On Friday 28 May, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued the Burma Sanctions Regulations (the Regulations) in relation to the implementation of Executive Order 14014, “Blocking Property with Respect to the Situation in Burma.”
The Regulations, which come into effect on 1 June, 2021, provide a framework, consistent with other US sanctions programmes, for the restrictions that apply under the Myanmar/Burma sanctions regime. The fact that OFAC is formalising these rules (and has announced that further regulations will follow) suggests that the Myanmar sanctions are likely to stay in place for some time.
Sanctions imposed to date
The US, Canada, the European Union and the UK have imposed targeted sanctions with regard to several individuals and entities associated with the Myanmar military regime since the coup on February 1, 2021. Our previous updates following developments in this area can be found here. While sanctions initially focused on individuals, they have more recently been broadened out to cover large commercial entities seen to fund the military regime (i.e. Myanmar Economic Corporation Limited and Myanmar Economic Holdings Limited) and the State Administration Council, which is the military junta’s political arm.
There has also been increasing pressure to impose sanctions on Myanmar’s national oil and gas company, Myanmar Oil and Gas Enterprise (MOGE), and a number of gas majors have already decided to cease making payments to MOGE, despite the fact that MOGE has not been formally sanctioned.
The Regulations generally mirror the restrictions applicable under other US list-based sanctions programmes, making it clear that nearly all dealings with persons and entities designated as SDNs are prohibited, if such dealings directly or indirectly involve US persons, US companies, or US financial institutions. Under these restrictions, if a sanctioned Myanmar official or military figure, or the Myanmar State Administration Council would benefit from or have a role in a transaction, US persons are prohibited from engaging in or facilitating such business. The Regulations formalise these restrictions, which were previously in effect, and do not materially change them.
In its announcement of the publication of the new regulations, OFAC noted that they are likely to be supplemented and amended in the coming weeks, signalling that the US Myanmar sanctions programme is likely to persist for some time and may involve the broadening of the current, limited and list-based, sanctions.
Parties doing any business which involves persons or companies in Myanmar should carefully review their position to ensure they are not dealing, directly or indirectly, with any SDNs sanctioned under the Regulations, and should be aware of the potential for these restrictions to change with limited or no advance notice.
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.