Malaysian Court Rules Online Gambling Not ‘Legally’ Illegal

Posted on: April 15, 2022, 05:40h. 

Last updated on: April 15, 2022, 12:19h.

Erik Gibbs Read More
Expertise: Asia Pacific Gaming, Gaming Business, Global Gaming.

Malaysia’s government wants to seize real estate and bank accounts linked to illegal online gambling. However, online gambling isn’t illegal after all, according to the country’s High Court.

Malaysia
Saloma Link Bridge in Kuala Lumpur, Malaysia. The country may have a distaste for online gambling, but a judge decides that it isn’t illegal. (Image: Japan Times)

Malaysia has found itself in a quandary of sorts. It deems the activity illegal and recently sought to target assets, including real estate and bank accounts, of 45 people it said were breaking the law. However, its request fell flat because, certainly to its surprise, because online gambling isn’t illegal.

The country’s High Court determined that the legal gaming framework, the Common Gaming Houses Act (CGHA), doesn’t include language for online gambling. This, it ruled, means that the government can’t call the activity illegal. The court also rejected the idea that bank accounts are assets subject to potential seizure. This is because, in its words, they’re not actually assets.

When Illegal Gambling Isn’t Illegal

In presenting its asset seizure request to the court, according to Free Malaysia Today, the government said the 45 individuals and companies had violated Section 4B of the CGHA. However, as High Court Judicial Commissioner Radzi Abdul Hamid explained, the government “failed to apply the correct law.”

The commissioner added that 4B discusses “dealing with and transacting in gaming machines.” However, it makes no mention of online gambling.

Despite the government’s ongoing war against illegal gambling activities, laws such as [the] Common Gaming Houses Act and Betting Act have not caught up with the times and they have not been updated to include express provisions for making online gambling illegal,” explains Judicial Commissioner Radzi Abdul Hamid.

The government targeted individuals and businesses with the argument that they violated anti-money-laundering (AML) laws. It said that the assets, including a house and vehicles, were proceeds of the activity. The bank accounts handled the transactions.

“However, the law (Common Gaming Houses Act), as it stands currently, does not provide the authorities with the correct legislative tools to battle online gambling,” Radzi added.

In simple terms, that means there is nothing to make online gambling illegal.

The High Court pointed out that then-Home Minister Ahmad Zahid Hamidi vowed to introduce amendments to the CGHA in 2017 to cover online gambling. These never arrived, though, probably because the politician was fighting his own accusations of violating anti-money laundering (AML) laws. That scandal is still ongoing.

Bank Accounts Aren’t Assets

The Malaysian government can’t touch privately-owned bank accounts. This is because they aren’t a form of asset or property that can be forfeited. Radzi explained in his 57-page ruling that the account is “a mere facility” the bank provides to the customer. Its sole purpose is to manage the financial relationship between the two.

Therefore, the accounts are not privately-owned property. Instead, they are “virtual storage” facilities that the bank still owns.

Radzi demonstrated the validity of his decision by highlighting how banks can freeze accounts almost at will. He added that a bank account isn’t a “monetary instrument” and is not a “legal document.” Instead, “[it] is merely a storage facility where no possession attaches, let alone ownership.”

That will certainly have implications for many legal, criminal, and civil cases provided it holds up. Lawmakers are likely scrambling to see how they can close loopholes. For now, though, online gambling isn’t technically illegal in Malaysia, and bank accounts are untouchable.