An anti-money laundering law expert has warned Malawi against slackening in the fight against illicit financial flows (IFF) and he has encouraged the government to be on guard by introducing strong measures to deal with it.
This follows the massive leak of 11.5 million secret files connected to a Panama law firm, Mossack Fonseca, which show how world public figures exploit secretive offshore tax regimes.
According to the International Consortium of Investigative Journalists (ICIJ), this firm has been helping the rich and the powerful to establish secret shell companies and offshore accounts.
No Malawian has been mentioned yet from the leaks.
In an interview on Tuesday, private practice lawyer, Jai Banda, who is an expert in anti-money laundering laws, called on the government to conduct thorough investigations to establish if Malawians are involved as IFF deprives the country of foreign exchange.
Banda said this is not the time for the government to close its eyes on the issue.
“We should not be resting; if this has been happening elsewhere, it can happen even here. Let us dig deeper and find out if Malawians are not involved,” Banda said.
He feared that some proceeds of crime, such as Cashgate, might be stashed in bank accounts outside the country.
He then suggested that the Fiscal Police department should be financially empowered to conduct the investigations.
Responding to a questionnaire, Financial Intelligence Unit (FIU) director, Atuweni Juwayeyi Agbermodji, said as Panama is one of the many offshore jurisdictions, there is a possibility of Malawians having offshore accounts in other tax havens.
“I will be quick to add, however, that the offshore accounts in themselves are not illegal; it’s how the accounts are used that usually causes problems,” Agbermodji said.
In a press statement released on Monday, chair of African Union (AU)/United Nations Economic Commission for Africa (ECA) High Level Panel (HLP) on IFF from Africa Thabo Mbeki said African countries should begin conducting their own investigations on the issue.
The statement, which was published on the ECA website, says now is the time for the global community to act in a firm and comprehensive manner to end IFF and close down the tax havens and financial secrecy jurisdictions which serve as the domiciles of IFFs.
“The staggering amount of illicit practices and the large number of global actors exposed by the Panama Papers demonstrate that governments of Africa and the rest of the world cannot avoid firm action against the tax havens/financial secrecy jurisdictions,” it reads.
It says IFF, which derive from tax evasion, deserves full attention continentally and globally.
“We should not misconstrue the release of the Panama Papers as a time for celebration or an end in itself. To the contrary, it is rather a time for deep reflection and regret that we have allowed the practice to persist which is made possible among others by the existence of tax havens/financial secrecy jurisdictions,” reads the report in part.
Some countries in the world such as South Africa, Britain and France have vowed that any of their citizens mentioned in the Panama Papers would be investigated by the relevant agencies to ensure they comply with the laws regarding tax evasion.
Malawi loses about K200 billion in IFF annually while Africa loses $50 billion which is approximately double the official development assistance that the continent receives, according to ECA data.