Financial Crime World

Malawi Toughens Banking Regulations to Combat Money Laundering and Terrorism Financing

In a bid to curb money laundering and terrorism financing, Malawi has strengthened its banking regulations in line with international standards. The country’s anti-money laundering (AML) and combating the financing of terrorism (CFT) regime was established after the enactment of the Money Laundering, Proceeds of Serious Crime and Terrorist Financing Act in 2006.

History of AML/CFT Regime

Malawi set up a separate division within the Reserve Bank of Malawi in 2009 to oversee the supervision of AML/CFT for all financial institutions. The country’s financial crimes act, which repealed the 2006 law, is currently governed by the Financial Crimes Act of 2017.

Compliance with International Standards

Malawi’s AML legislation conforms to the Financial Action Task Force (FATF) recommendations on AML/CFT. Failure to comply with these recommendations can result in severe sanctions that could affect the country’s financial sector globally.

Membership and Evaluations

Malawi is also a member of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), a FATF-styled regional body. Malawi has undergone two mutual evaluations, conducted by the World Bank in 2008 and 2018, to assess its implementation of FATF recommendations and effectiveness in combating money laundering and terrorist financing.

National Risk Assessments

In addition, Malawi has conducted two national risk assessments (NRAs) - one in 2013 and another in 2018 - to identify risks and threats facing the country. These NRAs analyzed:

  • Money laundering threats
  • Major predicate offenses generating significant criminal proceeds
  • Terrorism financing threats confronting Malawi
  • The country’s capabilities to combat money laundering and terrorist financing
  • Vulnerabilities within its financial sector

Strengthened Banking Regulations

These measures are aimed at ensuring that Malawi’s financial system is not used for illicit activities and that the country complies with international standards on AML/CFT. The country’s banking regulations have been strengthened to prevent money laundering and terrorist financing, and banks operating in the country are required to implement strict anti-money laundering measures to ensure compliance with international standards.

Conclusion

Malawi’s efforts to strengthen its banking regulations demonstrate its commitment to combating money laundering and terrorism financing. By conforming to international standards and implementing effective risk assessments, Malawi is working to prevent illicit activities and maintain a secure financial system.