Myanmar Blacklisted by Financial Watchdog for Financial Crimes

Surprise Move by FATF

In a surprise move, the international financial watchdog Financial Action Task Force (FATF) has put Myanmar on its blacklist for failing to prevent money laundering and other financial crimes. This decision comes despite previous efforts by the country’s government to improve its enforcement of anti-money laundering rules.

Reasons for Blacklisting

The FATF review found that Myanmar’s efforts to prevent money laundering and terrorist financing were inadequate, with weak supervision of money changers and non-bank financial institutions. The watchdog also criticized the country’s lack of effective measures to prevent criminals from running casinos and other high-risk businesses.

Central Bank’s Response

Myanmar’s central bank has vowed to address the deficiencies, citing an “action plan” to implement recommendations made by FATF. The central bank has assured the public that it will take action against currency manipulation and any “doings that do not comply with the rules and regulations” of the Central Bank of Myanmar.

Impact on Currency Exchange

Myanmar’s informal currency exchanges have seen a significant impact following the announcement, with the dollar’s value against the kyat jumping to between 4,000-5,000 kyats before falling back to around 3,000 kyats. The official exchange rate remains at 2,100 kyats per dollar.

Measures to Prevent Money Transfers

The central bank has also emphasized that more stringent due diligence precautions for money transfers will not prevent banks from conducting business and assured the public that there is no need to worry about Myanmar’s inclusion on the blacklist.

Historical Context

Myanmar had previously removed from the blacklist in 2016 after making progress towards better enforcement of anti-money laundering rules during a brief transition to civilian government. However, army leaders took control in February 2021, leading to a reversal of many of the gains made under the previous government headed by Aung San Suu Kyi.

Conclusion

Myanmar’s inclusion on the FATF blacklist is a significant setback for the country’s financial reputation and may have implications for its economy. The central bank’s vow to address the deficiencies and implement improvements will be closely monitored by international financial institutions and experts.