Myanmar Banking Regulation Updates: CBM Issues Directive on Agent Banking Services
Introduction
The Central Bank of Myanmar (CBM) under the State Administration Council (SAC) has issued a directive on agent banking services to provide comprehensive access to financial services for those without bank accounts and increase overall participation in the financial system.
Definition of an “Agent” and Agent Banking Services
- An “Agent” is defined as any business entity partnering with a bank approved by the CBM to offer banking services.
- The Agent Banking Service refers to the services that Agents can perform on behalf of banks.
Roles and Responsibilities
Banks
- Must submit a detailed application to the CBM, including information on the Agent’s business history, infrastructure, and personnel, along with proof of payment of 200,000 MMK per Agent as service fees.
- Must evaluate the proposed Agent’s suitability, considering factors such as their stability over the past two years, no history of borrower defaults, and sufficient infrastructure and personnel for secure and effective banking services.
- Are responsible for ensuring that Agents adhere to anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations.
- Must conduct regular inspections to verify compliance, provide operational guidelines and risk management training, and maintain internal control systems.
Agents
- Must provide detailed information in their application, including business history, infrastructure, personnel, financial statements, and evidence of financial sufficiency.
- Are responsible for educating customers on security practices, such as safeguarding personal identification numbers (PINs) and prominently displaying relevant information at their business locations.
Authorized Banking Services
The following banking services are authorized for Agents:
- Cash deposits and withdrawals
- Collecting invoices
- Submitting documentary evidence related to loan recovery and loan applications
- Domestic remittance
- Disbursement of pensions, allowances, and social benefits
- Checking account balances
- Facilitating correspondence services
- Providing banking services as permitted by the CBM from time to time
Security Measures
Both banks and Agents must ensure that security measures are in place to safeguard banking information and mitigate risks associated with internal and external threats.
Reporting Requirements
Banks must regularly submit reports on Agent banking operations to the CBM, providing:
- Monthly updates
- Annual activity summary
Termination of Agreement
The directive outlines specific conditions for terminating the agreement between the bank and the Agent.
Conclusion
The new directive aims to extend the benefits of formal financial services to underserved populations, driving economic growth and prosperity across the nation. The CBM plays a crucial role in monitoring and regulating banking activities, including approving applications, addressing incomplete submissions, conducting investigations, requesting information from banks and Agents, conducting field inspections, terminating agency contracts, and instructing banks to take corrective actions for Agent misconduct.