By Gregory Gondwe
Malawi has taken up the presidency of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) effective September 8, 2010 and will hold on to the mantle up to a year.
Finance Minister Ken Kandodo Banda is the President of the Council of Ministers of ESAAMLG which is the highest policy making organ, by the virtue of being the current incumbent of the cabinet post in Malawi.
The Secretary to the Treasury is the Chairperson of the Task Force of Senior Officials over the same period.
At the opening on the meeting in Lilongwe Malawi President, Bingu wa Mutharika called on African countries to find a common ground in fighting money laundering and terrorist financing at all levels of society.
Even when the newly appointed Essamalg President Kandodo promised to steer the grouping as its new leader in fighting against money laundering and corruption, President Mutharika nevertheless challenged cabinet ministers that were attending the meeting to not only fight the rot by word of mouth.
“Formulate and implement administrative measures that can eradicate money laundering on the continent,” advised Mutharika.
Mutharika said this is a white collar corruption which he described as the one of the worst forms of graft.
Deputy Director of a government instrument set up by parliament to among other things fight money laundering and terrorist financing the Financial Intelligence Unit (FIU) Tom Malikebu said by holding the Presidency of the Council of Ministers of ESAAMLG Malawi is set to benefit tremendously.
“The profile of the country’s anti-money laundering initiatives and progress will be raised,” said Malikebu in an exclusive interview with Bizcommunity.
He said as the head of the Council, the Minister of Finance will represent the Group in international and regional meetings dealing with anti-money laundering issues.
“While representing the Group, he will also take advantage of this to brief the world on what the country has achieved in this area. For instance, the Malawi FIU has managed to become a member of EGMONT Group of FIUs, being the third (after South Africa and Mauritius) to qualify for membership out of the 14 countries of ESAAMLG,” he explained.
Malikebu said they have numerous challenges as a body set to curb money laundering and their experience over the period in which they have been in operation, they have noted a number of challenges that the anti-money laundering drive faces which they now hope to take up, now that Malawi is at the helm.
“For instance, prevalence of cash-based transactions in our country and most countries of the region makes the fight against money laundering difficult since cash transactions do not leave a paper trail. We need to come up with mechanisms that can effectively curb money laundering in such an environment,” he said.
Malikebu said the other challenge is to ensure that foreign exchange liberalization, trade liberalization and promotion of foreign investment through simplified vetting processes do not create breeding grounds for money laundering.
“International bodies such as the IMF and the World Bank encourage countries to implement these initiatives,” said Malikebu before adding, “However, we have observed that unscrupulous people are abusing these positive initiatives and as a result, the country is losing a lot of foreign exchange through these channels.”
He said even in the face of this, the same international bodies require implementation of anti-money laundering requirements.
The anti-money laundering expert then explained that in order to comply with some of the anti-money laundering requirements, they have to ensure that they have systems for identification of prospective foreign investors, their source of capital – as some of the capital may emanate from illicit proceeds – and that international funds transfers are not related to money laundering.
“This requires careful scrutiny of transactions, which inevitably may be seen as countering the spirit of liberalization and promotion of foreign investment…” he said.
As FIU of Malawi Malikebu said their impression is that departments within the international bodies that deal with these matters do not compare notes to ensure that they do not pursue conflicting objectives.
“The Minister of Finance will bring these matters high on the agenda and discuss them with relevant bodies in order to find a solution that will facilitate implementation of these policy initiatives and this will help the country tremendously,” he said.
With the Minister of Finance at the helm FIU believes ESAAMLG will secure technical assistance in various areas, with the needs of the country in mind which will strengthen the country’s anti-money laundering systems.
It is also hoped that the Malawi presidency will also help raise the public awareness of money laundering issues in the country, starting from their hosting of the ESAAMLG meetings throughout the period that the country will hold the presidency.
By Gregory Gondwe