Malawi lost about $7.4 million (about K5.4 billion) due to illegal foreign exchange externalization, an analysis by the Financial Intelligence Authority (FIA) has revealed.
The money was lost between January and November 2017, and according to FIA, the money comes from 63 unsupported foreign exchange transactions remitted without imports being returned into the country to various countries including China, United Arab Emirate [Dubai], India and Hong Kong.
FIA Director General, Atuweni-Juwayeyi Agbermodji in a statement issued on Thursday said FIA and the Reserve Bank of Malawi (RBM) conducted transaction analysis on business accounts maintained by some non-Malawian nationals which revealed a syndicate.
Under the syndicate, huge sums of illicit funds possibly being laundered using the country’s banking system under the disguise of import payments being made by what appears to be legitimate businesses.
She said: “These businesses make huge cash deposits followed by immediate requests for funds transfer to firms in various jurisdictions. The requests for funds transfers are mostly supported by forged or fake customs importation documents with the aim of getting around with [RBM] Exchange Control Regulations.”
RBM spokesperson Mbane Ngwira said in an interview yesterday that while the regulator is not surprised with the revelations, the new foreign exchange system the central bank is working on will help curb the malpractice.
“With the new foreign exchange system, we are hoping to have instant monitoring which should increase accountability,” he said.
Cases of foreign exchange externalization has been on the rise in the country and recently, RBM disclosed that Malawi lost about $980 million (approximately K719.32 billion) to illegal foreign exchange externalization and transfer pricing.