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Myanmar Central Bank Issues Directive on Agent Banking Services to Boost Financial Inclusion

Promoting Financial Inclusion and Ensuring Banking System Integrity

Yangon, Myanmar - The Central Bank of Myanmar (CBM) has issued a directive on agent banking services aimed at promoting financial inclusion and ensuring the integrity of the banking system. This move is expected to extend the benefits of formal financial services to underserved populations, driving economic growth and prosperity across the nation.

Key Requirements for Banks

  • Submit detailed applications to the CBM, including information on the agent’s business history, infrastructure, and personnel
  • Evaluate proposed agents based on factors such as stability of their business over the past two years, no history of borrower defaults, and sufficient infrastructure and personnel for secure and effective banking services

Roles and Responsibilities

  • Banks:
    • Ensure that agents adhere to anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations
    • Provide operational guidelines and risk management training
    • Maintain internal control systems
  • Agents:
    • Implement robust security measures to safeguard banking information and mitigate risks associated with internal and external threats
    • Issue all transaction receipts, establish effective mechanisms for resolving complaints, educate customers on security practices, and prominently display relevant information at their business locations

CBM Responsibilities

  • Monitor and regulate banking activities
  • Approve or reject applications within three months
  • 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

Termination of Agreement

  • Conditions for terminating the agreement include financial fraud, breach of terms, or failure to compensate for losses
  • Banks must publicly announce the decision through national newspapers, media outlets, or at the agent’s business locations if an agreement is cancelled or terminated

Agent Requirements

  • Provide information such as:
    • Name of organization
    • Documentation proving compliance with relevant laws for establishment
    • Details of business operations for the past two years
    • Financial statements or tax returns for the past two years
    • Certificate confirming completion of training on AML and CFT

Authorized Services

  • Agents are authorized to offer various banking services, including:
    • Cash deposits and withdrawals
    • Collecting invoices
    • Disbursing pensions and social benefits
  • However, agents are prohibited from engaging in activities outside the scope of the agreement or making commitments on behalf of the bank

Promoting Financial Inclusion

This move is expected to promote financial inclusion by providing comprehensive access to financial services for people who do not have access to banking services. It aims to increase overall participation in the financial system while ensuring the safety and soundness of the banking system.

Disclaimer

The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.