Myanmar Central Bank Mobile Financial Services Regulations

MFS Regu Final(Website)(4‐4‐2016)‐5.docx

Myanmar Central Bank Mobile Financial Services Regulations (Monetary Law/Regulation 01/03-2016) (March 30, 2016)

The Central Bank of Myanmar issues these regulations under Sections 132 and 184 of the Monetary Law to ensure that financial service providers operate efficiently, effectively, and securely.

Chapter 1: Name, Applicability, and Definitions

These regulations shall be known as the Mobile Financial Services Regulations.
These regulations apply to providers of mobile financial services and related parties.

Definitions
3. The following terms used in these regulations have the specified meanings:
(a) Mobile Financial Services (MFS): Refers to services using mobile technology for payment and receipt of funds, as well as the provision of financial services. (b) Mobile Financial Services Provider (MFSP): Refers to non-bank financial institutions authorized by the Central Bank under these regulations to operate mobile networks. (c) Agent: Refers to persons or entities appointed under an agency agreement to assist the MFSP in providing mobile financial services. (d) Agent Service: Refers to the process where an agent assists customers in using mobile financial services. (e) Agency Agreement: Refers to the contract concluded between the MFSP and the agent. (f) Float: Refers to the total balance of mobile money accounts held by the MFSP at a bank, which it is obligated to pay to customers on demand. This represents the amount deposited in the float account opened by the MFSP at a bank. (g) Customer: Refers to an individual or entity that has opened or uses a mobile money account. (h) Customer: Refers to an individual who buys and sells goods and services. (i) Mobile Money Account: Refers to a mobile money account established by the MFSP for customers to use as a medium of exchange for financial services. (j) Mobile Network Operator (MNO): Refers to a licensed telecommunications company under the Telecommunications Law.

Chapter 2: Licensing of Mobile Financial Services Providers

Any individual or entity wishing to operate as an MFSP must establish a separate company under the Myanmar Companies Act and obtain a license from the Central Bank in accordance with its requirements. This provision does not apply to commercial banks.

Licensing Requirements
5. The applicant must meet the following requirements to operate mobile financial services:
(a) Minimum paid-up capital of 30 million Kyat.
(b) Submit the following documents and information to the Central Bank for licensing:
(1) Registration fee equal to 0.1% of the paid-up capital.
(2) Type and nature of mobile financial services to be provided.
(3) Types of mobile financial services to be operated.
(4) Business plan for the next two years, including location, agent network, fees and charges, cost structure, and staffing information. (5) Detailed information on the board of directors and senior management, including fitness and propriety criteria. (6) No-objection letter from the Ministry of Transport and Communications regarding the MNO, and a no-objection certificate from the relevant regulator for non-bank financial institutions. (7) Other information and documents requested by the Central Bank.
6. The Central Bank will approve or reject the application within 90 days from receiving a complete submission.

Fees and Charges
7. If the Central Bank determines that there is excessive market concentration, it may periodically set fees and charges for MFSPs.

Chapter 3: Appointment of Agents and Agent Responsibilities

Agent Appointment Requirements
8. (a) An MFSP must submit the following information to the Central Bank within two weeks after appointing an individual or entity as an agent:
(1) Agent name.
(2) Location and business address of the agent.
(3) Complete contact details of the agent.
(4) Key terms of the agency agreement differing from standard clauses.
(b) If any information changes, the MFSP must notify the Central Bank within two weeks of the change.

Central Bank Requirements and Agent Utilization
9. (a) An MFSP may:
(1) Use agents exclusively or jointly for customer services.
(2) Maintain dedicated agents for its operations.
(3) Be legally responsible for services provided through its appointed agents and related matters.
(4) Submit an internal audit report on controls to the Central Bank within one month of commencing operations. (5) Publicly disclose the list of agents, permitted services, fees, and charges. (b) To utilize agents, an MFSP must submit the following to the Central Bank:
(1) Two-year business plan for agent locations and services.
(2) Risk management policies and operational procedures for agents.
(3) Services provided through agents.
(4) Certified copy of the agency agreement template.
(5) Risk management policies and procedures for services provided through agents.
(6) Risk assessment report detailing mitigation measures.
(7) Agent operational policies and procedures.
(8) Other information requested by the Central Bank.
(c) The Central Bank may permit agent utilization based on submitted information.
(d) Agents must inform customers of all fees and charges, including those not set by the MFSP.
(e) Agents must clearly display fees and charges at their business locations and inform customers when opening accounts.

Chapter 4: Responsibilities of Mobile Financial Services Providers

MFSP Systems and Internal Controls
10. An MFSP must maintain at least the following systems and controls for its mobile financial services:
(a) Adequate internal control systems, risk management frameworks, and operational procedures.
(b) Internal policies, procedures, and responsibilities under the Anti-Money Laundering Act and Counter-Terrorism Financing Act. (c) Comprehensive operational continuity plans and disaster recovery measures. (d) Periodic internal audit schedules for system upgrades and enhancements.

Float Account Requirements
11. An MFSP must maintain a float account at a bank with an amount equal to 100% of its float. The funds must be kept separately and not commingled with other accounts, ensuring easy accessibility for customer withdrawals.
12. (a) Permitted accessible funds include:
(1) Deposits at commercial banks in Myanmar (excluding deposits linked to other operations or cash balances). (2) Other reserves permitted by the Central Bank. (b) The MFSP must submit an annual statement of accessible funds and interest/returns to the Central Bank for customer benefit. (c) The Central Bank may set conditions for float accounts opened at specific banks.

Float Account Reconciliation
13. The MFSP must reconcile its float account balance with the bank daily by 4:00 PM.
14. (a) If the accessible funds in the float account fall short of the required amount, the shortfall must be replenished by 12:00 PM the following day.
(b) Until reconciliation is completed, the MFSP may not open new mobile money accounts.

Mobile Money Account Regulations
15. (a) An MFSP must:
(1) Conduct all mobile money account and service operations in Myanmar Kyat.
(2) Comply with terms specified in the agreement between the MFSP and account holders.
(b) The MFSP must refund any requested amount from a mobile money account immediately upon request.
(c) If an amount is withdrawn, the MFSP and account holder must pay specified fees or charges as per their agreement.

Permitted Mobile Financial Services
16. (a) An MFSP may provide the following services:
(1) Opening and maintaining mobile money accounts.
(2) Depositing and withdrawing funds from mobile money accounts.
(3) Transferring funds between mobile money accounts.
(4) Domestic person-to-person transfers.
(5) Domestic person-to-business transfers.
(6) Domestic business-to-person transfers.
(7) Domestic business-to-business transfers.
(8) Other services periodically designated by the Central Bank.
(b) Mobile money accounts opened by MFSPs can be linked to bank accounts, allowing fund transfers between them.

Chapter 5: Anti-Money Laundering and Counter-Terrorism Financing for Mobile Money Accounts

Customer Due Diligence (CDD) and Know Your Customer (KYC)
17. (a) Mobile money accounts are classified into three tiers based on AML/CFT compliance requirements: Tier 1 and Tier 2 are for individuals, while Tier 3 is for registered entities/businesses.
(b) When opening accounts, MFSPs must perform KYC/CDD and maintain proper records.
(c) Services provided through agents must comply with the following KYC/CDD standards:

Tier	KYC & CDD Requirements	Daily Transaction Limit	Monthly Transaction Limit	Maximum Account Balance
Tier 1 (Individuals)	Valid ID card (primary)/Driver's license (secondary) or foreign passport.	K 50,000	K 1 million	K 200,000
Tier 2 (Individuals)	SIM card registration (primary)/Valid ID card or driver's license (secondary) or foreign passport.	K 200,000	K 5 million	K 1 million
Tier 3 (Registered Entities/Businesses)	Business registration certificate, valid bank account, supporting documents.	K 1 million	K 50 million	K 10 million

(d) MFSPs must ensure agents comply with Central Bank-prescribed KYC/CDD standards.
(e) The Central Bank may periodically adjust transaction limits and maximum balances.
(f) MFSPs operating multiple accounts must ensure that the total balance and transaction limits per account do not exceed prescribed amounts. (g) Payments to customers, tax payments, and government collections are exempt from the above account balance limits. (h) MFSPs must confirm SIM card registration data in the MNO database within 48 hours of account opening. (i) Discrepancies in accounts must be temporarily suspended until resolved. (j) Minor discrepancies may be corrected promptly without suspension if timely resolution is possible.

Chapter 6: Monitoring of Payment and Clearing Systems

Technical Standards
18. (a) MFSPs must comply with technical standards jointly prescribed by the Central Bank and the Ministry of Transport and Information Technology.
(b) MNOs may distinguish between information services and communication services provided through MFSPs.

System Reliability, Robustness, and Capacity
19. MFSPs must design their mobile financial services with the following in mind:
(a) Appropriate approval processes for service users.
(b) Adequate operational continuity plans and risk management measures.
(c) Robust systems with sufficient capacity.

Central Bank Supervision
20. (a) MFSPs must comply with the Central Bank's supervisory and inspection requirements under these regulations.
(b) The Central Bank will verify compliance, review information, systems, records, and accounts.
(c) The Central Bank may inspect records, accounts, and information of agents, service providers, joint venture partners, or licensed agent-operated entities. (d) MFSPs are responsible for monitoring and inspecting their agents, including:
(1) Collecting service types, transaction limits, and information for each agent.
(2) Ensuring compliance with risk management policies, limits, and other regulations set by the Central Bank and MFSPs.

Reporting
21. (a) MFSPs must submit prescribed reports to the Central Bank.
(b) Within three months after the end of each financial year, MFSPs must submit a certified copy of their audited annual report. (c) Any changes or enhancements to the payment system require Central Bank approval, with a 30-day prior notice and supporting documents.

Notification of Events
22. (a) MFSPs must promptly notify the Central Bank in writing within two business days of:
(1) Suspected or confirmed fraud related to mobile financial services.
(2) Operational failures affecting service quality, customer inconvenience, or other significant issues.
(3) System downtime exceeding two hours.
(4) Material information system failures or warnings.
(5) Other events designated by the Central Bank.
(b) If circumstances change, MFSPs must notify the Central Bank within two weeks.

Record Keeping
23. (a) MFSPs must maintain accurate records of mobile money accounts, customers, agents, transaction details, balances, and float account deposits.
(b) Records must be retained for at least five years.

Enforcement for Non-Compliance
24. (a) The Central Bank may take the following actions against non-compliant MFSPs:
(1) Issue directives for prompt rectification.
(2) Amend operational policies and procedures, or regulatory requirements.
(3) Suspend or revoke the operating license in the public interest.
(4) Revoke the licensing certificate.
(b) The Central Bank will issue a notice of non-compliance and required actions, except for license suspension/revocation orders. (c) MFSPs must immediately implement required actions or amend policies/procedures as directed. (d) If rectification is feasible within 14 days of receiving the notice, the MFSP must submit a justification and rectification plan to the Central Bank. (e) The Central Bank may grant an additional 14 days to consider the justification and plan. (f) If non-compliance persists, the Central Bank may revoke the license under Section 6. (g) Upon receiving the suspension or revocation order, MFSPs must...