Central Bank of Myanmar Issues New Compliance Requirements for Foreign Personnel
On 2 August 2021, the Central Bank of Myanmar (“CBM”) issued a statement on compliance requirements for the appointment of foreign employees, including advisers, for banks (“Statement”). The Statement repeals the earlier announcement by CBM on 20 May 2020. The Statement comes into force on 2 August 2021.
Under the Statement, banks have to seek CBM’s approval before recruiting foreign employees. This is to ensure that the bank’s operation can sustainably continue when the foreign employees resign or terminate their employment as well as when they are absent from their duties.
Under the Financial Institutions Law 2016 (“FIL 2016”), banks mean an entity licensed by CBM to carry on banking business. It includes licensed commercial banks, development banks and foreign bank branches.
Position and number of foreigners allowed
Governor or vice governor: Citizen owned banks are not allowed to appoint foreign employee as governor or vice governor.
Chief Executive Officer (“CEO”): If a foreign employee is appointed as CEO, the deputy CEO must be a Myanmar citizen.
Head of Department (“HOD”): If a foreign employee is appointed as HOD, with only 50% of such positions to be held by foreigners, the deputy HOD must be a Myanmar citizen. The probation period for HOD will be one year and other lower rank than HOD will be six months. The maximum term of employment is three years including the probation period and it can be extended to a maximum of two years.
Director: If foreigners are on the Board of Directors due to the bank’s equity participation, the bank must submit to CBM for its approval, which is on a case by case basis.
The number of foreign employees allowed by CBM is based on market share as below:
|Type of Bank||Market Share||Maximum no of foreign employees|
Banks have to seek CBM’s prior approval at least 30 days before appointment of a foreign employee. In this regard, banks are required to submit to CBM documents such as, draft employment contract, curriculum vitae and recommendation letter from previous organisations and undertaking letter that the foreign employee has not been involved in any political and criminal activities nor are they blacklisted. They must also not be involves in any money laundering and terrorist financing activities.
Regarding current foreign employees, if the term of the contract has yet to be completed but is in compliance with the Statement, the employment contract will have to be amended to be in line with the Statement and submitted to CBM.
If the number of appointed employees exceeds the limits set by the Statement, the bank has 30 days, from the date of the Statement, to submit to CBM a plan to downsize the number of foreign employees.
Obligations of the Foreign Employee
Under the Statement, foreign employees are obliged to do the following:
- They must be consistent with the fit and proper criteria issued by CBM and provisions under FIL 2016.
- The foreign employee must work together and provide training for the local Myanmar employee in the relevant professional role. In this regard, banks are obligated to develop a training plan for knowledge sharing with the view that the role undertaken by the foreign employee can be done by a local Myanmar employee.
- CBM is to be notified if the foreign employee is travelling to a foreign country for family-related or business-related matters. Such travel should not be more than three months, otherwise approval by CBM is needed. The bank will need to notify CBM upon the return of the foreign employee.
- CBM is to be notified one week in advance before the foreign employee:
- returns to their country in the event of a termination or completion of employment; or
- moved to other organisations.
- All applicants of stay permit and visa shall abide with local existing laws and act with proper conduct.
The bank have to submit to CBM, every three months, the foreign employee’s personal information, duties and work responsibility. Furthermore, the bank have to take responsibility for their foreign employee in respecting and complying with the existing laws in Myanmar. If the foreign employees are found to have violated the laws or lack proper conduct, reports must be sent to CBM and the employment contract will be terminated immediately.
Failure of banks to comply with the Statement, CBM will impose administrative penalties in accordance with FIL 2016. Section 154 provides penalties for financial institutions, their directors, members, executives, shareholders, officers, managers and staff. Penalties includes warnings, fines, orders including those restricting the operations of financial institutions, and suspension or permanent termination from duties in the financial institutions.
ZICO Law Myanmar will continue to monitor any update any further developments from CBM and other regulatory bodies.
If you have any questions or require any assistance in relation to the handling of data protection and privacy in Myanmar, please contact Thuzar Tin or the ZICO Law Myanmar partner you usually deal with.
This article is for general information only and is not a substitute for legal advice.