Why Is Myanmar on the Blacklist of FATF?

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An international watchdog has added Myanmar to its blacklist for terrorist funding, joining Iran and North Korea. This is another blow to the already shaky reputation of Myanmar’s military. The Group of Seven (G7) major countries established the Financial Action Task Force (FATF) in 1989 with the primary mission of combating money laundering. Since then, it has broadened its focus to include stopping the spread of WMD and money for terrorist organizations. Financially, the FATF’s recent action was a vote of no confidence in the military regime that took control in February 2021, which stoked a countrywide war and caused the country’s economy to tank. The real problems, however, existed long before the coup. As FATF president Raja Kumar put it, “This is for failing to resolve a substantial number of strategic shortcomings in its anti-money laundering and counter-terrorist financing systems.”

Consequently, the FATF urges other nations to conduct more stringent due diligence in their dealings with Myanmar. The FATF flags countries whose AML/CFT controls are inadequate. Since Myanmar has not adequately handled the AML/CFT recommendations, the FATF declared that the nation has been classified as a high-risk jurisdiction subject to a call for action. FATF has also suggested that member nations immediately ban Myanmar and apply additional due diligence measures. However, this does not necessarily spell the end of any and all financial dealings with Myanmar. Rather, such deals will be subject to more stringent regulations and more thorough due diligence.

The blacklist; what does it mean? 

Myanmar has been added to the Financial Action Task Force’s list of high-risk nations having severe inadequacies in countering money laundering, terrorist funding, and proliferation financing (FATF). This implies that responsible authorities and financial institutions must take extra due diligence procedures to manage the increased risk associated with financial transactions involving Myanmar, such as:

  • Acquiring more identifying information from a larger variety of or more credible sources and utilizing it to inform the individual customer risk assessment doing further searches (e.g., verified unfavorable media searches) to inform the individual customer risk assessment
  • Commissioning an intelligence study on the customer or beneficial owner to better comprehend the risk that the customer or beneficial owner is engaged in criminal conduct
  • Verifying the source of cash or riches involved in the business partnership to ensure that they are not the proceeds of crime
  • Obtaining extra information from the consumer regarding the purpose and intended nature of the business connection

– S. M. Saifee Islam is a Research Associate at the KRF Center for Bangladesh and Global Affairs (CBGA), Dhaka, Bangladesh.

Published in The Geopolitics [Link]