BANKING COMPLIANCE PROCEDURES IN MYANMAR TAKE CENTRE STAGE AS CBM ISSUES DIRECTIVE ON AGENT BANKING SERVICES

Introduction

The Central Bank of Myanmar (CBM) has issued a directive on agent banking services, aimed at providing comprehensive access to financial services for people who do not have access to banking services. The directive sets out the framework for banking services provided by agents and seeks to increase overall participation in the financial system while ensuring the safety and soundness of the banking system.

Definition of Agent Banking Services

The CBM defines an ‘agent’ as any business entity that partners with a bank approved by the CBM to provide banking services. The roles and responsibilities of banks, agents, and the CBM are explicitly outlined in the directive.

Roles and Responsibilities

• Banks:
  • Must submit detailed applications to the CBM before appointing an agent
  • Evaluate the proposed agent’s suitability based on factors such as business stability, infrastructure, and personnel
  • Ensure that agents adhere to anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations
  • Conduct regular inspections to verify compliance and implement robust security measures
• Agents:
  • Must provide detailed information in their application, including business address, contact telephone numbers, and evidence of financial sufficiency
  • Are responsible for issuing transaction receipts, establishing mechanisms for resolving complaints, and educating customers on security practices

Terminating the Agreement between Bank and Agent

• The CBM outlines specific conditions for terminating the agreement between the bank and the agent, including:
  • Financial fraud
  • Breach of terms
  • Failure to compensate for losses
• If an agreement is cancelled or terminated, the bank must publicly announce the decision through national newspapers, media outlets, or at the agent’s business locations.

CBM Regulation and Oversight

• The CBM will monitor and regulate banking activities, including:
  • Approval process for applications
  • Addressing incomplete submissions
  • Conducting investigations, requesting information from banks and appointed agents, conducting field inspections, terminating agency contracts, and instructing banks to take corrective actions for agent misconduct.

Conclusion

The CBM’s directive on agent banking services seeks to strike a balance between promoting financial inclusion and ensuring the safety and soundness of the banking system. By outlining clear roles and responsibilities for banks, agents, and the CBM, it provides a framework for effective regulation and oversight of agent banking activities in Myanmar.