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Money Laundering Trends and Typologies in Malawi: A Report by the Financial Intelligence Authority (FIA)

The Financial Intelligence Authority (FIA) in Malawi has released a report highlighting various money laundering trends and typologies observed during a certain period. This article summarizes the key points from the report, including continuing trends, case studies, and indicators of potential money laundering or financial crimes.

Theft of Public Funds

The FIA noted that senior public officials were abusing their powers to steal government funds by authorizing payments without validation or due regard to procedures. This trend has been observed in various cases, resulting in significant losses for the Malawian government.

  • Example: A senior public official working in the public service as a Manager abused their powers to authorize payments without validation, resulting in over MK350 million being stolen.

Payment of Salaries to Ghost Workers

Perpetrators opened bank accounts, which were later used to receive payments with transaction descriptions of payroll from various Government ministries and departments. This scheme allowed them to embezzle funds meant for real employees.

  • Example: Perpetrators opened bank accounts and received payments with transaction descriptions of payroll from various Government ministries and departments.

Case Studies

Theft of Malawi Government Funds by Senior Public Official through Fictitious Payments

A senior public official working in the public service as a Manager abused their powers to authorize payments without validation, resulting in over MK350 million being stolen. This case highlights the abuse of power by senior officials and the need for stricter controls on government transactions.

Payment of Salaries to Ghost Workers

Perpetrators opened bank accounts and received payments with transaction descriptions of payroll from various Government ministries and departments. This case demonstrates the use of fake employees to embezzle funds meant for real workers.

Indicators

The FIA identified several indicators that may suggest money laundering or other financial crimes, including:

  • Business accounts receiving huge amounts of funds transfers inconsistent with the business profiles
  • Deposits followed by transfers to personal accounts
  • Account transactions inconsistent with customer profiles
  • Preferential use of mobile banking to transfer funds through daily limits
  • Use of third-party accounts in an attempt to make transactions look legitimate

These indicators can help financial institutions and law enforcement agencies identify potential money laundering or financial crimes, allowing them to take proactive measures to prevent and investigate these activities.