Myanmar’s Compliance Risk Management Landscape: Understanding the Liabilities and Consequences for Undertakings

Introduction

In Myanmar’s rapidly evolving business environment, compliance risk management has become a top priority for undertakings operating in the country. As members of governing bodies and senior management are entrusted with overseeing and maintaining an organisation’s risk and compliance management framework and policies, they must ensure that their company complies with all pertinent laws, regulations, and directives governing its business operations.

Regulatory Framework

According to sources close to the matter, a breach of the reporting obligation under the Anti-Money Laundering Law does not, in and of itself, give rise to civil liability. Similarly, a financial institution’s failure to comply with the Central Bank of Myanmar’s directions or regulations on the prevention of money laundering or financing of terrorism does not, in and of itself, give rise to civil liability under the Financial Institutions Law.

However, regulatory authorities in Myanmar may take enforcement actions against companies for violations of risk management and compliance obligations. These actions typically result in administrative penalties or sanctions rather than civil liability.

Consequences of Non-Compliance

• Administrative Penalties: The Central Bank of Myanmar has wide-ranging powers under the Financial Institutions Law to issue directions and withdraw its licence for financial institutions to carry on business in Myanmar.
• Criminal Liability: In severe cases, failure to maintain an effective compliance program itself is not a criminal offence, but companies may incur criminal liability if found to be in breach of the underlying law. For instance, if the company is found to have violated the reporting obligations under the Anti Money Laundering Law, the company may be sentenced to a fine not exceeding one hundred million Kyats.
• Personal Liability: Members of governing bodies and senior management also face significant liabilities for breach of risk and compliance management obligations. If an undertaking incurs a loss due to such a breach, it might have a civil claim against the directors if they were negligent or failed in their fiduciary duty to prevent the breach.

Conclusion

In conclusion, Myanmar’s compliance risk management landscape presents significant challenges for undertakings operating in the country. As regulatory authorities continue to enforce strict guidelines and penalties, companies must prioritize compliance risk management to avoid administrative, regulatory, and even criminal consequences.