Myanmar moved off money laundering watchlist

Inter-governmental body the Financial Action Task Force (FATF) has removed Myanmar from its list of states deemed weak in combating money laundering and terrorist financing, which experts think should make international banks more comfortable doing business with the country.

FATF, which counts China, the United States and India as members, released a public statement on June 24 stating that Myanmar had been removed from the list of “jurisdictions with strategic weaknesses” in their anti-money laundering and counter-financing of terrorism (AML/CFT) regimes.

The decision came after an on-site visit from a FATF team to determine whether Myanmar was making sufficient progress with recommended reforms. Those reforms included criminalising terrorist financing, freezing terrorist assets and ensuring Myanmar’s financial intelligence unit was “operationally independent”.

Freedom from the list should mean other countries and their financial institutions now find it easier to do business with Myanmar. FATF calls on member and non-member states to enforce stronger due diligence and counter-measures when dealing with countries deemed high-risk.

High-risk states are those on the strategic weaknesses list – also known as the “grey list” – and those on a more serious “black list”, reserved for countries with no action plan for addressing AML/CFT.

“Removal from the grey list should help with the process of getting international banks more comfortable with transacting with Myanmar,” said Vicky Bowman, director at the Myanmar Centre for Responsible Business. “However it won’t remove the need for companies to undertake anti-corruption diligence on, and engage with, their business partners, or the need for government to do more to simplify and automate the complex permitting processes that encourage corruption.”

Myanmar spent almost five years on the black list from June 2011 until it was moved to the grey list on February 19 this year.

The country’s graduation to non-high risk comes just a month after the United States amended its sanctions regime against Myanmar. The US removed three state-owned banks from its blacklist of Specially Designated Nationals (SDNs) in May, and added two military-owned lenders to a general licence that allows financial transactions with those banks.

Although Myanmar bankers are hopeful that the sanctions amendments will ease barriers to doing business with US firms, some commentators noted that Myanmar is still not exempt from US Patriot Act rules that require US financial institutions to undertake special due diligence when dealing with a jurisdiction where money laundering is a concern.

Peter Kuick, a sanctions expert at Inle Advisory Group and former senior sanctions adviser at the US Treasury’s Office of Foreign Assets Control (OFAC), said that in removing Myanmar from the grey list FATF had noted a “significant improvement” in the country’s AML/CFT framework and supporting laws and regulations.

“The removal should pave the way for the rescission of the measures imposed against Myanmar under Section 311 of the US Patriot Act,” he added.

But there is no guarantee Myanmar will remain off the list and the country cannot afford to be complacent.

The recent on-site visit to confirm that AML/CFT measures were in place lasted no more than three days, an FATF spokesperson told The Myanmar Times. In 2017, the country faces a more rigorous FATF Mutual Evaluation, during which an assessment team will look at just how effective the measures in place are, and whether they protect the financial system from abuse, the spokesperson said.

The IMF is among the agencies providing technical AML/CFT technical assistance in Myanmar, which occurs partly through Japanese-government-funded programs, the IMF’s country representative Yasuhisa Ojima told The Myanmar Times in March.

The IMF has helped Myanmar draft laws and regulations and, along with others, helped train staff at Myanmar’s Financial Intelligence Unit, he said.

 

Source: Myanmar Times

NB: Take note that Myanmar has been taken off the US Sanction List by President Obama’s Executive Order signed on 7th October 2016. See US terminated remaining sanctions against Myanmar on 7 Oct 2016.

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