- Recently issued OFAC General License 20 authorizes certain transactions ordinarily incident to exports to Burma where a blocked party may be involved.
- This General License does NOT authorize transactions directly with, or on behalf of, a blocked party, and it does not remove other continuing OFAC Burmese sanctions.
- The license addresses concerns by third-party providers in export transactions, such as banks, brokers and logistics providers.
On December 7, 2015, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued a six-month general license authorizing certain trade-related transactions supporting exports to Burma (also known as Myanmar) otherwise prohibited by the Burmese sanctions. General License 20 allows individuals, companies and financial institutions to conduct most transactions otherwise prohibited by the Burmese sanctions that are ordinarily incident to the export of goods, technology or non-financial services to or from Burma. The license is effective until June 7, 2016, but may be extended.
The Burmese sanctions were first implemented in 1997 in response to repressive actions and human rights violations by that country’s military junta. Elections in November 2010 led to a peaceful transition from military rule to a quasi-civilian government and to various political and economic reforms within Burma. Beginning in 2012, the United States began easing certain financial and investment sanctions on Burma in response to these historic reforms. Since 2012, the United States has waived virtually all of its economic sanctions on Burma, with certain key exceptions, notably those against persons/entities placed on the Specially Designated Nationals (SDN) List.
Despite the removal of most sanctions, ties between Burma’s business and commercial sectors and certain Burmese officials and businessmen remaining on the SDN List have continued to complicate many U.S. export transactions with Burma. For example, in recent months, several U.S. banks questioned whether they could finance transactions with Burma. Most inbound and outbound trade moves through a port terminal in Rangoon that is owned by Asia World, a company that, in turn, is owned and controlled by Steven Law, who has been on OFAC’s SDN List since 2008. Not only banks, but also third-party exporters and foreign financial institutions, have refrained from transactions involving Burma where SDNs or other prohibited parties were involved, even if these parties were incidental to the transaction.
In response to these reports of unintended complications with Burmese trade due to these concerns of potential SDN involvement, OFAC issued General License 20. According to a separate U.S. Department of State press release, this general license is a “technical fix to support exports to and from Burma, while maintaining the integrity of U.S. sanctions and pressure on Specially Designated Nationals.” The intent of General License 20 is to solve “a discrete set of problems connected to use of critical infrastructure” that is owned by persons on the SDN List. The State Department notes that this license is temporary and does not in other respects signal a change in current U.S. sanctions policy toward Burma.
This general license authorizes only certain transactions “ordinarily incident” to exports to or from Burma in which SDNs or SDN-owned entities are involved, including participating in trade finance transactions and paying port fees, as well as shipping and handling charges associated with sending goods to or from Burma. Prior to the issuance of General License 20, these transactions incident to exports involving Burma may have been subject to U.S. sanctions if they involved SDNs or entities with significant ties to SDNs.
OFAC has made clear that General License 20 does not authorize any transactions to, from or on behalf of an SDN, or any other person whose property or interests in property are blocked. This general license does not authorize a U.S. financial institution to advise or confirm any financing by SDNs or blocked persons. It also does not impact other prohibitions under the Burmese sanctions – including the continuing ban on new investment involving Burma’s Ministry of Defense, state or non-state armed groups, or any entity in which any of the foregoing own a 50 percent or greater interest. Further, the prohibition on the import into the United States of Burmese-origin jadeite, rubies and jewelry containing them remains fully in effect.
OFAC states that General License 20 is also “an effort to calibrate the impact of our Burma sanctions and to support the ongoing flow of trade with Burma. Supporting Burma’s economic development – including the encouragement of normal trade with non-sanctioned businesses in Burma – is a key foreign policy goal.”