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Burma.

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.

Burma is a member of the APG, a FATF-style regional body. Its most recent mutual evaluation can be found at: http://www.apgml.org/members-and-observers/members/member-documents.aspx?m=e0e77e5ec50f-4cac-a24f-7fe 1ce72ec62

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 FlU's organization and structure.
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Title Annotation:Countries/Jurisdictions of Primary Concern
Publication:International Narcotics Control Strategy Report
Article Type:Report
Geographic Code:9MYAN
Date:Mar 15, 2017
Words:857
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