Financial Crime World

Myanmar Banking Sector Under Scrutiny: Compliance Regulations Take Center Stage

The Central Bank of Myanmar (CBM) has taken a significant step towards strengthening banking supervision in the country with the assistance of the International Monetary Fund’s (IMF) Monetary and Capital Markets Department. A series of missions were conducted in Yangon between 2018 and early 2019 to support the development of bank regulation and supervision.

Objectives

The key objective was to introduce a more risk-based approach to supervision, which will help identify and mitigate potential risks in the banking sector. The Guide to Risk-Based Supervision outlines approaches to risk assessment and risk mitigation based on international best practices.

Identified Risks

According to sources, the CBM has identified several key risks that are relevant to the Myanmar context, including:

  • Legal, regulatory and reputational risk
  • Strategic risk
  • Group and related parties’ risk
  • Credit risk
  • Market risk
  • Operational risk
  • Liquidity risk

Implementation Timeline

The regulator is committed to implementing the new approach by 2020.

New Risk Matrix Tool

In a significant move, the CBM has already begun using a new risk matrix tool to conduct risk assessments during examinations. This development is expected to enhance the effectiveness of banking supervision in Myanmar and ensure that the sector remains stable and resilient.

IMF Assistance

The IMF’s assistance is seen as a major boost for the country’s financial sector, which has been growing rapidly in recent years. The implementation of risk-based supervision will help prevent potential threats to financial stability and promote a more robust regulatory environment.

Industry Insights

Industry insiders believe that the move towards risk-based supervision will also encourage foreign banks to operate in Myanmar, thereby increasing competition and deepening financial markets.

Overall, the introduction of risk-based supervision is expected to have a positive impact on the banking sector in Myanmar, ensuring its stability and resilience for years to come.