Financial Crime World

Here is the converted article in markdown format:

Myanmar’s Central Bank Now Funds Military More Than All Other Borrowers Combined

======================================================

YANGON, MYANMAR - In a stark illustration of Myanmar’s military-dominated economy, the country’s central bank now funds the armed forces more than all other borrowers combined. The Central Bank of Myanmar (CBM) has become a key vehicle for the ruling junta to secure foreign exchange and finance its military operations.

Securing Foreign Exchange

According to sources, the CBM has issued over a dozen notifications, directives, and instructions since the February 2021 coup aimed at securing as much foreign exchange as possible. These measures have included:

  • Forced conversions of foreign currency accounts, export earnings, and worker remittances into kyat at unfavorable rates
  • Restrictions on foreign investors making dividend payments abroad

Evading International Sanctions

The CBM has also become a key player in the junta’s efforts to evade international sanctions imposed after the coup. The bank has issued notifications aimed at moving Myanmar’s trade and international payments away from the US dollar to other currencies, such as:

  • Chinese renminbi
  • Thai baht
  • Russian ruble

Tracking Down Resistance

Moreover, the CBM has been used by the junta to track down and punish resistance to its rule through mobile money and other forms of financial technology. The bank has compelled all banks, mobile wallet firms, and telecommunications companies to participate in near real-time monitoring of accounts, allowing the regime to identify and target individuals deemed to be resisting military rule.

Complicity in Criminal Activities

The CBM’s complicity in the junta’s criminal activities is also evident, with the institution effectively abandoning efforts to decouple the financial system from Myanmar’s illicit economy. This has led to the country being placed on the Financial Action Taskforce’s “black-list” alongside Iran and North Korea.

Leadership Transformed

In a sign of its transformed character, the CBM is now led by retired generals and staffed by military personnel, including lieutenant colonels in key policy positions.

Time for Sanctions

=====================

Given the CBM’s role in enabling misrule and human rights abuses, it is imperative that international sanctions be imposed on the institution. The United States has already taken steps to freeze the assets of the CBM held at the New York Federal Reserve following the coup. It is time for other countries to join the US in sanctioning the central bank.

Author Bio

Sean Turnell is a senior fellow at the Lowy Institute, Sydney, and was a former senior economic adviser to Myanmar’s civilian government from 2016-2021. He was imprisoned alongside Daw Aung San Suu Kyi and other members of her government following the coup, but was released in November 2022.

Photo Credit

A line to withdraw cash from a bank in Yangon, Myanmar, March 22, 2021. Myanmar has been crippled by a cash shortage since the military seized power six months ago, plunging the Southeast Asian nation into a financial crisis. (The New York Times)