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Myanmar Finance Industry Struggles with Compliance Issues

Yangon, Myanmar - In a move to tighten anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations, the Myanmar Microfinance Business Supervisory Committee issued Directive No. 4/2022 on September 13, 2022.

Key Points of the Directive

• Identifying and evaluating AML/CFT-related risks arising from MFI activities
• Monitoring and supervising operations and cash transactions of members
• Reporting suspicious activities to competent authorities
• Maintaining records in accordance with Anti-Money Laundering Law provisions
• Formulating policies and procedures for existing members and service distribution channels

Specific Responsibilities

MFIs must be aware of specific money laundering methods and certain factors related to terrorism financing. The directive emphasizes the importance of assigning specific duties and powers to employees to ensure that financial services/products and service distribution channels are not used for money laundering or terrorism financing.

Responsibilities of MFI Management Team

The management team is responsible for:

• Ensuring compliance with AML/CFT policies and procedures
• Establishing effective compliance practices
• Monitoring the effectiveness of policies and procedures

Risk-Based Strategy

MFIs must adopt a risk-based strategy, which includes classifying the risk level of its members as high, medium, or low, and determining the risk for non-citizen members and clients.

High-Risk Companies Identified by the Directive

The directive identifies the following companies as high-risk:

• Those with undisclosed beneficiaries
• Unregistered companies
• Companies without physical headquarters or branches in a country but doing business in another country
• Corporations connected with trusts or special mechanisms
• Businesses providing financial services
• Real estate agencies
• Gemstone and valuable goods traders