On 14 May 2012 the Council of the EU finally adopted the Regulation required to implement its Decision of 26 April 2012 to suspend, for one year, the bulk of the restrictive measures applied to Burma/Myanmar in various forms since 1996. These relaxations follow the Council's initial temporary suspension of limited aspects of the EU sanctions regime on 17 February 2012, and the subsequent European Parliament Resolution of 20 April 2012 calling for further relaxations in the wake of the parliamentary by-elections in the country.
As reported in our Myanmar group update (April 2012) and Corporate Crime bulletin (May 2012) , the temporary suspensions of EU sanctions are intended to incentivise the Burma/Myanmar Government to continue its programme of reform, and to develop its relationship with the EU.
Council Decision 2012/98/CFSP of 17 February 2012 (without an accompanying implementing Regulation) suspended, until the next date on which the EU sanctions are due for annual renewal (30 April 2013), the travel ban applied to some 87 individuals including the President, vice Presidents, cabinet members and Speakers of the two Houses of Parliament. It also suspended, for the same period, the asset freeze applied to 24 of these individuals.
The new Council Regulation 409/2012 of 14 May 2012 extends this temporary suspension to all remaining travel bans and asset freezes, as well as restrictions on trade and investment in certain key industries (see Council Regulation 194/2008 and Council Decision 2010/232/CFSP). The arms embargo, and the related embargo on (dual use) equipment which might be used for internal repression, remain in place.
The Regulation is directly applicable in all EU Member States and would override any conflicting national legislation (such as the Burma/Myanmar (Financial Restrictions) Regulations 2009 in the UK), but national provisions may be required to manage the practicalities of these amendments. HM Treasury has today published a Financial Sanctions Notice confirming that the suspension is effective as of today's date, following the publication of Regulation 409/2012 in the EU Official Journal on 15 May 2012. HM Treasury further confirmed that the relevant individuals and entities have been removed from the consolidated list. Any assets frozen can be released without prior authorisation by HM Treasury.
Regulation 409/2012 also (permanently) removes 31 individuals from the list of members of the Government and persons, entities and bodies associated with them, whose assets were to be frozen. These are all individuals formerly designated as "persons who benefit from Government economic policies and other persons associated with the regime". There is no explanation for these deletions given in either the underlying Decision (Council Decision 2012/225/CFSP of 26 April 2012) or in Resolution 409/2012 itself. They appear to be intended to comply with the recent judgment of the Grand Chamber of the EU Court of Justice on the scope of the restrictive measures adopted in respect of Burma/Myanmar. In a rare successful challenge to the legality of EU sanctions, it was held that restrictive measures cannot automatically be applied to family members of persons considered to be "associated" with the ruling regime but must be based on "precise, concrete" evidence that they personally stand to benefit from its economic policies.
Whilst Burma/Myanmar might be held out as an example of how restrictive measures can succeed in bringing about a change in the political climate (notably by opposition leader Aung San Suu Kiy), the recent relaxations may be more instructive in highlighting the practical problems caused by overlapping sanctions regimes. Whereas the EU, Canada, Switzerland and Australia have all relaxed their sanctions regimes to various degrees, the US has embarked on a more modest relaxation although further changes are expected in due course. In the interim, given the extra-territorial application of these respective regimes, the differences between them may well undermine the significance of the EU relaxations, to some extent, in practice.
The scope for engaging in business in Burma/Myanmar is also tempered by other forms of legal restrictions. Burma/Myanmar remains designated by the Financial Action Task Force (FATF) as having strategic deficiencies in its anti-money laundering/counter terrorist finance controls, and should be treated with vigilance by all FATF member states. In a Statement on Money Laundering controls in Overseas Jurisdictions in March 2012, HM Treasury urged entities regulated under the Money Laundering Regulations 2007 to take into account the risks presented by Burma/Myanmar and other countries identified by the FATF in respect of their systems and controls to counter financial crime, and to take appropriate actions to minimise the associated risks. Burma/Myanmar is also considered to be a relatively high risk from a corruption compliance perspective, ranking 180 out of 183 on Transparency International's Corruption Perception Index 2011 (albeit that this measures perceptions of corruption rather than the incidence of corruption in the ranked jurisdictions).