Malawi has between January and November 2017 lost $7.4 million (about K5.4 billion) due to illegal foreign exchange externalisation, an analysis by the Financial Intelligence Authority (FIA) shows.
According to FIA, the money—roughly 0.45 percent of the national budget estimated at K1.2 trillion—comes from 63 unsupported foreign exchange transactions remitted without imports being returned into the country to various countries including China, United Arab Emirate [Dubai], India and Hong Kong.
In a statement yesterday, FIA director general Atuweni-Juwayeyi Agbermodji said FIA and the Reserve Bank of Malawi (RBM) conducted transaction analysis on business accounts maintained by some non-Malawian nationals which revealed a syndicate where huge sums of illicit funds possibly being laundered using the country’s banking system under the disguise of import payments being made by what appears to be legitimate businesses.
She said: “These businesses make huge cash deposits followed by immediate requests for funds transfer to firms in various jurisdictions. The requests for funds transfers are mostly supported by forged or fake customs importation documents with the aim of getting around with [RBM] Exchange Control Regulations.”
RBM spokesperson Mbane Ngwira said in an interview yesterday that while the regulator is not surprised with the revelations, the new foreign exchange system the central bank is working on will help curb the malpractice.
“With the new foreign exchange system, we are hoping to have instant monitoring which should increase accountability,” he said.
Bankers Association of Malawi (BAM) president Paul Guta said he will need more time to comment on the issue, but briefly said banks are vigilant towards such issues.
Responding to a questionnaire, anti-money laundering 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.
Cases of foreign exchange externalisation has been on the rise in the country and recently, RBM disclosed that Malawi lost about $980 million (approximately K719.32 billion) to illegal foreign exchange externalisation and transfer pricing. n