The Financial Intelligence Authority (FIA) has disclosed that non-governmental organisations (NGOs) are among the sectors it will be investigating for possible money laundering and terrorist financing risk.
FIA is currently undertaking a National Risk Assessment.
FIU spokesperson Grace Thipa told Malawi News that the assessment will help Malawi have an understanding of the NGOs that pose the greatest risk of money laundering and terrorist financing to inform appropriate measures to mitigate the risks.
NGO Regulatory Authority (Ngora) Chief Executive Officer, Edward Chileka Banda, has since said his organisation welcomes FIA’s probe.
He said Ngora is ready to work with FIA in its assessment.
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“Issues to do with accountability are not only for government institutions but also for non-profit organisations.
“Let the FIA assess the non-profit organisations. If they find that some NGOs are involved in money laundering, let the law take its course,” Chileka Banda said.
organisations from being used to launder money
Lawyer Jai Banda, an expert in money laundering and financial crimes, said it is necessary for non-profit organisations (NPOs) to be assessed for money laundering and terrorist financing risk.
“There is nothing that could stop non-profits from being used to launder money or finance terrorism. In fact, some NPOs might be incorporated with the sole purpose of laundering and be disguised as NPOs.
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“Instances might arise where money from illegal sources (dirty money) is injected into a NPO. Part of the dirty money can be used, for instance, to build an orphanage, church or a school.
“The other amounts can be diverted and used to finance terrorism or put into personal use,” he said.
National Coordinator for Catholic Commission for Justice and Peace, Boniface Chibwana, said all the money that enters a country is supposed to be scrutinised according to laws governing that particular country.
“In this case, if the FIA would want to enforce the Money Laundaring and Terrorism Financing Act, then it is fine so long as the law is not applied selectively.
“In other countries, enforcement of laws has been stiffer; no wonder they manage to keep the resources that they generate within those countries,” Chibwana said.
According to Thipa, the National Risk Assessment which the FIA is undertaking is aimed at ensuring the integrity of Malawi’s non-profit organisations sector.
She further said the assessment will provide an updated understanding of the status of money laundering and terrorist financing risks in the country.
FIA last conducted such a risk assessment in 2018, and the analysis of the money laundering threat showed that the overall money laundering threat in Malawi was medium to high.
The real estate sector had the highest money laundering risks.
“The Financial Intelligence Authority continues to work with various stakeholders, including reporting institutions and law enforcement agencies, to prevent and combat money laundering,” she said.
She said, among others, that the FIA monitors and supervises the various players to ensure that they have in place a risk-based approach to mitigate money laundering threat as well as providing capacity-building programmes to enhance compliance with the Financial Crimes Act.
The 2018 FIA money laundering trends and typologies indicated that trade-based money laundering remains a major threat as legitimate businesses have been used to illegally externalise foreign currency.
The report shows there is an emerging trend whereby importers and some personnel of financial institutions collude to avoid customer identification requirements and allow illegal transactions.
“Some importers have used fake business registration documents to open bank accounts. The fake business registration certificates enable the beneficial owners of the accounts to be hidden. The fictitious businesses are making huge import payments,” reads part of the report.
