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Myanmar: Central Bank Issues Directive on Financial Institution Security Measures to Promote Financial Inclusion

Introduction

The Central Bank of Myanmar has issued a directive on agent banking services to provide comprehensive access to financial services and increase overall participation in the financial system. The move aims to promote financial inclusion and ensure the integrity of the banking system.

Requirements for Banks

To appoint agents, banks must submit a detailed application to the Central Bank, including:

  • Information on the agent’s business history
  • Infrastructure and personnel details
  • Proof of payment of 200,000 MMK per agent as service fees

The evaluation criteria include:

  • Stability of the agent’s business over the past two years
  • No history of borrower defaults
  • Sufficient infrastructure and personnel for secure and effective banking services

Security Measures

Banks must implement robust security measures to safeguard banking information and mitigate risks associated with internal and external threats. They must also conduct regular inspections to verify compliance with anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations.

Termination of Agreement

The directive outlines specific conditions for terminating the agreement between the bank and the agent, including:

  • Financial fraud
  • Breach of terms
  • Failure to compensate for losses

Public disclosure is mandatory in such cases, requiring banks to announce the decision through national newspapers, media outlets, or at the agent’s business locations.

Responsibilities of Agents

Agents must provide information on their organization, business operations, experience in the financial services industry, and financial statements. They are responsible for:

  • Issuing all transaction receipts
  • Establishing effective mechanisms for resolving complaints
  • Educating customers on security practices such as safeguarding their personal identification numbers (PINs)

Central Bank Monitoring and Regulation

The Central Bank will monitor and regulate banking activities, including the approval process for applications and addressing incomplete submissions. The bank will also conduct investigations, request information from banks and appointed agents, conduct field inspections, terminate agency contracts, and instruct banks to take corrective actions for agent misconduct.

Promoting Financial Inclusion

The directive is expected to promote financial inclusion by extending the benefits of formal financial services to underserved populations, driving economic growth and prosperity across the nation.