Money laundering expert faults banks on Cash-gate

Leading Malawian lawyer and financial crimes expert Jai Banda has faulted lax systems in the commercial bank  sector as one of the key factors that aided the looting of public funds at Capital Hill.

Over the past decade, Jai Banda, has extensively contributed to Institute for Security Studies (ISS) publications on organized crime legislation in Southern Africa and is knowledgeable on the incidence of economic crime in Malawi.

In an exclusive interview with Nyasa Times, Banda observed that under the Money Laundering Act (2006), commercial banks are mandated with monitoring their customer’s accounts and raising a red flag if they note unusual or extraordinary transactions.

“The standard procedure in regard to suspicious transactions where there are huge sums of money being withdrawn is that these suspicious deposits or withdrawals should be referred to the Financial Intelligence Unit (FIU) who would analyse the information to determine if it illegal,” Banda said.

Jai Banda: Innocent
Jai Banda:  Faults commercial banks

Banda defines money laundering as the process of disguising the true, criminal origin of property to hide the true owner and give them legal respectability by allowing them use of the property without fear of prosecution or confiscation.

According to the expert, the Money Laundering Act banks are supposed to make stringent checks on their customers’ accounts on a regular basis.

“Banks should know who they are dealing with and if someone deposits and withdraws K1 billion in an account that is not consistent with the organization or individual’s known legitimate business, that ought to raise suspicion,” he said.

Banda said the manner in which government cheques where deposited and withdrawn in commercial banks should have raised alarm.

“The banks should have checked with the companies in which the cheques were being deposited, ” he pointed out.

“For instance, they should have checked with other companies doing the same kind of business and discovered that the transactions were noticeably different. Or in some cases where a lot of money was suddenly deposited in an inactive.

“But what should have raised eyebrows was the nature in which these dummy companies conduct business – all their money comes from one source, government.”

Banda noted that under Section 29 of the Money Laundering Act, any supervisory authority or an auditor of a financial institution who fails to report a suspicious transaction shall be liable to prosecution.

According to Banda, if money laundering is allowed to flourish, it breeds adverse consequences including weakening financial institutions such as banks.

“High volatility of proceeds of crime leads liquidity problems and to reputational risks, leading to loss of public confidence. Hence the banks as the first port of call of injecting dirty money into the economy should always be on guard to stop this from happening,” he said.

Malawi is said to have lost billions of Kwacha since 2005 through cash leak at Capital Hill.

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