VZCZCXRO1349
RR RUEHDU RUEHJO RUEHMR
DE RUEHLG #0066/01 0251048
ZNR UUUUU ZZH
R 251048Z JAN 06
FM AMEMBASSY LILONGWE
TO RUEHC/SECSTATE WASHDC 2266
INFO RUEATRS/DEPT OF TREASURY WASHDC 0421
RUEHLMC/MILLENNIUM CHALLENGE CORPORATION WASHDC
RUEHLO/AMEMBASSY LONDON 0186
RUEHFR/AMEMBASSY PARIS 0078
RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
RUEAIIA/CIA WASHDC

UNCLAS SECTION 01 OF 02 LILONGWE 000066 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR AF/S 
TREASURY FOR INTERNATIONAL AFFAIRS/AFRICA/BEN CUSHMAN 
PARIS FOR D'ELIA 
 
E.O. 12958: N/A 
TAGS: EFIN ETRD PREL MI
SUBJECT: MALAWI LAWMAKERS CAUTIOUS ABOUT ANTI-MONEY 
LAUNDERING BILL 
 
LILONGWE 00000066  001.2 OF 002 
 
 
SUMMARY 
------- 
 
¶1.  MALAWI'S ANTI-MONEY LAUNDERING BILL HAS LANGUISHED ON 
THE EDGES OF PARLIAMENT FOR OVER THREE YEARS.  EMBASSY 
RECENTLY HOSTED AN INFORMAL BRIEFING AND DISCUSSION FOR 
KEY PARLIAMENTARIANS TO SENSITIZE THEM ON THIS ISSUE, TO 
HEAR THEIR CONCERNS, AND TO GAUGE THE BILL'S CHANCES OF 
PASSING AT THE NEXT SITTING.  WHILE THE BILL SEEMS LIKELY 
TO PASS, WE HEARD CONCERNS ABOUT THE POSSIBLE MISUSE OF 
THE NEW LAW AND ITS INSTITUTIONS FOR POLITICAL PURPOSES. 
EMBASSY PLANS TO EXTEND ITS OUTREACH EFFORTS TO EDUCATE A 
BROADER BASE OF LEGISLATORS AND JOURNALISTS ON THIS 
ISSUE.  END SUMMARY. 
 
 
A Sidelined AML Bill 
-------------------- 
 
¶2.  A draft anti-money laundering bill was presented to 
Parliament in June 2002.  Members complained that the 
bill was too complicated, and referred it back to the 
legal affairs committee with a request that it be 
simplified. (We also received reports that the Muluzi 
administration, noted for being aggressively corrupt, 
asked the legal affairs committee at that time to hold 
the bill.)  Although the bill was not substantially 
simplified, it was slightly updated and presented again 
at the last session of Parliament (September/October 
2005).  During that session, the legislature was 
preoccupied with a movement to impeach the President and 
acted on virtually no legislation.  The bill was again 
referred back to committee with no discussion. 
 
 
Embassy Pushes for Progress 
--------------------------- 
 
¶3.  On January 23, the Ambassador hosted a presentation 
and discussion on anti-money laundering with select MPs, 
GOM officials and banking executives. U.S. Treasury 
experts Carol Kelley, John Peyton, and David Beisner led 
the presentation, with a response from the chair of the 
legal affairs committee (and son of the former 
President), Atupele Muluzi.  During the course of the 
discussion, we sensed that many MPs would support the 
bill, though not everyone shared our sense of urgency on 
the issue.  At least some legislators appeared to view 
this as a "nice to have" law, perhaps necessary to keep 
the donor community happy but otherwise not particularly 
compelling.  We would attribute this mainly to the fact 
that, although the banking sector clearly sees Malawi as 
lagging in AML, and complains about it in the press, 
neither the GOM nor Parliament has a particularly well- 
oiled mechanism for receiving legitimate input from the 
private sector. 
 
¶4.  Many of our interlocutors noted that MPs in general 
are suspicious of the law, fearing that the government 
will usurp its provisions and institutions, particularly 
the financial intelligence unit, for political purposes. 
This fear stems partly from a sharp memory of the Banda 
dictatorship's misuse of the Forfeiture Act, under which 
an individual's assets could be seized at the discretion 
of the minister of finance.  Given Malawi's mixed record 
of establishing truly independent agencies, achieving 
political isolation for the FIU and other involved 
institutions will be a challenge.  Another source of 
concern was the question of retroactivity.  Senior 
politicians are generally too canny to dwell on this 
issue, but given an entrenched tradition of seeking 
political office for profit, it will have to be taken 
seriously and addressed preemptively. 
 
 
Further Engagement 
------------------ 
 
¶5.  We came away from the event with an appreciation for 
the need to engage actively on this issue between now and 
the (as yet undetermined) next legislative sitting.  To 
that end, we have leveraged the presence of the Treasury 
 
LILONGWE 00000066  002.2 OF 002 
 
 
experts to organize a training session for media 
professionals next week.  We intend to organize a short 
directed training session on the issue for MPs as well. 
Finally, as Treasury advisors ramp up for their resident 
tours here under the Millennium Challenge threshold 
program, they will assist the GOM in fine-tuning the 
legislation to facilitate swift passage and 
implementation. 
 
 
EASTHAM