Financial Crime World

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MYANMAR ISSUES DIRECTIVE ON COMPLIANCE RISK ASSESSMENT FOR MICROFINANCE INSTITUTIONS

YANGON, MYANMAR - The Myanmar Microfinance Business Supervisory Committee has issued Directive No. 4/2022, outlining strict guidelines for microfinance institutions (MFIs) to implement anti-money laundering and combating the financing of terrorism (AML/CFT) measures.

Key Obligations

The directive applies to licensed MFIs, their members, employees, and other financial institutions dealing with MFIs. The key obligations under the directive include:

  • 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 the Anti-Money Laundering Law
  • Formulating policies and procedures for existing members and service distribution channels

Specific Requirements

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

  • Assigning specific duties and powers to employees
  • Ensuring employee compliance with AML/CFT policies and procedures
  • Verifying information, submitting suspicious reports, and assisting in developing a culture of effective compliance

Risk-Based Strategy

MFIs must adopt a risk-based strategy, classifying member risks as high, medium, or low based on personal information and financial behavior.

High-Risk Industries

The directive also highlights specific industries considered high-risk, including:

  • Companies with undisclosed beneficiaries
  • Unregistered companies
  • Businesses providing financial services

Consequences of Non-Compliance

MFIs must implement these measures to effectively manage AML/CFT risks and ensure compliance with the directive. Failure to comply may result in severe consequences, including fines and penalties.

Conclusion

This latest development underscores the importance of robust risk management practices in Myanmar’s microfinance sector. As the country continues to develop its financial landscape, it is essential for MFIs to prioritize AML/CFT compliance to maintain the trust of customers and regulatory bodies alike.