Myanmar Microfinance Industry Urged to Implement Robust Anti-Money Laundering Measures
In a move to strengthen the country’s fight against money laundering and terrorism financing, the Microfinance Directive No. 4/2022 has been issued in Yangon, Myanmar. The directive outlines stringent measures for microfinance institutions (MFIs) to adhere to, aiming to prevent and mitigate risks associated with financial crimes.
Importance of Compliance
The directive emphasizes the importance of implementing an effective information management system, regular communication between compliance officers and senior management teams, and cooperation with law enforcement agencies to identify and mitigate risks. MFIs are required to implement robust anti-money laundering (AML) measures to ensure a secure and transparent financial environment.
Sources of Risk to Monitor
The directive identifies high-risk factors that MFIs must monitor, including:
- Members who have attempted abuse in the past
- Politically Exposed Persons (PEPs)
- Members involved in electronic money transfers
- Those who join through intermediaries
Medium-risk activities involve members included in risk classes, reported financial amounts, and grants from local/foreign donors/organizations.
Membership Acceptance Policy
MFIs must establish a membership acceptance policy that includes rejecting applicants with:
- Criminal records
- Links to terrorist organizations
- Individuals from countries with high rates of terrorist activity
Risk-Based Strategy
The directive requires MFIs to classify members into high, medium, or low-risk categories based on personal information and financial behavior. CDD/EDD procedures must be implemented to prevent risk-based problems.
Managing Risks
MFIs must:
- Identify inconsistencies in member nature and purpose
- Verify the level of risk for businesses that primarily use cash
- Monitor high-risk organizations, such as companies with undisclosed beneficiaries or unregistered entities
Consequences for Non-Compliance
Failure to comply with the directive’s provisions may result in prosecution under the Microfinance Law, Anti-Money Laundering Provisions Law, and Anti-Terrorism Law.
Strengthening Employee Knowledge
To effectively investigate suspicious transactions, MFIs must ensure that employees understand AML/CTF procedures through regular training and education campaigns.
The Myanmar government urges all MFIs to take immediate action to comply with the directive’s requirements, emphasizing the importance of cooperation and transparency in the fight against money laundering and terrorism financing.