Financial Crime World

Malawi Needs to Enhance Oversight of NPOs, Combat Currency Externalization

A national risk assessment conducted in 2018 has served as the basis for adopting, developing, and implementing a risk-based approach to anti-money laundering and combating the financing of terrorism (AML/CFT) in Malawi. However, despite progress made in some areas, significant improvements are still needed in others.

Key Findings

  • Malawi requires better oversight of non-profit organizations (NPOs)
  • Cross-border wire transfers need to be improved to combat currency externalization
  • Transparency is needed in legal persons and arrangements, including understanding the risks associated with their misuse

Progress Made

Malawi has implemented an AML/CFT system that is effective in some areas, such as:

  • ML/TF risk assessment and investigation
  • Prosecution and confiscation of predicate offenses
  • Strengthening its AML/CFT legal framework

However, many financial institutions (FIs), designated non-financial businesses and professions (DNFBPs), and competent authorities are still developing and implementing their policies, procedures, and processes.

Challenges

  • The newly created or re-established institutions to combat money laundering and terrorism financing lack adequate resources to operate at full capacity
  • Authorities need to improve on handling mutual legal assistance (MLA) and extradition matters by establishing a proper case management system

Recommendations

  • A more comprehensive approach is needed for ML/TF risk assessments, especially in areas such as:
    • Legal persons and arrangements
    • NPOs
    • Cross-border wire transfers
  • The Ministry of Finance, Economic Planning, and Development should provide policy direction and exercise oversight on AML/CFT policy and strategy
  • The National AML/CFT Committee should serve as an advisory body to coordinate strategies and implement AML/CFT policies across government agencies

Conclusion

While Malawi has made progress in implementing AML/CFT measures, it still needs to enhance its oversight of NPOs, combat currency externalization, and improve transparency in legal persons and arrangements. The country should also focus on addressing the resource constraints faced by competent authorities to ensure effective implementation of AML/CFT policies and strategies.