Cross-border financial flows are relevant for emerging markets as they integrate with the rest of the world.
This link enables individuals and corporations to reach around the world farther, faster, deeper and at a lower cost than ever before.
However, financial globalisation that has expanded opportunities in free-market economy also brings new risks.
It has turned the international financial system into a money launderer’s way out, siphoning off billions of dollars yearly while extending the reach of organised crime.
This unintended consequence presents a serious challenge to law enforcement agencies and financial regulators.
Advanced technology is widening the base of money launderers as well. Malawi might be involved in money laundering due to increased investments in money transfer businesses both locally and internationally.
Understanding the impact of money laundering will assist investigators, law enforcers and financial regulators pursuing the trail or footprint of a launderer by identifying the enforcement tools and techniques developed to overcome obstacles encountered when doing money transfers.
This is the responsibility of every good citizen.
Money laundering is a process by which criminals attempt to conceal the true origin and ownership of the proceeds of their illicit activity, allowing them to maintain control over the proceeds and, ultimately, providing a legitimate cover for their sources of income.
In short, it covers up the origin of illicit or unclean money by making it look legitimate or ‘clean’. Making lots of small cash deposits in numerous bank accounts and also using a cash-intensive business, such as a betting shop is a key indicator of money laundering. This falls under the first stage of the three money laundering process, called placement.
Finance institution should use this as an eye opener. Logically why would an individual want to have several bank accounts and make numerous small cash deposits?
At least with the coming in of know-your-customer initiative, it will be easier to trace such malpractices.
A government official may take a bribe in the form of cash and place it in a safe deposit box or bank account opened under the name of another individual to hide its existence or ownership.
To some extent, Malawi is at risk due to the rise of local mobile money transfer businesses, including Airtel Money, TNM Mpamba, Fast Cash or Zap Cash as well as Zoona.
On the international market, we have Western Union, Money Gram, Mukuru, Hello Paisa, World Remit just to mention a few.
Failure to monitor and regulate these services will turn the country into a money laundering tunnel. Undoubtedly, this will increase reputational risk of the country and its financial institutions. Consequently, they will increase exposure to organised crime and corruption, undermining legitimate private sector players. It will also bring a political threat and affects tax revenue.
It is my plea to every good citizen and all reporting institutions to follow with keen interest and report any suspicious transactions to relevant authorities, such as Financial Intelligence Authority.
The initiative will help to narrow the money launderers’ base. The one-billion dollar question should be: As a country where is Malawi in terms of civic education about money laundering?
Understanding the entire money laundering processes will help to mitigate the country’s reputational risk.