This Policy and Procedures outlines Farmers Development Bank (FDB)’s measures;
- To mitigate and manage to protect money laundering and terrorist financing by using the products and services of the bank.
- To identify, assess, monitor, manage and mitigate money laundering and terrorism financing risks including the risks associated with new products or technologies.
2. Governance Structure
2.1 Board Compliance Committee
The Board Compliance Committee shall be responsible for the following duties and responsibilities;
- Approving the Policy and Procedure concerns with AML/CFT.
- Reviewing the compliance and integrity risks which will occur in the Bank’s activities reported by the Management Committee and Chief Compliance Officer
- Reviewing AML/CFT matters reported form the Compliance Department.
- Instructing to ensure the Bank’s compliance and integrity related policies and rules are up to date and in line with any laws, rules, regulations, orders and directives enacted by the related regulators and international standards.
- Deciding the cases and complaints relating to compliance matters reported by the Management Committee and Chief Compliance Officer.
2.2 Management Compliance and Regulatory Committee
The Management Compliance and Regulatory Committee shall be responsible for the following duties and responsivities-
- Reviewing the Policy and Procedure concerns with AML/CFT.
- Managing and reporting to BOD related to the compliance and integrity risks which will occur in the Bank’s activities.
- Reviewing AML/CFT matters reported by the Compliance Department.
- Ensuring the Bank’s compliance and integrity related policies and rules are up to date and in line with any laws, rules, regulations, orders and directives enacted by the related regulators and international standards.
- Reviewing and reporting to the BOD concern with the cases and complaints relating to compliance matters.
- Carrying out other duties and responsibilities delegated by the BOD .
2.3 Compliance Department
The Compliance Department shall be responsible for the following duties and responsibilities-
- Drafting the Policy and Procedure concerns with AML/CFT and reporting to Management Committee and the BOD.
- Reporting to BOD or Management Committee related to the compliance and integrity risks which will occur in the Bank’s activities.
- Ensuring the Bank’s compliance and integrity related policies and rules are up to date and in line with international standards.
- Reporting the cases and complaints relating to compliance matters.
- Reviewing and approving for business transactions of High-risk customers.
- Reviewing, assessing and recording all related AML/CFT matters.
- Having the exclusive right to conduct Off-Site Monitoring and On-Site Inspection for all AML/CFT related matters to every Branches.
- Communicating with all organizations concerns with AML/CFT matters.
- Forming the Units including the Front-Line Compliance Officer for every branches.
- Holding the AML/CFT related training quarterly for all employee of the Bank.
- Carrying out other duties and responsibilities delegated by the BOD.
3. Due Diligence
FDB shall perform the following due diligence process –
- Identification and verification of the customer, including walk-in/occasional customers, beneficial owners.
- Risk assessments of the customer as well as transactions.
- Application of customer due diligence measures to customers.
- Exercising ongoing customer due diligence measures in relation to business relations and transactions.
- Application of enhanced customer due diligence measures to high-risk customers, including Politically Exposed Persons (PEPs) and Designated Non-Financial Businesses and Professions (DNFBPs).
- Maintaining records and information of customers and transactions.
- Monitoring transactions for all complex, unusual large or unusual patterns that have no apparent or visible economic or lawful purpose; and any business relationship or transaction with a person from or in a country which does not apply sufficient measures to prevent money laundering and financing of terrorism;
- Examining the background and purposes of transaction or business relationships as far as possible, and the findings shall be recorded in writing.
- Ensuring high standards of integrity while recruiting employees.
3.1 Customer Due Diligence (CDD)
- FDB shall not maintain or open an account or business relationship of unknown identity or in fictitious names.
- FDB shall ensure that the Bank know the identity of their customers, including beneficial owners and related parties.
- FDB must verify the identity of the customers and obtain reliable, independent source documents, data, or information as briefly describe in the SOP.
- FDB shall take Legible file copies of the relevant identification documents for all customers both natural and legal persons.
- FDB may engage in the business relationship with the customer prior to the completion of the customer verification process if the following circumstances are met- (a) When the verification occurs as soon as reasonably practicable
(b) When it is essential not to interrupt the normal conduct of business,
(c) When the ML and TF risks are effectively managed.
3.2 Enhanced Customer Due Diligence
- FDB shall apply enhanced customer due diligence procedures to customers or transactions that have been identified as high risk and shall conduct the facts as briefly describe in the SOP.
- FDB shall undertake enhanced CDD measures when carrying out occasional transactions of a customer who has no established relationship with the bank if the transaction amount is equal to or above the threshold of Kyat or any other currencies equivalent of (USD 15,000), including situations where the transaction is carried out in a single operation or in several operations that appear to be linked.
- FDB must verify the identity of the customers using reliable, independent source documents, data, or information as briefly describe in the SOP.
- FDB shall apply the enhanced customer due diligence measures to higher risk customers at each stage of the customer due diligence process and on an on-going basis.
- Enhanced customer due diligence measures for business relationships with customers not physically present for the purpose of identification, FDB shall perform the following: (1) certification of documents in line with relevant Laws and Directives;
(2) requesting additional documents and development of independent verification measures and/or contact with the customer.
3.3 Politically Exposed Persons
- FDB shall conduct enhanced Due Diligence when the Customer meet the criteria for Political Exposed Persons (PEPs) or related to PEPs and is one of the Designated Non-Financial Business and Professionals (DNFBPs) and detail process will prescribe in the SOP.
- FDB shall establish appropriate risk-management systems to determine whether a customer or beneficial owner is a politically exposed person and apply the additional customer due diligence measures.
- Measures for determining who is a politically exposed person, whether a customer or beneficial owner, should include: (1) seeking relevant information from the customer;
(2) referring to information about the customer;
(3) referring to commercial electronic databases of PEPs; and
(4) taking reasonable measures to determine whether the beneficiary(ies) of a life insurance policy and/or the beneficial owner of the beneficiary are politically exposed persons. This should occur, at the latest, at the time of the payout.
3.4 Determination of Beneficial Owner
- If FDB determines that the customer is acting on behalf of one or more beneficial owners, FDB should verify the identity of the beneficial owner by using relevant information or data obtained from a reliable source such that the bank is satisfied that it knows the identity of the beneficial owner.
- The information to be obtained on a beneficial owner should be consistent with Customer Identification Documents as briefly describe in the SOP.
- The requirement prescribed in (a) and (b) includes accounts opened by lawyers or law offices on behalf of their clients and by trustees. FDB should apply customer due diligence measures on the beneficial owner in these cases.
- If a customer is a company listed on a stock exchange, FDB is not required to identify and verify the identity of any shareholder or beneficial owner of the company provided that the company is subject to adequate disclosure requirements to ensure transparency of beneficial ownership. In this case, FDB should only obtain customer identification documents on the company itself and obtain the relevant identification data from public register or if not available from a public register, FDB shall obtain the information from the customer.
- Relating to customers that are legal persons or arrangements, FDB should take adequate measures to understand their ownership and control structure.
- With respect to such legal persons or arrangement, identification should be made of each natural person that: a. Owns or controls directly or indirectly more than 20 percent of the legal entity or exercises control of the legal person or arrangement through other means;
- With respect to legal arrangements, identification should be made of the Settlor, trustee, protector, beneficiary or of persons in similar positions and any other person exercising ultimate effective control including through a chain of control/ownership.
- FDB shall obtain information (including the following but not limited to) of the trustee before it establishes a business relationship or carries out an occasional transaction equal to or above the threshold; a. A trustee shall disclose its status to the bank.
b. Is responsible for the management of the legal entity.
b. A Trustee shall provide the banks with information on the beneficial ownership and the assets of the trust to be held or managed under the terms of the business relationship.
3.5 Shell banks and cross border correspondent banking relationships
FDB shall not enter or continue a correspondent or business relationship with a shell bank in a foreign country that allows its accounts to be used by a shell bank.
Before entering a cross-border correspondent banking relationship or other similar relationships, in addition to performing normal customer due diligence measures, FDB shall:
- Gather sufficient information about the respondent bank and understand the nature of the respondent’s business.
- Evaluate the anti-money laundering and combating the financing of terrorism controls measures implemented by the respondent bank.
- Based on publicly available information, evaluate the reputation of the respondent institution and the quality of supervision to which it is subject, including whether it has been subject to a money laundering or terrorist financing investigation or regulatory action.
- Obtain approval from senior management before establishing new correspondent relationships.
- Clearly understand and document the respective anti-money laundering and combating the financing of terrorism responsibilities of each bank.
- With respect to “payable-through accounts”, be required to satisfy themselves that their respondents have performed CDD obligations on customers with direct access to the accounts and that respondents can provide relevant CDD information upon request.
3.6 New products and business practices
FDB shall identify, assess and, take appropriate measures to manage and mitigate the money laundering or terrorism financing risks that may arise in relation to:
- The development of new products and new business practices including new delivery mechanisms for products and services; and
- The use of new or developing technologies for both new and pre-existing products.
- The risk assessment should take place prior to the launch of the new products, business practices or the use of new or developing technologies.
3.7 Wire or Electronic Transfers
In relation to wire or electronic transfers, either ordering or beneficiary ,FDB shall report the following transactions to the FIU:
- A cross-border wire or electronic transfer in excess of USD 10,000 or the amount as required and determined by the Central Body from time to time;
- A domestic wire or electronic transfer in excess of 100 million kyats or the amount as required and determined by the Central Body from time to time;
- A transfer where the originator’s information is incomplete or unavailable.
3.8 Due Diligence for Employee
FDB shall establish screening procedures to ensure appropriate standards when hiring employees and such procedures shall be approved by the Board of Directors or such other management body of the bank. Employee screening procedures must ensure that:
- employees have the high level of competence necessary for performing their duties;
- employees have appropriate ability and integrity to conduct the business activities of the bank;
- potential conflicts of interests are taken into account, including the financial background of the employee;
- fit and proper and code of conduct requirements are defined;
- persons charged or convicted of offences involving fraud, dishonesty or other similar offences are not employed by FDB.
4. AML/CFT Risk Management
FDB shall set up the AML/CFT Risk Management process including the following steps;
FDB shall aware of and identify the types of ML/TF risks that arise from;
- products and services;
- delivery channels;
- geographic regions and markets.
FDB shall develop techniques and mechanisms to measure or quantify risk and which will allow to assess the quantum of each type of ML/TF risk with which it is faced and the likely duration of such risk. FDB shall considers a specific type of customer to represent a high ML/TF risk and shall at all times be aware of the number of such customers it has and the types and volume of business activity and transactions they are conducting.
FDB shall develop a framework for controlling risk that establish clear lines of authority and reporting lines and responsibilities. FDB shall communicate its policies, procedures and limits to all employees and business units involved in the management of ML/TF risks to effectively control the risk.
FDB shall establish effective systems for the on-going monitoring of the bank’s risk exposures and the effectiveness of associated risk management systems and practices. FDB shall set up Management Information Systems (MIS) that measure their inherent ML/TF risks and changes in such exposures.
FDB shall effectively and consistently implement the above measures to successfully mitigate ML/TF risks as the outcome.
5. Sanction List and Account Freezing
FDB shall follow the sanction list set up by both national level and international level;
5.1 National Sanction List
FDB shall follow the processes that instructed by the CBM for the National Sanction List. The detail processes will be set up in the SOP.
5.2 International Sanction List
FDB shall follow for International Sanction Lists from the following Entities and detail processes will be set up in the SOP-
- Consolidated United Nations Security Council Sanctions List (UN)
- United States Department of the Treasury’s
- Office of Foreign Assets Control (OFAC)
- Office of Financial Sanctions Implementation HMT (OFSI)
- European Union Consolidated List (EU)
- Lists maintained by other G7 member countries
5.3 Account Freezing
FDB shall follow the instruction of CBM that describe in the Official Letter send to our bank concern with Black Listed Customer.
6. Record Keeping
FDB shall gather and maintain customer and beneficial owner(s) information throughout the course of the business relationship. Documents, data, or information and business correspondence collected under the customer due diligence process shall kept up to date and will review Quarterly and relevant by undertaking reviews of existing records at –
- A significant transaction is to take place;
- There is a material change in the way the account is operated;
- Information held on the customer is insufficient to enable the bank to understand the nature of the banking relationship or transactions being conducted.
FDB shall maintain copies of all records evidencing the identities of customers and beneficial owners.
FDB shall maintain clear copies of all records obtained through the customer due diligence process, account files and business correspondence, for at least five years after the business relationship has ended or a transaction with a customer who does not have an established business relationship with the bank has been carried out.
FDB shall maintain all records of transactions, both domestic and international, attempted or executed for at least five years following the attempt or execution of the transaction. Such records must be sufficiently detailed to permit the reconstruction of each individual transaction.
FDB shall maintain copies of reports sent and related documents for at least five years after the date the report was made to the FIU.
FDB shall set up the Training Program separately. FDB shall plan trimonthly the following training programs coordinate with Human Resource Department-
- Staff Onboarding Training
- Knowledge Sharing Training based on CBM’s Guideline.
- High-Level Workshop and Seminar coordinate with Regulators.
FDB shall arrange effective program to train the bank’s staff on all issues related to their AML/CFT regime and it is important that staff understand the bank’s inherent ML/TF risks and the nature of the measures that have been developed to mitigate these risks. Training will provide for all staff on joining the bank and will be an-ongoing activity. Apart from general training provided to all staff, targeted training programs will be developed for specific categories of the nature of their work in the context of ML/FT risks. AML/CFT awareness raising programs will be conducted for members of the Board of Directors.
FDB shall follow any penalties that enacted in Anti-Money Laundering Law (2014) and Rule (2015), Counter Financing Terrorism Law (2014) and Rule (2015), CDD Directives enacted by the Central Bank and any other AML /CFT related laws, rules, regulations, orders and directives that will be enacted or amended from time to time.
FDB shall maintain an adequately resourced and independent audit function to ensure that the compliance officer and staff are performing their duties in accordance with its AML/CFT internal policies, procedures, systems and controls.
FDB shall audit the AML/CFT processes by Internal Audit and shall provide all data and documents conducted by the On-Site and Off- Site Inspection of the Central Bank of Myanmar.
Based on this Policy, the Compliance Department shall have the right to set up SOPs, Instructions and Guidance to emphasize the detail processes regarding AML/CFT processes of the Bank.
This Policy is reviewed annually and the Board of Director shall give the approval with Signature.
- Financial Institutions Law (2016)
- Anti- Money Laundering Law (2014)
- Counter Financing Terrorism Law (2014)
- Anti-Money Laundering Rules (2015)
- Counter Financing Terrorism Rules (2015)
- AML/CFT Risk Based Management Guidance Note (2015)
- Directive for the CDD Measures (18/2019)