Myanmar Banking Regulations and Laws Clarified by Central Bank of Myanmar
Strengthening Banking Regulations in Myanmar
In a bid to promote financial inclusion and attract foreign investment, the Central Bank of Myanmar (CBM) has issued a series of guidelines and directives aimed at strengthening banking regulations in the country.
Primary Legal Framework: Financial Institutions Law (FIL)
The Financial Institutions Law (“FIL”) enacted in 2016 serves as the primary legal framework governing the establishment, operation, and supervision of various financial institutions in Myanmar. The law establishes a licensing regime for all financial institutions by the CBM and specifies minimum capital adequacy ratios for different types of institutions.
Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) Regulations
The Anti-Money Laundering Law 2014 prohibits money laundering, financing of terrorism, and predicate offenses such as drug trafficking, corruption, and fraud. Banks must adhere to the provisions of this law and implement effective AML/CFT programs, including:
- Conducting regular risk assessments
- Establishing a comprehensive know-your-customer/customer due diligence process
- Reporting suspicious transactions to the Financial Intelligence Unit
Customer Due Diligence Requirements
The CBM has also directed banks to develop effective frameworks and practices to manage their AML/TF risks. This includes identifying and assessing ML/TF risks arising from operations and taking measures necessary to effectively mitigate such risks.
In addition, the CBM has issued a Directive on Customer Due Diligence related to the Anti-money Laundering and Counter Financing of Terrorism, which requires banks to:
- Adopt internal policies, procedures, systems, and controls to combat money laundering and terrorism financing
- Undertake enhanced customer due diligence measures when carrying out occasional transactions with customers who have no established relationship with the bank
Risk Management Practices of Banks
The Central Bank of Myanmar has issued a Guideline on Risk Management Practices of Banks, which outlines seven key financial risks that banks must identify, measure, monitor, and control. The objectives of this guideline are to ensure that banks’ risk management systems are appropriate to their nature, scale, and complexity, encourage banks to enhance their risk management practices, and set out standards used by the CBM in assessing risk management systems.
Promoting Financial Stability and Strengthening Banking Regulations
The Central Bank of Myanmar’s efforts aim to promote financial stability and strengthen banking regulations in Myanmar, ultimately benefiting both domestic and foreign investors.