CHAPTER 8:07
MONEY LAUDERING, PROCEEDS OF SERIOUS CRIME AND TERRORIST FINANCING ACT
ARRANGEMENT OF SECTIONS
SECTION
PART I
PRELIMINARY
1. Short title
2. Interpretation
3. Meaning of charge in relation to a serious crime
4. Meaning of conviction in relation to a serious crime
5. Meaning of quashing of conviction
6. Meaning of value of property, etc.
7. Meaning of dealing with property
8. Meaning of gift caught by this Act
9. Meaning of deriving a benefit
10. Meaning of benefiting from the proceeds of a serious crime
PART II
ESTABLISHMENT OF FINANCIAL INTELLIGENCE UNIT
11. Financial Intelligence Unit
12. Disclosure to foreign institutions and agencies
13. Appointment and qualifications of Director of the Financial Intelligence Unit
14. Appointment of other staff of the Financial Intelligence Unit
15. Removal from office
16. Confidentiality
17. Disclosure of information
18. Accounts of the Financial Intelligence Unit
19. Annual budget of the Financial Intelligence Unit
20. Audit of the Financial Intelligence Unit
21. Annual report of Financial Intelligence Unit
22. Oath of office for officers of the Financial Intelligence Unit
23. Immunity of the Financial Intelligence Unit and officials
PART III
MONEY LAUNDERING AND TERRORIST FINANCING
24. Financial institutions to verify customers’ identity
25. Necessity of identification to conduct business
26. Financial institution to maintain accounts in true name
27. Financial institutions to establish and maintain customers’ records
28. Financial institutions to report suspicious transactions
29. Supervisory authority or auditor to report suspicious transactions
30. Disclosure of suspicious transaction reports and other information
31. Protection of identity of persons and information in suspicious transaction reports
32. Financial institutions to establish and maintain internal reporting procedures
33. Financial institutions and money transmission service providers to include originator information
34. Financial institution to monitor transactions
35. Money laundering offences
36. Terrorist financing offences
37. False or misleading statements
38. Seizure and detention of suspicious imports or exports of currency
39. Seizure of currency or negotiable bearer instruments
40. Detention and release of currency or negotiable bearer instrument seized
41. Power of the Financial Intelligence Unit to obtain search warrant
42. Property tracking and monitoring orders
43. Orders to enforce compliance with obligations under this Act
44. Secrecy obligations overridden
45. Protection of persons reporting suspicious transactions
46. Restitution of restrained property
47. Damages
PART IV
CONFISCATION
Division 1
Confiscation and Pecuniary Penalty Orders
48. Application for confiscation order and pecuniary penalty order
49. Notice of application
50. Amendment of application
51. Procedure on application
52. Procedure for in rem confiscation order where person dies or absconds
Division 2
Confiscation
53. Confiscation order on conviction
54. Effect of confiscation order on conviction
55. Voidable transfers
56. Protection of third parties
57. Discharge of confiscation order on appeal and quashing of conviction
58. Payment instead of a confiscation order
59. Application of procedure for enforcing fines
60. Confiscation where a person dies or absconds
Division 3
Pecuniary Penalty Orders
61. Pecuniary penalty order on conviction
62. Rules of determining benefit and assessing value
63. Statements relating to benefit from commission of serious crimes
64. Amount recovered under pecuniary penalty order
65. Variation of pecuniary penalty order
66. Lifting the corporate veil
67. Enforcement of pecuniary penalty order
68. Discharge of pecuniary penalty order
Division 4
Control of Property
69. Powers to search for and seize tainted property
70. Search warrants in relation to tainted property
71. Searching in emergencies
72. Record of property seized
73. Return of seized property
74. Search for and seizure of tainted property in relation to foreign offences
Division 5
Terrorist Cash and Terrorist Property
75. Seizure and detention of terrorist cash
76. Terrorist funding
77. Dealing in terrorist property
78. Restraining directives in respect of terrorist account or property
Division 6
Restraining Orders
79. Application for restraining order
80. Restraining orders
81. Undertaking by the Government
82. Notice of application for restraining order
83. Service of restraining order
84. Registration of restraining order affecting land
85. Contravention of restraining order
86. Duration of restraining order
87. Review of restraining order
88. Extension of restraining order
Division 7
Realization of Property
89. Realization of property
90. Application of proceeds of realization and other sums
91. Exercise of powers of public trustee
92. Paramountcy of this Part in bankruptcy or winding-up
93. Winding-up of company holding realizable property
Division 8
Production orders and other Information Gathering Powers
94. Production orders
95. Evidential value of information
96. Failure to comply with a production order
97. Production orders in relation to foreign offences
98. Power to search for and seize documents relevant to locating property
99. Search warrant for location of documents relevant to locating property
100. Search warrants in relation to foreign offences
Division 9
Monitoring Orders
101. Monitoring orders
102. Monitoring orders not to be disclosed
PART V
MISCELLANEOUS
103. Money laundering and financing of terrorism offences for extradition purposes
104. Mutual assistance
105. Regulations
9 of 2006
G.N. 23/2007
An Act to enable the unlawful proceeds of all serious crime and terrorist financing to be identified, traced, frozen, seized and eventually confiscated; to establish a Financial Intelligence Unit for the better prevention, investigation and prosecution of money laundering, terrorist financing and other financial and serious crimes; to require financial institutions to take prudential measures to help combat money laundering and terrorist financing; and to provide for matters connected with or incidental to the foregoing
[25TH AUGUST 2006]
PART I
PRELIMINARY
This Act may be cited as the Money Laundering, Proceeds of Serious Crime and Terrorist Financing Act.
In this Act, unless the context otherwise requires—
“account” means any facility or arrangement by which a financial institution does any one or more of the following—
(a) accepts deposits of currency;
(b) allows withdrawals of currency or transfers of currency into or out of the account;
(c) pays cheques or payment orders drawn on a financial institution by, or collects cheques or payment orders on behalf of, a person;
(d) supplies a facility or arrangement for a safety deposit box;
“act of terrorism” means—
(a) an act or omission, whether committed in or outside Malawi, which constitutes an offence within the scope of a counter-terrorism convention; or
(b) an act, or threat of action in or outside Malawi which—
(i) involves serious bodily harm to a person;
(ii) involves serious damage to property;
(iii) endangers a person’s life;
(iv) creates a serious risk to the health or safety of the public or a section of the public;
(v) involves the use of firearms or explosives;
(vi) involves releasing into the environment or any part thereof or distributing or exposing the public or any part thereof to any dangerous, hazardous, radio-active or harmful substance; any toxic chemical; or any microbial or other biological agent or toxin;
(vii) is designed or intended to disrupt any computer system or the provision of services directly related to communications infrastructure, banking or financial services, utilities, transportation or other essential infrastructure;
(viii) is designed or intended to disrupt the provision of essential emergency services such as police, civil, defence or medical services;
(ix) involves prejudice to national security or public safety;
(x) involves participating in the activities of a terrorist group, including the supplying of information or material resources, or the funding of its activities in any way, with knowledge of the fact that such participation will contribute to the criminal activities of the group,
and is intended, or by its nature and context, may reasonably be regarded as being intended, to intimidate the public or a section of the public; or compel a government or an international organization to do, or refrain from doing, an act; or seriously destabilise or destroy the fundamental political, constitutional, economic or social structures of a country or an international organization, and for the purpose of advancing a political, ideological, or religious cause; but does not include an act which disrupts any services, and is committed in pursuance of a protest, demonstration or stoppage of work, as long, and as long only, as the act is not intended to result in any harm referred to in this paragraph;
“administrator” means a person appointed under section 80 (2) (b) (i) or section 89 (2);
“authorized officer” means a person or class of persons designated as such by the Minister;
“beneficial owner” means a person who ultimately owns or controls a customer or the person on whose behalf a transaction is being conducted, and includes any person who exercises effective control over a legal person or arrangement;
“business relationship” means any arrangement or proposed arrangement between a person and a financial institution where—
(a) the purpose or effect of the arrangement is to facilitate an occasional, frequent, habitual or regular course of dealing between the person and the institution; and
(b) the total amount of any payment to be made by any person to any other in the course of that arrangement is not known or capable of being ascertained at the time the arrangement is made;
“collective investment scheme” means a scheme, in whatever form, in pursuance of which, members of the public are invited or permitted to invest money or other assets in a portfolio, and which scheme has the following characteristics—
(a) two or more investors contribute money or other assets to hold a participatory interest in a portfolio of the scheme through shares, units or any other form of participatory interest; and
(b) the investors share the risk and the benefit of investment in proportion to their participatory interest in a portfolio of a scheme or on any other basis determined in the deed;
“competent authority” means the Director of Public Prosecutions, and includes any person authorized by him in that behalf;
“counter-terrorism convention” means any of the United Nations Counter-Terrorism Conventions set out in the First Schedule;
“court” means the ordinary courts in Malawi where civil or criminal proceedings may be instituted;
“currency” means the coin and paper money of Malawi or of a foreign country that is designated as legal tender and which is customarily used and accepted as a medium of exchange in the country of issue;
“customer”, in relation to a transaction or an account, includes—
(a) the person in whose name a transaction or account is arranged, opened or undertaken;
(b) a signatory to a transaction or account;
(c) any person to whom a transaction has been assigned or transferred;
(d) any person who is authorized to conduct a transaction; or
(e) such other person as the Minister may by Notice published in the Gazette prescribe;
“defendant” means a person charged with a serious crime, whether or not he or she has been convicted of the offence, and includes, in the case of proceedings for a restraining order under Division 6 of Part IV, a person who is about to be charged with a serious offence;
“Director” means the Director of the Financial Intelligence Unit appointed pursuant to section 13;
“document” means any record of information, and includes—
(a) anything on which there is writing;
(b) anything on which there are marks, figures, symbols, or perforations having meaning for persons qualified to interpret them;
(c) anything from which sounds, images or writing can be produced, with or without the aid of anything else; and
(d) a map, plan, drawing, photograph or similar thing;
“financial institution” means any person carrying on the following businesses or activities, including but not limited to a financial institution licensed under the Banking Act—
(a) acceptance of deposits and other repayable funds from the public;
(b) lending, including consumer credit, mortgage credit, factoring (with or without recourse) and financing of commercial transactions;
(c) financial leasing;
(d) money transmission services;
(e) issuing and administering means of payment, such as credit cards, traveller’s cheques and bankers’ drafts;
(f) guarantee and commitments;
(g) trading for own account or for account of customers in money market instruments such as cheques, bills, and certificates of deposit, foreign exchange, financial futures and options, exchange and interest rate instruments, and transferable securities;
(h) underwriting share issues and participation in such issues;
(i) advice to undertakings on capital structure, industrial strategy and related questions, and advice and services relating to mergers and the purchase of undertakings;
(j) money-broking;
(k) portfolio management and advice;
(l) safekeeping and administration of securities;
(m) safe custody services;
(n) gambling house;
(o) casino and lottery; and
(p) buying or selling of gold bullion;
(q) a trust or company service provider not otherwise covered by this definition, which as a business, provides any of the following services to third parties as covered under the Trustee Act—
(i) acting as a formation agent of legal persons;
(ii) acting as, or arranging for another person to act as, a director or secretary of a company, a partner of a partner- ship, or a similar position in relation to other legal persons;
(iii) providing a registered office; business address or accommodation, correspondence or administrative address for a company, a partnership or any other legal person or arrangement;
(iv) acting as, or arranging for another person to act as, a trustee of an express trust;
(v) acting as, or arranging for another person to act as, a nominee shareholder for another person;
(r) legal practitioners, notaries, other independent legal professionals and accountants when they prepare for or carry out transactions for their client concerning the following activities—
(i) buying and selling of real estate;
(ii) managing of client money, securities or other assets;
(iii) management of bank, savings or securities accounts;
(iv) organization of contributions for the creation, operation or management of companies;
(v) creation, operation or management of legal persons or arrangements, and buying and selling of business entities.
(s) dealing in real estate, when the person dealing is involved in transactions for a client concerning the buying and selling of real estate;
(t) dealing in precious metals or stones, when the person dealing engages in any cash transaction with a customer equal to or above the applicable designated threshold as the Minister may prescribe by notice published in the Gazette ;
(u) such other business as the Minister may prescribe by notice published in the Gazette ;
“Financial Intelligence Unit” means the Financial Intelligence Unit established under section 11;
“confiscation” means the permanent deprivation of property by order of a court or other competent authority;
“gift” includes any transfer of property by a person to another person directly or indirectly—
(a) after the commission of a serious crime by the first person;
(b) for a consideration the value of which is significantly less than the value of the consideration provided by the first person; and
(c) to the extent of the difference between the market value of the property transferred and the consideration provided by the transferee;
“interest”, in relation to property, means—
(a) a legal or equitable interest in the property;
(b) a right, power or privilege in connection with the property;
“money laundering” means conduct which constitutes an offence as described under section 35;
“police officer” means any police officer of or above the rank of Inspector;
“proceedings” means any procedure conducted by or under the supervision of a judge or judicial office, however described, in relation to any alleged or proven offence, or property derived from such offence, and includes an inquiry, investigation, preliminary or final determination of facts;
“proceeds of crime” means any property derived or realized directly or indirectly from a serious crime, and includes, on a proportional basis, property into which any property derived or realized directly from the offence was later successively converted, transformed or intermingled, as well as income, capital or other economic gains derived or realized from such property at any time since the commission of the offence;
“property” means currency and any asset of every kind, whether corporeal or incorporeal, moveable or immovable, whether situated in Malawi or elsewhere and whether tangible or intangible, and includes any legal or equitable interest in any such property;
“property of, or in the possession or control of, any person” includes any gift made by that person;
“Public Appointments Committee” means the Public Appointments Committee of the National Assembly established under section 56 (7) of the Constitution;
“public official” means persons holding prominent public positions in Malawi or a foreign country such as heads of state or government, politicians on the national level, senior government, judicial, military or party officials on the national level, or senior executives of state-owned enterprises of national importance, or individuals or undertakings identified as having close family ties or personal or business connections to the aforementioned persons;
“realizable property” means—
(a) any property held by a defendant;
(b) any property possessed by a person to whom a defendant has directly or indirectly made a gift caught by this Act;
“serious crime” means an offence against a provision of—
(a) any written law in Malawi, for which the maximum penalty is death or imprisonment for life or other deprivation of liberty for a period of not less than 12 months, and includes money laundering and terrorist financing;
(b) a law of a foreign State, in relation to acts or omissions which, had they occurred in Malawi, would have constituted an offence for which the maximum penalty is death, or imprisonment for life or other deprivation of liberty for a period of not less than 12 months, and includes money-laundering and terrorist financing;
“supervisory authority” means the Reserve Bank of Malawi or any other authority having oversight over a financial institution or profession;
“tainted property” means—
(a) property intended for use in, or used in or in connection with the commission of a serious crime; or
(b) proceeds of crime;
“terrorist financing” means directly or indirectly providing or accumulating funds or other goods, or attempts to do so, with the intent that the funds be used or knowledge that the funds will be used in whole or in part to commit—
(a) an act constituting an offence in regard to and in accordance with the definition of one of the treaties listed in the appendix to the International Convention for the Suppression of the Financing of Terrorism to which Malawi is a party; or
(b) any act intended to cause the death of or serious bodily injury to any civilian or any other person not directly involved in a situation of armed conflict if, by virtue its nature or context, such act is intended to intimidate a population or compel a government or international organization to perform or refrain from performing an act of any kind;
“terrorist group” means—
(a) an entity that has one of its activities and purposes, the committing of, or the facilitation of the commission of, a terrorist act; or;
(b) any other entity so specified by the Minister by notice published in the Gazette ;
“terrorist property” means—
(a) proceeds from the commission of a terrorist act;
(b) money or other property which has been, or is likely to be used to commit a terrorist act; or
(c) money or other property which has been, is being, or is likely to be used by a terrorist group;
“unit trust” means any arrangement made for the purpose or having the effect of providing, for a person having funds available for investment, facilities for the participation by the person as a beneficiary under a trust, in any profits or income arising from the acquisition, holding, management or disposal of any property pursuant to the trust;
3. Meaning of charge in relation to a serious crime
Any reference in this Act to a person being charged or about to be charged with a serious crime is a reference to a procedure, however described, in Malawi or elsewhere by which criminal proceedings may be commenced.
4. Meaning of conviction in relation to a serious crime
For the purposes of this Act, a person shall be taken to be convicted of a serious crime if—
(a) the person is convicted of the offence;
(b) the person is charged with, and found guilty of, the offence but is discharged without any conviction being recorded; and
(c) a court, with the consent of the convicted person, takes the offence, of which the person has not been found guilty, into account in passing sentence on the person for another serious crime.
5. Meaning of quashing of conviction
For the purposes of this Act, a conviction of a person for a serious crime shall be taken to be quashed in any case—
(a) where section 4 (a) applies, if the conviction is quashed or set aside;
(b) where section 4 (b) applies, if the finding of guilt is quashed or set aside;
(c) where section 4 (c) applies, if either—
(i) the conviction of the person for the other offence referred to in that section, is quashed or set aside;
(ii) the decision of a court to take the offence into account in passing sentence for that other offence is quashed or set aside.
6. Meaning of value of property, etc.
(1) Subject to subsections (2) and (3), for the purposes of this Act, the value of property, other than cash, in relation to any person holding the property is—
(a) its market value of the property; or
(b) where any other person holds an interest in the property, the market value of the beneficial interest of first mentioned person in the property less the amount required to discharge any encumbrance, other than a charging order, on that interest.
(2) Subject to section 8 (2), references in this Act to the value, at any time referred to in subsection (3) as “the material time” of a gift or of any payment or reward, are references to—
(a) the value of the gift, payment or reward to the recipient when he or she received it, adjusted to take account of subsequent changes in the value of money; or
(b) where subsection (3) applies, the value therein mentioned, whichever is the greater.
(3) Subject to section 8 (2), if at the material time the recipient holds—
(a) the property which he or she received (not being cash); or
(b) property which in whole or in part indirectly represents, in the recipient’s hands, the property which he or she received,
the value referred to in subsection (2) (b) is the value to him or her at the material time of the property mentioned in subsection (2) (a) or, as the case may be, subsection 2 (b) so far as it represents the property which he or she received, but disregarding in either case any charging order.
7. Meaning of dealing with property
For purposes of this Act, dealing with property held by any person includes—
(a) where the property is a debt owed to that person, making a payment to any person in reduction or full settlement of the amount of the debt;
(b) making or receiving a gift of the property; or
(c) removing the property from Malawi.
8. Meaning of gift caught by this Act
(1) A gift is caught by this Act if—
(a) it was made by the defendant at any time after the commission of the serious crime, or if more than one, the earliest of the offences, to which the proceedings for the time being relate; and
(b) the court considers it appropriate in all the circumstances to take the gift into account.
(2) For the purposes of this Act, the circumstances in which the defendant is to be treated as making a gift include those where the defendant transfers property to another person, directly or indirectly, for a consideration, the value of which is significantly less than the value of the consideration provided by the defendant; and the provisions of sections 6 (2) and (3) shall apply as if the defendant had made a gift of such share in the property as bears to the whole property the same proportion as the difference between the values referred to under this subsection of the consideration provided by the defendant.
9. Meaning of deriving a benefit
A reference to a benefit derived or obtained by or otherwise accruing to a person includes a reference to a benefit derived or obtained by, or otherwise accruing to, another person at the request or direction of the first person.
10. Meaning of benefiting from the proceeds of serious crime
For the purposes of this Act—
(a) a person has benefited from an offence if the person has at any time received any payment or other reward in connection with, or derived any pecuniary advantage from, the commission of a serious crime, whether committed by that person or another person;
(b) proceeds of crime of a person are any payments or other awards received by him or her in connection with, and any pecuniary advantage derived by him or her at any time from, the commission of a serious crime; and
(c) the value of the proceeds of crime of a person is the aggregate of the values of the payments, rewards or pecuniary advantages received by him or her in connection with, or derived by him or her from, the commission of a serious crime.
PART II
ESTABLISHMENT OF FINANCIAL INTELLIGENCE UNIT
11. Financial Intelligence Unit
(1) There is hereby established a body to be known as the Financial Intelligence Unit (in this Act referred to as the “Financial Intelligence Unit”) which shall be an autonomous central national agency, having perpetual succession and a common seal with power to enter into contracts, responsible for receiving, requesting, analysing and disseminating to competent authorities disclosures of financial information as required under this Act, in order to counter money laundering and financing of terrorism.
(2) The Financial Intelligence Unit—
(a) shall receive, analyze and assess reports of suspicious transactions issued by financial institutions pursuant to section 28;
(b) shall send any report referred to in paragraph (a) to the appropriate law enforcement authorities and, the supervisory authority if, on the basis of its analysis and assessment, the Financial Intelligence Unit has determined that there is an element of money laundering or financing of terrorism;
(c) may enter the premises of any financial institution during ordinary business hours to inspect any record kept pursuant to section 28, and ask any question relating to such record, make notes and take copies of whole or any part of the record;
(d) shall send to the appropriate law enforcement authorities, any information derived from an inspection carried out pursuant to paragraph (c), if it gives the Financial Intelligence Unit reasonable grounds to suspect that a transaction involves proceeds of crime or terrorist financing;
(e) may instruct any financial institution to take such steps as may be appropriate to facilitate any investigation anticipated by the Financial Intelligence Unit;
(f) may compile statistics and records, disseminate information within Malawi or elsewhere, make recommendations arising out of any information received, issue guidelines to financial institutions and advise the Minister accordingly;
(g) shall create training requirements and provide such training for any financial institution in respect of transaction record-keeping and reporting obligations provided for in sections 27 and 28;
(h) may consult with any relevant person, institution or organization for the purpose of exercising its powers or duties under paragraph (e), (f) or (g);
(i) shall not conduct any investigation into money laundering or terrorist financing other than for the purpose of ensuring compliance by a financial institution with the provisions of this Act;
(j) may extend assistance to foreign jurisdictions with respect to property tracking, monitoring and confiscation orders.
(k) shall have the authority to request information from any financial institution, any supervisory agency and any law enforcement agency for purposes of this Act;
(l) may provide training programs for financial institutions in relation to customer identification, record keeping and reporting obligations and the identification of suspicious transactions;
(m) may periodically provide feedback to financial institutions and other relevant agencies regarding outcomes relating to the reports or information given under the Act;
(n) may conduct research into trends and developments in the area of money laundering and financing of terrorism and improved ways of detecting, preventing and deterring money laundering and terrorist financing;
(o) may educate the public and create awareness on matters relating to money laundering or terrorist financing;
(p) may disclose any report, any information derived from any report or any other information it receives to an institution or agency of a foreign state or of an international organization established by the governments of foreign states that has powers and duties similar to those of the Financial Intelligence Unit as set out in section 12, if on the basis of its analysis and assessment, the Financial Intelligence Unit has reasonable grounds to suspect that a report or information would be relevant to investigating or prosecuting a money laundering offence or terrorist financing;
(q) pursuant to a memorandum of understanding enter into any agreements or arrangements with any domestic government institution or agency regarding the exchange of information;
(r) may require the police and other investigative or prosecutorial bodies to report progress and outcomes on matters referred to them; and
(s) may perform such other acts as may be necessary to fulfill the objectives of the Financial Intelligence Unit.
12. Disclosure to foreign institutions and agencies
The Financial Intelligence Unit may disclose any report or information as set out under section 11 (2) (p) to an institution or agency of a foreign state or of an international organisation or body or other institution or agency established by the governments of foreign states that has powers and duties similar to those of the Financial Intelligence Unit—
(a) on such terms and conditions as are set out in the agreement or arrangement between the Financial Intelligence Unit and that foreign state or international organization regarding the exchange of such information; or
(b) where such an agreement or arrangement has not been entered into between Financial Intelligence Unit and that foreign state or international organisation or body, on such terms and conditions as may be agreed upon by Financial Intelligence Unit and the institution or agency at the time of disclosure which terms and conditions shall include the stipulation that the report or information shall be used for intelligence purposes only and be treated in a confidential manner and not be further disclosed without the express consent of the Financial Intelligence Unit.
13. Appointment and qualifications of Director of the Financial Intelligence Unit
(1) There shall be a Director of the Financial Intelligence Unit (in this Act otherwise referred to as the “Director”) who shall be appointed for a five year renewable term by the President, upon such terms as may be specified in the instrument of appointment.
(2) The appointment of the Director shall be subject to the approval of the Public Appointments Committee.
(3) The Director shall be the chief executive officer of the Financial Intelligence Unit and shall perform such functions and duties, and exercise powers, as are conferred upon him or her by this Act or any other written law.
(4) A person shall not be appointed or remain Director who—
(a) is a member of Parliament; or
(b) is a director, officer or servant of, or has a controlling interest in any financial institution.
(5) The Director shall be a person of recognized qualifications, integrity and experience in financial or legal matters or law enforcement with financial investigative background.
(6) The Director may at any time by notice in writing to the Minister resign his office.
(7) The Director may delegate to any person, subject to any terms and conditions that the Director may specify, any power, duty or function conferred on the Director under this Act.
(8) In the event of the absence or incapacity of the Director, or if the office of Director is vacant, the President may appoint a qualified person to hold office instead of the Director for a term of not more than six months, and the person shall, while holding that office, have all of the powers, duties and functions of the Director under this Act.
(9) If the President is satisfied that the Director—
(a) is incapacitated by physical or mental illness; or
(b) has become bankrupt or made arrangements with his creditors; or
(c) is otherwise unable or unfit to discharge the functions of director,
the President may declare the office of the Director vacant and shall notify the fact in such manner as the President thinks fit, and thereupon that office shall become vacant.
14. Appointment of other staff of the Financial Intelligence Unit
(1) The Director may appoint and employ, at such remuneration and subject to such terms and conditions as the Minister may approve, suitably qualified and experienced persons as officers and employees of the Financial Intelligence Unit, for the purpose of ensuring the proper performance of its functions and the attainment of its objectives.
(2) The other staff of the Financial Intelligence Unit shall include at least one legal practitioner and another person with a sound financial, economic or accounting training and experience.
(1) The President may, subject to the approval of the Public Appointments Committee, remove the Director from office only on the grounds of misconduct, incapacity or incompetence.
(2) The President may suspend the Director from office, pending—
(a) the determination of any inquiry as to whether grounds of misconduct, incapacity or incompetence exist; or
(b) an investigation of alleged violation of section 16.
(1) The Director and every staff member of the Financial Intelligence Unit shall—
(a) before they begin to perform any duties under this Act, take and subscribe before a commissioner of oaths such oath of confidentiality in the form set out in the Second Schedule; and
(b) maintain during and after their relationship with the Financial Intelligence Unit the confidentiality of any matter relating to the performance of their duties.
(2) Any person who contravenes this section commits an offence and on conviction, shall be liable to a fine of K100,000 and to imprisonment for two years.
(1) This section applies to a person while the person is or after the person ceases to be a Director, officer, employee or agent of the Financial Intelligence Unit.
(2) Except for the purpose of the performance of his or her duties or the exercise of his or her functions under this Act or when lawfully required to do so by a court, the person referred to in subsection (1) shall not disclose any information or matter which has been obtained by him or her in the performance of his or her duties or the exercise of his or her functions under this Act or which he or she has knowledge except for one or more of the following purposes—
(a) the detection, investigation or prosecution of an unlawful activity, a money laundering offence or an offence of financing of terrorism; or
(b) the enforcement of this Act.
(3) The Director, or an officer or employee or agent of the Financial Intelligence Unit shall not disclose any information that would directly or indirectly identify an individual who provided a report or information to the Financial Intelligence Unit, or a person or an entity about whom a report or information was provided under this Act.
18. Accounts of the Financial Intelligence Unit
(1) The funds of the Financial Intelligence Unit shall consist of—
(a) money appropriated annually by Parliament for the purpose of the Financial Intelligence Unit;
(b) any government grants made to it; and
(c) any other money legally acquired by it, provided that the Financial Intelligence Unit may accept donations only with prior approval of the Director.
(2) The financial year of the Financial Intelligence Unit shall be a period of twelve months commencing 1st July and ending 30th June the following year.
19. Annual budget of the Financial Intelligence Unit
The Financial Intelligence Unit shall prepare for each new financial year an annual budget of revenue and expenditure which shall be submitted to the Minister at least three months prior to the commencement of the financial year.
20. Audit of the Financial Intelligence Unit
(1) The Financial Intelligence Unit shall be subject to examination and audit by the Auditor-General.
(2) The Auditor-General and every person acting on behalf of or under the direction of the Auditor-General shall not use or disclose any information relating to the work of the Financial Intelligence Unit that they have obtained, or to which they have had access, in the course of an audit.
21. Annual report of the Financial intelligence Unit
(1) The Director shall—
(a) from time to time advise the Minister on the work of the Financial Intelligence Unit and in particular on matters that could affect public policy or the priorities to be set by the Financial Intelligence Unit;
(b) prepare and submit to the Minister on or before 31st December in each year an annual report reviewing the work of the Financial Intelligence Unit.
(2) The Minister shall lay or cause to be laid a copy of every annual report on the table of Parliament.
22. Oath of office for officers of the Financial Intelligence Unit
(1) The Director and every officer of the Financial Intelligence Unit—
(a) shall, before he or she assumes office, take the oath specified in the Second Schedule;
(b) shall not, except in accordance with this Act or otherwise as authorized by law—
(i) divulge any information obtained in the exercise of a power or in the performance of a duty under this Act;
(ii) divulge the source of such information or the identity of any informer or the maker, writer or issuer of a report given to the Director;
(c) shall maintain and aid in maintaining confidentiality and secrecy of any matter, document, report and other information relating to the administration of this Act that becomes known to him or her or comes in his or her possession or under his or her control.
(2) Notwithstanding subsection (1), the Director may, for the purpose of an enquiry into any matter under this Act, impart to an agency in Malawi or abroad, such information, as may appear to him to be necessary to assist an investigation or prosecution of money laundering, serious crime or terrorist financing.
(3) Any person who, without lawful excuse, contravenes this section commits an offence and shall, on conviction, be liable to imprisonment for two years and a fine of K100,000.
23. Immunity of the Financial Intelligence Unit and officials
No action shall lie against the Financial Intelligence Unit, the Director, or officer or employee of the Financial Intelligence Unit or any person acting under the direction of the Financial Intelligence Unit for anything done in good faith in the administration or discharge of any powers, duties or functions under this Act.
PART III
MONEY LAUNDERING AND TERRORIST FINANCING
24. Financial institutions to verify customers’ identity
(1) Every financial institution shall, before entering into a business relationship with a customer, ascertain the identity of the customer or beneficial owner on the basis of an official or other identifying document, and shall verify the identity of the customer on the basis of reliable and independent source documents, data or information or other evidence as is reasonably capable of verifying the identity of the customer when—
(a) a financial institution—
(i) enters into a continuing business relationship; or
(ii) in the absence of a business relationship, conducts any transaction;
(b) carrying out an electronic funds transfer;
(c) there is a suspicion of a money laundering offence or the financing of terrorism; or
(d) the financial institution has doubts about the veracity or adequacy of the customer identification and verification documentation or information it had previously obtained.
(2) Without limiting the generality of subsection (1), every financial institution shall—
(a) when establishing a business relationship, obtain information on the purpose and nature of the business relationship;
(b) if the transaction is conducted by a natural person, adequately identify and verify the identity of the person, including information relating to—
(i) the name, address and occupation of the person;
(ii) the national identity card or passport or other applicable official identifying document of the person,
and take reasonable measures to establish the source of wealth and source of property of the person;
(c) if the transaction is conducted by a legal entity, adequately identify and verify its legal existence and structure, including information relating to—
(i) the name, legal form, address and directors of the entity;
(ii) the principal owners and beneficiaries and control structure of the entity;
(iii) provisions regulating the power to bind the entity,
and verify that any person purporting to act on behalf of the customer is so authorized, and identify those persons;
(d) if the customer is a public official, in addition to the requirements in paragraph (b)—
(i) have appropriate risk management systems to determine whether the customer is a public official;
(ii) obtain the approval of senior management before establishing a business relationship with the customer; and
(iii) conduct regular enhanced monitoring of the business relationship.
(3) Every financial institution shall take reasonable measures to ascertain the purpose of any transaction in excess of such amount as the Minister may prescribe, from time to time by notice published in the Gazette , and the origin and ultimate destination of the funds involved in the transaction.
(4) Every financial institution shall, in relation to its cross- border correspondent banking and other similar relationships—
(a) adequately identify and verify the respondent institution with which it conducts such a business relationship;
(b) gather sufficient information about the nature of the business of the correspondent institution;
(c) determine from publicly available information the reputation of the person and the quality of supervision to which the correspondent institution is subject;
(d) assess the anti-money laundering and terrorist financing controls of the correspondent institution;
(e) obtain approval from senior management before establishing a new correspondent relationship;
(f) document the responsibilities of the financial institution and the correspondent institution.
(5) Where the relationship is a payable-through account, a financial institution shall ensure that the institution with whom it has established the relationship—
(a) has verified the identity of, and performed on-going due diligence on such of, the customers of that institution that have direct access to accounts of the financial institution; and
(b) is able to provide the relevant customer identification data upon request to the financial institution.
(6) Where a financial institution relies on an intermediary or third party to undertake its obligations under subsections (1) or (2) or to introduce business to it, it shall—
(a) immediately obtain the information and documents required by subsections (1) and (2);
(b) ensure that copies of identification data and other relevant documentation relating to the requirements in subsections (1), (2) and (3) will be made available to it from the intermediary or the third party upon request without delay;
(c) satisfy itself that the third party or intermediary is regulated and supervised for, and has measures in place to comply with the requirements set out in sections 25, 26 and 27.
(7) Subsection (1), (2) or (3) does not apply—
(a) if the transaction is part of an existing and regular business relationship with a person who has already produced satisfactory evidence of identity, unless the financial institution has reason to suspect that the transaction is suspicious or unusual;
(b) if the transaction is an occasional transaction not exceeding such amount as the Minister may prescribe by notice published in the Gazette, unless the financial institution has reason to suspect that the transaction is suspicious or unusual; or
(c) to such other person as the Minister may prescribe by notice published in the Gazette;
(8) The Minister, may by notice published in the Gazette, prescribe—
(a) the official or identifying documents, or the reliable and independent source documents, data or information or other evidence that is required for identification or verification of any particular customer or class of customers;
(b) the threshold for, or the circumstances in which, the provisions of this section shall apply in relation to any particular customer or class of customers.
(9) In the case of an existing customer, a financial institution shall verify the identity of the customer within such period as the Minister may prescribe by notice published in the Gazette .
(10) A person who contravenes this section shall be liable—
(a) in the case of a natural person, to imprisonment for two years and to a fine of K100,000; or
(b) in the case of a corporation, to a fine of K500,000 and loss of business authority.
25. Necessity of identification to conduct business
(1) If satisfactory evidence of the identity of a customer is not produced to, or obtained by a financial institution in accordance with section 24, the financial institution shall report the attempted transaction to the Financial Intelligence Unit and shall not proceed any further with the transaction, unless directed to do so by the Financial Intelligence Unit.
(2) A person who contravenes this section shall be liable—
(a) in the case of a natural person, to imprisonment for two years and to a fine of K100,000; or
(b) in the case of a corporation, to a fine of K500,000 and loss of business authority.
26. Financial institutions to maintain accounts in true name
(1) A financial institution that maintains accounts shall maintain them in the true name of the account holder.
(2) A financial institution shall not open, operate or maintain any anonymous account or any account which is in a fictitious, false or incorrect name.
(3) A person who contravenes this section shall be liable—
(a) in the case of a natural person, to imprisonment for two years and to a fine of K100,000; or
(b) in the case of a corporation, to a fine of K500,000 and loss of business authority.
27. Financial institutions to establish and maintain customers’ records
(1) Every financial institution shall establish and maintain records of—
(a) the identity of a person obtained in accordance with section 24;
(b) all transactions carried out by it and correspondence relating to the transactions as is necessary to enable the transaction to be readily reconstructed at any time by the Financial Intelligence Unit or competent authority, and shall contain particulars as the Minister may prescribe by regulation;
(c) all reports made to the Financial Intelligence Unit under section 28; and
(d) enquiries relating to money laundering and financing of terrorism made to it by the Financial Intelligence Unit.
(2) The records mentioned in subsection (1) must be kept for a minimum period of seven years from the date—
(a) the evidence of a person’s identity was obtained;
(b) of any transaction or correspondence;
(c) the account is closed or business relationship ceases, whichever is the later.
(3) The records established and maintained for purposes of subsection(1) shall be—
(a) sufficient to enable the transaction to be readily reconstructed at any time by the Financial Intelligence Unit or competent authority to provide, if necessary, evidence for prosecutions of any offence;
(b) maintained in a manner and form that will enable the accountable institution to comply immediately with requests for information from the law enforcement or Financial Intelligence Unit.
(4) Where any record is required to be kept under this Act, a copy of it, with the appropriate back-up and recovery procedures, shall be kept in a manner as the Minister may prescribe by regulation.
(5) The records maintained under subsection (1) shall be made available upon request to the Financial Intelligence Unit, or competent authority for purposes of ensuring compliance with this Act and for purposes of an investigation and prosecution of an offence.
(6) A person who contravenes this section shall be liable—
(a) in the case of a natural person, to imprisonment for two years and to a fine of K100,000; and
(b) in the case of a corporation, to a fine of K500,000 and loss of business authority.
28. Financial institutions to report suspicious transactions
(1) Whenever a financial institution processes a transaction exceeding such amount of currency or its equivalent in foreign currency as the Minister may, from time to time, prescribe by notice published in the Gazette , or suspects or has reasonable grounds to suspect that any transaction is related to the commission of a money laundering offence or terrorist financing, it shall as soon as possible but not later than three working days after forming that suspicion and wherever possible before the transaction is carried out—
(a) take reasonable measures to ascertain the purpose of the transaction, the origin and ultimate destination of the funds involved and the identity and address, of any ultimate beneficiary;
(b) prepare a report of the transaction in accordance with subsection (2), and communicate the information contained in the report to the Financial Intelligence Unit in writing or in such other form as the Director, may from time to time, approve.
(2) A report required under subsection (1) shall—
(a) contain particulars of the matters specified in subsection (1) (a) and in section 24 (2);
(b) contain a statement of the grounds on which the financial institution holds the suspicion; and
(c) be signed or otherwise authenticated by the financial institution.
(3) A financial institution which has reported a suspicious transaction in accordance with this section shall, if requested to do so by the Financial Intelligence Unit, give such further information as it has in relation to the transaction.
(4) If the Financial Intelligence Unit, after consulting a financial institution required to make a report under subsection (1), has reasonable grounds to suspect that a transaction or a proposed transaction may involve an offence of money laundering or financing of terrorism, it may direct the financial institution in writing or by telephone to be followed up in writing within one working day, not to proceed with the carrying out of that transaction or proposed transaction or any other transaction in respect of the funds affected by that transaction or proposed transaction for a period as may be determined by the Financial Intelligence Unit, which may not be more than five working days, in order to allow the Financial Intelligence Unit—
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