2 Tanzanians charged, remanded over $1.1m

Two Tanzanian nationals have been charged and remanded in Malawi for allegedly possessing US$1.1 million without supporting documentation, contravening the country's stringent foreign exchange regulations and anti-money laundering laws. Paschal Nyanda and Sanda Donald face charges under the Foreign Exchange Act 2025 for illegal exchange of foreign currency with an unauthorised dealer, and under the Financial Crimes Act 2017 for money laundering. The significant sum, now in the custody of the Reserve Bank of Malawi, highlights Malawi’s ongoing struggle with illicit financial flows and foreign currency shortages. This development underscores the robust enforcement efforts by Malawian authorities to curb financial crimes and maintain the integrity of its financial system, sending a clear message to individuals engaging in illicit cross-border currency movements.

Malawi's financial landscape is currently grappling with severe foreign exchange shortages, making the recent arrest and charging of two Tanzanian nationals with the illegal possession of US$1.1 million a particularly significant development. Paschal Nyanda, 28, and Sanda Donald, 24, were apprehended at a roadblock in Rumphi district while allegedly transporting the substantial sum without the requisite supporting documentation. This incident, which saw the Mzuzu Chief Resident Magistrate Godfrey Balaka remanding the individuals to prison, underscores Malawi's intensified efforts to combat illicit financial flows and enforce its foreign exchange control regime.

The suspects have been formally charged with illegal exchange of foreign currency with an unauthorised dealer under the Foreign Exchange Act 2025 and money laundering under the Financial Crimes Act 2017. The foreign currency has since been placed in the custody of the Reserve Bank of Malawi for verification, highlighting the central bank's critical role in safeguarding national financial stability. This article will delve into the pertinent Malawian legal framework governing foreign exchange and financial crimes, analyse the implications of these charges, and discuss the broader context for legal practitioners operating within or interacting with Malawi's financial sector.

Malawi's legal framework for regulating foreign exchange and combating financial crimes has undergone significant evolution, reflecting both domestic economic imperatives and international anti-money laundering (AML) standards. The primary legislation governing foreign exchange transactions is the Foreign Exchange Act 2025 (Act No. 18 of 2025), which repealed the earlier Exchange Control Act of 1984. This Act introduces a comprehensive regulatory framework, mandating the exclusive use of the Malawi Kwacha for domestic transactions and imposing stricter penalties for non-compliance, including unauthorized use of foreign currency and misrepresentation of information to the Reserve Bank of Malawi.

Complementing the foreign exchange regulations is the Financial Crimes Act 2017 (Act No. 14 of 2017), which replaced the Money Laundering, Proceeds of Serious Crime and Terrorist Financing Act. This Act established the Financial Intelligence Authority (FIA) as the principal national agency for preventing and combating financial crimes. It criminalises money laundering (ML) and terrorist financing (TF), broadens the scope of predicate offences, and enhances the asset forfeiture regime, including provisions for civil asset forfeiture. The Penal Code also contains provisions related to money laundering under Section 331A, which was amended in 2023 to align with international conventions and now carries severe penalties, including up to life imprisonment. The Reserve Bank of Malawi, established under the Reserve Bank of Malawi Act (Cap. 44:02), plays a pivotal role in implementing and enforcing these laws, particularly concerning monetary policy, currency management, and the supervision of financial institutions.

The charges against Paschal Nyanda and Sanda Donald, specifically illegal exchange of foreign currency with an unauthorised dealer under the Foreign Exchange Act 2025 and money laundering under the Financial Crimes Act 2017, carry significant legal weight. Under the Foreign Exchange Act 2025, the mere possession of foreign currency without the permission of the Minister (or as otherwise prescribed by regulations) and failure to offer it for sale to an authorised dealer constitutes an offence. The Act aims to prevent the circumvention of official exchange policies and address foreign reserve shortages. The substantial amount of US$1.1 million involved strongly suggests a deliberate attempt to operate outside the formal financial system, bypassing authorised dealers and potentially contributing to the parallel market.

The money laundering charge under the Financial Crimes Act 2017 is particularly serious. Section 42 of the Act criminalises various acts related to proceeds of crime, including concealing or disguising the nature, source, location, disposition, movement, or ownership of property, knowing that such property is derived from a serious crime. The Act also provides for the intentional elements of the offence to be inferred from objective factual circumstances, and it is not necessary for a person to be convicted of the predicate offence to prove money laundering. Given the large sum and the lack of supporting documentation, the prosecution will likely argue that the funds represent proceeds of an illicit activity, even if the specific predicate offence is yet to be fully established.

Malawi's regulations also stipulate strict requirements for the declaration of foreign currency upon entry and exit. While there is no limit to the amount of foreign currency that can be brought into Malawi, it must be declared upon arrival. The exit maximum for foreign currency is set at US$5,000, and failure to declare or exceeding this limit without proper authorisation can lead to arrest and confiscation of funds. The fact that the individuals were intercepted while travelling towards Tanzania with such a large undeclared sum strongly indicates a contravention of these cross-border currency movement regulations. The case of *Republic v Muhammad Jawad*, where the Supreme Court of Appeal upheld the forfeiture of US$269,970 for attempting to leave Malawi without authorisation, sets a clear precedent for the severe consequences of such violations.

The involvement of the Reserve Bank of Malawi in taking custody of the seized funds is consistent with its mandate to regulate and supervise foreign exchange operations and ensure compliance with financial laws. The ongoing verification by the RBM will be crucial in determining the ultimate disposition of the funds and may uncover further links to organised criminal networks. The penalties under both the Foreign Exchange Act 2025 and the Financial Crimes Act 2017 are designed to be punitive and dissuasive, reflecting Malawi's commitment to aligning its financial crime regime with international best practices and addressing the economic impact of illicit financial flows.

The charging and remand of the two Tanzanian nationals for the illegal possession of US$1.1 million serves as a stark reminder of Malawi's rigorous enforcement of its foreign exchange and anti-money laundering laws. For legal practitioners, this case underscores the critical importance of advising clients, particularly those engaged in cross-border transactions or carrying significant amounts of foreign currency, on strict adherence to Malawian regulations, including declaration requirements and the use of authorised channels for foreign exchange. The substantial penalties and the robust asset forfeiture regime under the Financial Crimes Act 2017 mean that non-compliance can have severe consequences, extending beyond fines to lengthy imprisonment and the permanent loss of assets.

Practitioners should closely monitor the progression of this case, particularly the judicial interpretation of the Foreign Exchange Act 2025 and the Financial Crimes Act 2017 in relation to large-scale undeclared currency. The outcome may further clarify the evidentiary standards for proving money laundering where a predicate offence is not immediately apparent, and the application of forfeiture provisions. As Malawi continues to strengthen its financial crime framework in response to economic pressures and international standards, legal professionals must remain vigilant and proactive in understanding and navigating these evolving regulatory landscapes to ensure compliance and mitigate risks for their clients.