FATF Status

Myanmar is on the FATF list of Countries that have been identified as having strategic AML deficiencies.

Latest FATF Statement  -  23 June 2023

In February 2020, Myanmar committed to address its strategic deficiencies. Myanmar’s action plan expired in September 2021.

In June 2022, the FATF strongly urged Myanmar to swiftly complete its action plan by October 2022 or the FATF would call on its members and urge all jurisdictions to apply enhanced due diligence to business relations and transactions with Myanmar. Given the continued lack of progress and the majority of its action items still not addressed after a year beyond the action plan deadline, the FATF decided that further action was necessary in line with its procedures and FATF calls on its members and other jurisdictions to apply enhanced due diligence measures proportionate to the risk arising from Myanmar. When applying enhanced due diligence measures, countries should ensure that flows of funds for humanitarian assistance, legitimate NPO activity and remittances are not disrupted.

Myanmar has continued to work with the FATF to strengthen the effectiveness of its AML/CFT regime by raising awareness and supervising FIs and DNFBPs for compliance with targeted financial sanctions.

Myanmar should continue to work on implementing its action plan to address these deficiencies, including by: (1) demonstrating an improved understanding of ML risks in key areas; (2) demonstrating that on-site/offsite inspections are risk-based, and hundi operators are registered and supervised; (3) demonstrating enhanced 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; and (7) managing seized assets to preserve the value of seized goods until confiscation.

The FATF urges Myanmar to work to fully address its AML/CFT deficiencies, including to demonstrate that its monitoring and supervision of MVTS is based on documented and sound understanding of ML/TF risks to mitigate undue scrutiny of legitimate financial flows.

Myanmar will remain on the list of countries subject to a call for action until its full action plan is completed. 

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 2023. According to that Evaluation, Myanmar was deemed Compliant for 7 and Largely Compliant for 18 of the FATF 40 Recommendations. It remains 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

Overview

In 2021, Burma failed to make progress on improving its anti-money laundering/combating the financing of terrorism (AML/CFT) regulatory framework and enforcement.  Burma remains extremely vulnerable to money laundering because of a sizable illicit economy, a banking sector on the verge of collapse and lacking public trust, and a military regime that overthrew a lawfully elected civilian government and has walked away from previous, precoup AML/CFT reforms.  In 2020, prior to the February 1, 2021 military coup, Burma issued new AML guidelines and worked to implement 2019 AML regulations on customer due diligence (CDD) and supervision of remittance service providers.  The regime has not implemented the new guidelines following the coup.

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.

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                         20

World Governance Indicator – Control of Corruption             13

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

On February 1, 2021, Burma’s military seized power in a coup d’état that reversed the economic progress of recent years. The military’s brutal crackdown on peaceful protests destabilized the country, prompted widespread opposition, and created a sharp deterioration in the investment climate. Burma’s economy shrank by 18 percent in 2021, according to the World Bank, which forecasts three percent growth in 2023. The regime’s ongoing violence, repression, and economic mismanagement have significantly reduced Burma’s commercial activity, compounded by the pro-democracy Civil Disobedience Movement that emerged in response to the coup. Immediately after the coup, the military detained the civilian leadership of economic ministries as well as the Central Bank of Myanmar (CBM) and replaced them with appointees who are beholden to the regime.

The CBM has imposed severe foreign exchange restrictions that limit commercial activity, and the regime severely limits access to U.S. dollars. Onerous import licensing and foreign currency conversion rules, as well as frequent power outages and reliance on generators have dramatically raised costs for business and limited both companies’ ability to move inputs into and produce products in Burma, as well as pay employee salaries and repatriate any profits from sales and asset liquidations. Suspensions of internet and other telecommunications have restricted access to information and seriously hindered business operations, particularly those of U.S. companies reliant on telecom and Internet Service Providers that are increasingly under the direct control or ownership of the regime’s Ministry of Transport and Communications (MoTC). The Bureau of Industry and Security’s addition of the MoTC to its Entity List on March 6, 2023, limits most network equipment exports to MoTC without an export license.

Many foreign companies have suspended operations, invoked force majeure to exit investments, and evacuated foreign national staff. These departures continued through March 2023. The rule of law is absent, regime security forces engage in random violence, disproportionally respond to pro-democracy People’s Defense Forces, and arbitrarily detain perceived regime opponents, including labor organizers and journalists. Companies invested in the market face a heightened reputational risk. There is also the potential for the regime to expropriate property or nationalize private companies. In response to the coup, the U.S. government has imposed targeted sanctions, including on members of the regime’s State Administration Council (SAC), ministers, and other authorities. The United States has also suspended its Trade and Investment Framework Agreement and instituted more stringent export controls. In the 2022 Business Advisory for Burma, the United States reaffirmed that it does not seek to curtail legitimate business and responsible investment in Burma. Nevertheless, investors should exercise extreme caution, including when assessing potential reputational and regulatory risks associated with regime-affiliated businesses, and conduct heightened due diligence when considering new investments in this market.

Country Links

Central Bank of Myanmar