FIU needs to be empowered, untied from politicians

The Financial Intelligence Unit (FIU) is one of Malawi’s most important public institutions.

Established under the Money Laundering, Proceeds of Serious Crimes and Terrorist Financing Act (2006), the unit—which purports to be an autonomous central national body—became operational in July 2007. The unit says it is responsible for coordinating and strengthening efforts of national and international intelligence and enforcement agencies in pursuing the global efforts to fight against money laundering, terrorist financing and related crimes as well as identifying the proceeds of serious crimes and to combat money laundering and terrorist financing activities.

All this is a noble cause that deserves public support which is being rendered already to some extent through national budget allocations that the agency receives every financial year.

Some development partners have also been providing additional support both technically and financially.

But my take is that the effectiveness of an agency, especially one that is directly linked to governance, is not in its input, neither is it in the output.

Instead, its success lies in the outcomes. Unfortunately, for the FIU, the outcome of its work is always dependent on other government agencies, most of which have a long history of inefficiency and failure to conclude most of the investigations and cases they launch.

As such, the agency’s constitution in terms of mandate has reduced it to a mere information-gathering and analytical unit with no scope to investigate these white-collar crimes falling under money laundering, financing of terrorism and other financial crimes.

Instead, once the unit has gathered, analysed and substantiated the financial intelligence, its role ends at just disseminating it to the so-called law enforcement authorities for them to investigate and prosecute.

For this important task, the FIU has to rely on the toothless Anti-Corruption Bureau (ACB), the feet-dragging Director of Public Prosecutions (DPP), the incompetent Fiscal and Fraud Police Unit (FFU), the heavily politicised and moribund National Intelligence Service (NIS) and the inefficient Malawi Revenue Authority (MRA).

What a joke!

I will give you a specific example. Probably the most consequential work the FIU has ever done in its six-years of existence was the unmasking of a syndicate involving public officers who were suspected of having defrauded over K400 million from the Malawi Police Service. By some estimates, the stolen funds run into billions.

In the agency’s own words, “the FIU thoroughly analysed financial transactions of the suspected officers using information provided by banks and other financial institutions” and then passed on the information to some of the agencies mentioned above for further investigation and case conclusion.

Almost two years and a few arrests later, no one has faced the wrath of the law for plundering public resources at will.

I will give you another example. In 2011/12 financial year, the FIU received 59 suspicious transaction reports (STRs) from banks, supervisory bodies, law enforcement agencies (LEAs) and money remitters.

From what they call Large Currency Transaction Reports (LCTRs) the FIU received, 22 STRs were extracted.

This brought the number of STRs to 81. And out of these STRs, 73 were dispatched to LEAs for investigations and possible prosecutions.

No one knows how many of these cases have been successfully completed, but knowing the enforcement agencies I mentioned earlier, you can bet that the success rate there is negligible.

The question then is: Is it not time we empowered the FIU to do more so that it leads an effective and focused effort in busting white-collar crime that is now the biggest threat to the national budget and the country’s development agenda? My answer is an unequivocal yes! After all, the ACB has already failed to justify its expensive presence.

I would also like to add that we also need to cut out the middleman—the Minister of Finance—in the unit’s reporting structure. Why should the FIU report to Parliament through the minister, who is a politician?

I also question the level of political will to make the unit fully operational. For years, the FIU has operated without a director, with the current one—despite doing a commendable job—still working in an acting capacity.

Is there a good reason that vacancy is not being filled substantively? If the Joyce Banda administration is serious about Public Finance and Economic Management, then it must do the needful here.