Financial Crime World

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Myanmar’s Fight Against Money Laundering: Reporting Organisations Must Act Now to Avoid Serious Consequences

In a bid to combat money laundering and terrorism financing, Myanmar has issued a slew of directives, presidential orders, guidance, and sector-specific instructions in the last quarter of 2019. These measures build on the country’s Anti-Money Laundering Law 2014 and Anti-Money Laundering Rules 2015.

Reporting Organisations Must Take Heed

Reporting organisations, including:

  • Banks
  • Financial institutions
  • Insurance companies
  • Finance companies
  • Securities exchange companies
  • Money changers
  • Lawyers
  • Accountants
  • Company service providers
  • Real estate agents
  • Dealers in precious metals and stones
  • Casinos

must take heed of these new regulations. Failure to comply can result in imprisonment for up to three years and fines.

Developing Internal Policies and Procedures

To avoid such consequences, reporting organisations must:

  • Develop and implement internal policies, procedures, and controls to manage and mitigate money laundering and terrorism financing risks
  • Conduct risk assessments to identify and understand the risk of money laundering and terrorism financing within their organisation

Risk-Based Approach Required

Reporting organisations must adopt a risk-based approach, with enhanced risk management, mitigation, and customer due diligence required where the risk of money laundering or terrorism financing is identified as high. Simplified measures suffice where a customer’s level of risk is identified as low.

Customer Due Diligence is Critical

Customer due diligence is a critical component of anti-money laundering compliance. Reporting organisations must:

  • Identify the customer and any beneficial owners
  • Verify their identity
  • Understand their business activities
  • Determine whether they are involved in suspicious transactions

Beneficial Ownership Disclosure

Beneficial ownership disclosure is another crucial aspect of anti-money laundering compliance. Myanmar’s Directorate of Investment and Company Administration has issued Directive No. 17/2019 requiring all companies to obtain information on their beneficial ownership and submit this information to DICA and the Inland Revenue Department.

Enhanced Preventive Measures Required in Certain Circumstances

Certain circumstances demand more stringent preventive measures, including:

  • Enhanced customer due diligence
  • Senior management’s prior approval
  • Enhanced ongoing monitoring
  • Identifying source of wealth and source of funds

This applies where foreign politically exposed persons are involved or in cases of high-risk domestic or international transactions.

Filing Suspicious Transaction Reports

Reporting organisations must also be aware of their obligations in the event that they are unable to complete the necessary customer due diligence requirements. They must file a suspicious transaction report with the Financial Intelligence Unit (FIU) while exercising caution to avoid falling foul of the “tipping-off” prohibitions.

Additional Reporting Obligations

Myanmar’s anti-money laundering regulations impose additional reporting obligations on reporting organisations, including:

  • Reporting transactions amounting to MMK 100 million or more
  • US$10,000 or more

Ensuring Compliance

To ensure compliance with these regulations, reporting organisations must:

  • Implement effective anti-money laundering measures within their organisation
  • Involve senior management and compliance officers
  • Provide ongoing training for employees
  • Conduct independent audits
  • Ensure that their measures are fully compliant, including with extensive record-keeping obligations, as the FIU and competent regulatory authorities may conduct inspections.