AMLA Malaysia – Introduction to “Smurfing”

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The physical transaction, especially between individuals, can be highly untraceable without proper monitor and regulation. Such transaction is an ideal vehicle to facilitate illicit activities, especially (concerning this topic) money laundering and terrorism financing. The above sentiment was echoed by Bank Negara Malaysia’s (BNM) report, titled “Malaysia’s 2017 National Risk Assessment on Money Laundering and Terrorism Financing1”. In the report, BNM noted that physical cash remains widely exposed to abuse by individuals in instances of corruption, fraud, smuggling, drug trafficking and organised crimes. One such form of abuse is called “smurfing”.

What is “Smurfing”?

Smurfing is a colloquial term used to describe a person (or a money launderer) who seeks to evade scrutiny from institutional bodies, such as banks, who are receiving such money by breaking up large transactions into a set of smaller transactions (also known as ‘structuring’) that are each below the reporting threshold as required by AMLA2 (as of today concerning a person can only transact a maximum amount of RM25,000.00 per day3).

The law on “Smurfing4

A person automatically commits an offence under Section 4A of the Act if:The person structures, or directs, assists or participates in structuring, any transaction in the domestic or foreign currency to avoid the act (smurfing) mentioned above.
What are the considerations when determining whether an act is considered smurfing vice versa?The main consideration, while not exhaustive, are:
1. The value of the money or property involved in each transaction; 
2. The total value of the transactions;
3. The period of time over which the transactions took place;
4. Interval of time between any of the transactions; and
5. The locations at which the transactions took place.
What happens if a person is charged and convicted under Section 4A?The person shall be liable to a fine of not more than five times the aggregate sum or value of the transaction at the time the offence was committed or to imprisonment for a term not exceeding seven years or both.

Example of Case Law

In R v Ozer & Ors5, a cashier at the branch of a Turkish bank in London appealed against various convictions including money laundering. The Appeal judge upheld the sentence for money laundering as by breaking up the transfers into small amounts he knew that this was the proceeds of something illegal and was knowingly engaging in money laundering.

In Ratzlaf v United States6 (92–1196), 510 U.S. 135 (1994), a man in Nevada ran up a very large gambling debt. He did not want anyone to know about his gambling and on being told that the casino would have to report any transaction over US$10,000 went and obtained banker’s cheques, each for less than $10,000 from many different banks. He was found guilty of structuring, even though the source of the funds appeared to be legal. In Regina v Hannes7 [2000] NSWCCA 503, an appeal case, one of the issues was whether the appellant had been engaged in money laundering regarding the proceeds of insider trading. As he had obtained 10 banker’s cheques each for A$9,000, so avoiding the reporting requirements, it was affirmed that he had breached the  Financial Transactions Reports Act8.

Closer to home, we had our first ever case in relation to this issue when the Malaysian Anti-Corruption Commission (MACC) recently charged a businesswoman for transaction restructuring amounting to RM230,000 at the Kuala Lumpur courts. According to MACC, the businesswoman is suspected of committing the offence in her attempt at avoiding the transactions from being detected by the bank. This was achieved by instructing an individual to deposit money into her business account in the amount not exceeding RM50,000 several times on the same day to avoid being detected as a suspicious transaction.


2. Section 14 (1)(a), Anti-Money Laundering and Anti-Terrorism Financing Act 2001.

3. In a Cash Threshold Reporting Circular dated 28 December 2018 issued by Bank Negara Malaysia, the new cash threshold amount for the submission of cash threshold reports (CTR) by reporting institutions on cash transactions has been reduced from RM50,000 and above in a day to RM25,000 and above in a day effective from 1 January 2019. The CTR requirements are applicable to single or multiple cash transactions aggregated within the same amount specified in a day.

4. Section 4A, Anti-Money Laundering and Anti-Terrorism Financing Act 2001.

5. [2002] EWCA Crim 925.

6. (92-1196), 510 U.S. (1994).

7. [2000] NSWCCA 5003.

8. 1988.

Have more question regarding AMLA? Consult with our lawyer:

Other articles you may interested:

  1. AMLA MALAYSIA: Instituting A Civil Action After Seizure-Is It Possible?
  2. Properties Held Under Trust – Can It Be Seized Under AMLA?
  3. AMLA Malaysia – What Are The Rights Accorded To An Information Provider?
  4. AMLA Malaysia – Challenging An Act of Seizure By Way Of Judicial Review
  5. AMLA Malaysia – How To Report A Suspicious Transaction?
  6. Introduction to Politically Exposed Persons (PEPs) in Malaysia
  7. Forfeiture of Properties 12 Months After Seizing/ Freezing-Is It Possible?
Anti-money Laundering and Anti-Terrorism Financing, Bank Negara Malaysia, corruption, drug trafficking, fraud, Kuala Lumpur courts, Malaysia Anti-Corruption Commission, money launderer, money laundering and terrorism financing, organised crimes, smuggling, smurfing, structuring, R v Ozer & Ors, Ratzlaf v United States, Regina v Hannes [2000] NSWCCA 503, Financial Transaction Reports Act