Financial Crime World

Banks’ Strict KYC Procedures Leave NGOs in Limbo

In a move that has sparked concerns over the impact on humanitarian efforts, banks are implementing strict Know Your Customer (KYC) procedures for their Non-Governmental Organization (NGO) clients in Myanmar.

Delays and Impediments to Humanitarian Efforts

According to reports, many NGOs have been unable to obtain registrations from the State Administrative Council (SAC), leading to delays, stops, and recalls of transactions. This has effectively de-risked these organizations, leaving them unable to carry out their critical programming. The situation is further complicated by the looming threat of being blacklisted by the Financial Action Task Force (FATF).

Barriers Faced by NGOs

The situation has led to a range of bureaucratic and administrative impediments that have left NGOs facing significant challenges, including:

  • Lack of Registration and MoUs: Many NGOs are unable to obtain or renew their registrations due to the suspension of NGO registration processes.
  • NGO Association Registration Law Reforms: The proposed new law would require mandatory registration and increase operational restrictions, curbing humanitarian access and placing unreasonable levels of scrutiny on agencies and staff.
  • Physical Access Barriers: NGOs’ physical access to communities in need is regularly impeded through movement restrictions and attempts to impose arbitrary financial regulations.

Call to Action

In light of the devastating humanitarian impact of blacklisting, FATF member states are being urged to reconsider listing Myanmar as a “high-risk jurisdiction.” The international community is also calling on FATF to:

  • Reconsider Blacklisting: Refrain from compelling states like Myanmar to adopt measures that may jeopardize or curtail legitimate NGO operations.
  • Review Due Diligence Requirements: Issue additional guidance to ensure that actions such as blacklisting are focused and proportionate, taking into account the risk-based approach set out in its recommendations.

Conclusion

The situation facing NGOs in Myanmar highlights the need for a nuanced approach that balances the need to prevent financial crime with the imperative of preserving humanitarian aid delivery. The international community must come together to ensure that the needs of vulnerable communities are not sacrificed at the altar of bureaucratic procedures and blacklisting measures.