Last week, the United States Department of the Treasury’s Office of Foreign Assets Control (OFAC) officially implemented what many folks thought had already happened: an easing of the U.S. sanctions on Burma. This is a move that everyone saw coming as the President and the State Department had already announced that it would occur as a sign of U.S. support for Burma’s ongoing reform efforts. That said, the U.S. maintains reservations concerning Burma’s military, corruption, and human rights abuses. Therefore, there were no easing of sanctions for the Burmese Ministry of Defense, the Burmese military, not state armed groups, or any other entity or organization owned by these groups. In short, there are still a number of Specially Designated Nationals in Burma who have U.S. sanctions imposed on them and they need to be accounted for from an OFAC compliance perspective. Indeed, to take it step further the President issued an executive order placing more sanctions on Burma targeting those threatening the peace, stability, and security of Burma.

What the easing of the sanctions did entail was the release of two general licenses. Those general licenses, numbered 16 and 17 respectively, authorize the export of financial services to non-SDN designated parties in Burma, and allow for new investment in Burma. Further, there is an interesting caveat found in General License 16 which allows for transfers of funds to or from an account of a financial institution that is blocked under the Burma sanctions program as long as the account is not on the books of a U.S. financial institution. In addition, General License 17 allows for new investment in Burma so long as the investment is not made to or through an SDN entity or individual. There are several new reporting requirements, as well that accompany these new general licenses, therefore, prior to seeking to engage in transactions under the general license its important to make sure to read them carefully so you are aware of such requirements.

As noted above, the President took the opportunity while easing certain Burmese sanctions prohibitions to reassert the U.S. commitment to targeting certain Burmese parties for sanctions by issuing a new executive order. As part of that order, the U.S. designated for sanctions the Directorate of Defence Industries, and Innwa Bank Ltd. This was a clear sign that while some of the country based aspects of sanctions might be eroded, that the U.S. still believes there is some threat to the national security of the United States by certain parties in Burma. In short, all the hype about removal of Burmese sanctions is just hype, as what the U.S. has done is not necessarily removed sanctions, but refocused them on certain parties.

The author of this blog is Erich Ferrari, an attorney specializing in OFAC matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.