Central Bank issues anti-money laundering guidelines

The Central Bank of Myanmar (CBM) has published guidelines for financial institutions on managing the risks of money laundering and terrorist financing.

Guidance on customer due diligence for banks, finance companies and money changers, will also be announced soon, said Daw May Toe Win, director at the Central Bank’s financial institutions regulation and anti-money laundering department.

“Our initial guidelines have been recognised by inter-governmental organisations, and we will announce details of customer due-diligence guidelines for combating money laundering very soon,” she said.

The initial guidelines were issued in late January, and made public on September 29 via the CBM website, so that foreign banks would have access to an English version, she said.

Effective risk management is required under the Basel Committee’s core principles for effective banking supervision and the Financial Action Task Force (FATF)’s 40 recommendations, according to the CBM notice.

The Basel Committee sets the global standard for banking regulation, supervision and practices, and the FATF is an inter-governmental body which develops and promotes policies to fight money laundering and terrorist financing.

The FATF reported in June 2015 that while Myanmar has taken steps towards improving its anti-money laundering and combating the financing of terrorism regime, it has not made sufficient progress in implementing its action plan.

It recommended that Myanmar should adequately criminalise terrorist financing; implement adequate procedures to identify and freeze terrorist assets; ensure an operationally independent and effectively functioning financial intelligence unit; and strengthen customer due diligence measures.

Under the Basel Committee’s core principles, supervisors – such as Myanmar’s Central Bank – must make sure banks have a comprehensive risk management process to “identify, measure, evaluate, monitor, report and control and mitigate all material risk on a timely basis,” said the CBM notice.

Risks can arise from a number of sources, such as customers, products and services, delivery channels, and geographic regions and markets, it said.

Lenders must set up effective policies and processes – including customer due-diligence rules – to promote highly ethical and professional standards in the financial sector, and prevent banks from being used, intentionally or not, for criminal activities, it said.

The FATF requires countries at a national level to identify, assess and understand country-specific money laundering and terrorist financing risks.

“In addition it is expected that countries will ensure banks identify and assess [money laundering and terrorist financing] risks arising from their operations and take the measures necessary to effectively mitigate such risks,” said the CBM.

Risk assessments and additional information should be documented, kept up to date, and be readily available for the Central Bank to review on request.

U Mya Than, chair of Myanmar Oriental Bank (MOB), said that banks received a CBM checklist several years ago, and have since been required to report any suspicious activity to the Central Control Board investigation body.

However, the recent CBM instructions will help banks understand how to become more compliant, he said.

“In Myanmar, banks mostly need to identify money laundering activities related to corruption and drugs trading, rather than terrorism.” As MOB is working with the World Bank and the International Finance Corporation, ensuring compliance with anti-money laundering standards is important, he said.

Banks are generally required to report any transactions over K100 million (about US$10,000) but they should also raise the alarm over unusual smaller transactions, said U Soe Thein, a banker and former official at the Ministry of Finance.

Banks are not yet able to carry out customer due diligence to an international standard, as banking services are still very new in Myanmar, said U Soe Thein, adding that banks often lack the technology and software to identify blacklisted individuals.

Source: Myanmar Times

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