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Financial Crime on the Rise in Myanmar: What You Need to Know
The Financial Action Task Force (FATF) has added Myanmar to its list of high-risk countries, joining Iran and North Korea as “blacklisted” nations. This move increases compliance risks and requires enhanced due diligence for businesses operating in or with ties to Myanmar.
Reasons behind the blacklisting
Myanmar’s blacklisting is due to concerns over money laundering, terrorist financing, and other financial crimes. The country’s lack of effective anti-money laundering and combating the financing of terrorism (AML/CFT) regulations has been cited as a major factor in this decision.
Implications for businesses
The FATF designation means that companies operating in or with ties to Myanmar will need to take extra steps to ensure compliance with international AML/CFT standards. This includes:
- Implementing risk-based updates to existing compliance programs
- Conducting enhanced due diligence on customers and counterparties
- Reporting suspicious transactions to the relevant authorities
For businesses already operating in Myanmar, this development may require significant changes to their internal policies and procedures. Companies should promptly review and consider whether risk-based updates to their existing compliance programs are appropriate.
FATF’s statement
In a statement, FATF highlighted that Myanmar’s lack of effective AML/CFT regulations has hindered its ability to combat financial crimes. The organization emphasized the need for the country to take immediate action to address these concerns and implement effective measures to prevent money laundering and terrorist financing.
FinCEN’s statement
The US Treasury’s Financial Crimes Enforcement Network (FinCEN) also issued a statement following FATF’s decision, noting that it did not call for specific countermeasures against Myanmar. Instead, FinCEN advised US financial institutions to continue consulting existing regulations and guidance on engaging with financial transactions in Myanmar, as well as a US Government advisory for businesses concerning human rights abuses.
Importance of robust compliance programs
For companies operating in or with ties to Myanmar, this development is a significant reminder of the importance of robust compliance programs and due diligence. With FATF’s blacklisting, the risks associated with doing business in Myanmar have increased, and it is essential that businesses take proactive steps to mitigate these risks.
Contact:
Michelle Williams Partner T: +1 202 912 5011 E: michelle.williams@cliffordchance.com
David DiBari Partner T: +1 202 912 5098 E: david.dibari@cliffordchance.com
Renée Latour Partner T: +1 202 912 5509 E: renee.latour@cliffordchance.com
Vasu Muthyala Partner T: +65 6661 2051 E: vasu.muthyala@cliffordchance.com
Jamal El-Hindi Counsel T: +1 202 912 5167 E: jamal.elhindi@cliffordchance.com
MJ Shin Associate T: +1 202 912 5908 E: mj.shin@cliffordchance.com
David Harris Law Clerk T: +1 202 912 5918 E: david.harris@cliffordchance.com