President Biden signed an Executive Order ("EO") authorizing sanctions against those responsible for the overthrow of the democratically elected civilian government of Burma by military authorities on February 1, 2021.

EO 14014 authorizes the Secretary of the Treasury, in consultation with the Secretary of State, to impose blocking sanctions on foreign persons operating in Burma's defense sector, as well as on those responsible for or complicit in actions or policies that undermine democratic processes, threaten peace or penalize freedom of expression in the country. The EO also authorizes blocking measures against the spouses and adult children of such persons, and sanctions against the Government of Burma itself.

Pursuant to its authority under EO 14014, Treasury designated ten current and former Burmese military officials responsible for the February 1 coup or associated with the new Burmese military regime. The sanctioned officials include Min Aung Hlaing, commander in chief of the Burmese military, and Mya Tun Oo, the newly appointed minister of defense.

The Department of State also released information on the situation in Burma and related sanctions, stressing that the designations "specifically target" military members involved in the coup and do not target the economy or people of Burma.

Commentary

Burma-related sanctions have come full circle, just like the country's military junta. Beginning in 2010, the former military regime began to relax its grasp on power and permitted a series of democratic reforms, culminating in nationwide elections in 2015. Along with these steps towards democratization, a once-stringent U.S. sanctions program was pared back and finally terminated in 2016. It is too early to forecast how far the current sanctions will go, and much will be determined by developments on the ground. The new sanctions could remain limited to targeted designations of the new military regime's leaders and their cronies, but EO 14014 authorizes much broader sanctions capable of being employed against key players in Burma's economy, including the financial sector. Indeed, while the Department of State emphasized that the sanctions were not designed to target the economy or people of Burma, Treasury Secretary Janet L. Yellen cautioned that the U.S. government is "prepared to take additional action should Burma's military not change course. If there is more violence against peaceful protestors, the Burmese military will find that today's sanctions are just the first."

Action by FinCEN could prove to be a bellwether. In 2003, the agency determined that Burma was a jurisdiction of primary money laundering concern under Section 311 of the USA PATRIOT Act, and U.S. financial institutions were prohibited from maintaining correspondent accounts for Burmese banks. In 2016, when sanctions were terminated, FinCEN did not rescind its 2003 determination. Instead, it issued an exception that allowed correspondent accounts under certain circumstances. If that exception is rescinded, the impact on Burma's financial sector - not to mention U.S. financial institutions that maintain correspondent accounts for Burmese banks - would be immediate and significant, and the move could portend even tougher sanctions to come.