Money Laundering Trends and Typologies in Malawi

Introduction

This report outlines various money laundering trends and typologies observed in Malawi, as identified by the Financial Intelligence Authority (FIA).

The FIA has identified several ongoing money laundering trends in the country, including:

This involves creating bogus investment schemes using third-party companies, offshore accounts, and fake loan agreements to move funds across borders.
Such schemes often target unsuspecting individuals with promises of high returns on investments.

The use of stored value to transfer proceeds is becoming increasingly common, particularly using mobile money services due to their low threshold amounts and anonymity.
Perpetrators often exploit these services to move funds across borders without arousing suspicion.

Senior public officials have been found to be abusing their powers by authorizing payments without validation of supporting documents, resulting in significant losses for the government.
This trend highlights the need for robust internal controls and oversight mechanisms within government institutions.

Two specific case studies are presented below:

A senior public official authorized payments to fake beneficiaries, including his girlfriends and their businesses, totaling over MK350 million (approximately $430,000 USD).
This case highlights the vulnerability of government systems to insider abuse.

Perpetrators opened bank accounts under false information and received payments from government ministries and departments.
The funds were then withdrawn, with some of them being laundered through various channels.

The report highlights several indicators of suspicious activity, including:

Business accounts receiving huge amounts of funds transfers inconsistent with business profiles: This suggests that the account may be used for money laundering activities.
Deposits followed by transfers to personal accounts: This pattern may indicate an attempt to launder proceeds.
Account transactions inconsistent with customer profiles: This could suggest that the account is being used for illicit purposes.
Preferential use of mobile banking to transfer funds through mobile banking by targeting daily limits: Perpetrators often exploit these services to move funds across borders without arousing suspicion.
Use of third-party accounts in an attempt to make transactions look legitimate: This tactic is commonly used to conceal the true nature of transactions.

The FIA has taken several subsequent actions, including:

Several individuals have been arrested and charged with various money laundering-related offenses.
The arrests demonstrate the commitment of law enforcement agencies to combating money laundering in Malawi.

The FIA has frozen assets derived from proceeds of crime, preventing further financial losses.
This action sends a strong message that those involved in money laundering activities will face consequences.

The FIA has restrained properties derived from proceeds of crime, preventing their sale or disposal.
This action helps to prevent the further laundering of illicit funds.

The FIA has preserved evidence related to money laundering activities, ensuring that it can be used in future investigations and prosecutions.
This action demonstrates a commitment to transparency and accountability in combating financial crimes.