Archive for the ‘Burma Sanctions’ Category


Sep

14

Burma Sanctions Will Sunset (No OFAC Action Necessary)


Posted by at 11:46 pm on September 14, 2016
Category: Burma SanctionsOFAC

Bagan by Staffan Scherz [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://flic.kr/p/aAeXsZ [cropped and processed]President Obama announced today, after meeting with the newly elected President of Burma, that he intends to lift all remaining sanctions on Burma. With unusual alacrity, at least for the Office of Foreign Assets Control (“OFAC”), that agency issued FAQ #480 stating that its sanctions against Burma would disappear the moment that the President issues an executive order terminating the national emergency with respect to Burma. In other words, the Burmese Sanctions Regulations will immediately become ineffective even if it takes, as it probably will, months for OFAC to get around to pulling them down or issue a rule repealing them.

Of course, and not surprisingly, that FAQ may not be true. The restrictions on the import of jade and rubies from Burma were imposed by the infelicitously named “Tom Lantos Block Burmese JADE (Junta’s Anti-Democratic Efforts) Act of 2008” and cannot be removed until the White House makes certain notifications to Congress.

There is also the question of the status of blocked individuals after the President declares that the national emergency with respect to Burma is over. Section 5(b)(1) automatically blocked the property of certain persons in Burma and section 5(h) requires congressional notification before waiving that sanction. In 2009, the President issued a waiver as to all such persons not listed on the SDN List and that waiver has been congressionally notified.

But is President Obama really intending to remove everyone on the SDN List designated under the Burma sanctions including Steven Law and his companies such as Asia World? Law is on the list for narcotics trafficking, and there seems little reason to rehabilitate him simply because Burma has a democratically elected government. But if Law and his companies remain on the SDN list and the regulations go away, what happens to General License No. 20, which permits goods to be exported to Burma through Asia World ports? Without that license, exports to Burma from the United States will effectively be halted again.

Perhaps we need a few more FAQs.

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Copyright © 2016 Clif Burns. All Rights Reserved.
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May

18

Burma Sanctions Continue to Sunset


Posted by at 5:56 pm on May 18, 2016
Category: Burma SanctionsOFAC

Bagan by Staffan Scherz [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://flic.kr/p/aAeXsZ [cropped and processed]

Yesterday the Office of Foreign Assets Control (“OFAC”) amended the Burmese Sanctions Regulations to broaden the scope of permissible trade with Burma. The Burma regulations, which have been amended piecemeal rather than simply re-issued, remain a complex and confusing mess with prohibitions in one section repealed in a later section. (Why not just remove the first provision, you ask? Don’t be silly, I answer. Do you want lawyers to starve?)

So, for example, section 537.202 prohibits the “exportation … to Burma of any financial services,” which effectively eliminates all trade with Burma because transferring money to Burma is considered an “export of financial services” in OFAC-ese. But if you keep reading the regulations, then you’ll find all the way at the end of the Burma regulations another provision, section 537.529, which says the exact opposite and says that exports of financial services to Burma are authorized. Of course, as is always the case, you still can’t transfer money, er, export financial services, to any blocked party.

Of course, that was all well and good until OFAC discovered that the best port in Burma, and the one through which almost all goods went to and from Burma, was owned by Asia World, a blocked party, effectively foreclosing U.S. trade with Burma. So on December 7, 2015, issued General License No. 20 which allowed all transactions “ordinarily incident to an exportation to or from” Burma as long as it did not involve an exportation of goods to a blocked party.

Although it’s not entirely clear that shipping goods through a blocked port isn’t an export to or from a blocked party, the intent, if not the language, was clear and the port at Yangon was back in business, at least until June 7, 2016, when General License 20 was set to expire. Yesterday’s amendment moved General License No. 20 to a new section 537.532, effectively eliminating the expiration date for dealing with Yangon Port or other blocked individuals while moving goods to and from Burma.

Yesterday’s amendment also dealt with a similar problem confronting U.S. persons residing in Burma, although there was no comparable General License and this issue is now being addressed for the first time by OFAC. Blocked parties have pervasive ownership interests in Burma.  Asia World, for example, owns toll roads, airports, hotels, electric companies and supermarkets. The new section 537.525 allows all transactions by U.S. persons “ordinarily incident to the routine and necessary maintenance within Burma,” other than transactions related to employment of a U.S. person by a blocked party. With this amendment, U.S. persons living in Burma will not have to worry that they’ll have to pay OFAC a $250,000 fine on top of a $1 highway toll, a $2 bread loaf purchase or a $30 electricity bill.

Finally, the amendment is intended to permit transactions with and through almost all banks in Burma. In addition to a number of other entities, the amendment removed three blocked banks from the SDN List and from the general license in section 537.531 since it would no longer be necessary for those banks. It also added two blocked banks to that general license. Of course, this still leaves the issue that we’ve talked about before. Nothing in the SDN listings for these five banks covered by the general license references the general license. So screening software will still show these banks as hits, and funds will be needlessly blocked.

Photo Credit: Bagan by Staffan Scherz [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://flic.kr/p/aAeXsZ [cropped and processed]. Copyright 2011 Staffan Scherz.

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Apr

7

Save the Fokkers


Posted by at 11:40 pm on April 7, 2016
Category: Burma SanctionsCriminal PenaltiesEconomic SanctionsGeneralIran SanctionsSudan

Fokker Services Building in Hoofddorp via http://www.fokker.com/sites/default/files/styles/carousel_innovations/public/media/Images/Services/Contact_Fokker_Services_Location_Hoofddorp_637x286.jpg?itok=NYP0cc2k [Fair Use]

The United States Court of Appeals for the District of Columbia Circuit just reversed the decision of a lower federal district court which tossed out the deferred prosecution agreement between the Department of Justice and Fokker Services B.V.  Fokker had admitted, in a voluntary disclosure to the Office of Foreign Assets Control (“OFAC”), that  it had obtained U.S. origin aircraft parts which it then re-exported to Iran, Sudan and Burma without the required licenses. This blog has previously criticized both the highly unusual decision of the DoJ to turn a voluntary disclosure to OFAC into a criminal prosecution and the district court’s decision to toss aside the DPA as too lenient, apparently in the belief that Iran was somehow involved in the 9/11 terrorist attacks.

The Court of Appeals decision, which restores the DPA and reverses the lower court, is based simply on its interpretation of the Speedy Trial Act. Because a DPA starts the Speedy Trial Act’s seventy-day clock running, the Act provides, in 18 U.S.C. § 3161(h)(2), that a DPA can turn off this clock “with the approval of the court.” Otherwise, of course, the defendant could escape prosecution after seventy days, despite provisions of the DPA that prosecution would be avoided only upon good behavior by the defendant during a longer period, typically one to three years.

The Court of Appeals held that this requirement of approval did not give the district court the authority to question the leniency of the DPA, the charges brought by the government or the parties prosecuted under those charges. Rather the court reviewing a DPA is limited to determining if the DPA is

geared to enabling the defendant to demonstrate compliance with the law, and is not instead a pretext intended merely to evade the Speedy Trial Act’s time constraint.

The only other authority of the lower court, according to the Court of Appeals, would be to reject “illegal or unethical provisions” of the DPA, noting that the District Court had not argued that anything in the DPA was either illegal or unethical.

The Court of Appeals opinion is, thus, good news and bad news. The bad news is that a court can’t refuse to approve a DPA on the grounds that it was unfair for the government to turn a voluntary disclosure to an administrative agency into a criminal prosecution. The good news is that if the exporter does agree to a DPA, it can have a high degree of certainty that the district court cannot condition approval of the DPA on the insertion of more onerous provisions.

Photo Credit: Fokker Services Building in Hoofddorp via Fokker http://bit.ly/23bmktC [Fair Use] [cropped]

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Copyright © 2016 Clif Burns. All Rights Reserved.
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Aug

14

What Happens in Nay Pyi Taw Doesn’t Always Stay in Nay Pyi Taw*


Posted by at 8:21 pm on August 14, 2014
Category: Burma SanctionsOFAC

Lake Garden Hotel Lobby via http://www.accorhotels.com/photos/9096_ho_00_p_346x260.jpg [Fair Use]
ABOVE: Lake Garden Hotel Lobby


When John Kerry, while attending the Association of Southeast Asian Nations (ASEAN) Regional Forum hosted by Burma, stayed at the Lake Garden Hotel, a posh French-managed resort in the country’s capital of Nay Pyi Taw, he probably wasn’t expecting it to be a big deal. Of course, that’s probably because no one at State realized that the resort was owned by Burmese tycoon U Zaw Zaw who is on OFAC’s SDN List. Sometimes you really are smarter when you stay at a Holiday Inn Express.

The State Department, however, rushed in to try to put out the public relations fires.

“You can stay at this hotel no matter who you are, you just can’t do business with it. So if you wanted to sell them towels, you could not do that. But you could stay there,” [State Department spokesman Marie] Harf explained.

That’s a fairly clumsy invocation of the travel exemption contained in the International Emergency Economic Powers Act (“IEEPA”), 50 U.S.C. § 1702(b)(4), which exempts from sanctions “any transactions ordinarily incident to travel to or from any country.” Although many exemptions do not extend to dealings with SDN, this statutorily based exemption does. (In case you’re wondering, the travel ban to Cuba is not affected by this exemption because those sanctions are imposed not under IEEPA but under the Trading with the Enemy Act.)

Of course, the problem here is this: what is “ordinarily incident” to international travel? Certainly, Kerry staying in the room, ordering a little room service, buying a miniature of vodka from the room’s minibar, and perhaps even watching a pay-per-view movie would fall within this. But suppose (purely hypothetically, of course) that Secretary Kerry decided to pay for a massage in the hotel spa? Is that “ordinarily incident” to international travel? Or paying the resort its standard greens fee for a round of golf?  As is the case in most sanctions matters, there is no clear answer here and no answers from OFAC.  That Holiday Inn Express is looking smarter and smarter.


*This headline would have been so much better if the military junta had not moved the capital of Burma from Rangoon to Nay Pyi Taw in 2005

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Copyright © 2014 Clif Burns. All Rights Reserved.
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Apr

8

The Best Question on Burma Sanctions Is Still Unanswered


Posted by at 6:28 pm on April 8, 2014
Category: Burma SanctionsCompliance Programs and ProceduresEconomic SanctionsGeneralOFACSDN ListZimbabwe Sanctions

By Bild von Stefan Grünig, CH-3752 Wimmis (de:Benutzer:Sgruenig)Sgruenig at de.wikipedia [GFDL (http://www.gnu.org/copyleft/fdl.html) or CC-BY-SA-3.0 (http://creativecommons.org/licenses/by-sa/3.0/)], from Wikimedia Commons http://commons.wikimedia.org/wiki/File%3ABurma06.jpg

OFAC announced last week that it issued additional Frequently Asked Questions and respective answers relating to what remain of U.S. sanctions against Burma.  None of the additional questions or answers is surprising or resolves an issue that is not otherwise answered by other OFAC guidance or applicable general licenses.

The questions and answers are, for the most part, a helpful recitation of the current landscape of sanctions involving Burma that summarize in one place the state of sanctions based on an assortment of scattered statutes, executive orders, regulations and licenses.  But one question stands out along with its non-responsive answer, in part, as follows:

What are the plans to update the SDN List for Burma?

Listings and any potential delistings under our Burma authorities will be pursued as appropriate to meet changing conditions in Burma.

The question itself has a colloquial quality to it as if the frequently asked question really put to OFAC has been along the lines of “What’s going on here?”

As other questions and answers describe, a number of banks remain on the SDN List but General License 19 authorizes U.S. persons to conduct most transactions with the banks.  In a similar situation about a year ago dealing with Zimbabwean banks, we posted about OFAC’s decision to keep those banks on the SDN List but, through a general license, to authorize almost all transactions with them.  At that time, I termed both the Burmese and Zimbabwean banks as SDN-lite designations and warned of the potential compliance difficulties such situations presented.

Keeping an entity on the SDN List would have the effect of blacklisting it from possible business with U.S. persons who rely solely on software to screen names on the SDN List to decide with whom to do business.  The results, of course, would create false positives because most transactions with these Burmese and Zimbabwean entities are permissible under U.S. law.  In fact, running these banks through OFAC’s SDN Search tool produces hits with no mention of any general license permitting dealings with them.

Delisting would, of course, be one option to correct the problem, but that would unblock any currently blocked assets, something OFAC might not wish to do.  Failing that, OFAC should at least put some annotation on the SDN List to denote that these very few entities are to be treated very differently than the thousands of others on the SDN List with whom U.S. persons may have no dealings.  At the moment, the question is back to OFAC, “What are the plans to update the SDN List?”

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Copyright © 2014 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)