Myanmar’s Central Bank Promises Improvements Amid FATF Blacklisting

Introduction

The Financial Action Task Force (FATF) has placed Myanmar on its terrorism and financial crimes blacklist, a move that is expected to have significant implications for the country’s economy. In response to this development, Myanmar’s central bank has vowed improvements in its enforcement of anti-money laundering rules.

Impact on Myanmar’s Economy

The dollar’s value against the Myanmar kyat jumped significantly after the FATF announcement, but later fell back to around 3,000 kyats per dollar. This sudden fluctuation highlights the impact that the blacklist can have on Myanmar’s economy.

History with FATF Blacklist

Myanmar was removed from the FATF blacklist in 2016 as its economy opened up during a brief period of transition towards a civilian government led by Aung San Suu Kyi. However, army leaders took control in February 2021, undoing much of the progress made towards better enforcement of anti-money laundering rules.

Deficiencies Identified by FATF

The FATF review found several deficiencies in Myanmar’s anti-money laundering regime, including:

• Inadequate precautions to prevent criminals from running casinos and other non-financial businesses
• Weak supervision of money changers and mobile financial services providers

Central Bank Response

Myanmar’s central bank has an “action plan” in place to address the FATF’s concerns. The bank noted that while the country was not designated for countermeasures like Iran and North Korea, it still faces increased scrutiny from international financial institutions.

The central bank also warned against currency manipulation, saying that actions will be taken against individuals or entities found to be engaging in such activities.

Implications of Blacklisting

Myanmar’s inclusion on the FATF blacklist is expected to lead to more stringent due diligence precautions for money transfers, which could make it harder for individuals and businesses to conduct financial transactions. While the central bank says this will not prevent banks from conducting business, many are worried about the implications of being on the blacklist.

Experts’ Views

Experts say that the blacklist is likely to have a significant impact on Myanmar’s economy, particularly in the informal sector. The inclusion on the blacklist could lead to more stringent regulations and increased scrutiny for businesses operating in Myanmar.