Financial Crime World

Myanmar Banking Compliance Best Practices Get a Boost with New Directives

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In a move aimed at strengthening banking governance in Myanmar, the Central Bank of Myanmar issued a set of Directives on March 25, 2019. The directives provide additional guidance on implementing provisions of the Financial Institutions Law, which was introduced in January 2016.

Key Areas Covered by the Directives

  • Fit and Proper Criteria for Employees, Directors, and External Auditors: Banks are now required to conduct thorough background checks and assess the competence, financial soundness, honesty, integrity, and reputation of their employees and directors before appointing them.
  • Bank Board Elections and Composition: The Directives outline the duties, powers, and responsibilities of board members, including term limits for directors and requirements for meetings and minutes.

External Auditors of Banks

The Central Bank has also issued a Directive on External Auditors of Banks, aimed at ensuring that external auditors have acceptable standards of competence and independence. The directive requires external auditors to:

  • Discharge their responsibilities effectively
  • Enforce international best practices in carrying out audits
  • Promote transparency and accuracy in financial reporting

The Directives set out guidelines for related party transactions, including:

  • Definition of what constitutes a related party
  • Documentation and reporting requirements

Acquisition of Substantial Interest in Banks

Another Directive covers the acquisition of substantial interest in banks, including:

  • Approval processes
  • Exercise of influence

Expected Outcomes

These new directives are expected to enhance market discipline, promote confidence in the financial system, and help safeguard depositors’ funds by ensuring that banks are subjected to effective external audits. The move is seen as a major step forward in strengthening banking compliance best practices in Myanmar.