MYANMAR
Summary
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Sanctions

EU sanctions and Arms Embargo

FAFT AML Deficient

No longer on List

Higher Risk Areas

 

Non - Compliance with FATF 40 + 9 Recommendations

US Dept of State Money Laundering Assessment

Not on EU White list equivalent jurisdictions

Corruption Index (Transparency International & W.G.I.)

World Governance Indicators (Average Score)

Failed States Index (Political Issues)(Average Score)

International Narcotics Control Majors List (Cited)

Offshore Finance Centre

Medium Risk Areas

Weakness in Government Legislation to combat Money Laundering

 

 

ANTI-MONEY LAUNDERING

 

FATF Status

Myanmar is no longer on the FATF list of Countries that have been identified as having strategic AML deficiencies

 

Latest FATF Statement - 24 June 2016

The FATF welcomes Myanmar’s significant progress in improving its AML/CFT regime and notes that Myanmar has established the legal and regulatory framework to meet its commitments in its action plan regarding the strategic deficiencies that the FATF had identified in February 2010. Myanmar is therefore no longer subject to the FATF’s monitoring process under its on-going global AML/CFT compliance process. Myanmar will work with the APG as it continues to address the full range of AML/CFT issues identified in its mutual evaluation report.

 

Compliance with FATF Recommendations

Myanmar has taken steps towards improving its AML/CFT regime. However, despite Myanmar’s high-level political commitment to work with the FATF and APG to address its strategic AML/CFT deficiencies, Myanmar has not made sufficient progress in implementing its action plan, and certain strategic AML/CFT deficiencies remain. Myanmar should continue to work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalising terrorist financing; (2) establishing and implementing adequate procedures to identify and freeze terrorist assets; (3) further strengthening the extradition framework in relation to terrorist financing; (4) ensuring a fully operational and effectively functioning financial intelligence unit; (5) enhancing financial transparency; and (6) strengthening customer due diligence measures. The FATF encourages Myanmar to address the remaining deficiencies and continue the process of implementing its action plan.

 

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

 

Burma’s economy is underdeveloped, as is its financial sector, and most currency is still held outside the formal banking system, although bank deposits have increased over the past several years. The lack of financial transparency, the low risk of enforcement and prosecution, and the large illicit economy makes it potentially appealing to the criminal underground. Burma’s long, porous borders are poorly patrolled.

 

The Burmese government has made significant progress in addressing international AML concerns, although the efficacy of its new legislation has yet to be tested. The expressed interest of key officials in the Minister of the State Counselor’s Office and Ministry of Foreign Affairs to take a joint leadership role to marshal AML cooperation is a positive development.

 

While Burma’s designation as a jurisdiction of “primary money laundering concern” under Section 311 of the USA PATRIOT Act remains in effect, the U.S. Department of the Treasury’s administrative exception issued in 2012 was reaffirmed in October 2016.

 

VULNERABILITIES AND EXPECTED TYPOLOGIES

 

Burma continues to be a major exporter of heroin, second only to Afghanistan, and a regional source for amphetamines. The government faces the additional challenge of having vast swaths of its territory, particularly in drug-producing areas along Burma’s eastern borders, controlled by non-state armed groups.

 

Endemic corruption remains an issue despite recent economic reforms that have significantly increased competition and transparency and some of the National League for Democracy’s stances on zero tolerance.

 

The illegal trade in wildlife, precious minerals, and timber is also a source of illicit proceeds. The NGO Global Witness estimates the volume of unofficial jade exports in the tens of billions of dollars annually. In January 2016, Burma filed its first report with the Extractive Industries Transparency Initiative, which included 53 percent of official sales of jade; the government plans to deepen and broaden reporting on natural resource revenues.

 

Many Burmese rely on informal money transfer mechanisms, such as the hundi, which remain unregulated and unsupervised and, therefore, vulnerable to exploitation by criminal networks. Many business deals and real estate transactions are done in cash. Fewer than 25 percent of adults have a bank account; Burma’s cash-based economy makes it difficult for authorities to detect illicit financial flows.

 

There have been at least five operating casinos, including one in the Kokang special region near China (an area the Burmese government does not control), that primarily have targeted foreign customers. Little information is available about the regulation or scale of these enterprises. They continue to operate despite the fact casino gambling is officially illegal in Burma.

 

KEY AML LAWS AND REGULATIONS

 

Burma has made steady progress in improving the technical compliance of its legal and regulatory framework in line with international standards. Burma made meaningful progress to address its strategic deficiencies by adequately criminalizing money laundering, establishing an FIU to oversee suspicious transaction reporting, enhancing financial transparency, and strengthening CDD measures.

 

AML DEFICIENCIES

 

Burma’s AML deficiencies mainly pertain to logistical challenges, such as insufficient computer systems and limited government capacity and coordination. Financial institutions remain reliant on paper-based record keeping and on manual data entry to automated systems. The government, however, in cooperation with international donors, is taking measures to increase the automation and processing of electronic reporting.

 

The FIU relies on the cooperation of 25 entities, including customs, the Central Bank, and law enforcement, but the understanding of these groups about AML issues and procedures is limited. Planning for oversight of non-conventional financial services, such as money transfer services, microfinance institutions, and securities firms, is in the initial phases, and the Central Bank provides limited AML oversight of state-owned banks.

 

In November 2003, the United States identified Burma as a jurisdiction of “primary money laundering concern,” pursuant to Section 311 of the USA PATRIOT Act, generally prohibiting U.S. financial institutions from establishing or maintaining correspondent accounts with Burma. While the Section 311 finding remains in place, in 2012, Treasury issued an administrative exception which permits U.S. financial institutions to maintain correspondent banking relationships under certain conditions; these permissions were reconfirmed on October 7, 2016, in conjunction with the termination of the economic and financial sanctions on Burma.

 

The FATF first placed Burma on its Public Statement in 2011. On February 19, 2016, the FATF noted Burma’s progress in implementing its action plan and adopting legislation and removed Burma from its Public Statement.

 

Burma is in the process of joining the Egmont Group. Burma does not have a records-exchange mechanism with the United States but high-level law-enforcement officials have stated they are willing to engage in an MOU.

 

ENFORCEMENT/IMPLEMENTATION ISSUES AND COMMENTS

 

Burma is working on relevant implementation of the 1988 UN Drug Convention.

 

Burma’s court systems have prosecuted only about 10 money laundering cases but the government, particularly the FIU, continues to build capacity. The FIU and international donors hold regular seminars to better inform the private sector and law enforcement of Burma’s AML law, their responsibilities under the law, and the FIU’s organization and structure.

 

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SANCTIONS

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

 

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BRIBERY & CORRUPTION

 

Index

Rating (100-Good / 0-Bad)

Transparency International Corruption Index

28

World Governance Indicator – Control of Corruption

17

 

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INVESTMENT CLIMATE - Executive Summary (US State Department)

Since 2011, Burma has implemented significant reforms to spur economic development and create an attractive business climate that will generate more inward foreign investment. Promising initial steps addressing some of the core structural challenges facing Burma’s economy include: unifying the country’s multiple exchange rates, passing a new foreign investment law, reducing trade restrictions, and reforming tax policy and administration. Consequently, the international business community has renewed its interest in Burma and the unique opportunities the country presents. Burma’s rich natural resources base, its market potential, its young labor force and its strategic location between India, China and the countries that make up the Association of South East Asian Nations (ASEAN) make it even more attractive to the international community.

In response to ongoing political reform, the United States Government has eased almost all of its economic sanctions on Burma, allowing U.S. investment, the importation of Burmese products into the U.S., and the export of financial services, while the European Union and Australia have lifted their sanctions entirely (except for an arms/military embargo). Remaining U.S. sanctions prevent U.S. persons from dealing with Specially Designated Nationals and restrict the import of Burmese-origin jade and rubies into the United States. As a result of the country’s economic liberalization, reduced sanctions, and a favorable external environment, Burma’s macroeconomic outlook is largely positive. Growth, led by strong performances in the services and manufacturing sectors, rose to 7.3 percent in fiscal year (FY) 2012/13, and the International Monetary Fund forecasts that growth will further accelerate to 7.5 percent in the medium term. International trade has also increased significantly in the last few years.

Despite the Burmese government’s economic reforms 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 is having to prioritize which among its long laundry list of desired reforms to implement first. Currently, the country has many laws and regulations that are outdated and inadequate. Property rights are not well-established and land sequestration and land-grabbing remain major issues. Investor protection and the criteria for foreign investment are not well-defined, and Burma’s weak rule of law means that it does not yet have in place the proper mechanisms and instruments for enforcing contracts and property rights and for settling disputes. A lack of reliable data and information adds to the frustration that many foreign investors experience when attempting to look up market data, consumer base information and other capital and financial indicators. Investment approval procedures are not transparent, are overly bureaucratic and complex, and exclude certain sectors, prohibiting foreign participation.

Although Burma has great commercial potential, the key to unlocking that potential is a sound and transparent investment environment through economic reforms that encourage inclusive opportunity and growth. The government’s efforts to date point to a positive trajectory in achieving this goal of a sound investment framework but investors should come in with “eyes wide open.”

 

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FURTHER REPORTS

Extracted from IMF Report:  Myanmar: 2013 Article IV Consultation and First Review Under the Staff-Monitored Program

The draft Counter Terrorism Law has been finalized and is in the process of being submitted to the Parliament. The new Control of Money Laundering Law is being redrafted with the assistance of the Fund’s technical assistance to more comprehensively address the requirements of international standards. Myanmar remained committed to implement a strong AML/CFT system and to address the remaining deficiencies in its AML/CFT regime.

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