Malawi is easing the verification procedures imposed on customers of banks and financial institutions.
The government has adopted a new regulatory framework allowing financial institutions to apply simplified checks to certain customer profiles as part of the country’s efforts to combat money laundering and terrorist financing.
The new rules, which replace those introduced in 2018, were published in a supplement to the Malawi Government Gazette, which contains official laws, regulations and notices.
Tailored Checks for Low-Risk Customers
Known as “Simplified Due Diligence” (SDD), the new framework allows banks to ease verification procedures for customers using bank accounts or electronic wallets whose monthly income or withdrawals do not exceed approximately 1 million kwacha.
According to the exchange rate provided, one US dollar is equivalent to approximately 1,733 kwacha.
Governed by the Financial Crimes Act and supervised by the Financial Intelligence Authority, SDD aims to adjust the level of scrutiny according to the degree of risk presented by each customer.
Financial institutions can therefore apply less stringent procedures to customers considered low-risk, while maintaining enhanced monitoring mechanisms for transactions deemed more sensitive.
A Tool to Promote Financial Inclusion
Beyond regulatory compliance, the reform also pursues an economic and social objective: facilitating access to financial services for people who remain excluded from the banking system, particularly low-income households and the unbanked population.
By reducing administrative requirements for low-risk transactions, the authorities also aim to enable financial institutions to better focus their compliance resources on transactions presenting a higher risk of money laundering or terrorist financing.
The new provisions also establish specific thresholds for several other financial services, allowing due diligence requirements to be tailored to the nature and risk level of transactions.
The reform therefore seeks to strike a balance between financial security, effective oversight and broader access to banking services in Malawi.
