MALAWI PASSES ANTI-MONEY LAUNDERING BILL

UNCLAS LILONGWE 000690 SIPDIS SENSITIVE SIPDIS E.O. 12958: N/A TAGS: PGOV KDEM KCOR KMCA EAID MI STATE FOR AF/S KAMANA MATHUR STATE FOR INR/AA USAID FOR AFR/SA IAN MACNAIRN SUBJECT: MALAWI PASSES ANTI-MONEY LAUNDERING BILL REF: A) LILONGWE 66 B) LILONGWE 273 1.(SBU) Summary: In a final surprise act of Parliament's nine- week sitting, the House passed the long-awaited Money Laundering, Proceeds of Serious Crime and Terrorist Financing Act. The bill, which had originally been introduced to Parliament over four years ago, defines and lays out the penalties for engaging in money laundering, and establishes a Financial Intelligence Unit (FIU) to analyze financial transactions to detect money laundering and other crimes. The bill is a key component of Malawi's Millennium Challenge Threshold program, and post has aggressively lobbied for its passage (reftels). Intense Lobbying -------------- ¶2. (SBU) The AML bill had failed in numerous parliamentary sessions due to lack of government support, MPs' inability to understand the complex issues involved, and fear that such a law might be abused. The Mission made a concerted effort over many months to sensitize decision makers about the need for AML legislation, organizing several seminars for key parliamentarians in collaboration with the bankers association, the parliamentary legal affairs committee, the Ministries of Justice and Finance, and other partners. The Minister of Finance worked behind the scenes in the final days of the session to push the legislation, and it passed easily this time, sailing through after only one day of debate. We understand that passage of a limited number of government bills was a part of a government-opposition deal to break the recent deadlock over the national budget. ¶3. (U) The bill was passed with two minor amendments meant to address opposition fears that the law will be used as a political tool: the ability to get wire-tap authorization from a judge by phone was removed (authorizations must be obtained in person),and the bill was amended to clearly limit it from being applied retroactively. A Boost for Reform and MCA -------------- ¶4. (SBU) Passage of the AML bill is a significant step forward for the GOM's reform agenda. The AML law is a benchmark for Malawi's MCA Threshold program, and its passage will enable our resident MCA-funded U.S. Treasury advisor to undertake his key mission of helping to establish an FIU. The bill should provide a helping hand to Malawi's financial sector, whose international business had been suffering due the lack of an effective AML law. The GOM must now select and appoint a technically competent candidate as Director for the FIU, allocate funds for the establishment and operation of the unit, and provide the all-important political support in order to build an effective AML regime in Malawi. GILMOUR