Financial Crime World

Malawi’s Small Businesses Face New AML Guidelines to Combat Financial Crimes

Malawi has been actively supervising anti-money laundering (AML), combating financing of terrorism (CFT), and combating proliferation since the Money Laundering, Proceeds of Serious Crime and Terrorist Financing Act was enacted in 2006. The Reserve Bank of Malawi established a separate division in 2009 to oversee AML/CFT supervision of all financial institutions.

Current AML Legislation

The Financial Crimes Act of 2017 governs AML/CFT supervision, replacing the 2006 act. Malawi’s AML legislation adheres to the Financial Action Task Force (FATF) Recommendations on AML/CFT. Failure to comply with these recommendations could result in severe sanctions against the country, which may impede its financial sector’s global transactions.

Regional Membership and Evaluations

Malawi is a member of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), a FATF-style regional body. The country underwent mutual evaluations by the World Bank under the Financial Sector Assessment Programme (FSAP) in 2008 and 2018 to assess its implementation of FATF Recommendations and effectiveness in combating money laundering and terrorist financing.

  • First mutual evaluation: Conducted in 2008, with the report approved by ESAAMLG’s Council of Ministers in August 2008
  • Second round of evaluations: Took place in 2018, with the report approved in September 2019

National Risk Assessments

Malawi also conducted national risk assessments (NRAs) on money laundering and terrorist financing in 2013 and updated them in 2018. These NRAs aimed to identify risks and threats facing the country, analyzing: + Money laundering threats + Predicate offenses generating significant criminal proceeds + Terrorism and terrorist financing threats

The assessments evaluated Malawi’s capabilities to combat these crimes and vulnerabilities within its financial sector.

Importance of AML Guidelines for Small Businesses

These developments highlight the importance of AML guidelines for small businesses in Malawi, which must adhere to strict regulations to prevent their use in financial crimes. Compliance with AML/CFT requirements is crucial to maintain the country’s reputation and avoid severe sanctions.