Government, industry bank on new rugulations
Malawi government and industry players expect beneficial ownership regulations to lift the veil of secrecy surrounding business ownership which has over the years eroded the country’s resources and fuelled corruption.
The Companies (Beneficial Ownership) Regulations 2022 gazetted in December last year seek to improve transparency and accountability in the ownership structures of companies operating in Malawi.
The regulations require all companies to disclose their beneficial ownership information to the Registrar of Companies, in a bid to fight against corruption, money laundering and other illicit activities.
Ministry of Finance and Economic Affairs principal revenue officer Leonard Mushani said in an interview on Friday after a sensitisation workshop on the new regulations in Blantyre that the regulations are an important aspect in the country’s development.
He said: “These instruments are important and urgent for national development because we cannot afford to operate without them.
“It was important that we start and maybe correct later if need arises because we have lost a lot in the absence of the regulations.”
Mushani, who is also Malawi Extractive Industries Transparency Initiative (Mweiti) technical and administrative manager, said the regulations have come as an answer to the extractives industry which is one of the risk areas where huge sums of money are swindled.
He said: “Without these instruments, a lot of funds have gone out of the country without the authorities knowing. With this, it is easy to trace ownership and protect our resources.
“We believe those working in the sector will be cautious, knowing that authorities know they are responsible.”
In her presentation, Financial Intelligence Authority deputy director of compliance and prevention Anita Mankhambo said beneficial ownership information would enhance revenue collection because it exposes corruption and nepotism in the acquisition process.
She said besides asking companies to voluntarily disclose information on their ownership structure, including any politically exposed persons, there are also mechanisms put in place to enable citizens to get to know ownership of divested wells, licence holders, lease holders and companies bidding for extractive industry contracts.
Indigenous Businesses Association of Malawi president Mike Mlombwa in an interview described the beneficial ownership regulations as important, saying they will help to address critical issues of concern for the country and Malawians.
He said: “It is pleasing that government finally moved to correct the situation in which we have seen money swindled out in the country, but failed to trace the same due to ownership issues.
“This is an important aspect towards protecting our resources. We call for political will and transparency in the implementation of this to ensure that it achieves the intended purpose.”
Anti-money laundering experts have described beneficial ownership as a useful tool that can help to effectively prevent, detect and counter financial crime.
Meanwhile, United Nations Conference of Trade and Development data shows that Malawi loses five percent of its total wealth as measured by gross domestic product annually to illicit financial flows.
