Financial Crime World

Title: “Malawi’s Anti-Money Laundering Regulations: A Focus on KYC and Identity Verification”

1. Overview

This article discusses the Malawian Anti-Money Laundering (AML) Know Your Customer (KYC) regulations, drawn from the Financial Crime Act and guidelines by the Financial Intelligence Authority (FIA) and the Reserve Bank of Malawi. This focus is on identity verification requirements as per Malawian law, specifically document verification and the usage of external services for diligence.

2. Background and Definitions

  • Client: Shufti Pro’s customer
  • Customer: Client’s customers
  • End-user: Individual person using a product or service
  • Document Verification: Confirming the authenticity of a document
  • Identity Verification: Verifying a natural person’s identity
  • Proof of Identity: Documents or methods used to prove identity
  • Enhanced Due Diligence (EDD): A higher level of risk assessment to mitigate known risks
  • Third-Party Diligence: Compliance checks performed on behalf of another business
  • Politically Exposed Person (PEP): Individuals who hold public office or possess significant political power

3. Identity Verification Requirements

Malawian regulations dictate that specific attributes must be gathered to verify a natural person’s identity from official documents. These attributes include:

  • Name
  • Address

Identity Verification can be accomplished through various methods, such as:

  • Document Verification
  • Real-time audio-video sessions

4. Required Documents for Verification

The following documents are essential for Identity Verification processes:

  • Government-issued identity documents (e.g., Identity Cards, Passports, Driving Licenses)
  • Proofs of address (e.g., utility bills, government-issued documents, bank statements)

5. Timing and Flexibility of Verification

Identity Verification is not a one-time procedure, and its application depends on specific requirements:

  • New customers must be onboarded with proper verification procedures
  • Additional checks should be considered as per monetary thresholds or enhanced risks

6. PEP and Enhanced Due Diligence Measures

Determining if a client is a PEP or holds public office is essential to meet Enhanced Due Diligence requirements. Shufti Pro offers an AML Screening service, which screens an individual’s ID attributes against:

  • Global regulatory authorities’ watchlists
  • Foreign/domestic databases
  • Compromised PEPs and sanctioned individuals

7. Utilizing External Services

Organizations may seek help from third-party service providers for due diligence compliance. However, clients bear the responsibility for maintaining compliance and meeting AML and KYC obligations regardless:

8. Data Retention and Collection

Retaining necessary data for at least seven years is required under Malawian regulations for due diligence purposes:

  • If this data is managed by a third party, clients are responsible for collecting all required information without delay