Myanmar Introduces Strict KYC Regulations for Microfinance Institutions to Combat Money Laundering and Terrorism Financing
Strengthening Reporting Requirements for Suspicious Transactions
Yangon, November 13, 2019 - The Microfinance Supervisory Committee under the Ministry of Planning and Finance has released Directive No. 2/2019 on Customer Due Diligence for Anti-Money Laundering and Combating the Financing of Terrorism. This directive aims to strengthen reporting requirements for suspicious transactions and ensure stricter compliance for microfinance institution (MFI) activities in Myanmar.
Key Measures Outlined in the Directive
- Conduct periodic money laundering and terrorist financing risk assessments on all transactions
- Identify and verify customers, including beneficial owners, and ensure their source of funds is properly identified
- Monitor and verify new products and services before launching them
- Collect information from cross-border parties to understand the nature of their business from an anti-money laundering and terrorism financing perspective
- Establish the veracity of originator and beneficial owner information for wire or electronic transfers
Enhanced Due Diligence Required for High-Risk Transactions
The directive categorizes levels of risk related to money laundering and terrorist financing, with enhanced due diligence required for high-risk transactions. Simplified due diligence is permitted for low-risk transactions, but MFIs must still conduct ongoing due diligence on customers.
Compliance Requirements
To comply with the directive, MFIs are expected to:
- Modify their operating and supervisory systems
- Designate a compliance officer at the senior management level
- Establish procedures for identifying and reporting suspicious transactions
Welcome Step Towards Regulating Financial Transactions
The move is seen as a welcome step towards regulating financial transactions undertaken by MFIs in Myanmar, which has long been vulnerable to money laundering and terrorist financing activities. The directive aims to reduce the severe menace of these activities and promote a safer financial environment in the country.