Originally published in the Export, Customs & Trade Sentinel, Volume II, Number 4, Fall, 2005
The Office of Foreign Assets Control ("OFAC") issued an interim final rule on August 16, 2005, revising the Burmese Sanctions Regulations (the "Regulations"). While Burma has been subject to sanctions since 1997, the passage of the Burmese Freedom and Democracy Act of 2003 (the "Act"), plus President Bush’s Executive Order of July 28, 2003, led to extensive revisions of the Burmese sanctions program. As a result of these amendments, OFAC decided to reissue the Regulations in their entirety.
The Regulations retain the prohibition on all "new investment" in Burma by U.S. persons, i.e., a contract for the development of resources (including natural, agricultural, commercial, financial, industrial, and human resources). Unlike other sanctions programs, however, the Regulations further identify certain types of indirect investments that are also barred. For example, the purchase of shares in a third-country company that is engaged in the economic development of resources located in Burma, is prohibited where the company’s profits are predominately derived from the company’s economic development of resources in Burma. Similarly, the purchase, directly or indirectly, from the Government of Burma or a non-governmental entity in Burma of shares of ownership, including an equity interest, in the economic development of resources located in Burma, also are banned.
In addition to new investment, the Regulations ban the import of products from Burma, subject to a few limited exceptions. The only direct controls on U.S. exports to Burma concern the exportation of "financial services," which are specifically forbidden under the Regulations. The exportation or reexportation of financial services to Burma is broadly defined to include: (1) the transfer of funds, directly or indirectly, from the United States or by a U.S. person, wherever located, to Burma; and (2) the provision, directly or indirectly, to persons in Burma of insurance services, investment or brokerage services, banking services, money remittance services; loans, guarantees, letters of credit or other extensions of credit; or the service of selling or redeeming traveler’s checks, money orders and stored value.
All other exports to Burma are permitted, provided that they do not implicate the ban on the provision of financial services. Furthermore, U.S. financial institutions can operate accounts for individuals in Burma, provided that those persons are not included on the Specially Designated Nationals and Blocked Persons ("SDN") list. Total remittances may not exceed $300 per Burmese household in any consecutive three-month period. However, any attempt by a U.S. person to "facilitate" a foreign person’s transaction with Burma is prohibited if that foreign person’s transaction would be barred if engaged by a U.S. person.
The reissued Burmese sanctions prove the rule that no two U.S. sanctions programs are exactly alike. Most notably, the Regulations differ from other U.S. sanctions regimes in that they generally allow for some economic dealings with the targeted country, with the noted exception for new investments and the export of "financial services" (a term unique to the Burma sanctions). The Regulations also include a much more detailed list of prohibited indirect foreign investments than other sanctions programs.
This article is presented for informational purposes only and is not intended to constitute legal advice.
