Myanmar Tightens Anti-Money Laundering Laws: Reporting Organizations Under Scrutiny
Introduction
Myanmar’s anti-money laundering (AML) regime continues to evolve, and reporting organizations are under increased scrutiny to ensure compliance with the country’s AML Law 2014 and AML Rules 2015. Failure to comply can result in imprisonment of up to three years and fines.
Presidential Orders and Sector-Specific Instructions
The recent issuance of presidential orders, guidelines, and sector-specific instructions has heightened the need for reporting organizations to analyze the applicable provisions and implement necessary policies, procedures, and controls. Reporting organizations must conduct risk assessments to identify and mitigate money laundering and terrorism financing risks.
Risk Assessments and Internal Controls
Reporting organizations must develop internal policies, procedures, and controls to effectively manage and mitigate these risks. This includes:
- Conducting customer due diligence at all “appropriate times” and on an ongoing basis
- Verifying the identity of customers and beneficial owners
- Understanding their business activities and risk profiles
- Identifying the ultimate beneficial owners and determining who exercises effective control over legal entities
Beneficial Ownership Identification
The identification of beneficial ownership is a crucial component in combatting money laundering and terrorism financing. Reporting organizations must identify the ultimate beneficial owners and determine who exercises effective control over legal entities. Banks are required to apply a lower threshold of 20% compared to other reporting organizations, which must apply a 25% threshold.
Directive No.17/2019
Myanmar’s Directorate of Investment and Company Administration (DICA) has issued Directive No.17/2019, requiring all companies incorporated in Myanmar to obtain information on their beneficial ownership and submit this information to DICA and the Inland Revenue Department. A lower threshold of 5% applies for disclosure purposes.
Enhanced Measures
Reporting organizations must implement enhanced measures where foreign “politically exposed persons” (PEPs) are involved, as well as in cases involving high-risk domestic or international PEPs, transactions lacking economic or lawful purpose, and cross-border transactions.
Ongoing Monitoring and Reporting
Ongoing monitoring of transactions is essential to determine if they are consistent with the reporting organization’s knowledge of the customer. If there are grounds for suspicion, reporting organizations must file a suspicious transaction report with the Financial Intelligence Unit (FIU) while exercising caution to avoid tipping off suspected criminals.
Record-Keeping Obligations
Myanmar’s anti-money laundering regulations also impose an additional obligation on reporting organizations to report transactions exceeding MMK 100 million or US$10,000. Implementation of AML measures within reporting organizations will involve senior management and mandatory compliance officers. Independent audits are essential to ensure the effectiveness of these measures.
Conclusion
As regulatory authorities may conduct inspections, it is advisable for reporting organizations to ensure full compliance with Myanmar’s AML regulations. Failure to comply can result in serious consequences, including imprisonment and fines.