United States: Burma Sanctions Lifted—Political And Reputational Risks Remain

If you read one thing...

  • On October 7, 2016, President Obama issued an Executive Order that effectively eliminates sanctions against Myanmar (referred to as Burma by the White House) and removes the sanctions designations of formerly restricted parties under the Burma sanctions program.
  • Despite the lifting of sanctions, many U.S. and Burmese officials and stakeholders maintain strong concerns. Accordingly, new opportunities in Burma may involve complex political and reputational risks.
  • Certain sanctions authorities remain in place that could be utilized by the White House to redesignate or reinvoke sanctions against delisted Burmese entities and individuals. Additionally, other sanctions programs remain in effect and are potentially applicable to transactions involving Burmese counterparts.

President Obama issued an Executive Order on Friday, October 7, 2016, that effectively lifts all executive branch sanctions against Burma by terminating the long-standing national emergency relating to Burma and revoking the Executive Orders that authorized past sanctions. The President also provided notification to Congress as required to waive certain legislative sanctions against Burma. These actions fulfill the commitment President Obama made on September 14, 2016, following meetings with Burmese State Counsellor Aung San Suu Kyi, and they complete the President's efforts over the past four years to bring reform to Burma.

The Executive Order effectively eliminates the Burmese Sanctions Regulations (BSR), which had been administered by the U.S. Department of Treasury's Office of Foreign Assets Control (OFAC) under 31 C.F.R. part 537. As of October 7, 2016, the BSR are no longer in effect and will be removed from the U.S. Code of Federal Regulations. The Executive Order also removes all blocked persons from OFAC's Specially Designated Nationals and Blocked Persons (SDN) List who had been blocked pursuant to the BSR.

These regulatory changes create a pathway for U.S. businesses to move forward with transactions involving Burmese counterparts formerly designated to the SDN List, including entities affiliated with the Burmese military, such as Myanmar Economic Corporation (MEC) and Myanmar Economic Holdings Limited (MEHL). In effect, the U.S. government has eliminated the legal risk of doing business with former Burmese SDNs. However, pursuing opportunities involving such Burmese entities and individuals could expose U.S. business to political and reputational risk, where the views and interests of State Counsellor Aung San Suu Kyi and her party, the National League for Democracy (NLD), will strongly influence optics and exposure in the United States.

Background on BSR

The BSR were a fixture of U.S. foreign policy for nearly 20 years and significantly prohibited U.S. persons from engaging in transactions with Burmese counterparts. President Bill Clinton established the sanctions program in 1997 in response to the Burmese military junta's persistent repression of democratic political opposition. The sanctions continued to expand through the course of President George W. Bush's subsequent tenure. Congress supplemented sanctions against Burma through two primary pieces of legislation: the Burma Freedom and Democracy Act of 2003 (Pub. L. 108-61 or "BFDA  Act") and the Tom Lantos Block Burmese JADE (Junta's Anti-Democratic Efforts) Act of 2008 (Pub. L. 110-286 or "JADE Act").

Over the course of this time, the United States maintained a broad importation ban on Burmese products and a widespread visa ban against persons involved with impeding Burma's transition to democracy. Additionally, the United States designated more than a hundred Burmese entities to the SDN List, often on the basis of direct ties to the country's military junta.

Recent U.S.-Burma Relations

Beginning in 2012, President Obama began to scale back the sanctions and also restored diplomatic relations with Burma due to the positive trend toward democratic rule in the country. In particular, the Burmese government transitioned to a nominally civilian administration in 2011 under President Thein Sein, following the first general election in 20 years and four decades of military rule. Burma's election commission approved 19 political parties to participate in the 2012 parliamentary by-elections, which included the victorious NLD led by Aung San Suu Kyi. President Thein Sein further pledged in 2012 to reduce the government's control over core sectors of Burma's economy, including finance, energy, telecommunications and health care. Following these events, the Obama Administration worked to build U.S. ties with Burma and started to gradually ease sanctions, while also seeking to maintain a firm position on persistent human rights and proliferation concerns.

The four-year shift in U.S.-Burma relations saw additional sanctions relief in May 2016 following the election of the NLD's Htin Kyaw to the presidency and culminated in the announcement of a broader bilateral partnership in September 2016. In particular, the United States and Burma now intend to work together towards a bilateral investment treaty, improvements to labor standards and human rights, and combating money laundering, corruption and trafficking. Moreover, the President issued a proclamation on September 14, 2016, to restore Burma's duty-free trade benefits under the Generalized System of Preferences (GSP), which is scheduled to take effect on November 13, 2016.

Termination of OFAC Sanctions

The President's October 7, 2016, Executive Order effectively terminates the long-standing OFAC sanctions regime affecting Burma. Practically speaking, only a narrow set of executive branch sanctions remained in effect prior to last week's Executive Order: the Burmese SDN listings pursuant to the BSR and corresponding property blocking requirements; limitations on certain banking and financial transactions; and an import ban on Burmese-origin jadeite and rubies. All of these sanctions have been lifted by the new Executive Order, and all property and interests in property that had been blocked pursuant to the BSR are now unblocked.

Authorities Remain for Enforcement of Past Violations and Designations Under Other OFAC Sanctions Programs

Nonetheless, OFAC still retains authority to continue or initiate investigations and enforcement actions for apparent violations of the BSR as operative at the time of the underlying activities. Moreover, the Executive Order does not preclude the possibility of delisted Burmese individuals and entities being redesignated under other U.S. sanctions programs (e.g., counter-narcotics or other policy-based sanctions) in the future if the White House has reason to do so.

Waiver of JADE Act Sanctions

With respect to the JADE Act, the Executive Order reissues a waiver of the financial sanctions imposed on parties affiliated with the Burmese military junta (e.g., MEC and MEHL) under Section 5(b) of the Act, but does not terminate the law itself, and the visa ban against Burmese military officials remains in place. Authority to rescind the financial sanctions waiver remains in place if either the current or a future administration determines to do so. Accordingly, it will remain important for businesses considering opportunities in Burma to maintain a close eye on U.S. policy and concerns in Washington in the months ahead, as well as to cultivate a close understanding of the interests and intersection of political forces within Burma.

Corresponding Measures to Facilitate Financial Transactions

To supplement President Obama's lifting of sanctions, the U.S. Department of Treasury's Financial Crimes Enforcement Network (FinCEN) also issued exceptive relief for Burma, allowing U.S. financial institutions to provide correspondent account services to Burmese banks, subject to certain due diligence obligations under Section 312 of the USA PATRIOT Act and its implementing regulation, 31 C.F.R. 1010.651.

Importantly, Burma remains a jurisdiction of primary money laundering concern under Section 311 of the USA PATRIOT Act, and FinCEN has reiterated that Burma has not sufficiently addressed corruption issues, accountability issues, or the implementation of new reforms to mitigate the threat of money laundering and terrorist financing. Therefore, the exceptive relief to enable correspondent account services is particularly qualified by Burma's ongoing engagement and cooperation toward improving these outstanding concerns.

Looking Ahead: Political and Reputational Risks

As a result of the Obama Administration's actions, the predominant risks of doing business with former Burmese SDNs are political and reputational rather than specifically legal. Although the Obama Administration has lifted sanctions and has signaled a move toward engagement with the Burmese military, various parties have expressed concern over the decision. For many members of Congress and the NGO community, Burma's outstanding human rights issues remain key concerns, particularly with respect to labor standards, trafficking and the plight of Burma's stateless Rohingya Muslim community. Moreover, many worry that President Obama's actions remove pressure from the Burmese military, which retains substantial control and influence in Burma's government and economy.

In an effort to communicate these concerns, Senators Ben Cardin and John McCain co-introduced the Cardin-McCain Burma Strategy Act of 2016 on September 13, 2016. The legislation sought to set benchmarks and guidelines on sanctions relief, given the context of "on-going challenges for democracy, good governance, ethnic reconciliation, legal reforms in the extractives sector, and the treatment of military-owned enterprises." Given the President's decision to lift sanctions outright, the legislation will remain largely symbolic, unless revised and reconsidered.

For its part, the U.S. Department of State has reiterated that the United States will work to develop new policies to address remaining challenges with Burma, "including the disproportionate role of the military in the economy and the need for responsible and transparent investment and business practices." Additionally, the State Department reiterated the need to strengthen "Burma's ability to combat money laundering and terrorist financing, an effort that is critical to Burma's reintegration into the international financial system." Moreover, it is likely that State Counsellor Aung San Suu Kyi and the NLD will seek to create domestic regulatory mechanisms in an effort to supervise and maintain limitations on transactions with entities controlled by, or affiliated with, the Burmese military.

Due to the risk of asymmetry on the U.S. side between the White House, lawmakers in Congress and human rights groups relative to their differing policy, political, economic and human rights concerns and interests—and in anticipation of responsive domestic policy changes on the part of Burma—businesses considering new opportunities in the country will need to ensure a proper read of the dynamic U.S.-Burma relationship over the remaining tenure of the Obama Administration and into the incoming administration. Moreover, we expect that businesses moving forward with opportunities in Burma will need to bolster their Corporate Social Responsibility programs, ensure proper standards for anti-money laundering and combating the financing of terrorism, and comply with the Foreign Corrupt Practices Act, in addition to any sector-specific compliance and risk mitigation measures. We continue to advise clients on the legal and business risks associated with conducting business in Burma and effectively managing the political and reputational risks that remain following the lifting of sanctions.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions