Recently, the Financial Intelligence Agency (FIA) said it has uncovered new trends in money laundering involving various actors, including public officers, entrepreneurs, individuals and financial institutions. In a report, it detailed how over K20 billion was laundered in 2024 alone. In this interview with our Mzuzu Bureau Supervisor JOSEPH MWALE, anti-money-laundering expert counsel JAI BANDA says a lot needs to be done. Excerpts:
Q1. Why do we have continued cases of money-laundering?
Q1. Although Malawi has made progress in strengthening its anti-money-laundering measures, it still struggles with effectively implementing these laws. For instance, despite amendments to the Financial Crimes Act, some areas remain partially compliant or non-compliant with global standards. Secondly, Malawi’s regulatory frameworks, such as those related to customer due diligence and transparency, require improvement. The Financial Action Task Force (Fatf) has noted that Malawi needs to enhance its compliance with certain recommendations, including those related to beneficial ownership and virtual assets.
Q2. Does corruption play any role in these cases?
A2. Cases of high-level corruption and involvement in money-laundering schemes have been reported, which can undermine efforts to combat the issue. For example, investigations have implicated prominent individuals and institutions, including the Reserve Bank of Malawi, in money-laundering and corruption. Further, Malawi’s law enforcement agencies and regulatory bodies may face capacity and resource constraints, which can limit their ability to effectively investigate and prosecute money-laundering cases.
Q3. What danger does growing money-laundering pose to the economy?
A3. It can distort economic data, making it challenging for policymakers to make informed decisions. It can compromise the integrity of financial institutions, potentially leading to financial instability and crises. Widespread money-laundering can erode trust in financial systems, discouraging investment and economic growth. It also enables criminals to profit from illicit activities, potentially funding further crime and undermining law enforcement efforts. You also need to know that it can contribute to corruption, as criminals seek to influence or bribe officials to facilitate their activities, leading to inefficient allocation of resources, as illicit funds are invested in unproductive or illegal activities. Lastly, countries with significant money-laundering problems may suffer reputational damage, deterring foreign investment and hindering economic development.
Q4. How do we strengthen the law to deal with challenges in combating money-laundering in Malawi?
A4. First, we need legislative enhancements. Review and revise the Financial Crimes Act to address emerging trends and technologies, such as virtual assets and digital currencies. We need to enhance regulations to ensure accurate and timely disclosure of beneficial ownership information, making it harder for individuals to hide behind complex corporate structures. Further, we need to enhance requirements for financial institutions to verify customers’ identities and maintain accurate records but also ensure that financial institutions have effective systems to detect and report suspicious transactions. Above all, there is need to increase monitoring and supervision of financial institutions to prevent money laundering.
Q5. Particularly on public officials, what can be done to deal with their acts, since lifestyle audits are not in shape, and even public declarations are not scrutinised to see how people have accumulated wealth?
A5. First, there is need to ensure that asset declarations are thoroughly verified, and discrepancies are investigated and addressed. Consider making asset declarations publicly available to increase transparency and accountability. Then require public officials to regularly update their asset declarations to track changes in their wealth. We also need to conduct thorough lifestyle audits that go beyond just financial assets, including investigations into luxury items, properties, and other indicators of wealth.
Q6. No one has been penalised so far for non-declaration of assets, and people are not even sure what is declared is the exact wealth or not. What should be done?
A6. Let us improve on accountability and consequences. In this, Malawi needs to investigate discrepancies between declared assets and actual wealth, and take action when necessary. Impose meaningful sanctions and penalties on public officials found to have engaged in corruption or accumulated unexplained wealth. It is also important to provide adequate protection for whistleblowers who report suspicious activity or corruption.
Q7. Anything for institutions like the Anti-Corruption Bureau (ACB) in all this?
A7. The country needs to ensure that anti-corruption institutions, such as the ACB, have sufficient resources and independence to effectively investigate and prosecute corruption cases. They should foster collaboration with international partners to share best practices, intelligence, and coordinate efforts to combat money-laundering. We also need to educate the public about the importance of transparency and accountability in government, and the role they can play in reporting corruption. Lastly, let’s encourage leaders to set a good example by demonstrating transparency and accountability in their own actions and decisions.
