By Alfred Chauwa
For the past three years, Malawi has lost $395 million (MK240 billion) due to various financial crimes chief among them being the illegal externalisation of foreign currency and transfer mispricing by several multinational companies operating in Malawi.
The transfer of goods and services from one
country to another within an interrelated company transaction can allow a
company to avoid tariffs on goods and services exchanged internationally.
Reserve Bank of Malawi Governor Dalitso Kabambe said this has prompted the bank to partner with seven other state agencies to fight the organised criminal syndicate.
“The government is doing all it can to stop this but criminals have their own ways of beating the system. That was the problem in the past,” Kabambe said.
He said the coming in of technology is now boosting the fight against illegal externalization of the money.
“For example, MRA (Malawi Revenue Authority) is now using the automated system which helps them a lot,” he said.
Other government agencies in the fight against illegal externalization of money include the Malawi Police Service, Office of the Director of Public Prosecutions (DPP), the Anti-Corruption Bureau (ACB), Malawi Revenue Authority (MRA), Immigration Department, National Intelligence Service (NIS), Financial Intelligence Authority (FIA) and the Reserve Bank of Malawi (RBM).
“Under the MOU, the taskforce will ensure that every dollar made from the country’s exports is retained in the country and that every remittance is in respect of payment for bona fide offshore payment,” he said.
Kabambe said under this MOU, eight institutions shall collaborate in intelligence sharing, investigations and prosecution of all financial crimes.
“No case shall be left out. As such, all perpetrators are being duly warned to stop these malpractices lest the long arm of the law will catch up with them and crash them,” he said.
Kabambe said the importance of foreign exchange reserves in any economy cannot be over emphasised adding that foreign exchange reserves play a critical role in satisfying a nation’s strategic imports demand.
Inspector General of Police, Rodney Jose said the Cops will not condone this malpractice and will take action on any person involved including Police Officers.
Recently, anti-money laundering expert Jai Banda, who is also a private practice lawyer, called for adequate coordination and intelligence exchange between financial agencies on suspicious transactions.
“Potential investors should be subjected to screening process that they have no criminal history while non-Malawians should be encouraged to invest in Malawi so that money is not taken out,” he said.
Cases of foreign exchange externalisation has been on the rise in the country.