Several multinational companies under probe in Malawi for financial crimes – RBM

At a Financial Services Lawyers conference at Nkopola Lodge in Mangochi on Monday, Deputy Governor of the Reserve Bank of Malawi, Dr. Grant Kabango disclosed that several multinational companies are under investigation under the suspicion of externalizing agricultural produce and products by under-declaring the sale of prices.

He said the companies are concealing a goal amount of foreign currency expected to be received by the country.

“By extension, the rest of the funds are being retained outside the country, this is defrauding the country of its export proceeds,” Kabango said.

The conference discussed various legal aspects impacting the financial sector such as transfer pricing, counterfeit currency, illegal foreign exchange externalisation and money laundering.

Kabango said the total amount suspected under this criminal activity of under transfer pricing has not yet been quantified but is estimated to be billions of kwacha.

He also said he could not disclose the companies involved because the process is still under investigation.

“The country loses out in terms of tax collection and one of the papers at this conference intends to survey and assess the adequacy of the transfer pricing regulation regime in Malawi from a taxation perspective.”

On the illegal foreign exchange externalisation, Kabango said the RBM through its departments of legal affairs, foreign flows monitoring and protective, is investivating and prosecuting several cases of these criminal activities in conjunction with Financial Intelligence Agency (FIA), Malawi Police Service Fiscal and Fraud, Malawi Revenue Authority and the office of the Director of Prosecutions.

“An amount in excess of of the equivalent of K30 billion is being investigated and the suspects prosecuted,” Kabango said.

“The Bank has successfully and conclusively prosecuted several cases of illegal foreign currency externalisation, amounting an equivalent of about K587.7 million.

“Most of this foreign currency has been confiscated by the courts to the Malawi Government through the RBM.

“The regulatory framework is weak and as such the Bank has drafted the Foreign Exchange Bill in a bid to replace the Exchange Control Act.”

He also touched on the gravity of counterfeit currency, saying it is very complex because ii is a global problem.

“If a country is saturated with fake currency, both the local and international community lose confidence in that currency and ultimately this negatively affects the entire economy.

“Counterfeit currency may lead to a reduction in the value of real money

And inflationary trends because of an increase in artificial money and a reduced acceptance of paper money.

“We have on many occasions in Malawi some incidences of counterfeit money and it is imperative that those in the legal fraternity, not only to know the features of their currency, but also those prosecuting ensure that culprits on counterfeit related offenses are brought to book,” he said.

Malawi Law Society (MLS) vice-president Patrick Mpaka said the conference is important in that it offers the legal fraternity to get updated on updated sections of the financial laws as well as to update their own knowledge.

“Every year, all lawyers renew their licenses and one of the requirements to achieve it is that one has undergone fresh knowledge of the law in that year.

“Malawi has a legal framework that is of high standards and there is always the need to maintain such standards,” he said.

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