VZCZCXYZ0000
RR RUEHWEB

DE RUEHLG #0026/01 0111536
ZNR UUUUU ZZH
R 111536Z JAN 10
FM AMEMBASSY LILONGWE
TO RUEHC/SECSTATE WASHDC 0230
INFO RUEAWJA/DEPT OF JUSTICE WASHDC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS LILONGWE 000026 
 
SIPDIS 
 
DEPT FOR INL, SCT, EEB, AF/S, AND PHAEDRA GWYNN 
JUSTICE FOR AFMLS, OIA, and OPDAT 
TREASURY FOR FINCEN 
 
E.O. 12958: N/A 
TAGS: KCRM EFIN PTER SNAR MI
SUBJECT: MALAWI 2009-2010 INCSR PART II, MONEY LAUNDERING AND 
FINANCIAL CRIMES 
 
REF: SECSTATE 114960 
 
¶1. Post is pleased to submit the following responses to the request 
for information contained in reftel.  Post's most recent INCSR 
report dates from 2007.  Accordingly, Post has chosen to reply to 
the reftel questions.  Answers are keyed to reftel paragraph 
numbers. 
 
¶2. Post contact for the 2009-2010 INCSR, Part II is Economic / 
Commercial Officer Daniel N. Daley. 
 
-------------------- 
Replies to Questions 
-------------------- 
 
¶3. [ref para 14:  Key information needed from all posts is 
information that fully addresses the following: (1) describe the 
anti-money aundering/counter-terrorist financing (AML/CFT) plans, 
programs and timetables adopted by the country; (2) discuss the 
adequacy of the legal and law enforcement measures taken to combat 
money laundering and terrorist financing; and (3) identify the 
accomplishments achieved in accord with those plans, including in 
particular whether the host country has successfully prosecuted 
money laundering and/or terrorist financing cases (if so, please 
provide the number of convictions in 2009 and details of noteworthy 
cases). If necessary, please provide additional information on these 
points and please convert any foreign currency figures into U.S. 
dollars.] 
 
(1) Malawi has enacted the Money Laundering, proceeds of Serious 
Crime and Terrorist Financing Act 2006(ML Act). There is also a 
National AML/CFT Committee which helps coordinate various aspects on 
AML/CFT in the country, including developing an AML/CFT national 
strategy to run from 2010 to 2015. The strategy has been approved by 
the Ministry of Finance, and is expected to be launched soon. 
 
The national strategy has 7 key strategic objectives, which include: 
1) to develop and consolidate effective AML/CFT legal and regulatory 
frameworks to fight money laundering and terrorist financing; 2) to 
develop adequate institutional frameworks and capacity within all 
key stakeholders to ensure they play their respective roles; 3) to 
increase awareness of AML/CFT matters, roles and responsibilities by 
the public and all reporting institutions; 4) to undertake research 
and assessments of money laundering and terrorist financing risks 
and vulnerabilities; and 5) to develop and sustain domestic, 
regional and international cooperation. 
 
(2) The Money Laundring Act addresses all aspects of AML/CFT and is 
substantially consistent with the FATF 40 plus 9 Special 
Recommendations.  For proper implementation of the ML Act, however, 
there is need for law enforcement agencies and financial 
institutions to be trained on AML/CFT matters.  Recognizing this 
need, the FIU has been working with technical assistance providers 
such as the World Bank to develop the capacity of these agencies so 
that they acquire requisite expertise and skills to investigate and 
prosecute financial crimes.  In 2009 the FIU trained 55 individuals 
in financial analysis to help them in investigating financial 
crimes, espeQally money laundering cases. 
 
(3) Achievements in 2009 include: 
 
* Training 55 officials from Reserve Bank of Malawi, FIU, 
Anti-Corruption Bureau, National Intelligence Services, Immigration, 
Malawi Gaming Board, Malawi Police Services on AML/CFT issues; 
* Training financial institutions on their reporting obligations, 
detection of money laundering, etc; 
* Presentations made to members of Society of Accountants; 
* Started implementing public awareness campaigns through 
bill-boards, newspaper inserts and brochures; 
* Admission of the FIU to the Egmont Group, which will foster 
exchange of information necessary for effective analysis of 
suspicious transactions involving other countries. 
The FIU has disseminated reports to various investigative 
authorities. These cases are still under investigation.  Malawi has 
prosecuted 3 cases in the past year for possession of foreign 
exchange suspected to have been obtained illegally.  The amounts 
involved for the cases totaled around US$183,000 
 
¶4. [ref para 15: Please also provide the names/numbers of relevant 
laws and regulations related to AML/CFT. We expect that numerous 
governments have made significant changes in legislation and 
implementing regulations to establish or strengthen their anti-money 
laundering regimes, including counter-terrorist financing 
components, subsequent to the submission of earlier responses to 
questionnaires developed by the United Nations (UN) or the Financial 
Action Task Force (FATF).  We request that you report on such 
changes made in 2009 and answer all questions in this cable. 
 
Historical information should be in the 2009 INCSR already, and does 
not need to be revisited as long as it is accurate.] 
 
* The country passed the amended Banking Act, Penal code, and Police 
Act in December 2009.  This Act introduced new provisions in line 
with the ML Act of 2006, empowering the Reserve Bank to take 
enforcement action against non-compliance with the ML Act and 
related regulations. 
 
* The country finalized draft regulations addressing most of 
deficiencies highlighted by the World Bank in their AML/CFT 
Evaluation report. 
 
* The country developed necessary instruments to monitor, detect and 
confiscate illegal cross-border shipment of currency and bearer 
negotiable instruments in compliance with FATF Special 
Recommendation IX.  These will be implemented in 2010. 
 
* The country developed mechanisms for dissemination of the UN 
Consolidated List (sent to the FIU by the office of UN Ambassador in 
New York) and US OFAC list (received from FDIC electronically) to 
financial institutions and other reporting institutions.  This helps 
to ensure that financial institutions don't open accounts or receive 
funds suspected to be related to terrorist financing. 
 
¶5. [ref para 16: Please identify any problems that are considered 
deterrents to more effective host government responses (e.g., 
absence of laws, lack of political will, resource constraints, 
corruption, inefficient financial systems, opposition by the 
financial system or other groups, malfunctioning of the judicial 
system to prosecute AML/CFT cases, lack of training for effective 
AML/CFT law enforcement, etc.).] 
 
* Investigative agencies do not have adequate financial and human 
resource capacity to carry out effective investigation and 
successful prosecution of money laundering cases. Investigative 
agencies have also shown reluctance to seriously tackle the often 
complex financial cases referred to them by the FIU. 
 
* The judiciary does not appreciate issues of money laundering 
sufficiently for them to make appropriate determination on cases 
that they handle. 
 
¶6. [ref para 18: Is the jurisdiction considered an important 
regional 
financial center?  What is its significance in terms of money 
laundering?] 
 
Malawi is not a regional financial center. 
 
¶7. [ref para 19: To the extent it is known, is money 
laundering/terrorist financing primarily related to proceeds from 
illegal narcotics, psychotropic substances, and chemical precursors? 
 (If applicable, specify drug.) If not, what is/are the major 
source/s of the proceeds?  Also, to the extent known, do the 
criminal proceeds laundered in the jurisdiction derive primarily 
from domestic or foreign criminal activity?  Are the money 
laundering proceeds controlled by drug-trafficking organizations, 
organized crime, or terrorist groups operating locally?  What is the 
extent that public corruption contributes to money 
laundering/terrorist financing in the host country?  If applicable, 
please provide examples.] 
 
* Malawi has not conducted a systematic assessment of the problem of 
money laundering in order to determine major sources of proceeds of 
crime.  No other illegal narcotics, psychotropic substances or 
chemical precursors are known to be used or trafficked in 
significant quantities. 
 
* Based on media reports, the police have seized cannabis in 
significant quantities, suggesting that it is a major source of 
proceeds of crime. 
 
* FIU case reports also indicate that tax evasion is another source 
of proceeds of crime. 
 
* Reports also indicate that Malawi is used as a transit route by 
human traffickers. 
 
¶8. [ref para 20: Is there a significant black market for smuggled 
goods in the country?  If so, is there evidence to suggest that it 
is significantly funded by narcotic proceeds or other illicit 
proceeds? Does contraband smuggling generate funds that are 
laundered through the financial system?] 
 
There are a significant amount of smuggled goods on the market, 
especially pirated tapes, CDs and DVDs.  These usually come from 
 
Asia, West Africa and East Africa.  There is no evidence that this 
activity is significantly funded by narcotic proceeds. 
 
¶9. [ref para 21: Does money laundering/terrorist financing occur in 
the formal financial sector, within an offshore financial center or 
free trade zone, or in the non-bank financial system (e.g. exchange 
houses) or via alternative remittance systems, such as hawala, 
hundi, or other systems?  Please note if the country is experiencing 
an overall increase or decrease in financial crimes.] 
 
No reliable information is available what sectors may be used for 
money laundering and/or terrorist financing, although the Formal 
financial sector and the Non-bank financial system are the most 
probable.  Controls through supervision have been put in place in 
both of these sectors.  Malawi's National AML/CFT Committee intends 
to examine this question as a priority issue.  There is no 
information on increase/decrease trends; this question will also be 
addressed in the upcoming AML/CFT report. 
 
¶10. [ref para 22: To the post's knowledge, do the jurisdiction's 
financial institutions engage in currency transactions involving 
international narcotics trafficking proceeds that include 
significant amounts of U.S. currency or currency derived from 
illegal drug sales in the United States or that otherwise 
significantly affect the United States?] 
 
No; to Post's knowledge Malawi's financial institutions are not 
engaged in currency transactions involving international narcotics 
trafficking. 
¶11. [ref para 23: Is there any indication that trade-based money 
laundering occurs in the post's jurisdiction?] 
 
Yes. 
 
¶12. [ref para 24: Is the country considered an offshore financial 
center? 
An offshore financial center is a financial center where attractive 
financial and corporate services, such as favorable tax treatment or 
freedom from exchange controls, are provided normally, but not 
necessarily exclusively, to non-residents.  The vulnerability for 
money laundering is most acute when services include absent and/or 
relaxed rules on disclosing any information regarding the beneficial 
owner of legal entities such as trusts or international business 
companies).] 
 
No; Malawi is not an off-shore financial center and its financial 
institutions are not allowed to deal with such centers. 
¶13. [ref para 25: Are offshore banks, international business 
companies, or other forms of exempt or shell companies or trusts 
permitted?  If so, how do offshore regulations differ from onshore? 
For example:] 
 
[a. Does the country license offshore banks and businesses?  Does 
the country adequately perform background checks on applicants for 
banking and business licenses in its offshore sector?  Is a physical 
presence required, or does the jurisdiction allow shell banks and 
/or companies?] 
 
Offshore banks are not licensed in Malawi. In addition shell banks 
are not licensed in Malawi. 
[b. Please provide: the numbers of offshore banks; trusts; offshore 
international business companies, exempt companies, or shell 
companies; and any other offshore financial services businesses, 
such as insurance companies, mutual fund companies, trust companies 
and agents.] 
 
There are none in the Malawi financial sector.  The Reserve Bank, 
which licenses banks, insurance companies etc., undertakes a 
rigorous assessment of all applications before a license is issued. 
Other entities such as business companies, legal practitioners, 
notaries, accountants have been included in the ML Act to ensure 
they comply with the same anti-money laundering and combating the 
financing of terrorism obligations.  The office of the Registrar of 
Companies, lawyers and accountants have been trained in AML/CFT to 
ensure they carry out their work properly. 
[c. Are nominee (anonymous) directors and/or trustees allowed?] 
 
Nominee directors or trustees are not allowed in the Malawi 
financial sector. 
¶14. [ref para 26:  Please provide the number of offshore casinos or 
internet gaming sites. Does the jurisdiction license and regulate 
these sites?] 
 
There are no offshore casinos and internet gaming sites in Malawi. 
Domestic casinos in Malawi are regulated by the Malawi Gaming Board 
and the Financial Intelligence Unit. 
¶15. [ref para 27: Is there a separate regulatory agency for the 
 
offshore sector, or is the offshore financial center regulated by 
the onshore regulator?  Are regulations governing offshore banks and 
businesses different in any key respects from regulations governing 
domestic banks and businesses?  If so, how?  For example, are 
offshore financial institutions required to perform customer due 
diligence and file suspicious activity reports?)  If not, what 
businesses and services are inadequately supervised and regulated?] 
 
There is no offshore sector in Malawi; there is no separate 
regulatory agency for the offshore sector. 
¶16. [ref para 28: Are there free trade zones operating in the 
jurisdiction?  If so, please give the number and name, and briefly 
describe their operations, capability and function.] 
 
There are no free trade zones (FTZs) operating in Malawi.  Nineteen 
companies operate as export processing zones (EPZs), however. 
Companies licensed as EPZs are eligible to import inputs duty free 
(must be bonded) on condition that their entire production is 
exported. 
 
¶17. [ref para 29: Is there any indication that these FTZs are being 
used in trade-based money laundering schemes or by the financiers of 
terrorism?] 
 
Post has no seen indications that the EPZ regime is being used in 
this way. 
 
¶18. [ref para 30: What types of supervisory programs and/or due 
diligence procedures are in place to monitor activities in the FTZ 
zone?  Are there identification requirements for companies and 
individuals who use the zone?] 
 
The Malawi Revenue Authority (MRA) is responsible for supervision of 
the export processing regime.  The MRA monitors imports of bonded 
inputs and is present when an EPZ company draws down on these goods. 
 The MRA also certifies the end products and that all EPZ products 
are exported.  Companies must be licensed by the Ministry of 
Industry and Trade to operate as an EPZ. 
 
¶19. [ref para 31: What laws and regulations exist in relation to 
AML/CFT?  Is money laundering a criminal offense in this 
jurisdiction?  Does the law apply only to drug-related money 
laundering?  Does the jurisdiction list specific crimes as predicate 
offences or take an "all serious crimes" approach? In some 
jurisdictions, anti-money laundering laws are applicable to 
predicate offences defined as "all serious crimes," crimes that 
carry a threshold minimum sentence in the jurisdiction's penal code. 
If there is a threshold minimum sentence, what is that threshold? If 
the country has a "list" approach, what offenses are covered?] 
 
Money laundering is legislated for under the Money Laundering, 
Proceeds of Serious Crime and Terrorist Financing Act of 2006 (ML 
Act).  The law is applicable to other types of predicate offences 
apart from drug related offences.  The definition of serious crimes 
under the ML Act includes all offences for whose punishment is 12 
months imprisonment, life imprisonment, or death. 
 
¶20. [ref para 32: Has the country enacted secrecy laws that prevent 
disclosure of client and ownership information by domestic and 
offshore financial services companies to bank supervisors and law 
enforcement authorities?] 
 
No.  In addition, the ML act specifically states in Section 44 that 
the provision of the Act shall effect not withstanding any 
obligations to secrecy or other restrictions on disclosure of 
information. 
 
¶21. [ref para 33:  Are bearer shares permitted for banks and/or for 
companies?] 
 
These are not permitted in any circumstances. 
 
¶22. [ref para 34: Which entities supervise and examine financial 
institutions for compliance with AML/CFT laws and regulations?  What 
is their capacity to conduct compliance investigations (i.e. are 
they adequately staffed and trained)?] 
 
According to the ML Act, institutions that had supervisors before 
the enactment of the ML Act will continue to be supervised by the 
same supervisors on AML/CFT compliance.  Thus, industries such as 
insurance companies, banks, and forex bureaus will continue to be 
supervised by the Reserve Bank of Malawi (RBM).  The FIU will assume 
responsibility for supervision of institutions such as estate agents 
who do not have a supervisor.  However it should be noted that the 
FIU has residual powers to enforce compliance by entering any 
financial institution and searching records maintained by such 
financial institution.  RBM and FIU staff capable of conducting 
 
compliance investigations, but are limited by human capacity and 
financial limitations. 
 
¶23. [ref para 35: Are banks and other financial institutions 
required to know, record, and report the identity of customers 
engaging in significant transactions, including the recording of 
large currency transactions at thresholds appropriate to the 
country's economic situation?  What is the statutory threshold?] 
 
Yes, banks are expected to know record and report identity of all 
their customers.  All transactions above 1 million Malawi Kwacha 
(about USD 6,850) must also be reported to the FIU, under Section 28 
of the ML Act. 
 
Stakeholder consultations are currently ongoing in order to 
determine a threshold below which simplified identification 
documents will not be required.  This will be in line with the 
policy to promote the use of the financial system by low income 
bracket of the population. 
 
¶24. [ref para 36: Are banks and other financial institutions 
required to maintain for an adequate time records necessary to 
reconstruct significant transactions through financial institutions 
in order to be able to respond quickly to information requests from 
appropriate government authorities in narcotics-related or other 
money laundering or terrorist finance cases?  For how long?] 
 
Yes; financial institutions are required to maintain records, in a 
manner that will allow for the transaction to be reconstructed.  The 
records are to be maintained for at least seven years.  This is 
provided for in Section 27 of the ML Act. 
 
¶25. [ref para 37: Do financial institutions report suspicious 
transactions?  Which ones?  Is such reporting mandatory or 
voluntary?  Is reporting required for all suspicious transactions, 
or is there a threshold amount below which suspicious transaction 
reports are not required?] 
 
Yes; financial institutions are required to report by mandate, and 
there are penalties for failing to do so.  Financial Institutions 
are required to submit three kinds of reports:  A) suspicious 
transaction reports, which do not involve any threshold amount, B) 
large currency transaction reports which are reports on any 
transaction in cash exceeding the threshold of one million Malawi 
kwacha, and C) reports on electronic funds transfers, which is not 
yet operational. 
 
¶26. [ref para 38: Are reporting individuals protected by law with 
respect to their cooperation with law enforcement entities?] 
 
Yes; reporting individuals are protected.  The ML Act makes it crime 
for any person to reveal that a suspicious transaction report has 
been filed or that there are other investigations taking place.  It 
is also a crime to reveal the identity of a person who has filed a 
suspicious transaction report. 
 
¶27. [ref para 39:  Are the AML/CFT controls as described in the 
preceding 5 paragraphs applied to non-bank financial institutions 
(NBFIs) and designated non-financial businesses and professions 
(DNFBPs), such as exchange houses, stock brokerages, cash couriers, 
casinos, dealers in jewels and precious metals, insurance companies, 
pawn shops, realtors, high-worth dealers in art and vehicles, and to 
intermediaries, such as lawyers, accountants, notaries, or 
broker/dealers?  Which are subject to the requirements to report 
suspicious transactions and/or large transactions?  Which entities 
have actually filed such reports?] 
 
Yes; DNFBPs are subject to the same regulations as Financial 
Institutions.  Under the ML Act section 2, DNFBPs are actually 
defined as financial institutions and are treated as such in term of 
what is expected from them. 
 
¶28. [ref para 40: Do current laws provide for the establishment and 
funding of a financial intelligence unit (FIU)?] 
 
An FIU is established under Section 11 (1) of the ML Act, and 
Section 19 of the same act provides that the FIU should provide its 
yearly budget to the minister of finance for them to be included in 
the country's yearly budgets.  Since the FIU was established in July 
2007, funding has been made without problems. 
 
¶29. [ref para 41: Has the country established an FIU?  Is it 
operational?  Is it adequately staffed?  To what degree does it have 
operational and budgetary independence?  Where in the government is 
it housed; e.g., within a finance or national police ministry, or as 
an independent agency?] 
 
Yes; an FIU has been established.  It was formally established in 
July 2007, but received its first reports in December 2007. 
Currently the FIU is housed in the Reserve Bank of Malawi (RBM) 
Building, but has operational independence.  The FIU currently has 9 
staff members occupying its five departments:  Finance and 
Administration, Legal and Policy, Compliance and Prevention, 
Monitoring and Analysis, and ICT.  Three additional staff members 
are expected to start work on 4th January, 2010.  The division of 
staff in the department is as follows, 
 
* Monitoring and Analysis 3 
* Legal and policy  1 
* Compliance and prevention 1 (to be increased to 3 in 1/2010) 
* ICT Department   1 (to be increased to 2 in 1/2010) 
* Finane and Administration 2 
 
The FIU is currently headed by an Acting Director; a permanent 
Director has yet to be appointed. 
 
Although the FIU is operationally independent, it is required to 
make annual reports to the Minister of Finance.  This gives a 
general picture of the work of the FIU. 
 
¶30. [ref para 42: Describe the authorities and functions of the FIU. 
 Is it an administrative body that performs analytical duties?  Does 
it also have criminal investigative and/or regulatory 
responsibilities?] 
 
Malawi's FIU is an administrative unit, performing only analytical 
duties.  According to the ML Act, the FIU is mandated to request, 
receive, analyze and disseminate to competent authorities 
disclosures of financial information as required in order to counter 
money laundering and financing terrorism.  The FIU also has 
regulatory powers to enforce compliance.  It has no investigatory or 
prosecutorial authority. 
 
¶31. [ref para 43: Does the FIU have access to the records or 
databases of other government entities or financial institutions? 
Does it have formal mechanisms in place to share information 
domestically (with law enforcement/prosecutors) or internationally 
with other FIUs?] 
 
Yes; the FIU has access to databases of other government 
institutions; this can be exercised either informally or by means of 
a memorandum of understanding (MOUs).  Informally access involves 
the FIU simply going to the required office and asking for 
information.  MOUs also exist indicating when and how information is 
to be exchanged, and how this information can be used.  Currently 
the FIU has MOUs with the Immigration Department and the Reserve 
Bank of Malawi.  The plan is to enter into MOUs with all relevant 
agencies. 
 
¶32. [ref para 44: How many suspicious transaction reports (STRs) 
were received in 2009?  How many were the subject of investigation 
or resulted in referrals to law enforcement for investigation?] 
 
Nine (9) STRs were received in 2009, out of which five (5) were 
disseminated to law enforcement agencies (LEAs). 
 
The FIU al also have disseminated to LEAs ten (10) reports stemming 
from Large Currency Transaction Reports. 
 
The FIU has also received ten (10) requests for information from 
LEAs, all of which have been responded to. 
 
¶33. [ref para 45: Which government bodies are responsible for 
investigating financial crimes, including money laundering and 
terrorist financing?  Are they adequately staffed and trained?] 
 
The investigation of money laundering and terrorist financing is 
done by the Anti-Corruption Bureau, the Malawi Revenue Authority, 
and the Fiscal and Fraud Police of the Malawi Police Services. 
Cases will be assigned to a particular agency depending on the 
nature of the predicate offence.  Training has been provided, but 
agencies still lack experience with financial investigations. 
 
¶34. [ref para 46: Have there been arrests, prosecutions, and 
convictions for money laundering or terrorist financing since 
January 1, 2009?  How many?  Please report highlights of any major 
cases not previously reported.] 
 
To date there have been no cases. 
 
¶35. [ref para 47: The seizure and forfeiture of assets (including 
but not limited to bank accounts, other financial assets, airplanes, 
autos, residences, other property) derived from international drug 
trade, money laundering, terrorist financing or other serious crimes 
 
can be important elements in efforts to control drug trafficking, 
money laundering, terrorist financing and organized crime activity. 
Has the country enacted laws and established systems for 
identifying, tracing, freezing, seizing, and forfeiting 
narcotics-related assets as well as assets derived from, or intended 
for, terrorist financing  and other serious crimes?  If so, please 
describe the authority (regulatory or judicial).  Are new 
legislation or changes in current laws, regulations, judicial or 
administrative authorities being considered?] 
 
Yes.  Malawi recognizes the importance of the seizure and forfeiture 
of assets derived from crime. The ML Act specifically addresses the 
issues of  identifying, tracing, freezing, seizing, and forfeiting 
property or assets related to any serious crime, which includes 
money laundering and terrorist financing.  Under the Act, the 
competent authority, the Directorate of Public Prosecutions (DPP) is 
generally responsible for court applications to freeze or seize 
assets. However throughout the process, especially where there are 
terrorist financing funds, the FIU or the RBM can move for freezing 
of such funds.  In addition there is a common law remnant in 
criminal cases where instruments used in crime can be seized upon a 
conviction. The Anti-Corruption Bureau (ACB), established under the 
Corrupt Practices Act as a specialized agency, also has a mandate to 
freeze property related to commission of corrupt practices related 
offences.  Presently there are no moves to change the law. 
¶36. [ref para 48: What are the obstacles or disincentives to 
enacting such laws, regulations, other authorities?] 
 
Although the ML Act has already been enacted, the concept of 
anti-money laundering efforts and CFT is fairly new to Malawi.  As a 
result there is a general lack of appreciation of what the issues 
are, and the need for such legislation.  The main challenge is now 
to put the enacted law in practice, complete with institutional 
framework and capacity. 
¶37. [49. What are the major provisions in current and/or proposed 
legislation?  For example, what assets can be seized?  Do they 
include:  instruments of crime such as conveyances used to transport 
narcotics, property on which illicit crops are grown or are used to 
support terrorist activity, or intangible property such as bank 
accounts?  Can substitute assets be seized or must a relationship to 
the crime be proven?  Can legitimate businesses be seized if used to 
launder drug money, support terrorist activity, or are otherwise 
related to other criminal proceeds?] 
 
Under the ML Act, Corrupt Practices Act, Customs and Excise Act, 
Police Act and Exchange Control Act, all of the above can be seized 
and confiscated.  Under the ML Act, legitimate business or assets of 
a lgitimate business can be seized if they are involved in money 
laundering or terrorist financing. 
 
Under ML Act, the court can order payment in other form were tainted 
property cannot be traced, or has been transferred to a third party, 
or located outside Malawi, or is commingled with other property that 
cannot easily be separated. 
 
¶38. [ref para 50: What government entities are responsible for 
tracing, seizing assets and freezing assets?  Is there a period of 
time ascribed to the action of freezing, after which the assets are 
released?  Are frozen assets confiscated?  If yes, by what 
government entity?  Is there an asset forfeiture fund?  What 
entity/s receive/s proceeds from asset seizures and forfeitures? 
Which agencies manage and have responsibility for seized assets? 
What is their capacity to manage seized assets?] 
 
The tracing, seizing and freezing of assets falls under the 
responsibility of the DPP with the assistance of the FIU and the RBM 
as provided under Section 78 of the ML Act, for the financial 
institutions which the two entities supervise. 
Bank accounts/funds can be frozen for an initial period of three 
months.  The ML Act provides for a period of not more than twelve 
(12) months after conviction during which the competent authority 
(the DPP) may apply to the courts to have the property confiscated. 
Other assets can be seized upon conviction or proof that they are 
proceeds of crime, or instrumentalities of crime. In both cases the 
freezing or seizure is subject to review by the court, where the 
affected persons have a right to be heard. Once that is done the 
assets can be confiscated.  In general under Malawi criminal law, 
seized assets or confiscated funds are owned by the GOM. Under the 
ML Act, the Attorney General is mandated to ensure that property 
finally confiscated is properly transferred or registered as 
property of the GOM. 
There is currently no asset forfeiture fund.  Where necessary the 
court can appoint an administrator to take possession of the 
property and empower the administrator to sell the property. 
¶39. [ref para 51: Does the banking community cooperate with 
enforcement efforts to trace funds and seize/freeze bank accounts?] 
 
Yes; the banking community does cooperate in the seizure and 
freezing of assets.  The Bankers Association has a robust 
sub-committee of Compliance Officers with a mandates to foster 
cooperation amongst the banks to ensure illegal funds do not 
infiltrate into the system. 
¶40. [ref para 52: Does the law allow for civil as well as criminal 
forfeiture?] 
 
The ML Act allows only for criminal forfeiture, but it does allow 
for a restraining order in order to ensure that property which may 
be subject to confiscation is not transferred or otherwise 
dissipated.  This is also possible under the Corrupt Practices Act. 
 
¶41. [ref para 53: Does the government enforce existing asset seizure 
and forfeiture laws?  Does the jurisdiction have adequate police 
powers and resources to trace, seize and freeze assets?  If so, can 
the jurisdiction freeze assets without undue delay?] 
 
Yes, the Government does enforce the laws.  The Anti Corruption 
Bureau has prosecuted corruption charges, and has confiscated and 
seized the property of some convicts.  The ML Act fairly new, 
however, and Malawi is still building capacity in this area and does 
not yet have a fully fledged seizure mechanism.  The ML Act is 
fairly adequate; the FIU is now in place, and all law enforcement 
agencies such as the DPP, Police, Revenue Authority, Anti-Corruption 
Bureau, and Immigration have been familiarized in its terms. 
Enforcement resources to trace, seize and freeze assets are limited, 
however, and can cause delays. 
¶42. [54. Does the government have an independent national system and 
mechanism for freezing terrorist assets? 
 
No. 
 
¶43. [ref para 55: What was the dollar amount of narcotics-related, 
terrorist-related and other criminal-related assets frozen, seized, 
and/or forfeited in the past year?  How does this amount compare to 
amounts seized / forfeited / frozen in previous years?] 
 
There are currently no statistics available to measure these 
amounts.  Capacity building efforts are being undertaken in relevant 
agencies such as the Home Affairs - Drugs Enforcement Unit to ensure 
that statistics are available in the future. 
¶44. [ref para 56: Has the country enacted laws for the sharing of 
seized assets with other governments?  Is the government engaged in 
bilateral or multilateral negotiations with other governments to 
enhance asset tracing, freezing and seizure?] 
 
Under the ML Act and under the Mutual Legal Assistance Laws, Malawi 
can enter into agreements both short and long term with Commonwealth 
and non Commonwealth countries.  Under those agreements issues of 
sharing assets can be specifically provided.  The ML law stipulates 
that Malawi is under an obligation to freeze tainted assets on the 
request of other countries. 
 
¶45. [ref para 57: Has the jurisdiction criminalized the financing of 
terrorism as required by the UN International Convention for the 
Suppression of the Financing of Terrorism and UN Security Council 
Resolution 1373?  If so, please provide title of act, date of 
enactment, and pertinent details.  If the jurisdiction has an "all 
serious crimes" anti-money laundering law, please indicate if 
terrorism and terrorist financing are considered serious crimes.  If 
the country has listed the predicate offenses for money laundering, 
please indicate if terrorism and terrorist financing are on the 
list.] 
 
Yes, financing of terrorism is criminalized under the Money 
Laundering, Proceeds of Serious Crime and Terrorist Financing Act 
which was passed in August of 2006.  The act provides for the 
seizure of assets suspected to be held for the purpose of terrorist 
financing.  The definition of Serious Crimes includes all crimes for 
whose punishment is 12 months imprisonment, life imprisonment, or 
death.  Offences include money laundering and terrorist financing. 
 
¶46. [ref para 58: Has the jurisdiction circulated to its financial 
institutions the list of individuals and entities that have been 
included on the UN 1267 sanctions committee's consolidated list as 
being linked to Usama bin Ladin, members of the Al Qa'ida 
organization or the Taliban?  Does the jurisdiction circulate the 
list of terrorist organizations/financiers that the USG or the 
European Union (EU) have designated under relevant authorities?  Did 
the jurisdiction identify, freeze, seize, and/or forfeit related 
assets in 2009?  If so, please provide dollar amount. 
 
Yes, Malawi circulates the UN and OFAC list.  To date financial 
institutions have not come across names matching any of the 
individuals or organizations appearing on these lists. 
 
 
 
¶47. [ref para 59: Does the jurisdiction acknowledge the existence 
and use of value transfer systems outside the formal financial 
system?  Describe the steps the jurisdiction has taken regarding 
regulating alternative remittance systems, such as hawala or hundi; 
the exploitation thereof, including black market exchanges; money 
remitters; trade-based money laundering; cross-border cash 
smuggling; or the misuse of precious metals and stones.] 
 
Yes, alternative value transfer systems are recognized.  These 
alternative remittance systems are not included in the ML Act. 
Malawi authorities indicate that (unspecified) plans are under way 
to ensure they are regulated. 
 
Trade-based money laundering and cross-border cash smuggling are 
covered by the ML Act. 
 
¶48. [ref para 60: Discuss the efforts the jurisdiction has taken to 
thwart the misuse of charitable and or non-profit entities that can 
be used as conduits for the financing of terrorism.  For example, is 
there a government entity that regulates or supervises the sector? 
If so, please name the entity.  Does it monitor the sector for 
potential terrorist financing abuse?  How are overseas financial 
transactions monitored to prevent potential terrorist financing?] 
 
Malawi has a Non-Governmental Organization (NGO) Board that conducts 
supervisory oversight of NGOs. 
 
The Council for Non-Governmental Organizations (CONGOMA), a civil 
society body, has been involved in AML/CFT Training. 
 
The FIU has made presentations to members of CONGOMA on AML/CFT 
issues. 
 
Neither the NGO Board nor CONGOMA is believed to have any 
significant capacity to monitor the sector for terrorist financing 
abuse. 
 
¶49. [ref para 61: Are there statutory requirements for limiting or 
monitoring the cross-border transportation of currency and monetary 
instruments?  If so, please describe cross-border currency reporting 
requirements for both inbound and outbound currency, including those 
that apply to cash couriers, including the monetary threshold that 
would require a report to be filed.  Are mandatory declaration forms 
used at border crossings?] 
 
The ML Act requires that declarations should be made when 
transporting currency across the borders, and failure to make such 
declarations is a crime.  Customs and Police officials are 
responsible for seizing any currency that has not been declared, any 
currency they suspect to be the proceeds of ML, or that could be 
used for terrorist financing.  The declaration forms are mandatory 
and are filed with the FIU.  The declaration system is yet to be 
implemented, however.  The FIU, the Malawi Revenue Authority, the 
RBM, and the Immigration Department have been holding meetings to 
draft an MOU specifying how the system should work and outlining the 
roles of the various players. 
 
¶50. [ref para 62: Are cash declaration or smuggling reports entered 
into a database?  Is such data shared between host government 
agencies, in particular with an existing FIU?] 
 
Currently this does not happen.  GOM authorities inform us that 
plans are underway to have such a system in place, although not 
implementation date is specified. 
 
¶51. [ref para 63: Has the country adopted laws or regulations that 
allow for the exchange of records with the United States on 
investigations and proceedings related to narcotics, all-source 
money laundering, terrorism and terrorist financing?  Has the 
jurisdiction reached agreement with the United States authorities on 
a mechanism for exchange of records in connection with such 
investigations and proceedings?  If not, is the country negotiating 
in good faith with the United States to establish such an exchange 
mechanism?  Does the jurisdiction have similar arrangements with 
other jurisdictions?] 
 
No such agreement currently exists or is being negotiated between 
the GOM and the U.S.  However Malawi and U.S. can still exchange 
such information under the international cooperation provisions of 
multilateral international anti-terrorism and CFT conventions to 
which both countries are parties. 
 
¶52. [ref para 64: Identify all treaties, agreements, or other 
mechanisms for information exchange that the host country has 
entered into with the USG or other countries, including agreements 
between the FIU and its counterparts, as well as membership in the 
Egmont group, and those with home country supervisors to facilitate 
 
the exchange of supervisory information regarding banks and trust 
companies operating in the host country.  Describe the status of 
efforts to update such agreements or arrangements.] 
 
The FIU was admitted to Egmont in May 2009.  So far MOUs have been 
signed with South Africa, Namibia, and United Arab Emirates.  Draft 
MOUs have been sent to Tanzania and Zambia. 
 
¶53. [ref para 65: Has the country cooperated, when requested, with 
appropriate USG law enforcement agencies and other governments 
investigating financial crimes related to narcotics, terrorism, 
terrorist financing and other crimes?  If the country has cooperated 
on important cases with USG agencies, please describe.] 
 
In general the GOM enjoys a friendly and cooperative relationship 
with the U.S.  Post is not aware of any specific USG or other 
government requests with respect to the crimes listed. 
 
¶54. [ref para 66: Please detail any instances of refusals to 
cooperate with foreign governments, as well as any actions taken by 
the USG and any international organization to address such 
obstacles, including the imposition of sanctions or penalties.] 
 
Post is unaware of any instances of the GOM refusing to cooperate 
with the USG or other foreign governments in any investigations or 
enforcements relating to issues covered by this report. 
 
¶55. [ref para 67: Is the country a party to the UN International 
Convention against Illicit Traffic in Narcotic Drugs and 
Psychotropic Substances (Vienna Convention), the UN Convention 
Against Transnational Organized Crime (Palermo Convention), the UN 
Convention Against Corruption, and the UN International Convention 
for the Suppression of the Financing of Terrorism or other 
applicable agreements and conventions?  If the country ratified or 
acceded to these conventions in 2009, please provide the date of 
ratification/accession.] 
 
Vienna Convention:  Acceded 12 October 1995; 
Palermo Convention:  Ratified 17 March 2005; 
Convention Against Corruption:  Ratified December 4, 2007 
Convention for Suppression of Financing of Terrorism:  Acceded 
August 11, 2003. 
 
¶56. [ref para 68: Does the country adhere to relevant international 
money laundering standards, such as the recommendations of the 
Financial Action Task Force (FATF)?  If so, what steps is it taking 
to implement the standards?  Is it a member of any FATF-style 
regional body?  If not, what, if any, steps is the country taking to 
become a member of a body or to implement AML/CFT measures?] 
 
Malawi is a member of the East and Southern African Anti-Money 
Laundering Group (ESAAMLG), a body comprising the Southern African 
Development Community (SADC) countries plus Uganda and Kenya. 
ESAAMLG subscribes to the FATF recommendations and encourages its 
members to do the same.  Malawi has enacted the Money Laundering 
Proceeds of Serious Crime and Terrorist Financing Act, which 
includes the FATF recommendations.  Malawi has also submitted itself 
to the AML/CFT mutual evaluation process and in this regard, has 
undergone a mutual evaluation process conducted by the World Bank in 
March 2008. 
 
BODDE