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Busted: Forex bleeding scam

Lyness Nkungula

Thabo Chakaka Nyirenda

Three Malawian citizens were arrested in Kenya last year in a “money laundering scheme” analysts say is one of the ways the country is being bled of its forex through the normal banking system.

The scheme also exposes lapses in the banking system in Malawi, the analysts further say.

In this scheme, the three people tricked over 100 ‘illiterate’ individuals into opening bank accounts with several financial institutions in the country.

And they took custody of the attendant debt cards.

The three Malawians were caught in Kenya after they suspiciously transacted huge sums of millions of money using the debit cards.

They are now answering money laundering and terrorist financing charges in the East African nation.

Details show that the three named as Authant Atusweghe Mwakisulu, Nickson Mwalitari and Athuman Mwakanji, between 2017 and 2022 and in different places, fraudulently facilitated the opening of 115 customer bank accounts in different commercial banks in the country.

They transacted using the details of the account holders of the debit cards in Kenyan commercial banks without the knowledge of the account holders.

Malawi News understands that the Malawian nationals have been in custody in Kenya for over 12 months now as they are still awaiting trial in that country.

Investigations by the authorities in Malawi also revealed that from January 7, 2022 to February 7, 2022, the accused persons carried out 117 ATM transactions in Kenya.

In some of their transactions, they withdrew a total of KHS4.5 million, equivalent to S$35, 635.10 in Kenya; one transaction in Rwanda amounting to 90,000 Rwandan Francs (RWF) equivalent to $82.76 while in Tanzania they withdrew 580, 000 Tanzanian Shillings equivalent to $248.27.

Attorney General Thabo Chakaka Nyirenda said the matter is in the Kenyan court at the moment.

The three have been appearing before the Kenyan court answering visa debit card fraud case offences that were committed both in Malawi and Kenya, he said.

According to Nyirenda, the Chief Resident Magistrate’s Court in Lilongwe also issued a warrant of arrest on February 24, 2022 and charged them with money laundering contrary to section 42 (1) (a) of the Financial Crimes Act.

“The three were initially detained while awaiting a formal extradition request from the Malawi Government. We applied for an extradition request to the Republic of Kenya,” Nyirenda said.

However, according to Nyirenda, the Kenyan Directorate of Public Prosecutions proceeded to charge them with money laundering and terrorist financing-related offences.

The Kenyan authorities felt that the three inflicted more harm on Kenya than on Malawi.

On the other hand, Malawi Government feels that the transactions by the accused persons contributed to illicit financial outflows from Malawi, causing substantial harm to the economy.

Nyirenda said the matter has been going on from June 20, 2022.

In January 2023, the matter was adjourned to February 13, 2023, as the date for commencement of trial, before the Senior Resident Magistrate’s Court in Kenya.

“But the Kenyan prosecutor indicated that the State was not ready to proceed with the trial as the National Prosecutions Headquarters were yet to give further instructions on the matter,” Nyirenda said.

He said the Kenyan authorities have since indicated that they are expected to commence trial on March 15, 2023, considering the transnational nature of the offences that the three are alleged to have committed.

We engaged the Bankers Association of Malawi on the extent of systemic weaknesses in the country’s banking system allowing such illicit operations.

Executive Director for the bankers’ body, Lyness Nkungula, said banks always ensure that they are compliant with all regulatory requirements.

She said this includes Know Your Customer (KYC) checks and procedures such as ID verifications and document collection.

If a customer satisfies all these requirements, banks are under obligation to do what is necessary.

“However, there are other undeserving Malawians that are using multiple individuals to open different accounts to do such mischievous work,” Nkungula acknowledged.

She insisted however that banks in Malawi have put in place stringent measures to stop such malpractices.

“As citizens, we have a duty to be patriotic to our country,” she said.

A banking systems expert, Lumbani Gondwe, indicated that it may not be an easy task to breakdown such a syndicate.

“The syndicate is quite complex to break once-off as these withdrawals are from different visa debit cards tied to different bank accounts, which would have been different if the withdrawals were made from one debit card,” Gondwe said.

He noted that it could be because of the works of such syndicates that both the Reserve Bank of Malawi, as a regulator, and the banks put in a number of measures such as capping the daily international withdrawal transaction limit.

“For similar transactions that would be above these limitations, the bank has to make prior approvals.

“Banks have also gone even further to disconnect or block some withdrawal terminals and areas where these transactions were happening in huge volumes, such as Chipata in Zambia and Nairobi in Kenya,” he said.

Gondwe also said the involvement of some bank officials in such syndicates cannot be overruled.

“Most of the time, such ideas are suggested by some bank officials. Nevertheless the burden still falls on the bank,” he said.

Business expert Alick Nyasulu also said often banks are complicit when it comes to some of these transactions.

“In earnest, they can easily detect such patterns and take pre-emptive actions including calling the customer in question if they observe some strange pattern,” Nyasulu said.

Malawi is a party to a number of anti-money laundering and anti-terrorism related international instruments including the United Nations Convention Against Transnational Organised Crime (2000) whose purpose is to promote cooperation to prevent and combat transnational organised crimes.

Malawi is also party to the United Nations International Convention for the Suppression of the Financing of Terrorism (1999).

The objective of the convention is to enhance international cooperation among states in devising and adopting effective measures for the prevention of the financing of terrorism as well as for its suppression through the prosecution and punishment of its perpetrators.

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