1. ) I-Serve Online Mall Sdn Bhd v 1. ) BANK NEGARA MALAYSIA (WA-25-38-01/2022)

I-SERVE ONLINE MALL SDN BHD (No. Syarikat: 201401020899 (1096985-X))

I-SERVE TECHNOLOGY & VACATIONS SDN. BHD. (No. Syarikat: 200101016573 (552330-X))

ADVANCE DIGITAL VENTURES BERHAD (No. Syarikat: 201901042642 (1351972-H))

TRILLION COVE HOLDINGS BERHAD (No. Syarikat: 202001029951 (1386271-T))

GOH HWAN HUA (No. KP: 660901-01-5175)

NEOW EAN LEE (No. KP: 680802-08-5854)

BONG SOON HENG (No. KP: 650128-04-5203) PEMOHON-PEMOHON

KAMAL BAHARIN BIN OMAR RESPONDEN-RESPONDEN JUDGMENT [1] This application for leave judicial review concerns the application of s 44(1) of the Anti-Money Laundering Anti-Terrorism Financing and Proceeds of Unlawful Activity Act 2001 (“AMLA”). [2] The brief factual background that led to the application is as follows. [3] On 11.11.2021, Bank Negara Malaysia (“Bank Negara”) issued a series of freezing orders (“the Freezing Orders”) under s 44(1) of AMLA against the applicants, including entities and individuals it deemed to be related to the applicants. [4] One example of the Freezing Orders by the Bank Negara states inter alia as follows:

An order of certiorari to quash the Freezing Orders.

A declaration that the Freezing Orders were wrongly issued by the Bank Negara.

An order of mandamus to compel the Freezing Orders to be varied or revoked pursuant to s 44A of AMLA in accordance with the specific requirements of the applicants. The grounds of the application [7] The grounds of the application for leave for judicial review are as follows. Freezing Orders are legally defective [8] First, the applicants contended that the Freezing Orders are legally defective. Learned counsel for the applicant submitted that the Freezing Orders, as seen above, merely state they are issued under s 44(1) of AMLA. [9] The Freezing Orders, according to learned counsel, had failed to state:

The person against whom the order is directed is the subject of an investigation into unlawful activity.

The alleged unlawful activity within the meaning of s 2 of

Which specific limb that the investigating officer (“IO”) had selected. According to learned counsel, the IO must state whether the Freezing Orders were under s 44(1)(b)(i) or (ii). Under sub-section (i), which is the first limb, the IO must have satisfied himself that an offence under s 4(1) of AMLA has been or is about to be committed. Under sub-section (ii), which is the second limb, the IO must satisfy himself that the property that is being frozen is either the proceeds of unlawful activity or the instrumentalities of an offence.

Whether there are reasonable grounds for the IO’s belief that an offence under s 4(1) of AMLA has been committed. [10] Learned counsel for the applicants submitted that it is necessary for the applicants who are subjected to the Freezing Orders to know that the statutory requirements have been met. The reason is this. Having known the basic information that led to the Freezing Orders, the applicants would be in a position to make an application under s 44A(1)(b) of AMLA for a possible variation or revocation. It provides that an order to freeze property issued under section 44 may be varied or revoked by the enforcement agency that issued the order on the application of the person named or described in the order. [11] It is therefore contended on behalf of the applicants that the BNM and the 2nd to 5th respondents had acted illegally, unlawfully and in excess of their jurisdiction in their failure to identify or particularise the subject of the purported investigation. The delay in the decision in the application under s 44A [12] The second ground of the application for leave is the applicants’ complaint in the manner the respondents dealt with their applications under s 44A of AMLA. [13] According to the applicants, the respondents:

Have unreasonably and unlawfully delayed in deciding on the applicants’ application to vary the Freezing Orders pursuant to s 44A of AMLA. According to the applicants, the delay was almost 3 months, and the respondents only acted after this application for leave to commence judicial review was filed.

Have made an unreasonable decision to only grant the payment of salaries for a limited period of 2 months without making allowances for the payments of compulsory statutory contributions.

Have refused to allow the applications’ application for variation to enable payment of legitimate third-party creditors and to make allowances for their personal subsistence. [14] On (a), it is contended by learned counsel that the delay in making the decision to verify the Freezing Orders under s 44A is as good as refusal to make the decision. Such a non-decision, according to learned counsel, is amenable to judicial review; see Zainal bin Haji Nasiruddin v The Registrar of Societies [2012] MLJU 1623. [15] As to (b) and (c) in submitting that a freezing order under AMLA is akin to a Mareva injunction, learned counsel argued that it is always open for the applicant to vary the order to enable the payment of bona fide business debts, commitments and other ordinary expenses; see PharmMalaysia Bhd v Dinesh Kumar Jashbai Nagjibha Patel & Ors [2005] 5 CLJ 50. The Leave [16] In short, the leave application is premised on the main argument that the Freezing Orders are defective in law. Secondly, the applicants also contended there was a clear procedural impropriety in how the respondents handled the applicants’ application under s 44A of [17] For the aforesaid reasons, learned counsel for the applicants submitted that the applicants have established that there are real, substantive, serious and arguable grounds to merit the granting of the leave herein. The Attorney General’s Objection [18] As is the requirement under O 53 r 3(3), the applicant lodged the relevant cause papers in this application for judicial review at the Attorney General's Chambers. [19] The Attorney General (“AG”) objects to this application for leave to commence judicial proceedings. [20] The basis of the AG’s objections are as follows:

The Freezing Orders are not amenable to judicial review; Khor Peng Chai & Ors v Bank Negara Malaysia [2012] 4 CLJ 987. The case carries the proposition that the court must be very slow to interfere with the enforcement matter of a statutory body and, in so doing, refraining them from carrying out their responsibilities.

The Freezing Order is no longer in effect since the statutory period of 90 days has elapsed since 10.2.2022. The learned Federal Counsel (“FC”) referred me to s 44(5) of AMLA, which provides 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 has not been charged with an offence under the Act. My attention was then drawn to the judgment of the Court of Appeal in Lim Hui Jin v CIMB Bank Bhd & Ors [2018] 8 CLJ 327 CA.

The applicants had erroneously sought to obtain leave against the putative 6th respondent, Kamarul Baharin bin Omar. It is not in dispute that the putative 6th respondent is not an officer of the BNM. The analysis [21] It should be borne in mind that the case Khor Peng Chai cited by the learned FC was decided on the original s 44 of AMLA prior to its amendment in 2014. In the circumstances, Khor Peng Chai should be viewed in the light of the aforesaid amendment. [22] The amended s 44(1) of AMLA reads as follows:

Subject to section 50, an enforcement agency may issue an order to freeze any property of any person, or any terrorist property, as the case may be, wherever the property may be, and whether the property is in his possession, under his control or due from any source to him, if-

an investigation with regard to an unlawful activity has commenced against that person; and

either-

the enforcement agency has reasonable grounds to suspect that an offence under subsection 11 4(1) or a terrorism financing offence has been or is being or is about to be committed by that person; or

(ii) the enforcement agency has reasonable grounds to suspect that the property is the proceeds of an unlawful activity or the instrumentalities of an offence. [23] The learned FC submitted that the effect of the applicants’ application for leave, if allowed, would expose the criminal investigative process of all law enforcement agencies to constant judicial review; Empayar Canggih Sdn Bhd v Ketua Pengarah Bahagian Penguatkuasa Kementerian Perdagangan Dalam Negeri dan Hal Ehwal Pengguna Malaysia & Anor [2018] Supp MLJ 16. [24] From the line of argument of the learned FC, it seems to me that her anxiety is premised on the following grounds:

The judicial review process should not be used to restrain a freezing order which was issued in the course of a criminal investigation.

The effect would be to expose evidence of an ongoing criminal investigation be adduced and assessed by this Court exercising its civil jurisdiction. [25] I must state the learned FC’s argument is very persuasive. [26] However, this Court does not have the advantage of knowing the status of the criminal investigation against the applicants. It should be noted that while the Freezing Orders were dated 11.11.2021, there is no evidence before this Court that any of the applicants were charged in a criminal court. [27] Secondly, the challenge is not against the criminal investigation but the manner in which the Freezing Orders were issued. According to the 5th applicant, who affirmed in the affidavit in support in Encl 3, the Freezing Orders do not even state who was the subject of the criminal investigation under AMLA. Was it the 5th applicant? Was it his wife, the 6th applicant? Were they the applicant companies? [28] According to the 5th applicant, there is nothing in the Freezing Orders that state the basis of the decision that leads to their issuance. [29] The 5th applicant’s argument is that the failure to state the subject of criminal investigation and the basis of the decision to issue the Freezing Orders is against s 44(1) of AMLA. [30] I will not decide at this stage, one way or the other, whether the Freezing Orders have contravened the aforesaid provision in AMLA. If it is indeed true, surely this Court cannot stand idly by. [31] The legality of the Freezing Orders is quite separate from the investigation papers that the learned FC is so anxious to protect and rightly so. In the course of the determination of this application for judicial review, I do not think there is any need for the putative respondents to reveal or otherwise expose the criminal investigative process. [32] From that perspective, Empayar Canggih is distinguished. [33] Secondly, the learned FC submitted that since the Freezing Orders had expired by effluxion of time, there is nothing left for this Court to review. [34] With respect, I do not think so. What if the Freezing Orders are held to be contravening s 44(1) of AMLA? In the circumstances, the applicants would be entitled to a claim in damages against the putative respondents for wrongful seizure for the 90-day period. [35] The issue is therefore a live issue. [36] In Zaidi bin Kanapiah v ASP Khairul Fairoz bin Rodzuan and other cases [2021] 5 CLJ 581 FC, the majority of the Federal Court held that the issue of the legality of the appellant’s detention was not academic despite the fact that his detention period of 21 days issued under s 4(1)(a) of the Prevention of Crime Act 1959 had expired by the time his application for the writ of habeas corpus was heard. [37] As to the alleged wrong party cited, the putative 6th respondent is at liberty to file an application to have his name removed from the cause papers. The Findings [38] For the aforesaid reasons, my findings are as follows:

The application for leave to commence the judicial review is anchored on the legality of the Freezing Orders, which is quite separate from the criminal investigative process.

In determining whether the Freezing Orders contravene s 44(1) of AMLA, there is no need for this Court to have access to the investigation papers, if at all, in relation to the applicants.

In the circumstances, the potential conflict of jurisdiction between a criminal and civil court does not arise.

Although the Freezing Orders have lapsed, there remain live issues to be determined by this Court, including damages in the event that the orders are held to be ultra vires s 44(1) of [39] For the reasons aforesaid, the applicants have shown that prima facie, their application for judicial review is not frivolous. [40] Leave to commence judicial proceedings is hereby granted to costs in the cause. Tarikh: 25 Julai 2022 (WAN AHMAD FARID BIN WAN SALLEH) Hakim Mahkamah Tinggi Kuala Lumpur.