Myanmar’s central bank has promised improvements and warned against currency manipulation after an international watchdog put the military-controlled country on a terrorism and financial crimes blacklist.
The Financial Action Task Force recommended that Myanmar be included among countries requiring stronger due diligence, citing deficiencies in its enforcement of precautions against money laundering and other financial crimes.
That jolted Myanmar's informal currency exchanges, where the dollar's value against the Myanmar kyat jumped to between 4,000-5,000 kyats from 2,900 kyats before falling back to about 3,000 kyats. The official exchange rate was 2,100 kyats per dollar on Friday.
The FATF removed Myanmar from its blacklist in 2016 as its economy opened up during a brief-lived time of transition toward a civilian, democratic government. But army leaders took control in February 2021. Most of the progress made toward better enforcement of anti-money laundering rules had taken place under the elected government headed by Aung San Suu Kyi.
Among its findings, the FATF's review found inadequate precautions to prevent criminals from running casinos and other non-financial businesses and professions designated for special precautions, such as property agents and gems dealers, lawyers and accountants.
It also cited weak supervision of money changers and non-bank financial institutions and mobile financial services providers, whose importance has grown after the army's seizure of power left many banks barely functioning for a time. But it welcomed progress in addressing the problems.
In its statement, the central bank said Myanmar has an “action plan” for addressing the FATF’s review. It also noted that it was not designated for countermeasures like Iran and North Korea, which are also on the blacklist.
Myanmar had increased its compliance to 24 out of 40 recommendations by the Financial Action Task Force, it said. It said the draft action plan would be implemented in the coming year.
More stringent due diligence precautions for money transfers won't prevent banks from conducting business, it said.
“Despite the high-risk jurisdictions being subject to a call for action, it is not a risk factor for Myanmar so people need not worry about it," it said.
It said actions would be taken against currency manipulation and other such “doings that do not comply with the rules and regulations of the Central Bank of Myanmar."
