On October 7, 2016, President Obama issued an Executive Order
terminating the Burma sanctions. This Executive Order implements
the President's September 14, 2016 announcement of the
intention to lift the sanctions.
The lifting of sanctions is comprehensive. The White House
terminated the national emergency with respect to Burma and revoked
the executive orders that were the basis for the sanctions. The
Treasury Department Office of Foreign Assets Control
("OFAC") Burma Sanctions Regulations ("BSR") no
longer have effect, and OFAC has removed all parties from the
Specially Designated Nationals ("SDN") list who were
listed under the Burma sanctions program. In parallel,
Treasury's Financial Crimes Enforcement Network
("FinCEN") issued an administrative exception to the USA
Patriot Act authorizing U.S. financial institutions to maintain
correspondent accounts with Burmese banks.
OFAC announced its intention to formally removed the BSR (31
C.F.R. Part 537) from the Code of Federal Regulations, effective
immediately. In concert with the Executive Order, OFAC removed all
persons from the SDN list that had been designated under the
"[BURMA]" sanctions program tag. Further, OFAC removed
Burma as a program option on its web-based screening tool, the
Sanctions List Search. The impact of the SDN removals means that
all property of persons formerly designated under the Burma
sanctions is now unblocked and can be released, transferred or
otherwise dealt in. Furthermore, U.S. persons are no longer
prohibited from engaging in transactions with these parties from
this point forward. (However, OFAC noted that any enforcement
investigations and activities relating to violations occurring
while the sanctions were in effect are not impacted.)
As a cautionary note, there continue to be a number of SDNs
located in Burma subject to sanctions under OFAC's other
sanction regimes (e.g., Foreign Narcotics Kingpin Sanctions
Regulations). U.S. persons continue to be prohibited from
transactions with entities sanctioned under one of OFAC's other
In addition to the lifting of the BSR and the unblocking of
SDNs, the new policy now permits the importation of Burmese-origin
jadeite and rubies, as well as jewelry made with these items. See,
Termination of Emergency with Respect to the Actions and Policies
of the Government of Burma, Oct. 7, 2016 (revoking Executive Order
13651, Aug. 6, 2013).
Finally, U.S. persons engaging in "new investment" in
Burma are no longer required to file public reports with the U.S.
State Department regarding human rights practices, although they
may continue to do so voluntarily. See, Termination of Emergency
with Respect to the Actions and Policies of the Government of
Burma, Oct. 7, 2016 (revoking Executive Order 13047, May 20,
In 2003, pursuant to Section 311 of the USA PATRIOT Act, FinCEN
designated Burma as a jurisdiction of primary money laundering
concern. This designation restricted the ability of U.S. financial
institutions to maintain correspondent accounts with Burmese
financial institutions. FinCEN's Burma rule contained an
exception to this designation for any activities authorized by
OFAC, and over the past few years OFAC had issued general licenses
authorizing certain transactions in recognition of the political
progress in Burma - the effect of which was to authorize U.S. banks
to maintain correspondent accounts with Burma. In light of the
withdrawal of the BSR and the corresponding removal of those
general licenses, FinCEN issued "exceptive relief" to
continue to give effect to the authorization for the maintenance of
In its October 7 action, FinCEN issued an exception to its Burma
rule for U.S. correspondent accounts, provided that Burmese
accounts on the other side are subject to the enhanced due
diligence obligations under Section 312 of the USA PATRIOT Act. The
operational effect of this exemption is to preserve the status quo
for U.S. banks. FinCEN has stated that it still has concerns with
respect to Burma's banking system, and one can expect that
FinCEN will require broader reform before lifting its designation
The complete lifting of Burma sanctions means more opportunities
for doing business in Burma. However, it is still important to
screen all parties, as some Burmese parties remain on the SDN list
under other sanctions programs. Further, heightened due diligence
and know-your-customer practices will continue to be an important
part of any company's operations in Burma, as the U.S.
government continues to recognize Burma as having significant
problems with corruption, lack of transparency, money-laundering,
and drug trafficking.
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.
Today's podcast is part of a series of Capital Insights podcasts we're hosting to examine the issues and potential regulatory and enforcement changes emanating from Washington D.C. as we transition to a new political administration.
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).