RBM moves to tighten forex transactions
Weeks after disclosing that foreign exchange externalisation is rampant, the Reserve Bank of Malawi(RBM) has introduced a new system for reporting data on cross-border financial transactions by commercial banks and other institutions licensed to deal in forex.
In a statement, RBM Governor Dalitso Kabambe said the new system, dubbed Cross-border Foreign Exchange Reporting System (Cfers), is expected to be operational at the beginning of March this year to enhance security of cross-border forex movement.
ones that pass through Mwanza Border Post
The development comes days after the central bank revealed that the country lost $394.6 million (about K240 billion) of foreign exchange due to externalisation, a development that is negatively affecting the country’s economy.
The central bank last week signed a memorandum of understanding with government security agencies to jointly deal with the situation.
The Cfers will interface with systems of banks, Malawi Revenue Authority (MRA) and other financial institutions to enhance transparency in the authorisation of foreign currency to financial dealers.
Reads the statement in part: “In order to comply with the requirements of the system, individuals and organisations processing cross-border payments and receipts with banks, foreign exchange bureaux, money transfer business operators and tourist operators, will be required to provide detailed information about the foreign exchange payments and receipts.”
Last week, Kabambe revealed there were several cases of illegal forex externalisation under investigation or at prosecution stage with the amount involved in excess of K30 billion.
In the statement, he explained that forex payment will not be effected until the applicant has fully declared the transactions and that any foreign exchange receipt will not be credited to the account of a recipient until the transaction has been fully declared.
The central bank has also stated that Cfers will replace the Foreign Exchange Statistical Database System, which has been in use in recent years for exporters.
Anti-money laundering law expert, Jai Banda, who is also a private practice lawyer, called for adequate coordination and intelligence exchange between financial agencies on suspicious transactions.
“Potential investors should be subjected to screening process that they have no criminal history while non-Malawians should be encouraged to invest in Malawi so that money is not taken out,” he said.
Commenting on alleged externalisation of forex by some firms, Minister of Industry, Trade and Tourism Francis Kasaila recently acknowledged that government allows foreign companies to send a percentage of their profits in foreign currency to their countries of origin.
