Financial Crime World

Myanmar on the Brink of Financial Blacklisting: A New Challenge for the Military Junta

According to a report by Nikkei Asia, the Financial Action Task Force (FATF) is allegedly set to recommend Myanmar for international financial blacklisting during its upcoming meeting in October 2022. The following details provide an overview of this potential development and its potential consequences for Myanmar.

The FATF Recommendation and Its Implications

Established in 1989, the FATF is an international financial watchdog tasked with combating money laundering, terrorist financing, and other financial crimes. Myanmar, a country long grappling with corruption and money laundering issues, could face devastating economic consequences if blacklisted by the FATF.

The unnamed diplomat informed Nikkei Asia that Myanmar could join North Korea and Iran on the FATF’s “call for action” list due to concerns over unsatisfactory progress in addressing money laundering and organized crime issues. A favorable majority at the meeting could lead to Myanmar’s blacklisting, which would have significant implications for the country’s banking and financial sectors.

Current FATF Listing and Consequences

Presently, only North Korea and Iran are on the FATF blacklist. Conversely, Myanmar is among 21 nations on the organization’s grey list, which calls for monitoring countries to enhance their anti-money laundering and counter-terrorist financing efforts. The consequences of blacklisting would likely leave a significant impact on Myanmar’s economy:

  • ** heightened regulatory requirements**
  • damaged reputations
  • reduced range of foreign entities willing to engage in business or investment

Economic Hardships in Myanmar

Myanmar’s economy has experienced significant hardships since the 2021 military coup:

  • severe international backlash
  • foreign investors fleeing
  • drastic devaluation of kyat currency

According to Fitch Solutions, Myanmar’s economy could contract by 5.5 percent in the current financial year and recover not until 2028.

The Military Junta’s Stance

Recent developments, such as the arrest of former U.K. ambassador and business advisor Vicky Bowman, demonstrate the junta’s disdain for foreign entities advocating ethical business practices within the country. The FATF blacklist poses a new challenge to the regime and may exacerbate the ongoing economic turmoil for the country. However, it remains to be seen whether the impacts will primarily burden the military rulers or the general population.

Key Takeaways

  • The FATF is set to recommend Myanmar for international financial blacklisting during its October 2022 meeting.
  • If blacklisted, Myanmar could join North Korea and Iran on the FATF’s “call for action” list.
  • The consequences of blacklisting would likely leave a significant impact on Myanmar’s banking and financial sectors, reputation, and international investments.
  • Myanmar’s economy has experienced severe hardships since the 2021 military coup.
  • The junta’s stance towards foreign entities advocating ethical business practices highlights their disregard for international opinion and potential economic instability.
  • The potential impacts of blacklisting remain uncertain, with the regime and the general population potentially bearing the brunt of the consequences.