The kyat has lost much of its value against the dollar since the Myanmar military’s 2021 takeover, and foreign currency is in short supply. © AP
These workers must send home at least 25% of their pay through authorized banking channels. If they fail to do so, both they and their employment agencies risk restrictions on their ability to work.
“Some organizations even help workers send money at their own expense,” an executive at a Thai agency said.
Under stricter enforcement measures issued in August, workers must show their employment agency proof of their remittances, and these agencies in turn must demonstrate to the government that a majority of their workers have made the required transfers. Authorities have stepped up enforcement with checks on agencies, mainly in Yangon.
Amid the political and economic turmoil that has plagued Myanmar since the 2021 military takeover, the kyat has lost two-thirds of its value against the dollar, and foreign currency is in short supply. Remittances from abroad are received by 7.5% of Myanmar households, according to the World Bank, and serve as a valuable source of foreign currency for the government.
The crackdown also comes in response to scrutiny by the Group of Seven-led Financial Action Task Force, which has raised concerns about informal hundi money transfer networks.
A Myanmar national working in South Korea reported using an informal broker introduced to them by an acquaintance to send money to family in a remote village by app, citing the low fees and better exchange rates. White-collar workers use hundi networks as well.
The FATF in October 2022 put Myanmar on its “black list” of high-risk jurisdictions — a status shared by only Iran and North Korea — citing inadequate safeguards against money laundering and terrorism financing.
The Southeast Asian country has since more closely checked the sources and purposes of money transfers. But “that’s something we’d worked on for some time, so the impact has been limited,” an executive at a foreign bank in Yangon said.
The concern for lenders and businesses now is the prospect of “countermeasures” mentioned by the FATF as its next step.
If there is a ban on setting up offices or foreign-currency transactions, that would be the end for foreign-bank branches, the executive said. It would also lead to a cash crunch for the companies they serve.
At its last plenary meeting in October, the FATF did not implement countermeasures and apparently acknowledged improvement in the military government’s awareness of money laundering risks and its management of hundi networks. Meanwhile, currency pressure on the regime has eased. Black-market rates for the kyat, which had weakened beyond 7,000 to the dollar at one point in August, have settled at around 4,400 since November.
With the next meeting slated for February, observers will be watching to see how the government is assessed in other areas, such as cooperation with the international community.
source : asia.nikkei