Myanmar Tightens Grip on Anti-Money Laundering Laws
Introduction
The Financial Institutions Law (FIL) and Anti-Money Laundering Law (AML Law) have played a vital role in reforming and developing Myanmar’s financial sector. The FIL, enacted in 2016, has attracted foreign investment and promoted financial inclusion by clarifying the licensing of banks and non-bank financial institutions.
Key Provisions
- The AML Law prohibits money laundering, including concealment, acquisition, conversion, or use of illegally obtained funds, financing of terrorism, and predicate offenses.
- Banks, such as KBZ Bank, must adhere to the provisions of the AML Law by implementing effective anti-money laundering and counter-terrorism financing (AML/CFT) programs.
Central Bank Requirements
The Central Bank of Myanmar (CBM) requires banks to: + Conduct regular risk assessments + Establish a comprehensive know-your-customer due diligence process + Implement transaction monitoring mechanisms + Report suspicious transactions to the Financial Intelligence Unit (FIU) + Develop effective frameworks and practices to manage their money laundering/terrorist financing risks
Internal Policies and Procedures
Banks are required to adopt, develop, and implement internal policies, procedures, systems, and controls to combat money laundering and terrorism financing. KBZ Bank, for example, must undertake enhanced customer due diligence measures when carrying out occasional transactions of a customer who has no established relationship with the bank if the transaction amount is equal to or above the threshold.
Risk Management Practices
The CBM issues guidelines on risk management practices for banks, requiring them to: + Establish comprehensive risk management systems overseen by their Board of Directors + Define seven types of key financial risks and set out standards for assessing risk management systems under its risk-based approach to supervision
Effectiveness and Future Prospects
Myanmar’s anti-money laundering laws have been praised for their effectiveness in promoting financial stability and transparency. The country’s efforts to combat money laundering and terrorism financing are seen as a crucial step towards joining the global financial community.