Financial Crime World

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Malawi’s National Risk Assessment Provides Basis for Strengthening Anti-Money Laundering and Combating the Financing of Terrorism Efforts

Lilongwe, Malawi - The government of Malawi has made significant progress in strengthening its anti-money laundering (AML) and combating the financing of terrorism (CFT) regime, according to a recent report.

Progress Made in AML/CFT Regime

The country’s National Risk Assessment (NRA) conducted in 2018 has served as a foundation for developing and implementing a risk-based approach to AML/CFT. Malawi has achieved some good results in areas such as:

  • Money laundering/terrorist financing (ML/TF) risk assessment
  • Investigation, and prosecution of predicate offenses

Areas for Improvement

However, there are still significant improvements needed in the following areas:

  • Oversight of non-profit organizations (NPOs)
  • Cross-border wire transfers
  • Transparency of legal persons and arrangements

The report highlights that while Malawi has strengthened its AML/CFT legal framework, many financial institutions (FIs) and designated non-financial businesses and professions (DNFBPs) are still in the early stages of developing and implementing policies, procedures, and processes to comply with the new framework.

Resource Constraints

Additionally, the country’s newly created or re-established institutions tasked with combating ML and TF have made progress in investigating and prosecuting cases, but lack adequate resources to perform at their maximum capabilities.

Understanding of ML/TF Risks

The report notes that Malawi has demonstrated a good understanding of its ML risks, particularly among FIs. However, there is still a need for a more comprehensive approach to ML/TF risk assessments, particularly with regards to:

  • Legal persons and arrangements
  • NPOs
  • DNFBPs

Coordination and Cooperation

The Ministry of Finance, Economic Planning and Development provides policy direction on AML/CFT matters, while the National AML/CFT Committee serves as an advisory body to the government. The committee has played a key role in coordinating strategies and implementing AML/CFT policies across various agencies.

Leveraging NRA Results

Malawi is using the results of its 2013 and 2018 NRAs to coordinate an effective risk-based allocation of resources to mitigate identified ML/TF risks through national-level programs. However, competent authorities lack adequate resources to prioritize and mitigate higher-risk areas.

Conclusion

The report concludes that Malawi has applied the NRA results in developing and implementing action plans, policies, and programs supported by a risk-based allocation of resources approach. The country is also finalizing its National AML/CFT Policy to promote coordination and cooperation on AML/CFT matters.

Overall, while Malawi still faces challenges in strengthening its AML/CFT regime, the country’s commitment to implementing a risk-based approach and leveraging the results of its NRAs will help to mitigate ML/TF risks and protect its financial system.