Financial Crime World

Money Laundering Trends and Typologies in Malawi (2018-2019)

Malawi has experienced a significant increase in money laundering activities in recent years, with various methods being employed by criminals to launder funds. This report highlights the key trends and typologies identified during the period of 2018 to 2019.

The following are some of the key trends and typologies associated with money laundering in Malawi:

  • Exchange Control Violations: There has been an increase in cases where individuals or businesses have colluded with bank officials to externalize large sums of money without proper documentation.
  • Theft of Public Funds: Government funds have been stolen through corrupt means, such as embezzlement and diversion of public funds.
  • Insurance Fraud: Individuals have filed false insurance claims or staged accidents to collect insurance payouts.
  • Business Email Compromise (BEC): Hackers impersonate key contacts or decision-making officials to obtain sensitive information from victims, which is then used to initiate financial transactions.
  • Use of New Payment Methods: There has been an increase in the use of new payment methods, such as online wallets and cryptocurrencies, which can be used for money laundering.

Case Studies

Two case studies are highlighted below:

Case Study 1: Collusion between Bank Officials and Businesses

A syndicate was discovered where bank officials colluded with foreign nationals to externalize over K4 billion without supporting documents. The funds were transferred to country C without proper documentation, and the transactions were purportedly payments for imports.

  • A syndicate of bank officials and foreign nationals colluded to externalize over K4 billion without proper documentation.
  • The funds were transferred to country C without supporting documents.
  • Transactions were purportedly payments for imports.

Case Study 2: Money Laundering using Business Email Compromise

The FIA observed an increase in cases where individuals lost money through fraudulent transfers of funds using wire-payments initiated and instructed through email systems. Fraudsters used the internet to gain details of bona fide overseas suppliers and created email addresses that were similar to those of the suppliers.

  • The FIA observed an increase in cases where individuals lost money through fraudulent transfers of funds.
  • Wire-payments were initiated and instructed through email systems.
  • Fraudsters gained details of bona fide overseas suppliers using the internet.
  • Email addresses similar to those of the suppliers were created by fraudsters.

Conclusion

The report highlights the various methods used by criminals to launder money in Malawi, emphasizing the need for law enforcement agencies and financial institutions to work together to prevent and detect such activities.