Myanmar Lands on Financial Crimes Blacklist, Promises Reforms Amid Currency Turmoil
The Financial Action Task Force (FATF) has placed Myanmar on its list of high-risk countries requiring enhanced due diligence for money transfers, citing deficiencies in its enforcement of anti-money laundering rules and other financial crimes. This decision has sent shockwaves through the country’s informal currency exchanges, with the value of the US dollar against the Myanmar kyat soaring to between 4,000-5,000 kyats before falling back to around 3,000 kyats.
A Setback for Myanmar
The FATF’s decision is a significant setback for Myanmar, which was removed from the blacklist in 2016 as its economy opened up during a brief period of democratic transition. However, army leaders took control in February 2021, and most of the progress made towards better enforcement of anti-money laundering rules had taken place under the elected government headed by Aung San Suu Kyi.
FATF’s Review Finds Deficiencies
The watchdog group’s review found that Myanmar failed to take adequate precautions to prevent criminals from running casinos and other non-financial businesses designated for special scrutiny. It also cited weak supervision of money changers, non-bank financial institutions, and mobile financial services providers, whose importance has grown since the army seized power and left many banks barely functioning.
Key Findings
- Myanmar failed to take adequate precautions to prevent criminals from running casinos and other non-financial businesses designated for special scrutiny.
- Weak supervision of money changers, non-bank financial institutions, and mobile financial services providers.
- Deficiencies in enforcement of anti-money laundering rules and other financial crimes.
Myanmar’s Response
Despite these findings, Myanmar’s central bank welcomed progress in addressing the problems and vowed to implement an “action plan” for addressing the FATF’s review. The bank said it had increased its compliance with 24 out of 40 recommendations by the Financial Action Task Force and pledged to take action against currency manipulation and other rule-breaking activities.
Bank’s Commitment
- Increased compliance with 24 out of 40 recommendations by the Financial Action Task Force.
- Vowed to implement an “action plan” for addressing the FATF’s review.
- Pledged to take action against currency manipulation and other rule-breaking activities.
Reassurances from the Bank
The bank also sought to reassure the public, saying that more stringent due diligence precautions for money transfers would not prevent banks from conducting business. “Despite the high-risk jurisdictions being subject to a call for action, it is not a risk factor for Myanmar so people need not worry about it,” it said. The bank warned against currency manipulation and other activities that do not comply with its rules and regulations.
Conclusion
Myanmar’s placement on the FATF’s blacklist is a significant setback for the country, but the central bank has vowed to implement reforms to address the deficiencies found by the watchdog group. With increased compliance and a commitment to taking action against rule-breaking activities, Myanmar hopes to regain its position as a responsible player in international financial markets.