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Financial Institutions Urged to Develop Policies on Money Laundering and Terrorist Financing
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The Reserve Bank of Malawi has issued guidelines on Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) for financial institutions in the country.
Guidelines for Financial Institutions
According to the guidelines, financial institutions (FIs) are required to develop policies and procedures to identify and manage money laundering and terrorist financing risks. FIs must also conduct ongoing risk assessments to remain effective in detecting and preventing such activities.
Understanding Customers and Transactions
The guidelines emphasize that FIs should have a comprehensive understanding of their customers and transactions, including:
- The nature of customer relationships
- Transaction volumes
- Geographic locations
FIs are required to identify specific products, services, customers, delivery channels, and geographic locations that pose a high risk of money laundering and terrorist financing.
High-Risk Products and Services
Some of the products and services identified as posing a high degree of risk include:
- Electronic funds payment services
- Electronic banking
- Deposit products
- Foreign exchange
- Trust and asset management services
Identifying High-Risk Customers
The guidelines also highlight that certain customers, such as foreign FIs and non-bank financial institutions, may pose a high level of risk to the FI.
Compliance Programs
FIs are required to have compliance programs in place, including:
- Policies and procedures for customer acceptance
- Due diligence
- Ongoing monitoring
Annual reviews of risk assessment processes and training programs must also be conducted to ensure that they are effective in detecting and preventing money laundering and terrorist financing activities.
Monitoring Compliance
The Reserve Bank of Malawi will monitor compliance with the guidelines, and failure to comply may result in regulatory action, including fines and penalties.
Conclusion
“The guidelines are aimed at ensuring that financial institutions in Malawi are equipped with the necessary tools and measures to prevent and detect money laundering and terrorist financing,” said a spokesperson for the Reserve Bank of Malawi. “We urge all FIs to adhere to these guidelines to ensure the integrity of our financial system.”
The guidelines will come into effect on [insert date].