Myanmar microfinance institutions to comply with Directive on Customer Due Diligence for Anti-Money Laundering and Combating the Financing of Terrorism
19 December 2019
On 13 November 2019, the Myanmar Microfinance Supervisory Committee under the Ministry of Planning and Finance released Directive No. 2/2019 on Customer Due Diligence for Anti-Money Laundering and Combatting the Financing of Terrorism (“Directive”). This Directive applies to microfinance institutions (“MFIs”) operating in Myanmar and is aimed at strengthening reporting requirements for suspicious transactions and ensuring stricter compliance for MFI activities.
The Directive stipulates that MFIs shall not provide financial services to, take financial support from, communicate and transact with clients, partners, donors and members of MFIs with unidentifiable, indistinguishable, fictitious or false names or symbols.
The Directive outlines key regulatory measures and methods of risk assessment which must be adhered to. For example, MFIs are instructed to:
- conduct periodic money laundering and terrorist financing risk assessments on all transactions in which they participate;
- maintain up-to-date written records of all risk assessments undertaken; and
- specifically regulate customers or beneficial owners deemed to be domestic or foreign politically exposed persons and/or internationally politically exposed persons as defined under the Anti-Money Laundering Law.
The Directive mandates record keeping by MFIs with regard to all transactions. This information must be readily available to the Financial Intelligence Unit and other relevant authorities. The Directive sets out the information that should be kept.
MFIs must carry out specified actions prior to entering into a business relationship with cross-border correspondent banks and other similar relationship, in addition to normal due diligence measures undertaken for customers. Both the normal due diligence measures and the specified actions are set out in the Directive. The Directive provides that MFIs are to conduct ongoing due diligence on customers in every business relationship. They shall verify all transactions to determine if they are consistent with their knowledge of the customer, business activities and risk profile, and source of funds, if necessary.