Financial Crime World

Malawi Takes Steps to Combat Money Laundering and Terrorist Financing

Progress in Combating Money Laundering and Terrorist Financing

The government of Malawi has made significant progress in combating money laundering and terrorist financing (ML/TF) since the implementation of the Money Laundering and Terrorist Financing Act (ML&TF Act) in 2007. A recent report by international assessors highlights seven cases currently under investigation that may lead to prosecution under the ML&TF Act.

Key Developments

  • The ML&TF Act criminalizes money laundering and terrorist financing offenses, including all designated offenses listed in the Financial Action Task Force (FATF) Recommendations.
  • Malawi has ratified the United Nations Convention on the Suppression of the Financing of Terrorism and has criminalized terrorist financing.
  • However, the authorities are yet to establish a legislative or regulatory framework to implement United Nations Security Council Resolutions (UNSCR) 1267 and 1373, which require the freezing of terrorist assets without delay.

Areas for Improvement

  • The report noted that while Malawi’s confiscation regime is adequate, there is a need for an appropriate legislative or regulatory framework for freezing terrorist assets.
  • Review of cash transaction reporting requirements is needed to ensure they do not undermine the Financial Intelligence Unit’s (FIU) core function of receiving, analyzing and disseminating suspicious transaction reports.

Key Responsibilities

  • The FIU has been designated as the national central agency responsible for receiving, analyzing and disseminating suspicious transaction reports.
  • Other financial institutions need to comply with ML&TF Act requirements.
  • Insurance companies are not covered by the ML&TF Act and therefore do not have any obligations under the act. This omission should be addressed.

Ongoing Efforts

  • The Reserve Bank of Malawi (RBM) has issued directives to prohibit the issuance of bearer certificates and require customer identification and verification on such existing certificates.
  • Banking secrecy is not an impediment to the fight against money laundering, and information is accessible to relevant authorities and financial institutions can exchange information in relation to financial crime.

Recommendations

  • Establish a system to implement the provisions of the ML&TF Act for monitoring cross-border physical transportation of currency.
  • Ensure that all financial institutions comply with the act’s requirements.

Conclusion

While progress has been made, there are still areas that need improvement. Malawi has taken significant steps to combat money laundering and terrorist financing, but more work is needed to ensure full compliance with international standards.