On May 17, 2021, the US Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) announced sanctions designations of the State Administration Council (“SAC”) and sixteen individuals associated with the SAC. The SAC is the senior leadership body that was created by Myanmar’s military government following the coup on February 2, 2021. The SAC was designated pursuant to Executive Order 14014, “Blocking Property With Respect to the Situation in Burma [also known as ‘Myanmar’],” for being a political subdivision, agency, or instrumentality of the Government of Myanmar. The designated individuals include four SAC members, the governor of Myanmar’s Central Bank, nine ministers (including the Minister of Commerce, the Minister of Natural Resources and Environmental Conservation, and the Minister for Planning, Finance, and Industry, among others), and three family members of previously designated officials.
As a result of these designations, all property and interests in property of the SAC and the designated individuals that are in the United States or in the possession or control of US persons are blocked and must be reported to OFAC. In addition, any entities that are owned, directly or indirectly, 50% or more by SAC or the designated individuals are also blocked.
Unless authorized by a general or specific license issued by OFAC, or otherwise exempt, all transactions by US persons or within (or transiting) the United States that involve any property or interests in property of the SAC or the designated individuals are prohibited. The prohibitions bar essentially all business dealings with the sanctioned persons in which US persons or US dollars are directly or indirectly involved, to any extent.
Executive Order 14014 authorized the Treasury Department to designate any “political subdivision, agency or instrumentality of the Government of Burma or that is owned or controlled by or that has acted on behalf of the military or security forces of Burma or any person designated under the order.” Although the SAC currently controls the national government of Myanmar, OFAC did not clarify whether the SAC’s designation extends to all subordinate instrumentalities and state-owned entities. In the months since the coup, OFAC has used EO 14014 to issue targeted sanctions aimed at specific entities closely associated with the military government (we discussed the targeted designation of two state-owned entities in a previous post). The designation of SAC does not appear to be intended to expand the sanctions program to apply comprehensively to all government entities.
However, dealings with the SAC or the sanctioned individuals are generally prohibited, even if such persons are acting in an official capacity on behalf of a non-sanctioned government agency.
We will continue to monitor developments in this area, and encourage you to subscribe to be kept informed of latest developments. Please contact the authors or our usual Herbert Smith Freehills contacts for more information.