Administration Ends Investment and Financial Services Sanctions Against Burma
For the past 15 years, the United States has prohibited U.S. persons from engaging in a number of activities in Burma (Myanmar), such as participating in new investment, providing financial services to entities in that country, and importing Burmese-origin products. On July 11, 2012, the U.S. Office of Foreign Assets Control (OFAC) issued two long-awaited “General Licenses” that permit U.S. persons to engage in new investments in Burma and/or provide financial services to Burmese entities effective immediately. These changes had been announced by the Administration in May in the wake of positive developments by the Myanmar government, but the specifics were not issued until yesterday. It should be noted, however, that imports of goods from Burma into the U.S. are still prohibited for the time being.
Specifically, the two new “General Licenses” are as follows:
General License No. 16: Authorizes U.S. persons to provide financial services to Burma
Does not permit:
- Providing financial services, directly or indirectly, to the Burmese Ministry of Defense, any state or non-state armed group, or any entity in which any of the foregoing own a 50 percent or greater interest
- Providing such services to “blocked persons” or entities, i.e., persons on the U.S. “List of Specially Designated Nationals” (SDNs).
General License No. 17: Authorizes U.S. persons to engage in new investment in Burma
Does not permit:
- New investments pursuant to agreements entered into with the Burmese Ministry of Defense, any state or non-state armed group, or any entity in which the foregoing own a 50 percent or greater interest
- Transactions with, directly or indirectly, “blocked persons” or entities
U.S. persons interested in utilizing the two new “General Licenses” should take into account the following considerations:
- There is no need to apply to OFAC for a “specific” license; so long as the transaction meets the requirements of a “General License,” it is already authorized.
- As indicated above, the new “General Licenses” do not permit activities with the Burmese Ministry of Defense or entities owned at least 50 percent by the Ministry. Consequently, U.S. persons engaged in transactions will need to know all Burmese parties involved and will need to ensure that they are not owned by the Ministry of Defense.
- Also on July 11, the President issued an Executive Order Targeting Persons Threatening the Peace, Security, or Stability of Burma. Therefore, anyone engaging in or facilitating new investments or exportation and re-exportation of financial services to Burma should make sure they have checked the up-to-date SDN List.
- The U.S. Department of State will impose reporting requirements on U.S. persons engaged in new investments in Burma. The proposed reporting requirements will undergo a public comment process before they are finalized. However, the initial proposal would require reporting by:
- U.S. persons undertaking a new investment with the Myanma Oil and Gas Enterprise (MOGE) (report required within 60 days of the investment); and
- U.S. persons with more than $500,000 in aggregate new investment in Burma (annual reporting requirement).