Burma
is a low-income country, according to UN classification. However, because of
abundance of natural resources and self-sufficiency in basic food, most
citizens do not think that Burma is poor.[1]
Burma
is a resource-rich country but still suffers from pervasive government controls,
inefficient economic policies, corruption, and rural poverty. Burma is the
poorest country in Southeast Asia; approximately 32% of the population lives in
poverty. Corruption is prevalent and significant resources which are
concentrated in the extractive industries are concentrated in a few hands. The
Burmese government has initiated notable economic reforms. In October 2011, 11
private banks were allowed to trade foreign currency. On April 2, 2012, Burma's
multiple exchange rates were abolished and the Central Bank of Myanmar
established a managed float of the Burmese kyat.
In
recent years, foreign investors have shied away from nearly every sector except
for natural gas, power generation, timber, and mining. The exploitation of
natural resources does not benefit the population at large. The most productive
sectors will continue to be in extractive industries - especially oil and gas,
mining, and timber - with the latter two causing significant environmental
degradation. Other areas, such as manufacturing, tourism, and services,
struggle in the face of poor infrastructure, unpredictable trade policies,
undeveloped human resources (the result of neglected health and education
systems), endemic corruption, and inadequate access to capital for investment.
Burma,
a major drug producing and trafficking country, has a mixed economy with
substantial state controlled companies, mainly in energy and heavy industry,
and with private business primarily in agriculture and light industry. Burma’s
economy continues to be vulnerable to drug money laundering due to its
under-regulated financial system, inadequate implementation of its anti-money
laundering regime, and policies that facilitate the funneling of drug money
into commercial enterprises and infrastructure investment.
Its
economy is underdeveloped and its historically isolated banking sector has just
started taking tentative steps to connect to the international financial
system. However, Burma’s prolific drug production, relationship with the North
Korean government, the growing use of credit/debit cards connected to
international financial institutions and
lack of transparency make it attractive for
domestic and possibly international money laundering. While its
underdeveloped economy remains unattractive as a destination to harbor funds,
the low risk of enforcement and prosecution makes it appealing to the criminal
underground. Trafficking in persons and public corruption are also major
sources of illicit proceeds.
Additionally money launderers exploit the illegal trade in wildlife,
gems, and timber; and trade-based money laundering is of increasing concern.
The
Country is the world’s second largest producer of Opium. Money laundering
problems are exacerbated by a cash-based economy, and whilst anti money-laundering
legislation exists it is not enforced. Details are sketchy but because of the
major drug producing levels it must be suspected that domestic money laundering
is substantial. Commentary suggests that Casinos on the country’s borders are
used for money laundering, as these establishments are entry points to the
international financial system. The government actively encourages drug groups
to invest their profits in legitimate enterprises, and it is rumored that the
Government itself is involved in drug trafficking. There is no problem with
international organized crime as such, but domestic groups obviously present as
part of the drug production and distribution culture.
Burma
enacted a “Control of Money Laundering Law” in 2002. It also established the
Central Control Board of Money Laundering in 2002 and a financial intelligence
unit (FIU) in 2003. It set a threshold amount for reporting cash transactions
by banks and real estate firms, albeit at a high level of 100million kyat
(approximately $100,000). Since adopting a “Mutual Assistance in Criminal
Matters Law” in 2004, Burma has taken additional steps to address money
laundering and to combat terrorist financing, including adding fraud to the
list of predicate offenses and defining penalties for “tipping off” suspicious
transaction reports. As a result, FATF lifted its countermeasures in October
2004. The GOB’s 2004 anti-money laundering measures amended regulations,
originally instituted in 2003,which had set out 11 predicate offenses, including
narcotics activities, human and arms trafficking, cyber crime, and “offenses
committed by acts of terrorism,” among others. The 2003 regulations also called
for suspicious transaction reports (STRs) by banks, the real estate sector, and
customs officials, and imposed severe penalties for non-compliance.
The GOB established a Department Against Transnational
Crime in 2004 with a mandate that included anti-money laundering activities. It
is staffed by police officers and support personnel from banks, customs,
budget, and other relevant government departments. In response to a February
2005 FATF request, the Government of Burma submitted an anti-money laundering
implementation plan and progress reports. In 2005, the government also
increased the size of the FIU from 10 to 40 staff. In August 2005, the Central
Bank of Myanmar issued guidelines for on-site bank inspections and required
reports reviewing banks’ compliance with AML legislation. Since then, the
Central Bank has disbursed teams to instruct on the new guidelines and to
inspect banking operations for compliance.
Burma holds observer status in the Asia/Pacific Group on
Money Laundering and applied for full membership in 2005. Burma is a party to
the 1988 UN Drug Convention. Over the past several years, the Government of
Burma (GOB) has extended its counternarcotics cooperation with other states.
The GOB has bilateral drug control agreements with India, Bangladesh, Vietnam,
Russia, Laos, the Philippines, China, and Thailand that address cooperation on
drug-related money laundering issues. InJuly 2005, the Myanmar Central Control
Board signed an MOU with Thailand’s Anti-Money Laundering Office governing the
exchange of information and financial intelligence.
In its October 2012 Public Statement, the Financial Action
Task Force (FATF) notes that Burma has
taken steps to improve its AML/CFT
regime, including by removing its reservations to the extradition articles of several international
conventions. However, FATF expressed
concern that Burma has not made sufficient
progress in implementing its action plan and continues to have certain strategic AML/CFT deficiencies. The
United States continues to issue advisories to financial institutions, alerting
them of the risk posed by Burma’s AML/CFT deficiencies and of the need to conduct enhanced due diligence with
respect to financial transactions
involving Burma.
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