Financial Crime World

Malawi’s National Risk Assessment: Key Takeaways for AML/CFT Efforts

Kampala, Uganda - In a significant move towards strengthening anti-money laundering and combating the financing of terrorism (AML/CFT) efforts in Malawi, the country has made notable progress in recent years. A comprehensive national risk assessment conducted in 2018 served as the basis for adopting a risk-based approach to AML/CFT.

Areas Requiring Improvement

While significant strides have been made, Malawi still faces challenges in key areas:

  • Oversight of non-profit organizations (NPOs)
  • Cross-border wire transfers to combat externalization of currency
  • Transparency of legal persons and arrangements
  • Understanding the risks associated with misuse of these entities is essential

Effective AML/CFT System

Malawi has implemented an effective AML/CFT system in some areas:

  • ML/TF risk assessment, investigation, and prosecution of predicate offenses and associated money laundering
  • Financial intelligence gathering and cooperation between domestic and international authorities are also notable strengths

Challenges Remain

However, the majority of financial institutions (FIs), designated non-financial businesses and professions (DNFBPs), and competent authorities are still in the early stages of developing and implementing policies, procedures, and processes to comply with the new AML/CFT framework.

Room for Improvement

Authorities need to:

  • Improve risk-based supervision of non-bank FIs and DNFBPs
  • Compliance with preventive measures
  • Better handling of mutual legal assistance (MLA) and extradition matters through an effective case management system
  • Maintenance of ultimate beneficial ownership information

Assessment of Risks

Malawi demonstrated a good understanding of its money laundering risks, particularly following the release of the 2018 national risk assessment results. However:

  • There is a need for a more comprehensive approach to assessing ML/TF risks, including those associated with legal persons and arrangements, NPOs, and DNFBPs.

Coordination and Policy Setting

The Ministry of Finance, Economic Planning, and Development provides policy direction and exercises oversight on AML/CFT matters. The National AML/CFT Committee serves as an advisory body and promotes multi-agency coordination and cooperation. However:

  • Competent authorities still lack adequate resources to prioritize and mitigate identified higher risks.

Conclusion

Malawi’s efforts towards strengthening its AML/CFT regime are commendable. However, there is still room for improvement in key areas, including oversight, transparency, and resource allocation. By addressing these challenges, the country can further enhance its ability to combat money laundering and terrorist financing.