The Financial Action Task Force (FATF) warned that Myanmar could face its highest level of financial sanctions later this year if it fails to make significant progress in combating money laundering and terrorist financing, potentially placing it alongside Iran and North Korea under full international countermeasures.
In a statement released June 19, the Paris-based global financial watchdog said Myanmar remains on its blacklist because its compliance with anti-money laundering and counter-terrorism financing standards continues to fall short of expectations. FATF said it will review Myanmar’s progress in October and could consider imposing additional measures if deficiencies persist.
Myanmar’s military regime has taken some steps to address concerns, including establishing a financial intelligence unit, conducting joint international investigations into transnational money laundering, and seizing related assets and materials. However, FATF said urgent shortcomings remain.
The watchdog said Myanmar’s financial intelligence unit must improve its analysis and dissemination of information related to money laundering and take action against networks responsible for converting illicit funds into legitimate assets.
Myanmar, a member of the Asia/Pacific Group on Money Laundering, was returned to the FATF blacklist in October 2022 after failing to meet minimum international standards. It had previously been removed from the blacklist in 2016 after being listed from 2011.
The country currently remains subject to Enhanced Due Diligence (EDD), requiring foreign financial institutions to conduct heightened scrutiny when dealing with Myanmar-based banks and businesses. FATF warned that continued failures could result in Myanmar being designated as a jurisdiction subject to countermeasures, the organisation’s most severe category.
Such measures could include calls for member countries and financial institutions to sever banking relationships, deny the establishment of foreign branches or subsidiaries, and restrict or suspend financial transactions involving entities from the sanctioned country.
North Korea and Iran are currently the only countries subject to full FATF countermeasures.
The FATF statement also highlighted the continued growth of online scam operations in Myanmar and the persistence of illicit financial flows linked to such activities.
During a visit to China last week, Myanmar junta chief and self-appointed President Min Aung Hlaing acknowledged the threat posed by online scams in an interview with Chinese state broadcaster CCTV.
“All countries need to participate and cooperate. Only in this way can online scams be eradicated,” Min Aung Hlaing said, describing the issue as a major global challenge.
Economic analysts warn that a move to full countermeasures could further isolate Myanmar from the international financial system. One economist, who requested anonymity, said the country lacks sufficient legal mechanisms to prevent the laundering of funds generated by rapidly expanding online scam syndicates.
“If Myanmar is designated as a country subject to countermeasures, it could become more disconnected from the international financial system and foreign currency transfers could be blocked,” he said. “There will be major impacts on imports, trade and financial transactions.”
A banking industry source, who also requested anonymity, said Myanmar citizens and companies could face increased difficulties opening bank accounts abroad, while foreign banks could be discouraged or prevented from operating in the country.
Efforts to obtain comment from Central Bank board member Dr. Zaw Oo were unsuccessful.
Following its return to the blacklist in 2022, Myanmar’s military junta pledged to work toward removal from the FATF list. Nearly four years later, the country remains under enhanced scrutiny, with the prospect of tougher sanctions looming if progress remains insufficient.
