Myanmar’s Central Bank Publishes Guidelines for Anti-Money Laundering and Terrorist Financing
New Effort to Combat Illicit Activities
In a significant move, Myanmar’s Central Bank has published guidelines for financial institutions on managing the risks of money laundering and terrorist financing. The guidelines were made available on the bank’s website this week, with an English version accessible to foreign banks.
Initial Guidelines Recognized by Inter-Governmental Organizations
The initial guidelines have been recognized by inter-governmental organizations and will soon be followed by guidance on customer due diligence for banks, finance companies, and money changers. According to May Toe Win, director at the Central Bank’s Financial Institutions Regulation and Anti-Money Laundering Department, these guidelines are a crucial step towards improving Myanmar’s anti-money laundering and combating the financing of terrorism regime.
Emphasis on Effective Policies and Processes
The Basel Committee’s core principles for effective banking supervision require financial institutions to have a comprehensive risk management process in place. The guidelines emphasize the importance of effective policies and processes, including customer due diligence rules, to promote ethical and professional standards in the financial sector.
FATF Recommendations
The Financial Action Task Force (FATF) has recommended that Myanmar:
- Adequately criminalize terrorist financing
- Implement adequate procedures to identify and freeze terrorist assets
- Ensure an operationally independent and effectively functioning financial intelligence unit
- Strengthen customer due diligence measures
The FATF reported in June 2015 that while Myanmar had taken steps towards improving its anti-money laundering and combating the financing of terrorism regime, it had not made sufficient progress in implementing its action plan.
Benefits for Banks
According to Mya Than, chairman of Myanmar Oriental Bank (MOB), banks have been required to report any suspicious activity to the Central Control Board investigation body for several years. However, he believes that the recent guidelines will help banks understand how to become more compliant with anti-money laundering standards.
Challenges Ahead
Soe Thein, a banker and former official at the Ministry of Finance, noted that while banks are generally required to report transactions over 100 million kyat (US$77,000), they should also raise the alarm over unusual smaller transactions. However, he also pointed out that banks in Myanmar still lack the technology and software to identify blacklisted individuals.
Importance of Guidelines
The Central Bank’s guidelines come as part of an effort to improve Myanmar’s anti-money laundering and combating the financing of terrorism regime, which was identified by the FATF as a key area for improvement. The move is seen as crucial in helping to prevent the use of financial institutions for illicit activities such as money laundering and terrorist financing.