The court upheld the bank's lawful restrictions under AMLATFA, finding the customer's claims for interest barred by prior litigation and a settlement agreement.

JUDGMENT

Atan Mustaffa Yussof Ahmad J:

Introduction

[1] This originating summons concerns a dispute between a customer and a bank over monies in the customer's accounts that were frozen and subsequently seized pursuant to orders issued under anti-money laundering legislation. The central issues that arise for determination are whether the bank, on advice of its solicitors, unlawfully failed to return or account for alleged accretions and benefits earned on the customer's accounts during the material period when restrictions were imposed, and whether this amounted to an unconstitutional deprivation of the customer's property rights. This in turn requires examination of the scope and legal effect of the anti-money laundering orders made, and whether the bank and its solicitors' interpretation of those orders can bind the customer or override her rights to the disputed sums The court is also called upon to consider if the claims are sustainable against the bank's solicitors as a separate party, and whether those claims are properly brought by way of originating summons or are otherwise caught by a prior settlement agreement between the parties. In grappling with these issues, the court must ultimately strive to strike a just and equitable balance between the customer's property rights, the bank's duties and obligations, and the wider public interest in an effective anti-money laundering legislative regime.

Background Facts

[2] Between December 2012 and March 2014, the 1st Defendant ("CIMB") granted the Plaintiff ("Madam Tan") an Overdraft Facility with a limit of RM26,500,000.00 (Account No 8004998003) ("the Overdraft Facility') against Structured Deposits and a Flexi Loan Facility of RM3,500,000.00 (Account No 8005000924) ("Flexi Loan Facility').

[3] In February-March 2014, Madam Tan invested in 7 structured products under account RSP 15971 ("RSP 15971"). Out of the RM26,500,000.00 principal for the structured products (except RSP 118), RM19,600,000.00 was obtained from Madam Tan's Overdraft Facility with CIMB. The structured products, except RSP 118, were assigned, charged and pledged to CIMB as security for the Overdraft Facility.

[4] Pursuant to the terms of the structured products, coupon payments earned would be deposited into Madam Tan's Money Multiplier Current Account No 8004997963 ("MMA") quarterly and half-yearly. The MMA generates interest on the balances.

[5] On 30 April 2014, a first freezing order under s 44(1) of the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 ("AMLATFA") was issued by the police to freeze several of Madam Tan's accounts with CIMB, including Fixed Deposit accounts, a Savings Account (No 7031168993) ("SA"), Foreign Currency Current accounts and the MMA. On 15 May 2014, a second freezing order under s 44(1) AMLATFA was issued by the police to freeze Madam Tan's MMA with CIMB. The two freezing orders are referred to together as "the Freezing Orders."

[6] On 24 July 2014, a seizure order under s 50(1) AMLATFA was issued by the police to seize Madam Tan's Fixed Deposit accounts, MMA and RSP 15971 with CIMB ("the Seizure Order').

[7] CIMB admitted that due to the AMLATFA Orders and acting on the advice of its solicitors Shearn Delamore & Co ("Shearn"), the 2nd Defendant, it was prevented from moving, transferring or crediting any "accretions" earned from RSP 15971 and the Fixed Deposit Accounts to the MMA or SA.

[8] Between September 2015 and December 2016, Madam Tan defaulted on repayments under the Overdraft Facility and Flexi Loan Facility. CIMB issued demand letters dated 29 April 2015 and 17 September 2015 terminating the facilities and seeking repayment of the outstanding sums.

[9] CIMB commenced a suit against Madam Tan and obtained summary judgment on 15 February 2016 in Kuala Lumpur High court Suit No WA-22NCC-309-10-2015 ("Suit 309") for the sums outstanding under the Overdraft Facility and Flexi Loan Facility as at 31 August 2015 with interest and costs.