The Directive defines an “Agent” as any business entity partnering, through an agency agreement, with a bank approved by the CBM to provide banking services. “Agent Banking Service” refers to the services that Agents may perform on behalf of the banks. This Directive explicitly outlines the roles and responsibilities of banks, Agents, and the CBM. Now, let’s explore the crucial details below.
Application Process: Banks seeking to appoint an Agent must submit a detailed application to the CBM, including information on the Agent’s business history, infrastructure, and personnel, along with proof of payment of 200,000 MMK per Agent as service fees.
Evaluation Criteria: They must evaluate the proposed Agent’s suitability, considering factors such as the stability of their business over the past two years, no history of borrower defaults, and sufficient infrastructure and personnel for secure and effective banking services.
Regulatory Compliance: They must ensure that agents adhere to anti-money laundering (“AML“) and combating the financing of terrorism (“CFT“) regulations and may conduct regular inspections to verify compliance.
Responsibilities: They are responsible for their appointed Agents’ actions, providing operational guidelines and risk management training, and maintaining internal control systems. They must conduct all agent banking services exclusively in MMK through designated agents.
Security Measures: Both banks and Agents must implement robust security measures to safeguard banking information and mitigate risks associated with internal and external threats.
Reporting Requirements: They must regularly submit reports on Agent banking operations to the CBM, providing monthly updates and an annual activity summary.
Termination Conditions: The Directive outlines specific conditions for terminating the agreement between the bank and the Agent, including financial fraud, breach of terms, or failure to compensate for losses.
Public Disclosure: If an agreement is cancelled or terminated, the bank must publicly announce the decision through national newspapers, media outlets, or at the Agent’s business locations.
Agent Application Requirements: The organization seeking to act as an Agent for a bank must provide the following information in its application.
- Name of the organization;
- Documentation proving compliance with relevant laws for establishment;
- Details of business operations for the past two years preceding the application, along with the relevant license or registration certificate;
- Statement detailing experience in the financial services industry;
- Financial statements or tax returns for the past two years;
- Business address and contact telephone numbers;
- Evidence of financial sufficiency to support all agency operations;
- A certificate confirming completion of training on AML and CFT; and
- Any additional information deemed necessary by the bank.
Authorized Banking Services: The Agent, as per the agreement with the bank, is authorized to offer the following banking services.
- Cash deposits and withdrawals;
- Collecting invoices and submitting them to the bank;
- Collecting documentary evidence related to loan recovery and loan applications;
- Domestic remittance;
- Disbursement of pensions, allowances provided by the Union, and social benefits such as grants from social organizations;
- Checking account balances;
- Facilitating correspondence services between banks and customers; and
- Providing banking services as permitted by the CBM from time to time.
The CBM monitors and regulates banking activities, including the approval process for applications and addressing incomplete submissions. Completed applications receive approval within three months, while incomplete ones are returned with specified requirements. Applications undergo review upon resubmission; if they still need to be completed, they are rejected. The CBM also conducts investigations, requests information from banks and appointed Agents, conducts field inspections, terminates agency contracts, and instructs banks to take corrective actions for Agent misconduct. Additionally, periodic field inspections are carried out at agent locations providing banking services.
Per the Financial Institutions Law, non-compliance with any conditions or terms outlined in this Directive by banks and Agents will result in actions against them. To sum up, the Directive underscores the CBM’s commitment to promote financial inclusion and ensure the integrity of the banking system. By fostering partnerships between banks and Agents, it aims to extend the benefits of formal financial services to underserved populations, driving economic growth and prosperity across the nation.
