Financial Crime World

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Microfinance Institutions Must Implement Strong AML/CFT Measures to Prevent Money Laundering and Terrorism Financing

YANGON, MYANMAR - The Myanmar Microfinance Industry is under increasing scrutiny to implement robust Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) measures to prevent financial crimes. According to a recent directive issued by the country’s regulatory body, microfinance institutions (MFIs) must take immediate action to identify and mitigate risks associated with money laundering and terrorism financing.

Key Measures Required

The directive outlines several key measures that MFIs must implement, including:

  • Information Management: Implementing an appropriate information management system and keeping it up-to-date
  • Communication: Communicating regularly between Compliance Officers and Senior Management Teams
  • Law Enforcement: Communicating with Law Enforcement Agencies

High-Risk Factors to Monitor

The directive also identifies high-risk factors that MFIs must monitor closely, including:

  • Newly joined members
  • Applicants for membership through current members
  • Politically Exposed Persons (PEPs)
  • Members who have attempted abuse in the past
  • Those who join as members through an intermediary

Membership Acceptance Policy

MFIs are further required to establish and apply a membership acceptance policy that prohibits accepting persons with criminal records or connections to criminal groups.

Risk Classification and Due Diligence

MFIs must classify risk levels of its members as high, medium or low based on personal information and financial behavior, and conduct due diligence procedures accordingly.

Ongoing Monitoring and Reporting

The directive emphasizes the importance of ongoing monitoring and reporting of suspicious transactions and activities. MFIs are required to:

  • Maintain controls on money laundering and terrorist financing
  • Process risk assessments
  • Submit reports to relevant authorities

Consequences of Non-Compliance

Failure to comply with the directive’s provisions can result in prosecution under the Microfinance Law, Anti-Money Laundering Provisions Law, and Anti-Terrorism Law.

Recommendation

“We urge all MFIs in Myanmar to take immediate action to implement these critical measures,” said [Name], a legal expert at DFDL. “The consequences of non-compliance are severe, and we recommend that all MFIs seek professional advice to ensure compliance with the directive.”

About DFDL

DFDL is a leading international law firm providing comprehensive legal services to clients operating in Southeast Asia and beyond. With offices in Myanmar, Laos, Cambodia, and Vietnam, we have extensive experience advising on complex legal matters in the region.

Disclaimer

The information provided here is for general purposes only and does not constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.