Financial Crime World

Malawi’s New Financial Crimes Regulations: Strengthening the Fight Against Money Laundering and Terrorist Financing

The Malawian government has issued new regulations under the Financial Crimes Act to strengthen the country’s stance against money laundering and terrorist financing. Known as the Financial Crimes (Money Laundering) Regulations, 2020, these new regulations provide guidance to financial institutions and reportable institutions in implementing Customer Due Diligence (CDD) measures.

Essential Aspects of the Regulations

These regulations contain various provisions, ranging from the interpretation of terms and implementing a risk-based approach to identifying customers to reporting suspicious transactions. Here’s a quick rundown of some essential aspects of the regulations:

Risk-based Approach

  • Reporting institutions are required to apply a risk-based approach in identifying their customers.
  • This approach ensures that reporting institutions tailor their CDD measures based on the inherent risks of doing business with various individuals and entities.

Customer Due Diligence

  • The regulations outline the procedures for conducting CDD, including:
    • Customer identification and verification for Malawian citizens, foreign nationals, politically exposed persons, legal persons, and foreign companies.

Reporting Institutions

  • Reporting institutions include:
    • Financial institutions (banks, insurance companies, etc.)
    • Casinos
    • Other entities

Record Keeping

  • Reporting institutions must keep records related to customer identification, transactions, and reports submitted to the Financial Intelligence Authority.

Monitoring Transactions

  • Reporting institutions must monitor transactions to identify and report any suspicious transactions.

New Technologies

  • The regulations also incorporate provisions for new technologies and foreign branches and subsidiaries.

Enhancing Malawi’s Efforts Against Financial Crimes

These regulations aim to enhance Malawi’s efforts in preventing money laundering and terrorist financing while ensuring the financial system operates efficiently and effectively. The Financial Intelligence Authority will play a crucial role in overseeing the implementation of these regulations and enforcing penalties for violations.

Conclusion

These regulations represent a significant step forward in Malawi’s efforts to counter financial crimes and align with international standards. Reporting institutions are expected to familiarize themselves with the regulations and take immediate action to implement the necessary procedures.