Archive for the ‘Burma Sanctions’ Category


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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May

12

Re:  Burma (or is it Myanmar?):  Why We Are All Lost in Translation


Posted by at 10:33 am on May 12, 2013
Category: Burma SanctionsEconomic SanctionsOFACSanctions

Baganmyo http://commons.wikimedia.org/wiki/File:Baganmyo.jpg [Public Domain]The White House last week issued a notice continuing the national emergency with respect to Burma. The notice itself is an annual rite of passage for all U.S. sanctions programs under IEEPA, including those relating to Burma. What is surprising this time around is that nothing has changed from past notices.  The current notice still refers to the “unusual and extraordinary threat to the national security and foreign policy of the United States” by “the actions and policies of the Government of Burma.”

This is where the head-scratching should begin.  A lot has happened in the past year or so that one would think warrants an updated (and apt) notice.  In late 2011, Secretary of State Clinton made the first State visit to Burma since 1955.  Last May, the President nominated the first U.S. ambassador to the country in over two decades.  Just this past November, the President became the first sitting president to visit Burma.  Most important to U.S. businesses was OFAC’s significant relaxation last year of countrywide sanctions prohibiting the export of financial services to Burma, new investments in Burma and imports from Burma.

All of these events are major developments in U.S.-Burmese relations.  So why would the White House use a boilerplate notice when it could have taken the opportunity to depict an accurate picture of what U.S. foreign policy currently is?  The notice is, of course, a legal requirement and the Burmese government has not shed all doubt over its commitment to democracy and human rights.  But describing the situation as an “unusual and extraordinary threat” to the United States without any further context?  In light of all this Administration has accomplished with Burma, it seems odd and misleading to use an off-the-shelf response in this instance.

One consequence of this on the U.S. business community will likely be time and resources many spend confirming that the sanctions that have been lifted against Burma have now not been repealed.  Such a sanity check would be reasonable given the notice and especially for those who have begun exploring business with Burma.

The Administration should have a complete and consistent script of what U.S. foreign policy is with respect to Burma so it, and the rest of us, can all be on the same page.

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Apr

30

The Bad News Is You’re Still on the SDN List


Posted by at 6:37 pm on April 30, 2013
Category: Burma SanctionsEconomic SanctionsOFACSanctionsSDN ListZimbabwe Sanctions

U.S. Navy photo by Mass Communication Specialist 2nd Class Jesse B. Awalt/Released (DefenseImagery.mil, VIRIN 090202-N-0506A-310) [Public domain], via Wikimedia Commons http://commons.wikimedia.org/wiki/File%3ARobert_Mugabe%2C_12th_AU_Summit%2C_090202-N-0506A-310.jpg
ABOVE: Robert Mugabe

OFAC last week issued its first general license for U.S. sanctions relating to Zimbabwe. The license authorizes for the most part “all transactions involving Agricultural Development Bank of Zimbabwe and Infrastructure Development Bank of Zimbabwe.” Both banks, however, are on OFAC’s SDN List.

Since the two banks have been and remain on the SDN List, the license does not unblock the banks’ property interests that had been blocked as of the date of the license. OFAC issued a similar general license in February of this year authorizing dealings with four banks in Burma but kept the banks on the SDN List and continue to block the banks’ property interests blocked prior to the license. A major development from these licenses is, of course, giving U.S. exporters local banking options that were previously unavailable and without them likely stymied business development in those countries.

Exporters should also take note, however, of how OFAC’s easing of sanctions through these licenses has an onerous side-effect on U.S. companies. If a company’s policy is to determine whether to deal with entities or individuals based on their presence on the SDN List or other relevant sanctioned party lists, the authorization granted to deal with listed banks through these general licenses would go unnoticed. Exporters now must check all the lists they routinely do as well as stay on top of licenses issued by OFAC to know whether someone has, from most exporters’ perspectives, been in effect delisted.

If these SDN-lite designations continue, exporters will either need to monitor closely OFAC’s daily activity or make sure their screening software is doing so for them, at least if they want to be sure they are not unnecessarily limiting their export opportunities.

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Mar

19

Government Ministers Who Are Also SDNs Can Make Deals Hazardous


Posted by at 8:49 pm on March 19, 2013
Category: Burma Sanctions

BurmaThe Office of Foreign Assets Control (“OFAC”) has just released new guidance on the Burma sanctions and, more importantly, what’s left of the Burma sanctions. Buried at the end of the guidance is something of an answer to a conundrum we have addressed before, namely, if a government member is on the SDN list, what restrictions are thereby imposed on dealings by a U.S. person with that government.

This blog first addressed that question not too long ago when Specially Designated National Nalinee Taveesin was appointed the Prime Minister’s Office Minister of Thailand. I suggested that this meant that U.S. persons and companies could not deal with her either in her private or her official capacity and cautioned that transactions in which she was any way involved for the Thai government should be avoided.

That question is posed again by Burma where many members of the current government are holdovers from the military regime and remain on the SDN list. The omnipresence of designated cronies of the old junta in Burma was uncomfortably brought home to U.S. Assistant Secretary of State Jose Fernandez when he got caught in a grip and grin photo op in Burma with the Union of Myanmar Federation of Chamber of Commerce and Industry President (and Specially Designated National) Win Aung. Oops.

Here is what OFAC has to say about Burmese government officials who also happen to be SDNs:

285. If a Burmese Government minister is an SDN, how does that impact the ministry he leads?

A government ministry is not blocked solely because the minister heading it is an SDN. U.S. persons should, however, be cautious in dealings with the ministry to ensure that they are not, for example, entering into any contracts that are signed by the SDN.

Unfortunately, the more you examine this “guidance,” the less actual guidance it provides. The problem, of course, is with the phrase “for example” stuffed into the last sentence. The SDN can’t “for example” sign any contracts. But what else “for example” would pose a problem? Negotiating the contract? Approving the contract? Recommending changes to the contract? Taking actions that implement the contract? To be safe, a U.S. company needs to make sure that the SDN official has never heard of the contract and is on a different continent when the contract is negotiated, signed and performed.

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Nov

20

What Makes The Dawn Come Up Like Thunder? Imports!


Posted by at 3:59 pm on November 20, 2012
Category: Burma Sanctions

Burma LandscapeThe Office of Foreign Assets Control (“OFAC”) has taken another step in polishing off the economic sanctions against Burma by issuing General License 18 which authorizes most imports from Burma. This action was no doubt timed to coincide with the presidential visit to Burma which just took place.

Under the General License, all imports of items from Burma are now permitted, with two exceptions. First, the license prohibits import of any items from persons whose assets are still blocked under the Burma sanctions. A number of individuals associated with the Burmese military dictatorship are still blocked. Second, the new license does not authorize the import of rubies or jadeite mined in Burma or articles of jewelry containing rubies or jadeite mined in Burma.

If it seems odd that OFAC would leave in place the import ban on rubies and jadeite while permitting all other imports, it is odd, but OFAC had little discretion here. The ban on rubies and jadeite is mandated by the Tom Lantos Block Burmese JADE (Junta’s Anti-Democratic Efforts) Act of 2008, so OFAC has no discretion here without Congressional authorization. Don’t hold your breath that Congress will get around to recognizing that things in Burma have changed and that the Lantos Act no longer serves any real purpose.

A second obstacle to Burmese imports also complicates matters somewhat. On November 18, 2003, the Secretary of the Treasury designated Burma as a jurisdiction of primary money laundering concern; and then, on April 12, 2004, applied a “special measure” against Burma under Section 311 of the USA PATRIOT Act. That special measure prohibits any U.S. financial institution from maintaining a correspondent account for any Burmese bank, which will certainly complicate paying for imports from Burma. There is an exception in the special measure for correspondent accounts only used for permitted activities, which may ameliorate the situation somewhat, but banks may be justifiably hesitant to worry about whether correspondent accounts satisfy this requirement and may not permit accounts that would otherwise be permissible under this exception.

[Thanks to Rudyard Kipling, via the Cowardly Lion, more of less, for the title!]

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