Financial Crime World

Myanmar’s Money Services Business Licensing Framework Falls Short of International Standards

Yangon, Myanmar - A recent report by the Combating the Financing of Terrorism (CBM) has highlighted concerns over Myanmar’s licensing framework for money services businesses (MSBs), also known as money transfer and payment services (MTTS).

Shortcomings in the Licensing Framework

  • There is no legal obligation for MSB providers to register their agents or maintain a current list of their agents accessible by competent authorities in countries where they operate.
  • There is no requirement for MSB providers to include their agents in their anti-money laundering (AML) and combating the financing of terrorism (CFT) programs, nor do they have to monitor their agents for compliance with such programs.

Progress Made

  • Myanmar has two complementary licensing regimes for MSBs under the Financial Institutions Law and the Foreign Exchange Management Law.
  • The country’s Financial Institutions Law requires companies wishing to engage in non-banking financial institution business to apply for a registration certificate, while the Foreign Exchange Management Law prohibits providers of international MSBs from operating without a license.

Sanctions and Enforcement

  • Sanctions are available under both laws for carrying out MSBs without a license or registration.
  • However, these sanctions are considered dissuasive but not fully proportionate as lesser penalties do not appear to be available for lower-level breaches.

AML/CFT Awareness-Raising Activities

  • The CBM has established a procedure for regularly identifying unregistered MSBs and collecting information from open and closed sources.
  • Myanmar has also conducted AML/CFT awareness-raising activities for unregistered MSBs.

Room for Improvement

  • While Myanmar’s AML/CFT obligations are mostly met, there is room for improvement.
  • The country’s Remittance Business Regulation sets out AML/CFT obligations for licensed MSBs, but only covers international MSBs and not domestic ones.

Positive Developments

  • Myanmar has recently issued a notification and amended its Remittance Business Regulations to require licensed MSBs to report on their agents or branch offices every three months and provide updated lists of agents if requested by the CBM and competent authorities.
  • Licensed MSBs are also responsible for monitoring whether their agents or branch offices comply with AML/CFT rules and regulations.

Conclusion

While Myanmar has made some progress in licensing MSBs, there is still much work to be done to bring its framework in line with international standards.