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Financial Institutions Urged to Boost ML/TF Risk Assessment and Management

Reserve Bank of Malawi Issues Guidelines for Strengthening Anti-Money Laundering and Combating the Financing of Terrorism Framework

The Reserve Bank of Malawi has issued guidelines for financial institutions (FIs) to strengthen their efforts in mitigating money laundering and terrorist financing (ML/TF) risks.

Key Requirements for Financial Institutions

  • Develop and implement policies and procedures for:
    • Customer acceptance
    • Due diligence
    • Ongoing monitoring to control identified inherent risks
  • Document the results of these assessments and communicate them to relevant stakeholders, including supervisors, financial intelligence authorities, law enforcement agencies, and others as required
  • Have compliance programs in place, which include:
    • Reviewing relevant policies and procedures
    • Risk assessment processes
    • Training programs to evaluate their effectiveness
  • Conduct an internal or external audit annually

Identifying ML/TF Risks

  • Identify specific products, services, customers, delivery channels, and geographic locations that pose a ML/TF risk to the FI
  • Consider factors such as:
    • Transaction volume
    • Customer relationships
    • Interaction methods when preparing risk assessments
  • Certain products and services are likely to pose a higher level of risk, including:
    • Electronic funds payment services
    • Foreign exchange
    • Trust and asset management services
    • Others
  • Customers from specific geographical locations or with specific occupations may also pose higher risks

Ongoing Risk Assessment and Management

  • Update risk assessments periodically, at least annually, to take into account dynamic changes to risk levels as:
    • New products are offered
    • Markets entered
    • High-risk customers open or close accounts
    • FI’s products, services, policies, and procedures change

Background and Compliance

The guidelines were issued in October 2018 by the Reserve Bank of Malawi in an effort to strengthen the country’s anti-money laundering and combating the financing of terrorism (AML/CFT) framework. FIs are expected to comply with the guidelines to ensure that they operate within acceptable risk levels.