Myanmar’s Banking Sector Adheres to Strict Regulations to Combat Money Laundering and Terrorism Financing
===========================================================
Myanmar’s banking sector has taken a proactive approach to promote financial stability by adhering to strict regulations aimed at combating money laundering and terrorism financing.
The Financial Institutions Law (FIL) of 2016
The FIL serves as the primary legal framework governing the establishment, operation, and supervision of various financial institutions in Myanmar. The law applies to:
- Banks
- Non-bank financial institutions
- Financial holding companies
However, it excludes:
- Insurance companies
- Microfinance institutions
- Cooperatives
Anti-Money Laundering Law (AML) of 2014
The AML prohibits money laundering, financing of terrorism, and predicate offenses. Banking institutions must adhere to the provisions of the AML law by implementing effective anti-money laundering and counter-terrorist financing programs, including:
- Conducting regular risk assessments
- Establishing comprehensive customer due diligence processes
- Reporting suspicious transactions to the Financial Intelligence Unit
Central Bank of Myanmar (CBM) Guidelines
The CBM has directed banks to develop effective frameworks for managing money laundering/terrorism financing risks. Banks must:
- Ensure a comprehensive risk management process is in place to identify, measure, evaluate, monitor, report, and control material risks on a timely basis
- Maintain adequate records of customer information and transactions
Customer Due Diligence Guidelines
The CBM has issued guidelines for customer due diligence, requiring banks to:
- Adopt internal policies and procedures to combat money laundering and terrorism financing
- Undertake enhanced customer due diligence measures when carrying out occasional transactions above a certain threshold
Risk Management Practices Guidelines
The CBM has also issued guidelines on risk management practices of banks, emphasizing the importance of establishing a comprehensive risk management system overseen by the bank’s Board of Directors. The guidelines define seven types of key financial risks and set out standards for assessing risk management systems under its risk-based approach to supervision.
Benefits of Adhering to Regulations
By adhering to these regulations, Myanmar’s banking sector is able to maintain a high level of transparency and integrity, which is essential for promoting foreign investment and fostering economic growth.