Money Laundering Trends and Typologies in Malawi: 2018-2019

Continuing Trends

Exchange Control Violations

• Connivance between bank officials and customers: Bank officials and customers colluding to illegally externalize foreign currency.
• Fake documents for foreign travel allowance: Customers applying for foreign travel allowance using fake documents.

Theft of Public Funds

• Ghost loan beneficiaries or suppliers: Corrupt public officials creating ghost loan beneficiaries or suppliers.
• Manipulation of financial records: Officials manipulating financial records to hide illicit transactions.

Typology 1: Money Laundering using Business Email Compromise (BEC)

Introduction

Business Email Compromise (BEC) involves impersonating key contacts and decision-making officials to obtain sensitive information, which is then used to send instructions through hacked email accounts.

Common Cases in Malawi

• Fraudulent email addresses: Fraudsters create email addresses similar to those of bona fide suppliers.
• Urgent funds transfers: They send fraudulent emails posing as supplier’s contact persons, requesting urgent funds transfers.

Typology 2: Collusion between Bank Officials and Businesses

Case Study

A syndicate involving bank officials colluding with foreign nationals to externalize over K4 billion without supporting documents.

Key Findings

• No supporting documents: Transactions done without supporting documents.
• Unauthorized staff transactions: Transactions carried out by staff not authorized to do so.
• Connivance between bank officials and businesses: Collusion between bank officials and businesses involved.

Typology 3: Money Laundering using Wire-Payments

Introduction

The Financial Intelligence Authority (FIA) observed an increase in Malawians losing money through fraudulent transfers of funds using wire-payments initiated and instructed through email systems.

Common Cases

• Fraudulent transfers: Fraudsters targeting Malawians buying goods from overseas.