The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) eased certain sanctions against Burma/Myanmar on May 17, 2016, including by allowing most transactions involving Burmese financial institutions. Certain sanctions remain in place to incentivize further reform in Burma/Myanmar.
In connection with the eased sanctions, the former Director of OFAC and current Acting Under Secretary for Terrorism and Financial Intelligence applauded Burma/Myanmar’s reforms to date, stating “Burma reached a historic milestone over the last year by holding competitive elections and peacefully transitioning to a democratically-elected government. Our actions today demonstrate our strong support for this political and economic progress while continuing to pressure designated persons in Burma to change their behavior . . . [t]hese steps will help to facilitate trade with non-sanctioned businesses and, in turn, help the people and Government of Burma achieve a more inclusive and prosperous future.”
OFAC published several amendments to the Burmese Sanctions Regulations (BSR) to add new general licenses, expand existing general licenses and update the Specially Designated Nationals and Blocked Persons (SDN) List with respect to certain entities in Burma/Myanmar. The new changes authorize transactions related to U.S. individuals residing in Burma, extend and expand an existing general license authorizing trade-related transactions, update an existing general license authorizing certain banking services and make changes to the SDN List with respect to certain entities in Burma/Myanmar. Subject to certain conditions, these general licenses authorize specific types of transaction without the need to individually apply for a specific license. The eased sanctions apply to U.S. persons, which include U.S. citizens or permanent residents (wherever located), entities organized under U.S. law (including foreign branches) and persons located in the U.S.
OFAC made two amendments to the BSR to further authorize trade-related transactions. First, OFAC extended indefinitely a prior general license (General License No. 20 to the BSR, initially issued in December 2015 for a six-month period) that authorizes transactions that are ordinarily incident to exports to or from Burma/Myanmar that are otherwise prohibited due to the involvement of an individual or company that is designated or otherwise blocked by OFAC’s sanctions. Second, to further support trade-related transactions, OFAC expanded this authorization by adding a general license permitting certain transactions incident to the movement of goods within Burma/Myanmar (e.g., transporting goods from a warehouse in Burma/Myanmar for further distribution to retail outlets in Burma/Myanmar).
The practical effect of these changes is to permit U.S. persons to engage in transactions that require the transit of items through ports and facilities that are owned or controlled by Burmese SDNs (such as Asia World Port Management), as long as the underlying transaction is not to, from or for the benefit of an SDN.
Banking Services for Financial Institutions
OFAC also updated an existing general license (set forth in section 537.531 of the BSR) authorizing most transactions involving certain financial institutions in Burma/Myanmar that are identified as SDNs. The prior general license authorized U.S. persons to engage in transactions with Asia Green Development Bank, Ayeyarwady Bank, Myanma Economic Bank, and Myanma Investment and Commercial Bank – all of which were listed as SDNs – as long as the transactions did not involve any other SDNs.
OFAC amended this license by adding two additional SDN financial institutions in Burma/Myanmar – Innwa Bank and Myawaddy Bank – to the scope of authorized institutions with which U.S. persons can transact. Two of the financial institutions that were previously included in the general license (Myanma Economic Bank and Myanma Investment and Commercial Bank) were delisted or removed from the SDN List and therefore removed from the general license as authorization to transact with these financial institutions is no longer required. OFAC also removed the state-owned Myanmar Foreign Trade Bank from the SDN List, and U.S. persons are authorized to engage in transactions involving this institution as long as no other sanctioned persons are involved. As a result, most types of financial services transaction are now possible with all of the major financial institutions in the country. At the same time, certain types of transactions (new investments, in particular) with financial institutions remain subject to restrictions and should be carefully evaluated in advance.
Personal Transactions for U.S. Persons Living in Burma
OFAC added a general license that will make it easier for U.S. persons to reside and work in Burma. U.S. persons residing in Burma now are permitted to pay rent and other living expenses and buy goods and services for personal use. The new general license is intended to complement an existing exemption in the BSR for travel to or from Burma.
Changes to SDN List
In addition to removing Myanma Economic Bank, Myanmar Foreign Trade Bank and Myanma Investment and Commercial Bank from the SDN List, OFAC also removed the following seven state-owned enterprises from the SDN List: Myanmar Timber Enterprise; Myanmar Pearl Enterprise; Myanmar Gem Enterprise; No. 1 Mining Enterprise; No. 2 Mining Enterprise; No. 3 Mining Enterprise; and Co-Operative Export-Import Enterprise.
At the same time, six companies were added to the SDN List as a result of being 50% or more owned by persons on the SDN List (Steven Law and Asia World). These companies are Asia Mega Link Co., Ltd., Asia Mega Link Services Co., Ltd., Green Asia Services Co., Ltd., Global World Insurance Company Limited, Pioneer Aerodrome Services Co., Ltd. and Shwe Nar Wah Company Limited. U.S. persons are prohibited from engaging in any transactions involving these companies and must block any property or interests in property of such persons that come within possession or control of U.S. persons.
According to the Frequently Asked Questions published by OFAC simultaneously with the BSR amendments described above, the U.S. Department of State is in the process of revising the reporting threshold for U.S. persons engaging in new investments in Burma/Myanmar from US$500,000 to US$5 million. The proposed change is currently undergoing administrative review and is expected to take effect soon.