Financial Crime World

Here is the converted article in markdown format:

Compliance Regulations on Banking in Myanmar Tightened

Background

The Central Bank of Myanmar (CBM) has issued a statement on compliance requirements for the appointment of foreign employees, including advisers, for banks in Myanmar. The new regulations come into effect on August 2, 2021.

Key Requirements

  • Banks must seek CBM’s approval before recruiting foreign employees to ensure sustainable operations even when foreign employees resign or terminate their employment.
  • The number of foreign employees allowed by each bank will be determined by its market share.
  • Specific requirements are set out for the appointment of foreigners at different levels within a bank, including:
    • A foreigner cannot be appointed as governor or vice governor of a bank owned by citizens.
    • If a foreigner is appointed as CEO, the deputy CEO must be a Myanmar citizen.
    • If a foreigner is appointed as HOD, the deputy HOD must also be a Myanmar citizen.

Employment Terms

  • The probation period for HODs will be one year, and other lower-ranking employees will have a six-month probation period.
  • The maximum term of employment for foreigners will be three years, including the probation period, and can be extended by up to two years.

Documentation Requirements

  • Banks must submit documents such as draft employment contracts, curriculum vitae, and recommendation letters from previous organizations to CBM at least 30 days before appointing a foreign employee.
  • Foreigners must provide an undertaking that they have not been involved in any political or criminal activities and are not blacklisted.

Current Foreign Employees

  • If their contract has yet to be completed but is compliant with the statement, current foreign employees will need to amend their employment contract to comply with the new regulations and submit it to CBM.
  • If the number of appointed foreign employees exceeds the limits set by the statement, banks have 30 days to submit a plan to downsize the number of foreign employees.

Training Requirements

  • Foreign employees are required to work together with local Myanmar employees and provide training for them in their relevant professional role.
  • Banks must develop a training plan for knowledge sharing to ensure that the roles undertaken by foreign employees can be done by local Myanmar employees.

Consequences of Non-Compliance

  • Failure to comply with the statement will result in administrative penalties, including warnings, fines, and orders restricting the operations of financial institutions, as well as suspension or permanent termination from duties in the financial institution.