ISSUE: 2026 No. 47 ISSN 2335-6677 EXECUTIVE SUMMARY • Since being labelled a “Jurisdiction of Concern” by the Financial Action Task Force (FATF) in 2022, Myanmar’s military government has undertaken efforts to improve its technical compliance with the FATF’s recommendations on anti-money laundering and countering the financing of terrorism (AML/CFT). • The focus on technical compliance has not adequately addressed the interaction of AML/CFT recommendations with economic policy changes – namely, the regime’s multiple exchange rate system, which is a key driver of informal financial flows. This points to a fundamental challenge – Myanmar’s regime is supposed to regulate informal financial flows that are incentivised by its own self-serving economic policies. • The target of the regime’s crackdowns on informal financial flows includes money agents, known as hundis. Though connections between hundis and illicit activities such as drug production and scam centres exist, hundis’ primary business is facilitating informal trade and migrant worker remittances. Previous military regimes have acknowledged the largely legitimate nature of the hundi system. • Myanmar’s military regime uses AML/CFT compliance less to address actual money laundering, and more as a tool to compel individuals and businesses to use the statecontrolled financial system. This increases the regime’s access to and control over foreign currency and is a novel method of using global rules on financial crime as a cover for authoritarian economic controls to capture foreign exchange. • The regime also uses AML/CFT compliance to target politically connected persons, conflict opponents and non-profit organisations. This tactic, when combined with the lack of an independent judiciary, raises questions about the effectiveness and potential abuse of AML/CFT compliance. • FATF should acknowledge that a traditional AML approach is not an appropriate or useful response to financial transactions facilitated by hundis for humanitarian or legitimate economic reasons in present-day Myanmar, and should adjust the application of recommendations accordingly. 2