It is clear from the Financial Intelligence Authority (FIA) report that Malawi continues to lose billions of kwacha through dubious financial transactions perpetrated by business persons of the Asian community. In its latest report, the FIA has revealed that suspicious financial transactions have gone up by 65% for the past two years. A total of 134 cases of dubious transactions were recorded between 2015 and 2016. Out of these, 37 are a combination of tax evasion, corruption, illegal externalisation of funds, money laundering and terrorist financing.
This is worrying because the financial crimes are on the increase and little is done to stop these crimes. Mind you, the issues raised by FIA are not new. In 2015 fiscal agencies ( Reserve Bank, Fiscal Police, Malawi Revenue Authority, FIA,ACB) were investigating at least 14 companies owned by Asians for illegally externalising K10 billion between 2011 and 2014. As usual, nothing has come out of these investigations. And it seems the issue has died a natural death.
Companies and individuals are still going about with their businesses as usual, knowing that no one will take them to task.It is not surprising that cases of illegal financial transactions have increased because fiscal regulatory bodies are extremely weak. To put it bluntly, they are failing their job and letting down the country.We know that some companies use corrupt politicians and their cronies to avoid paying taxes. But institutions should be professional and just do their work.
Externalisingforex illegally, tax evasion, money laundering and financing terrorism are serious crimes which require swift action and perpetrators be punished accordingly. For example, illegal externalisation of funds is economic sabotage. It deprives the country of the much-needed foreign exchange and undermines the country’s ability to build foreign reserves.
Fiscal agencies (including Reserve Bank) should begin to treat financial crimes seriously and take to court companies, individuals and institutions involved in illegal transactions or illegally externalising funds. Commercial banks are complicity in these illegal transactions because theyfacilitate the transactions. Banks need to be vigilant and report suspicious applications to remit funds to relevant institution(s) rather than do the wrong thing. Some bank employees corruptly connive with criminal syndicates to externalise funds illegally.
But not once have we heard that a bank being held accountable for facilitating illegal transactions, let alone Fiscal Police sending to jail individuals externalisingforex illegally. Yet this is happening unabated. What type of regulators do we have that fail to take action when things go wrong? No wonder commercial crimes are escalating. It is like having a dog that does not bark. Can fiscal agencies start biting?
Reporting on the crime is not good enough. Action is needed. Start sending these economic saboteurs to jail, impose heavy fines or penalise or shut down banks that externalise funds illegally, freeze accounts that are suspected to be used for terrorist activities or illegal transactions. In cases where foreign individuals are involved, have them deported after they serve a jail term. In that way, our fiscal agencies will send a clear message that there is no place for financial crimes in Malawi.
Fiscal agencies just have to be serious with their work. It is high time individuals involved in financial crimes are put behind bars while institutions that facilitate illegal transaction should be penalized. Hence, there should be very close working relationship among fiscal agencies and also between fiscal agencies and financial institutions in reporting suspicious transactions. More importantly, swift action has to be taken where there is a case of illegal transaction.
Malawi has robust financial legislation such asMoney Laundering Proceeds of Serious Crime and Terrorist Financial Act, Financial Crimes Act, Exchange Control Act, Banking Act and Reserve Bank Act which should be used effectively to deal with all forms of financial crimes.
There is need for fiscal agencies to put their heads together and develop stringent requirements for business transactions to make financial crimes more difficult. Regular workshops should be held with commercial bank staff so that they know and understand how financial laws affect their work.