Financial Crime World

MALAWI SMALL BUSINESSES FACE NEW AML GUIDELINES: WHAT YOU NEED TO KNOW

In an effort to combat money laundering and terrorist financing, the Malawian government has introduced new guidelines for small businesses in the country. The Financial Crimes Act, which was assented to on February 28, 2020, aims to improve the country’s anti-money laundering (AML) regime.

What You Need to Know

  • The guidelines were outlined in Government Notice 10 of 2020 and came into effect immediately.
  • Small businesses are considered “designated non-financial businesses and professions” (DNFBPs) under the Financial Crimes Act, subjecting them to AML regulations.

Key Requirements

  • Customer Due Diligence (CDD): Small businesses must verify the identity of customers, assess their risk profile, and report suspicious transactions to the Financial Intelligence Unit (FIU).
  • Ongoing Monitoring: Businesses must monitor customers’ transactions on an ongoing basis.
  • Accurate Records: Small businesses must maintain accurate records of all transactions for a minimum of five years.
  • AML Compliance Officer: Each business must designate an AML compliance officer responsible for ensuring compliance with the law.

Consequences of Non-Compliance

  • Failure to comply with the new guidelines can result in severe penalties, including:
    • Fines
    • Imprisonment

The government is urging small businesses in Malawi to familiarize themselves with the new regulations and take necessary steps to ensure compliance.

  • The Financial Crimes (Money Laundering) (Amendment) Regulations, 2020 were published on July 31, 2020, and are expected to come into effect soon. The amendments aim to further strengthen Malawi’s AML regime and improve cooperation between financial institutions and law enforcement agencies.

Conclusion

With the new guidelines in place, small businesses in Malawi must be proactive in ensuring that they comply with AML regulations. Failure to do so can result in serious consequences, including reputational damage and legal penalties.