Financial Crime World

Strengthening Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) Measures in Myanmar

The Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) measures in Myanmar have several areas that require improvement. This article highlights the key findings from a report and provides recommendations to address these issues.

Financial Intelligence, Money Laundering, and Confiscation

Challenges with Financial Intelligence

  • The Myanmar Financial Intelligence Unit (MFIU) has access to a wide range of transaction information but struggles with staffing shortages and manual processes.
  • Suspicious Transaction Reports (STRs) are only filed by banks, and the quality is low.

Limited Investigations

  • ML investigations and asset-tracing investigations are not prioritized and do not occur in parallel with predicate investigations.

Terrorist Financing and Financing Proliferation

Prioritization of TF Cases

  • TF cases are not sufficiently prioritized and are conducted after the conclusion of CT investigations.

Gaps in Myanmar’s TF Offense and Framework

  • There are some minor gaps in Myanmar’s TF offense and framework for implementing TFS related to TF and terrorism.
  • FIs have a reasonable understanding of TFS, but smaller banks do not have automated monitoring systems.

Preventive Measures

Enterprise Risk Assessments

  • Banks are implementing enterprise risk assessments with support from CBM.

Lack of Specific Guidance

  • There is a lack of specific, detailed, and practical guidance on high-risk issues based on Myanmar’s context.
  • FIs do not sufficiently differentiate between CDD and EDD, and controls for PEPs, correspondent banking, and wire transfers are not implemented effectively.

Supervision

Measures to Prevent Criminal Ownership

  • CBM implements measures to prevent criminals owning or controlling banks but does not comprehensively check beneficial ownership.
  • CBM supervision of banks is guided by detailed guidance for onsite and offsite monitoring, and increasingly risk inputs from the MFIU and offsite supervision.

Lack of Enforcement Actions

  • However, CBM has not imposed serious enforcement actions in recent years.

Recommendations

  1. Strengthen MFIU’s operational capabilities: Improve the quality of STRs and enhance its ability to disseminate financial intelligence to support ML investigations.
  2. Improve TF case prioritization: Ensure a more effective response to terrorist financing by coordinating TF cases with CT investigations.
  3. Enhance FIs’ understanding of TFS: Implement automated monitoring systems for transactions and accounts, and provide specific guidance on high-risk issues based on Myanmar’s context.
  4. Improve CDD and EDD controls: Enhance the implementation of customer due diligence (CDD) and enhanced due diligence (EDD) controls, including for PEPs, correspondent banking, and wire transfers.
  5. Enhance CBM supervision: Comprehensively check beneficial ownership and impose serious enforcement actions when necessary.

By addressing these areas of improvement, Myanmar can strengthen its AML/CFT measures and better prevent and combat money laundering and terrorist financing in the country.