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| Business |
| IMF to help fine tune money laundering Bill |
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by
Rankin Nyekanyeka, 23 December 2004
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17:20:34
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International Monetary Fund (IMF) experts will visit Malawi from January 10 to 21 to scrutinise the country’s Bill on money laundering.
The visit is a result of a request by the Reserve Bank of Malawi (RBM) for technical assistance from the IMF in dealing with money laundering issues.
A source said the IMF team is expected to look at the Bill, recommendations by various international and local bodies and see if it is consistent with international standards.
The team is also expected to look at legislation on terrorist financing as well.
RBM governor Elias Ngalande in an interview Monday confirmed this development.
“Indeed the team will be here for that purpose,” he said.
Meanwhile, the bank has also issued instructions to all financial insitutions to ensure they take measures to know their customers better and report to the bank any suspicious transactions.
“We can’t just sit and wait till the Bill is passed. There are certain things we can do in advance. The measures are for normal and good practice for financial institutions,” said Ngalande.
Money laundering is a process by which one converts or transfers cash or other assets derived from an illegal activity for the purpose of concealing or disguising the criminal origin.
The Money Laundering and Proceeds of Serious Crime Bill (2000) was gazetted in September 2002, expecting to be tabled in Parliament that time.
At a money laundering workshop organised by South African based Institute for Security Studies with funding from the Norwegian Government held in Blantyre in September this year, Justice Minister Henry Phoya said the Bill was not tabled because of lack of knowledge of the Bill.
He told participants it would now be tabled after a thorough public awareness campaign so that all stakeholders appreciate the concept of money laundering.
In an interview this week the minister said: “The Bill is ready for tabling in the next sitting of Parliament, but still there is need to sensitise the public on it”.
Phoya, however, said that is not the ministry’s task.
“We are a policy making body. The rest, in terms of preparation, is the mandate of the Law Commission,” he said.
Law Commissioner Justice Elton Singini Tuesday said his commission did not work on the Bill. He said some time before the Bill was drafted, the Law Commission only worked on some amendments to the penal code regarding money laundering issues.
“That amendment too is stuck in Parliament,” said Singini.
Chief Parliamentary Draughtsman Antony Kamanga Tuesday said money laundering is a technical area and sensitisation on it is “an on going process”.
During the September workshop, a task force was formed to follow up a number of recommendations.
A source said the task force, which is chaired by the Ministry of Finance, has since not met.
A parallel group, the Malawi National Counter Terrorism Committee, chaired by chief secretary to the President and Cabinet, of late meets almost every month, according to the source.
There is a close relationship between money laundering and terrorism financing in only that the primary motivation for terrorism financing is not financial.
In a related development, ISS has asked countries in eastern and southern Africa who have not put in place legislation on money laundering to do so as a matter of urgency.
Corporate lawyer Jai Banda, who represented Malawi at an ISS meeting on money laundering two weeks ago in Nairobi, Kenya, said the institute also urged the countries to set up financial intelligence centres as one way of dealing with money laundering.
ISS is a South Africa based independent applied policy research institution that has been conducting research into human security issues affecting Africa since 1991.
Part of the research focus is to assess the nature and prevalence of money laundering in eastern and southern Africa and responses to the problem by states in the region.
Participants at the meeting were from Kenya, Uganda, Namibia, Zimbabwe, South Africa, Botswana, Tanzania and Malawi.
“The institute noted that the absence of legislative support for anti money laundering is attractive to the money launderer. Launderers will always look around for a jurisdiction that is less rigorous in the fight against money laundering,” Banda said.
He said seminar participants appreciated the fact that Malawi is making some efforts towards legislating against money laundering.
In a paper on Malawi which he presented at the Nairobi meeting, Banda says if the Bill is enacted into law, every financial institution will be required to take measures to satisfy itself as to the true identity of any applicant seeking to enter into a business relationship with it or to carry out a series of transactions with it.
He said every financial institution will also be required to establish and maintain customer records of every transaction exceeding such amount of currency or its equivalent on foreign currency as may be prescribed from time to time.
“The records will be required to be kept by the financial institutions for a period of at least seven years,” said Banda.
The institutions will also be required to report suspicious transactions.
In the absence of legislation criminalising money laundering, financial institutions currently have no responsibility to detect the malapractice.
“They are not obliged to report any suspicious transactions neither have they any obligation to verify their customers’ identities,” argued Banda.
Anti money laundering programmes, said Banda, help identify and reduce fraud, tax evasion, breaches of exchange control and other economic crimes.
He described these as predicate cases which yield money for laundering. He also noted that from media reports, cases of this nature are common, which is an indication that money laundering is becoming a serious problem in Malawi.
“It is, therefore important that every country puts in place legislation not only combating money laundering, but that the legal and constitutional definitions of money laundering adopted by different governments be compatible in one jusrisdiction will be recognised as such in others,” Banda concluded in his paper.
In an interview Wednesday, Banda, who has become an authority on money laundering issues and is ISS representative in Malawi welcomed the coming of the IMF experts.
“Malawi does not have the skills and resources to forge ahead and requires technical assistance,” he observed.
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