Government authorities in Myanmar are zooming in on potential money laundering in the booming real estate industry as they investigate the investments of a former prime minister’s grandson linked in a deal with a business tycoon subject to U.S. financial sanctions.
After parliament passed an anti-money laundering law in March, government authorities have emphasized strict regulations requiring businesses to report property and other transactions worth more than 100 million kyats (about U.S. $100,000).
The move comes amid concerns about a massive inflow of “black money” into the country’s property sector, industry executives say.
“We will investigate that amount of money [that exceeds 100 million kyats] — whether it is money-laundering or a bid to evade taxes,” Soe Myaing, joint secretary of the newly set up Central Committee for Anti-Money Laundering, told RFA’s Myanmar Service.
Anyone suspected of money laundering would be investigated, and no one would be above the law, Myaing said.
The government and Financial Intelligence Unit (FIU) are stressing the self-reporting policy for transactions worth more than U.S. $100,000 to especially protect the real estate market from illegal activities, officials said.
The FIU, like the Central Committee for Anti-Money Laundering, comes under the Home Ministry.
Voluntary reporting
For now, the FIU must rely on voluntary reporting from businesses about large transactions because new rules and regulations supplementing the anti-money laundering law are not expected until October, The Irrawaddy online journal reported.
Myanmar real estate officials however say the voluntary reporting of deals over U.S. $100,000 will be difficult to enforce.
“People in the market would be afraid of doing business because they’d have to report it,” Khin Maung Than, chairman of the Myanmar Real Estate Service Association, told RFA.
He called on individual real estate agents to collaborate with the association to help get the word out that self-reporting was nothing to fear.
Real estate deals in Yangon can reach as much as U.S. $3 million-U.S. $4 million, he said.
Nevertheless, officials remain optimistic about the impact their efforts will have.
When the FIU files charges against those who violate the country's anti-money laundering law, their property could be confiscated, but only by the courts, according to an Eleven Myanmar report.
Industry officials believe there is little possibility that businesses tied to the real estate association are involved in money laundering since the group received an official seal of approval from the Ministry of National Planning and Economic Development.
Kyaw Ne Win investigation
The government's strict supervision of huge investments come amid an investigation into the capital and property holdings of former prime minister Ne Win's grandson, Kyaw Ne Win, who is a member of a consortium that wants to purchase part of prominent businessman Tay Za's stake in Asia Green Development Bank Ltd., according to the Myanmar Times.
The bank and Tay Za are on the U.S. Treasury Department’s blacklist for financial sanctions because of Za’s links to the previous military junta.
He is described as “a notorious regime henchman and arms dealer” by the U.S. Treasury.
The FIU recently sent a report on the investigation of Kyaw Ne Win's holdings to President Thein Sein's office, but has yet to receive a response, according to Eleven Myanmar.
The FIU is also said to be investigating five cases in which “black money,” or money earned illegally and not declared for tax purposes, may have been laundered through property sales and purchases, the newspaper said.
Under the current regulations, the government is authorized to collect a combined income and stamp tax of 35 percent on property transactions valued at more than 300 million kyats (U.S. $300,000).
Although Myanmar has laws to check money laundering activities linked to terrorism, it is now trying to curtail domestic crime while improving its international image to attract more foreign investment.
Meeting to be held
Myaing said the Central Committee for Anti-Money Laundering plans to hold a meeting soon to discuss the latest situation.
The committee issues final decisions on money-laundering cases brought to it by FIU.
It has complied with a request from the Financial Action Task Force (FATF), an intergovernmental body that develops and promotes policies to combat money laundering and terrorist financing, to formally designate any financial support to terrorists a crime, Myaing said.
He also pointed out that most of the black money in Myanmar came from sales of drugs.
Myanmar is about to sign memorandums of understanding with Japan and the United Kingdom for information exchanges pertaining to transnational money laundering, Eleven Myanmar reported.
Myanmar already has signed agreements with Bangladesh, Indonesia, Nepal, Russia, Sri Lanka, South Korea and Thailand, the report said.
Myanmar was ranked in the anti-money laundering (AML) Index 2014 published by the Basel Institute on Governance with the tenth highest overall risk score on a list of about 160 countries.
Reported by Thin Thiri and Khin Khin Ei of RFA's Myanmar Service. Translated by Khet Mar. Written in English by Roseanne Gerin.