FATF AML Deficiency List
US Dept of State Money Laundering assessment
Non - Compliance with FATF MER Recommendations
Corruption Index (Transparency International & W.G.I.)
World Governance Indicators (Average Score)
International Narcotics Control Majors List
Weakness in Government Legislation to combat Money Laundering
Myanmar is on the FATF list of Countries that have been identified as having strategic AML deficiencies.
FATF Statement re AML Strategic Deficiencies: 25 February 2021
Since February 2020, when Myanmar made a high-level political commitment to work with the FATF and APG to strengthen the effectiveness of its AML/CFT regime and address any related technical deficiencies, Myanmar has taken steps towards improving its AML/CFT regime, including by resourcing the supervisory body for DNFBPs and focusing bank supervision on high-risk thematic areas. Myanmar should continue to work on implementing its action plan to address its strategic deficiencies, including by: (1) demonstrating an improved understanding of ML risks in key areas; (2) demonstrating that onsite/offsite inspections are risk-based, and hundi operators are registered and supervised; (3) demonstrating enhances in the use of financial intelligence in LEA investigations, and increasing operational analysis and disseminations by the FIU; (4) ensuring that ML is investigated/prosecuted in line with risks; (5) demonstrating investigation of transnational ML cases with international cooperation; (6) demonstrating an increase in the freezing/seizing and confiscation of criminal proceeds, instrumentalities, and/or property of equivalent value; (7) managing seized assets to preserve the value of seized goods until confiscation; and (8) demonstrating implementation of targeted financial sanctions related to PF, including training on sanctions evasion.
Compliance with FATF Recommendations
The latest follow-up Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Myanmar was undertaken in 2020. According to that Evaluation, Myanmar was deemed Compliant for 6 and Largely Compliant for 14 of the FATF 40 Recommendations. It was deemed Highly Effective for 0 and Substantially Effective for 0 of the Effectiveness & Technical Compliance ratings.
US Department of State Money Laundering assessment (INCSR)
Burma is categorised by the US State Department as a Country/Jurisdiction of Primary Concern in respect of Money Laundering and Financial Crimes
Burma’s economy and financial sector are underdeveloped, and most currency is still held outside of the formal banking system. Burma has porous borders and significant natural resources, many of which are in parts of the country that the government does not fully control.
In 2019 the Burmese government made progress regarding its AML/CFT regulatory oversight. The government issued two regulations to improve its AML regulatory framework and passed new legislation to regulate casinos. In addition, the government of Burma demonstrated renewed political will to address money laundering issues, including the establishment of a new AML task force.
Burma is designated as a jurisdiction of “primary money laundering concern” under Section 311 of the USA PATRIOT Act, but the U.S. Department of Treasury began waiving the legal ramifications in 2012 and issued an administrative exception in 2016, allowing U.S. financial institutions to provide correspondence services to Burmese banks.
There are currently EU Sanctions in place including an embargo on arms and related material, a ban on exports of equipment for internal repression and a ban on provision of certain services
BRIBERY & CORRUPTION
Rating (100-Good / 0-Bad)
Transparency International Corruption Index 28
World Governance Indicator – Control of Corruption 29
Corruption is endemic in Myanmar, presenting companies with high risks. Many businesspeople rate corruption, a weak rule of law and complex and opaque licensing systems as serious barriers to investment and trade in Myanmar. The country suffers from high levels of corruption across all sectors. In November 2015, Myanmar held its first national election, ending 50 years of military rule. Aung San Suu Kyi's National League for Democracy (NLD) won a landslide victory, which is widely interpreted as a step towards an opening up of the previously isolated country. While the government is increasingly addressing corruption issues, these remain deeply rooted and pervasive in the public and private sectors. The Anti-Corruption Law criminalises active and passive bribery in the public sector, abuse of office and attempted corruption. Facilitation payments are not specifically addressed in the law, but should be considered illegal. Gifts are illegal in principle, but there are a number of specific exceptions. The maximum punishment for corruption is fifteen years' imprisonment and a fine. For further information - GAN Integrity Business Anti-Corruption Portal
Since the transition to a civilian government in 2011, Myanmar has begun an economic overhaul aimed at attracting foreign investment and reintegrating into the global economy. Economic reforms have included establishing a managed float of the Burmese kyat in 2012, re-writing the Foreign Investment Law in 2012 to allow more foreign investment participation, granting the Central Bank operational independence in July 2013, enacting a new Anti-corruption Law in September 2013, and granting licenses to nine foreign banks in 2014 and four more foreign banks in 2016.
The government’s commitment to reform, and the subsequent easing of most Western sanctions, led to accelerated growth in 2013 and 2014. In 2015, growth slowed because of political uncertainty in an election year, summer floods, and external factors, including China’s slowdown and lower commodity prices. Myanmar’s abundant natural resources, young labour force, and proximity to Asia’s dynamic economies have attracted foreign investment in the energy sector, garment industry, information technology, and food and beverages. Pledged foreign direct investment grew from $4.1 billion in FY 2013 to $8.1 billion in FY 2014.
Despite these improvements, living standards have not improved for the majority of the people residing in rural areas. Myanmar remains one of the poorest countries in Asia – approximately 26% of the country’s 51 million people live in poverty. The previous government’s isolationist policies and economic mismanagement have left Myanmar with poor infrastructure, endemic corruption, underdeveloped human resources, and inadequate access to capital, which will require a major commitment to reverse. The Burmese government has been slow to address impediments to economic development such as insecure land rights, a restrictive trade licensing system, an opaque revenue collection system, and an antiquated banking system. The newly elected government, led by AUNG SAN SUU KYI, will likely focus on accelerating agricultural productivity and land reforms, modernizing and opening the financial sector, and improving fiscal management.
Agriculture - products:
rice, pulses, beans, sesame, groundnuts; sugarcane; fish and fish products; hardwood
agricultural processing; wood and wood products; copper, tin, tungsten, iron; cement, construction materials; pharmaceuticals; fertilizer; oil and natural gas; garments; jade and gems
Exports - commodities:
natural gas; wood products; pulses and beans; fish; rice; clothing; minerals, including jade and gems
Exports - partners:
China 37.7%, Thailand 25.6%, India 7.7%, Japan 6.2% (2015)
Imports - commodities:
fabric; petroleum products; fertilizer; plastics; machinery; transport equipment; cement, construction materials; food products, edible oil
Imports - partners:
China 42.2%, Thailand 18.5%, Singapore 11%, Japan 4.8% (2015)
Investment Climate - US State Department
Following years of isolation from the global economy, Burma in 2011 embarked on a new course and began implementing significant reforms to spur economic development and create an attractive business climate meant to generate more inward foreign investment. With the success of Burma’s historic nation-wide Parliamentary elections in November 2015, followed by the first transition to a democratic government in over 50 years in April 2016, the prospects are promising for a continued focus on inclusive economic growth. Over the past several years, the government has addressed some of the challenges facing Burma’s economy, including eliminating multiple exchange rates; reducing trade restrictions; reforming tax policy and administration; passing new arbitration, investment and labor laws; and easing some of the administrative hurdles to doing business in Burma. A revised investment law is expected to be passed in 2016. In their Doing Business 2016 report, the World Bank ranked Burma 167 out of 189 countries on the ease of doing business, a jump from the 2015 ranking of 177. Burma’s progress in the World Bank’s rankings was driven in part by improvements in regulations, costs, and procedures related to establishing a new venture and the creation of a one-stop shop for registering new businesses. The incoming government of Aung San Suu Kyi’s National League for Democracy (NLD) has already emphasized its focus on countering corruption throughout the government.
Burma’s move towards economic liberalization has improved its macroeconomic outlook. Initial forecasts of multilateral financial institutions suggest that for the fiscal year ending March 31, 2016, Burma’s real GDP growth was 7 percent, which is a decline from growth of 8.3 percent in FY 2014/15, mainly because of flood damage following Tropical Cyclone Komen and delays related to uncertainty regarding the 2015 elections and government transition. Growth is expected to rebound to 7.8 to 9 percent in FY 2016/17 because of agriculture-sector recovery and increased levels of investment after the new democratically-elected government is in place. Rising inflation affected Burma’s economic performance during FY 2015/16, driven by food shortages caused by midyear nationwide flooding, rising deficit spending, high levels of liquidity, and rising demand for consumer goods. The IMF reported inflation at 16.3 percent in October 2015, decreasing to 10.1 percent in January 2016. A recent census put Burma’s population 9 million people below previous figures. In turn, this increased per capita GDP from USD800 in 2010 to about USD1,200. According to the U.N.’s Development Program, this puts the country on track to fulfilling the per capita income criteria for graduation from least-developed country status by 2024.
Despite the reforms undertaken and improving economic indicators, the government has more work to do in order to create the foundation for a healthy investment environment that contributes to economic development and attracts foreign interest. The government has limited capacity and must prioritize among its long list of desired reforms. Currently, the country has many laws and regulations that are outdated and inadequate. Property rights are not well-established and conflicts over land title are a major concern. Investor protection, and the criteria for foreign investment, is not well-defined, and rule of law is weak. There is limited reliable market and consumer base information. The outgoing government’s investment approval procedures were at times unclear and excluded foreign participation in certain sectors.
According to the OECD’s investment policy review in 2014, Burma’s potential to attract Foreign Direct Investment (FDI) remains largely untapped. The majority of the investment that Burma received in past decades went into natural resource sectors, with only a small portion of that investment going to the manufacturing or services sectors. However, this has started to change. The sectors receiving the largest share of FDI since 2011 include oil and gas, transport and communication, tourism and power sectors.
Moving forward, observers expect the manufacturing and tourism sectors to continue growing and attracting more FDI, given the inauguration of a democratically-elected government, Burma’s re-entry into the global economy, and the removal of the majority of international sanctions. Conversely, observers suggest that political uncertainty and the rising influence of civil society might temporarily have halted or deterred new large-scale investments in the power and mining sectors that did not have sufficient support from the local communities most affected by the projects. Foreign investors are starting to explore investment opportunities in power, aircraft leasing, protection services, education, health services, banking, financial services such as accounting, and telecommunication.
However, as the World Bank’s 2014 Enterprise Services Report notes, reforms to improve Burma’s investment climate are urgently needed across a number of areas, especially in access to finance, land, electricity and skilled workers. In addition, private firms also indicate that the incidence of corruption as measured by bribe payments is one of the highest in the region. Addressing these key constraints is critical to ensuring a fair and transparent business environment in which all enterprises can grow and create jobs.
The international business community’s interest in Burma and the unique opportunities the country presents – including a rich natural resources base, a large market potential, a young labor force, and a strategic location between India, China and the countries that make up the Association of South East Asian Nations (ASEAN) – continues to grow. The U.S. Government has eased many of its economic sanctions on Burma, allowing U.S. investment, the importation of Burmese products into the United States, and the export of financial services, although remaining U.S. sanctions prevent U.S. persons from dealing with Specially Designated Nationals (SDN) and ban the import of Burmese jade and rubies into the United States. U.S. companies have expressed concern over the difficulty that remaining U.S sanctions, especially the SDN list, causes them in trying to do business in Burma. Some have also asserted reputational risks associated with Burma, given the remaining sanctions. The U.S. Government has designed the sanctions regime to target specific individuals who undermine the reform process while promoting broad and inclusive economic development, with the goal of bringing opportunities to both U.S. investors and the people of Burma, and continues to review the sanctions regime to ensure that it supports reform efforts in the country. Following the nation-wide elections in November 2015, and the inauguration of a democratically-elected government in 2016, the United States is encouraging U.S. economic engagement in Burma during this pivotal time in the country’s history. In May 2016, the U.S. Department of Treasury’s Office of Foreign Assets Control issued regulatory amendments to support U.S. trade and investment in Burma.
While the government’s efforts to date indicate tentative progress toward the goal of a sound investment framework, investors should prepare to do extensive due diligence and research in the market.
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