Financial Crime World

Myanmar’s Financial Future Hangs in Balance as FATF Considers Blacklisting

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The Financial Action Task Force (FATF), a global anti-money laundering and terrorist financing watchdog, is poised to add Myanmar to its “call for action” blacklist next month. This move would deal a significant blow to the military-ruled nation’s economy, placing Myanmar banks and financial entities outside the mainstream of the international financial system.

FATF Grey-List and Blacklist

The FATF blacklist currently only includes two nations: North Korea and Iran. Myanmar is one of 21 countries currently on the FATF grey-list of “monitored jurisdictions.” A blacklisting would further isolate the country’s economy, making it difficult for foreign entities to do business or invest in Myanmar.

Consequences of Blacklisting

Burdensome Reporting Requirements

Foreign firms would be required to fulfill burdensome reporting requirements, making it challenging to operate in the country.

Isolation from International Financial System

Myanmar banks and financial entities would be excluded from international transactions, limiting their ability to conduct business globally.

Myanmar’s Economic Situation

Since the military coup in February 2021, Myanmar’s economy has experienced a stunning collapse. Fitch Solutions projects a 5.5 percent contraction in the financial year to September. The kyat currency has gone into free-fall, increasing cost of living pressures on those untouched by the intensifying conflict.

Economic Outlook

Fitch states that economic output lost during the pandemic will not be recouped until at least FY28. A blacklisting would deepen Myanmar’s downward economic tailspin, forcing the military onto a deeper reliance on foreign entities from countries like China and Russia.

International Pressure Needed

The impact of a FATF blacklisting is unclear, but it could lead to widespread economic hardship for the people of Myanmar. The path out of the current quagmire is likely to be long and turbulent, with many stakeholders calling for greater international pressure on the military junta to address its financial misdeeds.

Call to Action

  • Greater international pressure is needed to address Myanmar’s financial misdeeds.
  • The FATF blacklisting could be a wake-up call for the military junta to take action against organized crime and money laundering.
  • The international community must work together to support the people of Myanmar in their struggle for economic stability and democratic governance.