You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

April 5, 2022

Myanmar Requires Conversion of Foreign Currency Transfers and Balances to Local Currency

Subscribe to Updates

On April 3, 2022, the Central Bank of Myanmar (CBM) issued far-reaching requirements for nearly all individuals, companies, and other organizations in Myanmar to convert foreign-currency income received from abroad to kyat (MMK) within one working day of its receipt. These requirements are effective immediately for all transfers, and apply retroactively to foreign currency balances already in the country.

CBM Notification No. 12/2022 and Directive No. 4/2022, issued in accordance with the Foreign Exchange Management Law, instruct Myanmar banks that hold an authorized dealer (AD) license on converting foreign currency. Together, the notification and the directive stipulate that all foreign-denominated income received by “internal residents” from abroad into a foreign currency account opened at an AD-licensed bank must be exchanged into MMK within one working day, unless subject to regulatory exclusions. “Internal residents” include locally registered companies, organizations, and offices; Myanmar branches of foreign companies; and individuals residing or established in Myanmar for at least 183 days (excluding foreign diplomatic staff and foreign civil servants).

As noted above, the notification and the directive have retroactive effect on foreign-currency accounts holding funds that had already entered Myanmar. This means that for the purposes of these regulations, these foreign-currency amounts are treated as if they were transferred into Myanmar after the date of issuance (i.e., April 3, 2022), and are to be converted to MMK in accordance with the new rules.

The conversions are to be made at the official exchange rates set by the CBM, which for US dollars is currently USD 1 to MMK 1,850. Additionally, foreign-currency transfers out of Myanmar must be performed through AD-licensed banks with the permission of the CBM’s Foreign Exchange Supervisory Committee.

Noncompliance with the notification or directive is punishable under the Foreign Exchange Management Law with imprisonment for up to one year, a fine, or both. Exceptions to the conversion requirement and outbound remittances of foreign currency are expected at a later stage.

For more details on these foreign exchange developments, or on any aspect of financial regulations in Myanmar, please contact Tilleke & Gibbins at [email protected].

Related Professionals

Practices

Banking and Finance

Location

RELATED INSIGHTS​ 

January 26, 2023
On December 30, 2022, the Central Bank of Myanmar (CBM) updated its guidelines on the Thai baht to Myanmar kyat (THB-MMK) direct payment mechanism for Myanmar-Thailand border trade and other flows of capital. The CBM’s guidelines outline an expanded mechanism allowing more trade gates and more designated banks, stipulating banking arrangements for worker remittances, setting out a payment mechanism for exports, clarifying procedures for importing goods via the Myanmar-Thailand border trade, and instituting new reporting procedures. The THB-MMK mechanism came into being on March 3, 2022, as a pilot project for border trade in Myawaddy, Tachileik, and other areas approved by Myanmar’s Central Committee on Ensuring Smooth Flow of Trade and Goods. In this update, Myawaddy, Tachileik, Myeik, Kawthoung, Mawtaung, and other approved border trading zones are identified as open to the THB-MMK mechanism. During 2022, the following banks were approved to provide services for the THB-MMK direct payment mechanism: Approved March 4: Ayeyarwaddy Farmers Development Bank and Kasikornbank Public Company Limited Approved July 29: Myanmar Economic Bank and Bangkok Bank Public Company Limited (Yangon branch) Approved August 12: Kanbawza Bank (KBZ) and Bangkok Bank Public Company Limited (Yangon branch) Approved December 30: Ayeyarwady Bank and Bangkok Bank Public Company Limited (Yangon branch), CB Bank PCL and Bangkok Bank Public Company Limited (Yangon branch), UAB Bank and Krung Thai Public Company Limited, Myanmar Apex Bank and Siam Commercial Bank Myanmar Limited, Yoma Bank and Siam Commercial Bank Myanmar Limited Banking arrangements for workers’ remittances were also stipulated in the new update. In this regard, designated banks can process these remittances by partnering with CBM-permitted international currency transfer businesses, mobile banking service providers, and mobile money service providers after obtaining approval from the CBM. An addition to the direct payment mechanism is a requirement that exporters manage their received export
Read More
January 24, 2023
The Contract Committee of Thailand’s Consumer Protection Board has issued new requirements and prohibitions for consumer loan agreements. The Notification of the Contract Committee Re: Stipulation of Loan Business for Consumers as a Contract-Controlled Business B.E. 2565 (2022) was published in the Government Gazette on December 13, 2022, and will take effect after 90 days (i.e., on March 13, 2023). The notification repeals and replaces the Contract Committee’s previous notifications regarding the same subject matter, which were issued in 2001 (Nos. 1–2), 2002 (No. 3), and 2015 (No. 4). The notification enhances protection for consumers by extending the scope of application and stringently regulating the content of agreements for loans to individual consumers. Key Definitions The scope of the notification is largely indicated by its definitions of a few key terms: “Loan business for consumers” refers to a business in which the operator enters into an agreement to grant a loan to a consumer (i.e., not a juristic person) or to allow the consumer to borrow money from the business operator, whereby the consumer will spend money for a purpose other than their occupation or business to earn income. This includes granting loans to consumers through an electronic channel. The notification can also apply to personal loan businesses, digital loan businesses, and peer-to-peer lending businesses regulated by the Bank of Thailand. “Business operators” include financial institutions under the law relating to financial institutions; banks established under specific laws; individuals who carry out a loan business in their ordinary course of business; and juristic persons that engage in loan business, securitization business, or asset management of rights to monetary claim. Certain types of businesses and organizations—such as cooperatives—are excluded from the scope of this notification. “Interest” means legal interest in accordance with the Civil and Commercial Code, and it includes
Read More
December 8, 2022
The rapidly growing middle class in Southeast Asia is bringing with it increased household wealth, increased consumption, and increased investment. As a result, the commercial banking sector has seen a boom in the more economically developed countries of the region—especially in Thailand. A select few foreign banks have also been very successful in Cambodia, Laos, Myanmar, and Vietnam for many years, but as other banks seek to replicate their Thai success in these new markets, the field looks likely to become much more crowded in coming years. Six major Thai banks are active in at least one other jurisdiction in mainland Southeast Asia, with some already operating across them all, and many larger international banks also beginning to take note. Amid that background, this guide examines the legal frameworks for foreign banks seeking to operate in these jurisdictions, and addresses some current and upcoming developments that investors should note. The full guide is available as a PDF through the button below.
Read More
November 3, 2022
On October 31, 2022, the Department of Trade in Myanmar’s Ministry of Commerce announced that payments for importation at the border are to be made via bank transaction. This announcement comes into force with Import/Export Newsletter No. 10/2022, dated October 31, 2022, issued by the Department of Trade, with the purpose of implementing a systematic payment system for import and export at the border, in accordance with a suggestion made by the Financial Action Task Force (FATF), an international financial watchdog. (This follows the recent news that the FATF has blacklisted Myanmar.) This requirement means that only bank transactions will be accepted for import payments in the border trade. Initially, this system will be applied to trade at the Myanmar-Thailand border only. The new requirement to pay for imports only via bank transaction states that export earnings and other types of foreign currency earnings (including salary and income remitted by Myanmar workers overseas) will be allowed to be used for imports. Importers are required to make the payments for import goods—using these earnings—via their banks. That is, Importers operating in the border trade must have foreign currency earnings received through official banking channels and must make import payments abroad through official banking channels using those earnings. In contrast to previous practices, they are unable to use other sources of income and are not able to make other payment arrangements that do not involve bank transactions. The procedures for importation at the Myanmar-Thailand border are as follows: Companies applying to the Department of Trade for an import license must produce credit advice and original bank statements that prove the receipt of export earnings or other earnings into their bank account. The Department of Trade will scrutinize the reported export earnings or other earnings, and approve the import license for an
Read More