Experts move against money laundering

The government has formed a committee to combat money laundering in the country, aiming to get off a list of the world’s worst offenders.

Experts from 15 different institutions including government ministries as well as the Central Bank and Supreme Court were named to the Anti-Money Laundering Central Board last week.

The board’s joint secretary U Soe Myaing said Myanmar longs to be removed from the list of countries with a bad reputation in money laundering.

“Foreign investors and the country’s economy are slowed by the impact of perceptions of money laundering ,and the global community deals with us critically,” he said.

Separately, investigators have also said they are looking into the capital and property of U Ne Win’s grandson, U Aye Ne Win, who is part of a consortium planning to buy part of businessman U Tay Za’s stake in Asia Green Development bank.

Meanwhile, the intergovernmental organisation Financial Action Task Force (FATF), which focuses on money laundering, once again pointed to Myanmar as a major source of money laundering in an October 2013 report. It listed Iran and North Korea as the worst offenders, while 11 countries including Myanmar occupied the next spot.

Officials say Myanmar has taken steps to stem money laundering. It enacted an Anti-Money Laundering Law in March, modernising a law that officials said was 70 percent outdated.

The new law incorporated 40 recommendations from FATF in areas like penalties, with a one-year prison sentence implemented for convicted launderers. The new law also lays out the role of the judge and offers two or three chances to appeal.

U Soe Myaing said that not only laundered money will be seized, but also the properties funded by the unclean money.

While banks will be the main target of efforts, Myanmar will also investigate jewellery shops, notaries and real estate agents, he said.

“With e-banking, money transfers will be so fast, meaning money laundering will also be fast,” he said. “If we cannot handle the problem effectively, our country will drift into nightmares.”

Experts pointed out that the most prominent money launderers in Myanmar are likely keen to repatriate funds that were moved abroad during the previous regime, though added illegal income has also found its way into the property sector.

Economist Sean Turnell, associate professor at Australia’s Macquarie University, said laundered funds can be most profitably applied back home in all sorts of projects.

“This requires a degree of ingenuity to bring it back, but most often through front companies presenting the money as foreign investment, remittance flows and so on,” he said.

“The front line for money laundering is the ‘banking system’ which must identify illicit funds through ‘know thy customer’ and other requirements. There are laws in place for this in Myanmar, and the CBM seems to be doing all it can which brings us again to the banking system broadly, and banks individually,” he said.

Myanmar’s banking sector has been regarded as containing some money launderers, with Myanmar Universal Bank particularly well known for its role before being shut down in 2005. The government has seized about US$200 million in 73 cases of money laundering since 2004, according to officials from the Financial Investigation Unit (FIU).

U Thurein Zaw, FIU senior investigator, said five current suspects will be prosecuted under the old laws, as new rules and regulations are still being drafted.

Agencies such as gold shops and banks are also required to confirm a customer’s identity and report to the FIU when they use more than K100 million at a time, he said.

The FIU is also investigating U Aye Ne Win’s family property and foreign currency after hearing about their plan to purchase shares of Asia Green Development bank from prominent entrepreneur U Tay Za – beginning several months before reports in local media, he said. However, U Thurein Zaw said the organisation would issue any more information on it at this time.

FIU police captain U Myint Soe said it is important to figure out who is the ultimate beneficiary of a business, as rich people often hide their profiles.

Myanmar has also signed agreements with several countries on the issue, including Russia, Nepal and Sri Lanka this year, and Indonesia, South Korea and Thailand in previous years.


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