The Budget and Finance Committee of Parliament has asked commercial banks to put more stringent measures for travellers using debit cards outside Malawi to control foreign exchange externalisation and money laundering.
The issue emerged in Lilongwe on Wednesday when the committee’s vice-chairperson Ralph Jooma met with the Bankers Association of Malawi (BAM) to understand the steps banks are taking to curb forex externalisation.
The meeting follows the arrest of five Malawian women found with 338 automated teller machine (ATM) cards at Kamuzu International Airport in Lilongwe last month.
The cards were suspected to have been used for externalising forex.
Jooma faulted banks for the way they handled the matter, saying the financial institutions could have detected suspicious transactions in the accounts, deactivated the cards and the accounts, and reported the issue to the Financial Intelligence Authority.
He said people are taking advantage of the debit cards to externalise forex, which must be stopped.
Said Jooma: “We wanted to find out how the five women could be using the cards whose owners did not even travel because what we know is that when somebody is going to use a card outside the country, they must first inform their bank and share itinerary.
“So, the explanation is not coming to the point, to be honest. Because what they are saying is that there are certain amounts that you can transact even without informing the bank, and we are saying this is a very big loophole. And we thought that perhaps by now, they could be telling us that this has been stopped.”
He further said this gives an impression that the banks are not taking the matter seriously, accusing some officials of being involved in the syndicate.
BAM chief executive officer Lyness Nkungula acknowledged the challenge of forex externalisation in the country, but said the banks are doing everything possible to curb the malpractice.
“For example, we have reduced the pre-approval amount for transactions from $2 000 per card to below $1 000. We have also already deactivated some of the cards and accounts of the suspected women,” she said.
Nkungula explained that banks produce monthly reports of all suspected transactions which are submitted to the FIA and the Reserve Bank of Malawi.
She further argued that debit cards take away a very small amount of forex, saying a lot of forex is going out of the country through Telegraphic Transfer (TT) where some people pretend to be importing items using proforma invoices when their intention is to externalise forex.
However, the committee said it was not satisfied with the answers from BAM.
