Reserve Bank of Malawi (RBM) imposed sanctions on some commercial banks between 2016 and 2017 for violating some of the anti-money laundering and combating the financing of terrorism (AML/CTF) provisions, it has emerged.
The revelations of the administrative sanctions are contained in a National Risk Assessment (NRA) report on money laundering and terrorist financing launched in Lilongwe last week by the Financial Intelligence Authority (FIA).
Following the violations, the central bank cracked its whip on non-compliant banks, some of whom paid monetary penalties while others were warned in writing.
RBM imposes the sanctions on non-compliant banks based on the country’s Financial Services Act and the Financial Services (Customer Due Diligence Requirements for Banks, Leasing and Finance Companies or Discount House) Directive of 2016.
According to the risk assessment report, in 2016, one bank was given a warning letter for non-compliance of on-site examination and AML/CTF requirements.
Later in 2017, four more banks were also sanctioned on several
One bank paid a penalty of K30 million for failing to implement many of the AML/CTF on-site examination recommendations.
In the same year, another bank was slapped with a penalty of K25 million for failure to submit an action plan for the implementation of AML/CTF on-site examination recommendations within the stipulated deadlines.
Later during the same year, the report says RBM gave one bank a first and final warning for failure to implement some of the AML/CTF recommendations while another bank was slapped with a directive to file the suspicious transaction following its resistance to do the same to FIA.
In August 2017, the report says FIA sanctioned one bank by directing it to comply with reporting a specific suspicious transaction.
“The on-site examination reports on banks conducted by FIA and RBM have revealed significant deficiencies among banks relating to compliance with various obligations,” reads the report in part.
The report did not mention the banks that violated the law.
It also says there has never been a court trial for anti-money laundering non-compliance in the banking sector.
FIA director general Atuweni Agbermodji said in an interview on Friday that corruption-related proceeds are posing a high money laundering threat to Malawi, although the number of identified and investigated money laundering cases may not give an accurate and full-scale picture of the threat.
She said their assessment found that the real estate sector was most vulnerable to money laundering, trailed by the banking sector, money remitters, foreign exchange bureaus, securities, insurance industry, mobile payments, lawyers, casinos, accountants, dealers in precious metals, non-governmental organisation and microfinance institutions.
The banking sector comprises nine commercial banks and one leasing and finance company.
According to the FIA report, as at April 2017, the sector’s total asset value was valued at K1.3 trillion, a significant jump from a combined asset value of K531 billion recorded in 2016.