Malawi’s Customs Agency Steps Up Fight Against Fraudulent Transactions
Introduction
Malawi has been facing significant revenue losses due to fraudulent transactions, particularly overvaluation of goods imported into the country. The Malawi Revenue Authority (MRA) has taken steps to curb this menace by introducing a new system that flags suspicious transactions and enhancing inter-agency cooperation.
The Problem of Overvaluation
A recent study revealed that overvaluation of imports results in significant revenue losses for the government, which can also lead to money laundering and other financial crimes. To combat this, the MRA has introduced a valuation database that records maximum and minimum values for every brand of product, allowing Customs officials to flag problematic transactions during clearance processing.
The Valuation Database
The database was put into service in 2016 and its deployment coincided with an unprecedented increase in revenue collection for the 2016/17 financial year. The system has also been successful in detecting cases of fraud, including one instance where an exporter presented forged Customs documents to a bank to externalize funds.
Inter-Agency Cooperation
Inter-agency cooperation is crucial in fighting fraudulent transactions. The Malawi Revenue Authority works closely with other agencies such as:
- Anti-Corruption Bureau (ACB)
- Director of Public Prosecutions (DPP)
- Fiscal and Fraud Police Unit (FFU)
to identify and prosecute cases of overvaluation.
Future Plans
To further strengthen its efforts, the MRA plans to conclude Memoranda of Understanding (MoUs) with:
- Reserve Bank of Malawi (RBM)
- Financial Intelligence Authority (FIA)
- Anti-Corruption Bureau (ACB)
The MoUs will enable joint investigations and prosecutions, as well as seamless exchange of information and intelligence among the agencies.
Data Analytics
The MRA is also strengthening its capacity to use data analytics to identify potential revenue fraud. A Customs officer has been appointed to audit declarations entered in the Customs automated system and analyze mirror analysis results to identify potential cases of overvaluation.
Import Document Verification Facility
The Import Document Verification Facility has been introduced, which connects ASYCUDA World to commercial banks’ computerized systems, allowing them to verify the authenticity of Customs documents before making payments to foreign suppliers. This has helped to reduce foreign currency externalization through overvaluation.
Commitment to Combating Trade-Based Money Laundering
The Malawi Revenue Authority is committed to playing a significant role in pinning down and flagging trade-based money laundering (TBML) in cross-border transactions. To achieve this, the MRA:
- Provides Customs officers with tailored training programs on financial and trade data analysis
- Promotes a culture of intelligence
- Effectively exchanges information among all agencies involved at the national and international level
Contact
For more information, please contact: fkalizinje@yahoo.co.uk