Terrorist Financing Methods in Myanmar Pose Significant Risks to Global Financial System, Says FATF Report

Introduction

A recent report by the Financial Action Task Force (FATF) has highlighted the significant risks posed by terrorist financing methods in Myanmar, a country that has been struggling to address its anti-money laundering and combating the financing of terrorism (AML/CFT) deficiencies.

Myanmar’s Failure to Address AML/CFT Deficiencies

According to the report, Myanmar’s action plan expired in September 2021, but despite commitments made by the government, the country has failed to make significant progress in addressing its AML/CFT deficiencies. The FATF has therefore decided that further action is necessary and has called on its members and other jurisdictions to apply enhanced due diligence measures proportionate to the risks arising from Myanmar.

Key Areas for Improvement

The report highlights several key areas where Myanmar needs to improve its AML/CFT regime, including:

• Demonstrating an Improved Understanding of Money Laundering (ML) Risks: Myanmar’s financial institutions and regulators need to demonstrate a better understanding of ML risks in key areas.
• Registering and Supervising Hundi Operators: Myanmar needs to register and supervise hundi operators to prevent the use of these services for terrorist financing.
• Enhancing the Use of Financial Intelligence in Law Enforcement Authorities (LEAs) Investigations: Myanmar’s law enforcement agencies need to make better use of financial intelligence in their investigations to combat ML and TF.
• Ensuring that ML is Investigated/Prosecuted in Line with Risks: Myanmar needs to ensure that ML cases are investigated and prosecuted in line with the risks identified.
• Investigating Transnational ML Cases with International Cooperation: Myanmar needs to investigate transnational ML cases with international cooperation to disrupt terrorist financing networks.

Call for Action

The FATF urges Myanmar to work to fully address its AML/CFT deficiencies, including demonstrating that its monitoring and supervision of money or value transfer services (MVTS) is based on a documented and sound understanding of ML/TF risks. Myanmar will remain on the list of countries subject to a call for action until its full action plan is completed.

International Cooperation

The report highlights the importance of international cooperation in addressing terrorist financing methods and the need for countries to work together to prevent the flow of illicit funds. The FATF has given Myanmar until October 2024 to make significant progress, after which it may consider imposing countermeasures if no further progress is made.

Conclusion

Terrorist financing is a significant threat to global security and stability, and it is essential that countries work together to prevent the flow of illicit funds. Myanmar’s AML/CFT regime must be strengthened to prevent the financing of terrorist activities and to protect the integrity of its financial system.