Following a White House visit by Burmese/Myanma State Counsellor Aung San Suu Kyi in September, President Obama signed an executive order on October 7, 2016 concluding 19 years of U.S. economic sanctions against Burma/Myanmar. The executive order revokes six previous executive orders authorizing sanctions against the country and waives the blocking and financial sanctions of the Tom Lantos Block Burmese JADE (Junta’s Anti-Democratic Efforts) Act of 2008.
Beginning in 1997, various executive orders and administrations declared national emergencies in Burma/Myanmar and imposed economic sanctions designed to promote democracy in the country. Pursuant to these measures, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) published the Burmese Sanctions Regulations (BSR), prohibiting U.S. persons from transacting with many of Burma/Myanmar’s leading entities.
The Obama administration has slowly eased economic sanctions against Burma/Myanmar throughout the year. Our coverage of prior easing of sanctions may be accessed online here. In a statement announcing the termination of the sanctions program as a whole, President Obama noted, “I have determined that the situation that gave rise to the national emergency with respect to Burma has been significantly altered by Burma's substantial advances to promote democracy, including … greater enjoyment of human rights and fundamental freedoms[.]”
The Termination of Sanctions
As of October 7, OFAC is no longer enforcing the BSR. The termination of the BSR has resulted in the following significant changes (among others):
OFAC will be removing the BSR from the Code of Federal Regulations. All property and property interests that had been blocked pursuant to the BSR have been unblocked. Likewise, Burmese-origin jadeite and rubies (and jewelry that contains them) can now be imported into the United States.
Banking Services for Financial Institutions
All banking-related OFAC-administered restrictions and authorizations under the BSR have been terminated. Moreover, the Financial Crimes Enforcement Network (FinCEN) is providing “exceptive relief” to U.S. financial institutions that are covered by its prohibition on maintaining correspondent accounts for Burmese banks, meaning that such financial institutions can now maintain correspondent accounts for Burmese banks provided that they conduct the required due diligence measures.
Watch List Changes
OFAC has removed all individuals and entities blocked pursuant to the BSR from its Specially Designated Nationals and Blocked Persons (SDN) List. However, Burmese individuals and entities who are on the SDN list pursuant to other sanctions programs have not been removed from the SDN list.
Voluntary Reporting Requirements
Reporting under the State Department’s Responsible Investment Reporting Requirements, which required U.S. persons to report certain investment activities in Burma/Myanmar, is now voluntary and no longer mandatory.
Generalized System of Preferences
In September 2016, the Obama administration reinstated benefits for Burma/Myanmar under the U.S. Generalized System of Preferences (GSP) program. In returning Burma/Myanmar to the GSP program, the U.S. government recognized the country’s advancement since its GSP status was revoked in 1989. Under the new policy, the U.S. government has committed to strengthening its democratic and economic ties to Burma/Myanmar.
U.S. Trade Representative Michael Froman noted, “[w]hile there is more work to be done, including to address concerns regarding human trafficking, Burma has made important progress in recent years with respect to worker rights[.]” In order to maintain its status under the GSP program, Burma/Myanmar must continue to meet several international labor standards, including affording workers the right to associate and organize, prohibiting forced labor and child labor, and establishing acceptable conditions of work.
Continued Monitoring and Screening
While the President’s announcement has resulted in the removal of several individuals and entities in Burma/Myanmar from the SDN List, the U.S. government will continue to enforce restrictions against entities, including certain Burmese/Myanma entities, added to the list under OFAC authorities other than the BSR. Accordingly, companies should remain vigilant in screening counterparties to transactions against U.S. government watch lists to ensure they are not engaging in transactions with sanctioned entities or persons.