Myanmar Banking Sector Gets Boost with Compliance Regulations
In a move aimed at promoting financial inclusion and ensuring the integrity of the banking system, the Central Bank of Myanmar has issued a directive on agent banking services, effective February 6, 2024.
Promoting Financial Inclusion
The new regulations aim to provide comprehensive access to financial services for underserved populations and increase overall participation in the financial system. By fostering partnerships between banks and agents, it aims to extend the benefits of formal financial services to those who need them most.
Key Requirements for Banks and Agents
According to the directive, an “agent” is defined as any business entity partnering with a bank approved by the Central Bank of Myanmar (CBM) to provide banking services. The CBM has outlined specific roles and responsibilities for banks, agents, and itself in the implementation of this new framework.
Banks:
- Must submit detailed applications to the CBM, including information on the agent’s business history, infrastructure, and personnel
- Are responsible for evaluating the proposed agent’s suitability, ensuring compliance with anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations
- Must provide operational guidelines and risk management training to their agents
Agents:
- Must implement robust security measures to safeguard banking information and mitigate risks associated with internal and external threats
- Are required to report regularly to the CBM on their agent banking operations, provide monthly updates, and submit an annual activity summary
- May offer authorized banking services such as cash deposits and withdrawals, collecting invoices, and disbursement of pensions and social benefits
Conditions for Termination
Agent agreements may be terminated under the following conditions:
- Financial fraud
- Breach of terms
- Failure to compensate for losses
CBM Monitoring and Regulation
The Central Bank of Myanmar will monitor and regulate banking activities, including the approval process for applications and addressing incomplete submissions. Non-compliance with any conditions or terms outlined in this directive by banks and agents may result in action against them.
Conclusion
This new directive is seen as a major step towards promoting financial inclusion and ensuring the integrity of the banking system in Myanmar. By fostering partnerships between banks and agents, it aims to drive economic growth and prosperity across the nation.