A shop owner advertises the Wave Money mobile banking service. (AFP)

Junta weaponises digital banking transition to starve resistance funding

Resistance fighters say ramped-up financial surveillance has made it harder to fund their struggle, as new central bank rules separate ordinary people and business owners from their money.


Ma Thinzar thought her small business selling imported clothes over Facebook had survived the military takeover. Those around her were forced to shutter operations amid the economic downturn that followed the February 2021 coup. However, she had continued to serve a loyal Yangon customer base, despite a free-falling kyat eating into her margins.

That was until September 19, when the 29-year-old discovered that KBZ Bank had closed her mobile money account without prior warning.

“It just happened this morning when I tried to transfer money to my supplier in Thailand,” she told Frontier on the day of the closure. “There was more than four million kyat (US$1,900) in my account!”

“I’m trying to keep my business afloat despite the skyrocketing cost of dollars, and now this has happened to me. The bank said the account was closed because it had shown multiple transactions over recent months, and now they can’t reopen it.”

“I’m extremely angry and depressed at the same time,” she said, noting that her business had operated within the shifting rules laid down by the junta-controlled Central Bank of Myanmar.

Ma Thinzar is one of many people affected by intrusive new rules from the CBM that make it easier for the junta to monitor how citizens’ cash is spent. The rules apply to mobile wallets, whose use has shot up since the military put withdrawal limits on ATMs shortly after the coup, severely reducing the availability of cash. While this “digital transformation” may be beneficial in normal circumstances, it has been weaponised by the regime in the absence of a functioning legal framework to protect users.

At the start of 2021, Yoma Bank’s Wave Money had over 65,000 agents across Myanmar. (Frontier)

Four cuts, digitised

The new rules were contained in an August 15 directive sent to mobile money providers and seen by Frontier. In it, the CBM said all users of mobile banking applications had to “upgrade” their accounts or they would be frozen. To upgrade, an account holder must supply providers with a photograph and video of their face, a copy of their national identity card, and their mobile phone and SIM card numbers. Point 7 of the directive specifies that “CCTV must be installed in all agents’ shops to record both senders and beneficiaries [of mobile money transactions]”.

Over the following month, there were hundreds of anecdotal accounts of mobile money wallets being frozen, predominantly those held by Myanmar’s largest bank, KBZ. Inside sources told Frontier that no effort had been made by the CBM or junta to claim the balance of frozen accounts, and that funds remain in mobile money operators’ trust accounts. Operators have told customers they can reclaim funds, but it is unclear if any have managed to do so

The CBM directive is part of raft of measures that allow the junta to more accurately locate and identity citizens. These include a threat to deactivate SIM cards that are not registered to a Citizen Scrutiny (or “National Registration”) Card, strict night-time inspections of homes to check for unregistered guests, and a demand that citizens request permission from local administrators to travel before moving between regions. There have also been credible reports that the regime is attempting to establish “smart cities” by importing face recognition CCTV technology from China.

In theory, by firmly linking users’ faces, names and personal details to accounts that previously only required a telephone number to open, the CBM’s August directive allows providers to tie each digital transaction to a distinct sender and beneficiary. Interception laws that preceded the coup mean providers must surrender this information, along with a users’ banking history and location, to the junta on request.

Although bureaucratic inefficiency and a lack of technical know-how may prevent the junta from fully using its surveillance tools, recent prosecutions show it is already using this information to locate, starve and in some cases kill its opponents.

In a press conference on September 20, military spokesperson Major-General Zaw Min Tun said the new CBM rules were mainly aimed at cracking down on fraud facilitated by mobile payments. However, he betrayed what was probably the regime’s real concern when he added, “It’s also to protect agents from being abused by the terrorists [opposition groups] and later charged in terrorism-related crimes.”

Although it has targeted a range of dissidents, the regime is most concerned with cutting supply lines to the armed resistance groups and the parallel National Unity Government, which it has labelled terrorist organisations. As battles again erupt in Rakhine State, and with the dry season likely to promote fiercer fighting, armed resistance groups continue to pose an existential challenge to the regime. To cut off their financing is, for the junta, more vital than ever, and resistance sources told Frontier the regime had had some success in doing this.

Aside from freezing accounts and removing sender anonymity, point 8 of the CBM’s August directive states that people wanting to maintain or set up a “Level 3” account – enabling large mobile transactions, in excess of 5 million kyat ($1,600) – must now gain, in person, written recommendations from both their local administrator and police force. This is an impossible ask for those forced by the junta to go into hiding or operate from “liberated” territory controlled by resistance groups.

A source working for the NUG from Thailand told Frontier last month that several of his KBZPay mobile money accounts had been closed without explanation.

“All my accounts were used for fundraising for our shadow government, who I work for remotely. All of them were frozen by KBZ Bank earlier this year, so I began using a trusted friend’s account, but even that was closed last week. It contained around 1 million kyat ($473) which I can’t access anymore,” he said.

“When I contacted their call centre, KBZ said the account was closed by direct order of the [junta]. They apologised but said there was nothing they could do about it,” he said, adding that we was too frightened to report the account closures on social media, for fear of arrest and torture if deported to Myanmar.

Ko Bike Pu, a fighter from a People’s Defence Force in Sagaing Region, told Frontier that his battalion had accepted public donations via KBZPay and WavePay before the directive was introduced, but now most of the group’s accounts had been closed.

“We lost all the contributions, and all of our missions have been delayed because of it. We are now being very careful about how we take donations over these apps, and are thinking of alternative approaches,” he said.

Another resistance fighter operating in Bago Region in territory controlled by the Karen National Liberation Army told Frontier that his battalion is now almost entirely dependent on funds from supporters abroad, deposited to accounts opened by his friends and other trusted individuals. “We don’t register the accounts with our own names. We use different names; some of which are family members, or close friends,” he said.

As the junta attempts to suppress and control access to funds, armed resistance groups are turning to a digital currency that is beyond the regime’s reach.

A member of Yangon-based anti-coup youth organisation Octopus, which organises flash mob protests in the city, told Frontier that his group was now using NUGPay – a payment platform that uses a digital kyat – to receive funds both from inside the country and from overseas.

“Since last year, all our KBZPay accounts have been exposed by military supporters and reported to the [junta] for closure. We migrated to WavePay to receive funds by using secret codes, until this new CBM policy was introduced,” he said.

“We’ve since opened NUGPay accounts to receive funds in an alternative way. There are agents and fees to pay depending on the transaction you make, and it works via a QR code which is generated by the payee and scanned by the beneficiary,” he added.

NUGPay was launched by the NUG’s Ministry of Finance and Investment on June 26 as a pilot project, with up to 10,000 users able to join. According to an NUG announcement on August 2, 5,000 users have opened accounts so far.

Since the new digital kyat uses blockchain technology, the military council cannot trace transactions, and users can top up money into NUGPay through its official agents. As the use of QR codes suggests, there is no need for an account holder to ever reveal a phone or account number linking them to their wallet.

However, the junta has outlawed NUGPay, putting anyone with the application on their phone in danger of arrest. This might inhibit the growth of the platform as a safe, efficient funding medium for the resistance.

Restrictions on ATM withdrawals put in place by the junta have caused more people to rely on mobile wallet transactions. (Frontier)

‘I’ve given up’

While the junta may be primarily targeting resistance financing, many ordinary citizens and businesses have been locked out of their accounts. When they complain, banks and mobile money providers often provide them with contradictory explanations, or claim to be unable to help, suggesting they contact the CBM, which rarely if ever responds.

“I’ve been using KBZPay for a long time – with the same SIM code, under the same registered name – but I can’t transfer anything,” said Ma Nan, a woman in Lashio in Shan State, about the freezing of her account last month.

“I spoke to the call centre who, after checking all my info, said everything was correct and that it had been a mistake to shut down my account. They told me to email the CBM, who’ve yet to reply,” she told Frontier.

Ma Thae Hsu, a sales executive who runs an online shop from Yangon, had a similar experience when her account was suddenly closed on September 18.

“I saw that my Level 2 KBZPay account, which has always been registered to the same SIM and name, had been closed … When I asked the bank for a reason, the agent told me it’s because I had a lot of money! I was just selling and buying things for my [online] shop … there was exactly 176,362 kyat! ($83),” she said.

“They later apologised, blamed the CBM and asked me to email it a complaint letter … but still, no reply [as of September 22],” she added. “To be honest, I’ve given up. They didn’t even warn me before they did such a thing. I’d say they [the bank] are stealing from their own customers.”

A September 22 article in junta mouthpiece the Global New Light of Myanmar quoted a KBZ statement that similarly invited customers to “report to CDM directly if their accounts are frozen unfairly”. The article also warned that users failing to follow the new procedures would have their accounts “cancelled”.

Mobile money providers contacted by Frontier refused to talk on record due to fear of reprisals.

However, Ko Myo Aung, an agent for WavePay in Yangon’s Insein township, said the CBM’s measures had made it harder for ordinary people to support their families.

“Many Wave users rely on the service to transfer money to their loved ones in other parts of the country,” he told Frontier. “I think the main purpose [of the new measures] is to gather more information on users, to monitor them until they can decide whether they are supporters of resistance groups or not.”

“They [mobile money providers] should have sent customers warnings first. Because they didn’t, people are extremely angry. Among the KBZPay and WavePay users whose accounts were closed are those who run online businesses, such as clothing stores and bakeries. If [the companies] want to close the accounts, they should at least allow users to withdraw their hard-earned cash beforehand,” he added.

“But now, all of their profits are gone.”

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