"Executive Summary: Since the military coup in Myanmar on 1 February 2021, the operational challenges around the delivery of humanitarian assistance have evolved significantly in response to new areas of conflict and displacement, access and security constraints, and the limitations of the formal financial sector. At the same time, rising conflict and displacement, surging poverty levels, and a destruction of livelihoods has led to over 14.4 million people in need according to the UN’s 2022 Humanitarian Needs Overview.1 While prior to the coup humanitarian actors in Myanmar had focused on longer-term structural and market assistance, the year since has seen a staggering rise in the need for basic needs and emergency assistance, including cash and voucher-based assistance. These concurrent shifts have forced humanitarian actors, both local and national, to expand the modalities they use to meet their operational cash needs – including paying salaries, vendors, partners, and last-mile distributions to beneficiaries. While formal (for example, mobile money providers, microfinance institutions, and bank to bank services) and informal cash transfer modalities (those who move or provide cash, regionally or domestically, without regulation and formal approval from the Myanmar authorities) have been operational for decades in Myanmar – and were widely used as part of the cross-border response and initial post-Nargis response, use of the formal financial system has been dominant for the last decade due to operational ease, reduced risks, and built-in compliance and documentation. Following the coup, the Myanmar government instituted draconian measures to limit both humanitarian agencies and individuals from accessing bank-held funds. This, coupled with the increasing security and political reasons for not engaging or being able to access formal financial institutions (including banks, mobile money providers, and payroll services), has meant reduced reliance on formal financial systems, although increased flexibility by these institutions in the past few months has meant they continue to be used by primarily international organisations to meet some of their operational cash needs. It is unknown, but likely, there will be increased scrutiny on these transactions in the near future – and there are still large concerns around data protection. New modalities – including formal financial service providers and informal cash transfer modalities – are used to meet operational cash needs in a variety of ways, including: moving cash between offices; providing/ sourcing physical cash to agencies they can use for payments; agents to source cash liquidity for bank- held funds; or payments to third-parties, including vendors, partners, and beneficiaries. This paper aims to provide an overview of the different options for sourcing and transferring operational cash – including how they work, challenges, and risks. Given the plurality of options, and the decentralised nature of the informal financial sector, it is critical there are established best-practices that provide humanitarian actors with flexibility, while ensuring that basic compliance and risk management practices are followed. In order to remain relevant and fit for the future in the protracted crisis environment, donors need to have clear risk-appetites and clarity of purpose around continued humanitarian activities. The priority should be ensuring that aid continues to flow in line with the humanitarian imperative, and that donors’ risk-threshold reflects both the need for accountability and flexibility. Policies should focus on mitigating the misuse of funding by ensuring the principles of compliance are followed, and there is clear documentation of the money flow. This paper draws from the experience of the UN, INGOs and local actors, in Myanmar and other comparable contexts, to develop an operational guide – from identification to the final receipt of funds – to guide humanitarian actors through the process. The aim is to establish clear minimum standards which can be used across the humanitarian sector, and which can be adapted by both operational partners and donors. The guidance included in this document ensures that humanitarian actors are operating within accepted compliance regulations, in line with precedent previously established in the Myanmar context as well as other fluid operating environments. Given the plurality of contexts and localised challenges, and the humanitarian imperative to reach the most vulnerable, flexibility and alternative documentation may be needed – but compliance requirements, including audit trail and vetting, will still be met. Key Recommendations Donors should have a clear risk threshold that reflects the protracted nature of the conflict and the need to ensure flow of aid in an accountable manner. Donors should support humanitarian organisations to use a wide variety of modalities to meet their operational needs, recognising the benefits, challenges and risks of each modality and why they should be used in different contexts. Using a toolbox of approaches is the only way to ensure that assistance continues to flow to the most vulnerable, in line with the humanitarian imperative, while reducing the risk of harm to humanitarian workers and beneficiaries. Donors and NGOs should understand the risks of using both formal and informal modalities. The continued use of formal financial systems, where operational and liquid, has many benefits from a compliance and fraud perspective – although determining legality raises questions around legitimacy and ability to regulate in a given However, given the ongoing conflict and scrutiny on humanitarian actors, the oversight of the formal financial system by the Central Bank of Myanmar and the SAC raises significant concerns around regulation, oversight, restriction of aid flows limiting certain partners or geographic areas, data security, and physical security in some areas, which can justify the use of informal modalities. Donors and NGOs should ensure accountability, and that there is clear documentation of the money This can be done with both formal and informal cash transfer modalities, as long as organisations’ existing policies and procedures are followed, and the principles of compliance are met with alternative documentation when a derogation from these policies is needed. Donors should support organisations to strengthen their internal controls and procedures if needed, particularly for local organisations..."