deputy Public Prosecutor who consented to the release, as a respondent. Naming only the Government or the investigating officers was not enough.

Route Two: Claiming as a Third Party Under Section 61

The main legal route for victims is Section 61. It applies when the Public Prosecutor seeks forfeiture, either after a prosecution under Section 55 or without a prosecution under Section 56.

How the process works

The Small AMLA book describes the steps in a forfeiture application without prosecution. The Public Prosecutor files the application in the High Court with supporting affidavits. At the first hearing, the court is asked to fix a date for the third party notice (Notis Pihak Ketiga) required by Section 61(2). The notice is published in the Gazette, usually within about three weeks of being sent for printing. On the date in the notice, any third party claiming an interest can attend, file an affidavit and show cause why the property should not be forfeited. After hearing everyone, the court decides whether to forfeit the property or return it to the claimant or the respondent.

Miss the date and you may lose your claim

Section 61(2A) provides that a third party who fails to attend before the court on the date specified in the Gazette notice cannot make any claim after a forfeiture order is made. The BIG AMLA BOOK notes that this strict rule raises fairness questions for victims who do not monitor the Gazette, but the wording is clear. Victims should therefore stay in touch with the investigating officer and watch for the notice.

Case Spotlight: Pendakwa Raya lwn Taiko Fertiliser & Ors [2019] MLJU 88 (Court of Appeal)

Facts: Customs froze seven bank accounts holding about RM280,000 and seized a BMW X6 and an Audi TT, suspecting they were proceeds of smuggling. The Public Prosecutor applied for a Gazette notice under Section 61(2) and for forfeiture. The High Court went straight to the merits and dismissed the forfeiture application without dealing with the Gazette notice.

Decision: The Court of Appeal allowed the appeal. Because Section 56(1) is expressed to be “subject to section 61”, and Section 61(2) says the judge “shall” publish a notice, the Gazette notice is mandatory and must come first. The court explained that Section 61 gives bona fide third parties the right to be heard and to claim the property before it is forfeited or otherwise dealt with. It would make no sense to decide forfeiture first and only then invite third parties to explain why it should not happen. The case was sent back to the High Court for the notice to be published.

Lesson for victims: The law guarantees victims an opportunity to be heard before property is forfeited. That opportunity comes through the Gazette notice.

The BIG AMLA BOOK also notes that the Court of Appeal in Genneva Sdn Bhd v Dato’ Vengadasalam Letchumi Kandan & Ors [2024] MLJU 1 held that Section 61 claims are only heard once the court is satisfied the property is forfeitable. If the forfeiture application fails, third party claims cannot proceed under Section 61, although the book notes that civil claims may still be pursued separately.

The Five Conditions Victims Must Prove

Under Section 61(4), the court or enforcement agency must return the property to a claimant only when satisfied of all five of the following. The courts have repeatedly held that the conditions are cumulative, so failing one is fatal, and that the claimant must prove them on the balance of probabilities.

Condition	What victims typically need to show
(a) A legitimate legal interest in the property	That the money is theirs, usually through receipts, bank transfer records or payment slips
(b) No participation, collusion or involvement in the offence	That they were not part of the scheme, for example that they were never charged or implicated
(c) No knowledge of the illegal use, and no deliberate ignorance	That they genuinely did not know the scheme was illegal and did not turn a blind eye to obvious warning signs
(d) No rights acquired to avoid forfeiture	That they paid with their own money in a genuine transaction, not as part of an arrangement to shield the money
(e) Did all that could reasonably be expected to prevent illegal use	That they acted sensibly, for example by checking the scheme where there was reason to and lodging a police report promptly

Section 61(3) also allows the court or enforcement agency to infer a lack of good faith from the objective circumstances of the case. In practice, conditions (c) and (e) are where many victims’ claims succeed or fail.

When Victims Succeeded

Case Spotlight: Public Prosecutor v Wan Norai bt Wan Ismail & Ors (Florena Francis Ubong & Ors, third parties) [2018] 7 MLJ 830 (High Court, Kota Kinabalu)

Facts: A company launched a bungalow development project in Kota Kinabalu in 2014, advertised for many days in a local newspaper. Buyers who owned land were asked to pay a 20% deposit, with the balance over 20 years. Agents were promised commissions, free bungalows and even BMW cars for high sales. Within a month, 75 customers had registered and about RM1.6 million had been collected. Buyers and agents later realised there were no documents showing that any bungalow was being built. There were 83 police reports, and the company’s director was charged with cheating under Sections 416 and 420 of the Penal Code.

The money: Bank balances and bankers’ cheques totalling RM751,403.73 were seized. The Public Prosecutor sought forfeiture, a Gazette notice was published, and the victims came forward. Their claims totalled RM1,242,000.

Decision: The High Court allowed the claims. The victims had a legitimate interest because it was their money. None of them had been charged or shown to be involved. Given that 65 claimants had done the same thing, relying on a project advertised publicly without complaint, it was reasonable that each did not carry out a background search. They had paid with their own money, and they had lodged police reports as early as possible. Crucially, the prosecution did not challenge their affidavits.

Not everyone succeeded: The court stressed that the burden was on each claimant to prove payment, for example with receipts. Some claimants failed because they could not show they had actually paid the agents or the company.

Pro rata division: Because the claims exceeded the money seized, the seized sum was divided among the successful claimants in proportion to their claims. Victims recovered part, not all, of what they lost.

When Victims Failed

Case Spotlight: Tan Boon Ee & Ors v Pendakwa Raya [2021] 5 MLJ 421 (Court of Appeal)

Facts: In 2010, about RM9.34 million was seized from five bank accounts of The Gold Label Sdn Bhd, suspected of taking deposits without a licence. After a Gazette notice in January 2012, 436 people came forward to claim, including the three appellants, who claimed RM73,000, RM73,000 and RM385,000. They had “bought” gold from the company, which promised rebates of 2.5% to 3% a month. They never received the gold, only safekeeping receipts for gold said to be stored in Singapore. The High Court dismissed all 436 claims.

Decision: The Court of Appeal dismissed the appeal. The appellants had only filed statutory declarations and had not prepared witness statements, so they had not put forward evidence on most of the conditions. On the evidence, they had only proved condition (a), that they paid money to the company.

Due diligence: Cross-examination showed that the appellants knew or should have known the transactions were not genuine. Two of them were experienced stock market investors. One lived and worked in Singapore but never went to see his gold. None of them checked the company’s background. The court said rebates of 3% a month, or 36% a year, were too good to be true compared with bank interest or share dividends, and a prudent investor would have checked the business first. The High Court had also noted that the public had been warned repeatedly through the media about schemes offering such returns.

Lesson: Victims must prove every condition with proper evidence, and ignoring obvious red flags can defeat a claim even where the money clearly came from the claimant.

The BIG AMLA BOOK summarises similar decisions. In PP v Winter Bloom Sdn Bhd & Ors [2025] MLRHU 2584, the High Court held that claimants who invested in a scheme advertised on social media without checking whether it was registered with the Securities Commission or the Companies Commission of Malaysia failed the reasonableness test in Section 61(4)(e), and that victims of “money games” who ignore high-risk warning signs cannot be treated as bona fide. In Syarikat Semut-semut (M) Sdn Bhd & Ors v Public Prosecutor [2021] 5 MLJ 687, the Court of Appeal emphasised that victims of such schemes are not automatically entitled to their money back, and that failing to check the scheme’s status with Bank Negara Malaysia or the Securities Commission can prevent a finding of good faith.

The book also summarises Teh Tek Soon v Pendakwa Raya [2015] MLJU 2212, where a man who said he had been cheated of RM5.18 million claimed RM1,095,000 in buried cash recovered by the police. The Court of Appeal rejected his claim because his own police report showed the money had been advanced for “lobbying” to secure government projects, which suggested he knew of the illegality. The court inferred a lack of good faith under Section 61(3), and the money was forfeited to the Government.

When No Victim Came Forward

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

Facts: Investors were lured into an investment scheme called Grow Asia Capital Ventures, supposedly exporting durians to China. One investor deposited RM12,000 after being promised RM720 a day for 78 days, received only RM3,600 and lost the rest. Thirty investors lodged police reports, and the case was investigated as cheating under Section 420. The investors’ money went into accounts registered in the names of others, then moved in dozens of transfers totalling millions of ringgit into the accounts of two businesses, and was mostly withdrawn in cash. Evidence showed the accounts were controlled by the first appellant.

Decision: No one was charged. The Public Prosecutor applied for forfeiture without prosecution, and the High Court forfeited the balances in the appellants’ accounts. The Court of Appeal dismissed their appeals. It held that the victims’ statements proved on the balance of probabilities that cheating had taken place, and that no conviction was needed. It also held that the prosecution did not need to link every transaction in the accounts to the scheme, because money mixed with the proceeds of crime can also be treated as proceeds.

The point for victims: The Court of Appeal noted that Section 61 allows bona fide third parties to come forward and claim seized property, but that in this case, no third parties came forward. The money was forfeited to the Government, even though it was traced to cheated investors.

	Wan Norai (2017)	Liew Ket Boh (2024)
Predicate offence	Cheating under Sections 416 and 420	Cheating under Section 420
Victims’ role	65 claimants came forward after the Gazette notice	No third party came forward
Outcome	Seized money divided pro rata among victims who proved payment	Seized money forfeited to the Federal Government

Why Speed Matters

The freeze only catches what is left in the account at the time. The BIG AMLA BOOK notes the observation in PP v Sim Sai Hoon [2020] 6 MLRH 58 that delay in reporting or freezing can allow tainted money to be completely dissipated, and that if the dirty money has already gone, the remaining legitimate balance cannot be forfeited as the subject matter of the offence. The book also notes that forfeiture without prosecution does not allow substitute compensation for funds that have already been spent.

Time limits also work against victims who wait. If the Public Prosecutor does not charge anyone or apply for forfeiture within the periods set by Sections 52A and 56, the seizure lapses and the property must be released to the person from whom it was seized. An earlier article in this series, “How Long Can the Authorities Hold My Assets?”, explains these time limits. Victims who want the money to be dealt with through forfeiture proceedings, where they can claim, have every reason to report early and keep in contact with the investigators.

Finally, victims thinking of suing should note Section 54(3). While a seizure remains in force, no civil action may be started or continued over the seized property, except by the Government or with the Public Prosecutor’s written consent. A civil claim may still be possible against the wrongdoers, but the seized money itself is protected while the seizure lasts.

A Checklist for Scam Victims

Lodge a police report as soon as possible, and give full details of every payment. Early reports helped the victims in Wan Norai.
Keep every receipt, transfer slip, screenshot and message. Some claimants in Wan Norai lost because they could not prove payment.
Note the report number and the investigating officer’s name, and ask whether the recipient account has been frozen or seized and under which provision.
Write to the investigating officer and the Public Prosecutor asking for release under Section 60, with your proof of payment.
Watch for the Gazette notice under Section 61 and attend on the date stated. Missing it may bar your claim.
File proper evidence, not just a statutory declaration. In Tan Boon Ee, claimants who did not give full evidence failed.
Be ready to explain why you believed the scheme was genuine, and what checks you made.
Consider joining with other victims, as claims are often heard together and the money may be divided pro rata.
Get legal advice early, including on whether a separate civil claim is worthwhile.

Prevention is still the best protection

The cases show that courts expect investors to check before they pay. Before putting money into any scheme, check whether it is registered or licensed with the relevant authority, such as Bank Negara Malaysia, the Securities Commission or the Companies Commission of Malaysia. Be very wary of returns that are far above bank interest, of schemes promoted mainly through friends or social media, and of “investments” where you never receive or see what you have supposedly bought.

Conclusion

A frozen account is the start of the recovery process, not the end. AMLA gives the State strong powers to freeze, seize and forfeit scam money, but forfeited money belongs to the Federal Government unless victims step forward and prove their claims. The law does protect genuine victims through Sections 60 and 61, and the Wan Norai case shows it can work. But the cases also show that victims must act quickly, keep evidence, attend when called, and be able to show they did not ignore obvious warning signs.

For victims, the practical message is simple. Report early, keep proof, stay in touch with the investigators, and do not miss the Gazette notice. Otherwise, as Liew Ket Boh shows, the money traced from your account may end up in the Government’s hands instead of yours.

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