The U.S. Office of Foreign Assets Control (“OFAC”) issued General License 20 for Myanmar (Burma) on December 7, 2015, which authorizes certain trade related transactions that were previously prohibited due to the role of sanctioned parties in the country’s ports and other trade infrastructure.
The U.S. sanctions regime for Myanmar, although substantially reformed, continues to prohibit transactions with Specially Designated Nationals (“SDNs”). According to OFAC policy, this prohibition extends to entities in which an SDN has a more than 50% ownership interest. Because of the presence of SDNs and their affiliates in the Myanmar economy and their ownership interests in the economy’s trade infrastructure, some otherwise lawful transactions have had a nexus with sanctioned parties.
The country’s main port in Yangon is operated by Asia World group, which is owned by Steven Law who has been designated as an SDN. As a result, U.S., European and Japanese companies have been concerned about sanctions risks and banks have blocked funds transfers between trade parties even though the only connection to a sanctioned entity has been shipment through the Asia World port facility. For example, banks have blocked payments from US importers to small Burmese exporters such as shrimp farmers because their product has been shipped through the Asia World port, even though the export/import transaction has not involved Asia World or Steven Law as a party to the transaction.
The General License authorizes transactions that are ordinarily incident to the export to or import from Myanmar of goods, technology or non-financial services as long as they are not to, from or on behalf of an SDN or blocked party. Thus, for example, trade with non-sanctioned parties that happens to pass through a SDN-operated port are not prohibited and, according to the OFAC statement accompanying the General License, “trade finance transactions and paying port fees as well as shipping and handling charges associated with sending goods to or from Burma” are permitted (www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20151207.aspx).
The General License permits banking and other services incident to authorized trade, including insurance. Banks may unblock property blocked on or after April 1, 2015 which would have been authorized under the General License, subject to reporting requirements.
The General License is valid for six months until June 7, 2016 (unless otherwise extended). The General License does not apply to trade to, from or on behalf of a SDN or parties in which an SDN holds a greater than fifty percent interest, directly or indirectly. It also does not authorize transactions related to the import to the United States of rubies or jadeites from Myanmar or jewelry containing the same, which remains prohibited.