Today the President issued an Executive Order lifting all U.S. economic and financial sanctions on Myanmar, pursuant to a previous announcement on which we commented at the time. In addition, the Treasury Department’s Office of Foreign Assets Control (OFAC) has issued a fact sheet, frequently asked question (FAQ), and delisting announcement, and the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has issued a press release and an exceptive relief announcement.
At the time of the President’s September 14, 2016 announcement that he intended to terminate the national emergency and remove most U.S. sanctions on Myanmar, there remained some uncertainty about the extent of the President’s authority to lift certain sanctions with a statutory mandate, and about how far the President would want to go in removing restrictions on doing business with the Myanmar military (Tatmadaw) and in sensitive sectors such as jade and gemstones. Today’s action answers most of these questions. OFAC’s sanctions on Myanmar are no longer in force, and it is expected soon to remove the Burmese Sanctions Regulations (BSR) from the Code of Federal Regulations (CFR) in their entirety. All 111 Specially Designated Nationals (SDNs) listed by OFAC under the authority of the BSR (i.e. under the “[BURMA]” tag) have already been delisted. That includes government officials, major private sector businesses and – quite notably – military-linked state-owned enterprises and military procurement/contracting entities. This means that in general it will now be lawful from a sanctions perspective for U.S. companies and individuals to do business with former SDNs, although various legal and reputational risks will continue to complicate any such endeavor, especially for dealings with military-linked entities.
There will continue to be legal restrictions on business in Myanmar. The U.S. arms embargo under the International Traffic in Arms Regulations (ITAR) and other stringent export controls will remain in place. There will also continue to be a visa ban imposed on a non-public, but potentially broad, list of individuals viewed as being linked to the Tatmadaw. In addition, there are SDNs located in Myanmar who will remain listed under authorities related to North Korea (there are 2 North Korean government officials currently listed under the “[DPRK2]” tag) and narcotics trafficking (there are 31 currently listed under the “[SDNTK]” tag), and OFAC could add more names in the future under these and other remaining authorities. Some of the SDNs under the narcotics trafficking program include major businesses such as Yangon Airways and a group of companies linked to the United Wa State Army (USWA) in Kachin state, the jade mining region in northern Myanmar. In addition, financial institutions will still be subject to enhanced due diligence requirements in processing financial transactions involving Myanmar (e.g. through correspondent banking relationships), as it remains designated by FinCEN as a jurisdiction of primary money laundering concern under Section 311 of the USA PATRIOT Act. However, also today, FinCEN has suspended the prohibitions on correspondent banking with Myanmar (which had already been greatly loosened under the BSR and FinCEN rules), leaving in place only the enhanced due diligence requirement (FinCEN’s relief is conditioned on continued improvement in Myanmar’s anti-money laundering regime).
We will be issuing in-depth advisory on these developments shortly.