Financial Crime World

Reputation of Respondent Institution Questioned Amid Money Laundering and Terror Financing Concerns

A recent directive has raised concerns about the reputation of a financial institution, citing inadequate supervision and potential breaches of anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations.

Inadequate Supervision and Potential Breaches

The institution has been criticized for:

  • Establishing new correspondent relationships without approval from senior management
  • Failing to clearly understand and document the respective AML/CFT responsibilities of each bank
  • Not ensuring that respondents have performed customer due diligence (CDD) obligations on customers with direct access to accounts
  • Questionable risk assessment procedures, particularly in relation to new products and business practices

Failure to Comply with Reporting Requirements

The institution has also faced criticism for its inability to comply with the following requirements:

  • Including specific information on the originator and recipient of wire or electronic transfers
  • Reporting suspicious transactions to the Financial Intelligence Unit (FIU), including cross-border transactions exceeding USD 10,000 or domestic transactions exceeding 100 million kyats

Consequences of Non-Compliance

Failure to comply with AML/CFT regulations can have severe consequences, including:

  • Fines
  • Penalties
  • Criminal charges

Regulatory Action

The institution has been subject to regulatory action in the past, including a money laundering investigation by the Central Body. The investigation found that the institution had failed to adequately implement AML/CFT measures, resulting in potential breaches of regulations.

Conclusion

It is essential that the institution takes immediate action to address these concerns and ensures its compliance with regulatory requirements. This includes:

  • Implementing effective risk-based preventative procedures for determining when to execute or reject transactions lacking required information
  • Reporting suspicious transactions to the FIU
  • Maintaining accurate records of all transactions

The reputation of a financial institution is crucial in maintaining public trust and confidence in the financial system. Any failure to comply with AML/CFT regulations can have severe consequences, including fines, penalties, and even criminal charges.