Archive for the ‘Burma Sanctions’ Category


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amended piecemeal rather than simply re-issued, remain a complex and confusing mess with prohibitions in one section repealed in a later section.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.

Permalink Comments (0)

Bookmark and Share


Copyright © 2016 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)

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]

Permalink Comments Off on Save the Fokkers

Bookmark and Share


Copyright © 2016 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)

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

Permalink Comments (1)

Bookmark and Share


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

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?”

Permalink Comments Off on The Best Question on Burma Sanctions Is Still Unanswered

Bookmark and Share


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

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.

Permalink Comments (2)

Bookmark and Share


Copyright © 2013 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)