Parliament on Friday passed the Financial Crimes Bill (Amendment) which aims to align the country’s laws with the Financial Action Task Force (Fatf)’s 40 recommendations to strengthen systems for detecting and halting financial crimes.
The country was on the verge of being blacklisted by the global watchdog due to delays in addressing gaps in laws combating money laundering and terrorist financing.
Fatf first flagged Malawi’s weak legal framework in 2018, citing a lack of clear definitions for terms like “funds” and inadequate measures to track illicit financial flows.
Some of the key changes in the newly passed Bill include expanding the list of “competent authorities” to include agencies such as the Malawi Gaming and Lotteries Authority and mandating banks to track details of electronic money transfers.
It also empowers the Confiscation Fund to compensate victims of financial crimes and finance legal reforms.
Parliament’s Budget Committee chairperson Gladys Ganda, who presented a report on the committee’s considerations, said members supports stricter requirements for financial institutions to retain originator or beneficiary information in electronic transfers.
She added that there needs to be a way of addressing emerging financial crime trends like price transfers, forex drainers, and cash-based payments.
Said Ganda: “The committee acknowledged that frequent amendments to this law indicate deeper systemic issues and calls for a comprehensive review to avoid piecemeal legislation.
“The committee observed the need for balancing power and cautioned against concentrating excessive authority in individuals like a minister’s discretionary powers over institutions like police or immigration.”
Mzimba North lawmaker Yeremiah Chihana was the only MP who rejected the Bill, arguing it fails to clearly define competent authority and also criticised institutions like the Reserve Bank of Malawi for lacking transparency.
He warned that such institutions cannot be sued if designated as authorities.
Chihana further said that a robust legal framework alone does not generate income, and urged the country to relax policies and position itself as a tax haven just like Panama and Dubai.
In an emailed response, Financial Intelligence Authority (FIA) compliance and public relations manager Masautso Ebere explained that Malawi was assessed by the Eastern and Southern Anti-Money Laundering Group (ESAAMLG) in 2018, with a Mutual Evaluation Report approved by the ESAAMLG Council of Ministers in 2019.
He said: “Due to some factors, including the Covid-19 pandemic, we did not meet that deadline. Since then, we have addressed most issues highlighted in the Mutual Evaluation Reports. Out of 40 Fatf recommendations, we had 11 recommendations with strategic deficiencies in 2019, and by 2023, we managed to sufficiently address deficiencies in five recommendations.”
Ebere warned that Fatf blacklisting would have severely impacted the country’s financial sector, causing international transactions to face heavy scrutiny, delays and reputational damage.
In a separate interview, anti-money laundering expert Jai Banda said that delays in amending the law undermined Malawi’s fight against financial crimes.
