Financial Crime World

Myanmar Issues Directive on Anti-Money Laundering Guidelines for Microfinance Institutions

Yangon, January 5, 2023 - A New Era in Fighting Financial Crime

The Myanmar Microfinance Business Supervisory Committee has issued Directive No. 4/2022, outlining anti-money laundering and combating the financing of terrorism (AML/CFT) guidelines for licensed microfinance institutions (MFIs). This directive aims to enhance the country’s efforts in preventing money laundering and combating terrorism financing.

Key Obligations Under the Directive

The directive applies to MFIs, their members, employees, and others dealing with MFIs, including banks and financial institutions. The key obligations under the directive include:

  • Identifying and Evaluating AML/CFT-Related Risks: MFIs must identify and evaluate AML/CFT-related risks arising from MFI activities.
  • Monitoring and Supervising Operations: MFIs must monitor and supervise the operations of MFIs and cash transactions of members.
  • Reporting Suspicious Activities: MFIs must report suspicious activities to competent authorities.
  • Maintaining Records: MFIs must maintain records in accordance with Anti-Money Laundering Law provisions.
  • Formulating Policies and Procedures: MFIs must formulate policies and procedures for existing members and service distribution channels.

Responsibilities of MFI Management Teams

The directive also outlines responsibilities for MFI management teams, including:

  • Establishing Effective Compliance Practices: MFI management teams must establish effective compliance practices.
  • Guiding the Compliance Officer: MFI management teams must guide the compliance officer.
  • Ensuring Employee Compliance: MFI management teams must ensure employees comply with AML/CFT policies.

Risk-Based Strategy

A risk-based strategy is also required, which includes:

  • Classifying Member Risks: MFIs must classify member risks as high, medium, or low based on personal information, financial behavior, and country of residence.
  • Evaluating AML/CFT Risks for Non-Citizen Members and Clients: MFIs must evaluate AML/CFT risks for non-citizen members and clients and conduct due diligence checks.

Companies Considered High-Risk

The directive also lists companies considered high-risk, including:

  • Companies with Undisclosed Beneficiaries
  • Unregistered Companies without Physical Headquarters
  • Corporations Connected to Trusts
  • Businesses Providing Financial Services

Implementation Timeline

MFIs are expected to implement the guidelines by carrying out regular reviews of their risk environment, managing AML/CFT risks with clear responsibility and accountability processes, and having transparent communication with employees. The directive aims to enhance the country’s efforts in preventing money laundering and combating terrorism financing.