Burma Business Advisory Issued

Posted

Six U.S. Departments published a Supplemental Advisory, reminding businesses and individuals of the compliance and reputational risks associated with trading with the military regime in Rangoon.   While North American companies continue to engage in Burmese extractive industries, the growing ring of sanctions means firms in the Rare Earths, Timber and Precious Metals trade run an increasing risk of negative legal, financial, or reputational consequences.

U.S. Departments of State, the Treasury, Commerce, Homeland Security, Labor and the U.S. Trade Representative are publishing a Supplemental Advisory to highlight additional sectors and activities of concern in the country, as well as actions taken under various federal authorities and multilateral authorities to address destabilizing conduct involving the military regime or private entities located in or operating in Burma.

This supplemental information builds on and adds to the previous advisory, and is intended to inform individuals, businesses, financial institutions, and other persons, including investors, consultants, non-governmental organizations, and due diligence service providers (hereafter “businesses and individuals”) of the continued risks and considerations for businesses and individuals with exposure to entities responsible for undermining democratic processes, facilitating corruption, and committing human rights and labor rights abuses in Burma.

The additional sectors and activities of concern within Burma highlighted in this Supplemental Advisory are: 

Sectors of concern: 

    • Rare earth elements;
    • Base metals and gold;
    • Timber; and
    • Aviation services, components, and fuel.
Activities of concern: 

      • Potential diversion to military end uses and end users;
      • Financial and related services to state-owned banks; and
      • Ongoing abuses of Burmese workers' internationally recognized labor rights.

Since the previous U.S. advisory in January 2022, the U.S. Government and certain international organizations have expanded restrictions on individuals and entities tied to Burma’s military regime.   Several countries and international organizations have also introduced new commercial restrictions since the January 2022 advisory, including the European Union, Australia, Canada, New Zealand, the Republic of Korea, and the United Kingdom.
 
Businesses and individuals with potential exposure to, or involvement in operations or supply chains tied to, the military regime should continually review sanctions measures imposed with respect to Burma. Businesses and individuals that do not conduct appropriate due diligence run the risk of engaging in conduct or transactions that may expose them to significant reputational, financial, and legal risks, including violations of U.S. sanctions and export controls.

Burma also continues to present significant reputational, economic, and legal risks to the private sector, particularly financial institutions, as a result of gaps in its anti-money laundering (AML) and counter financing of terrorism (CFT) legal framework, in part because the regime cannot impartially prosecute financial crimes at this time. In October 2022, the Financial Action Task Force (FATF) placed Burma on its “blacklist” and called upon its members and other jurisdictions to apply enhanced due diligence measures proportionate to the risk arising from Myanmar. The FATF has repeated these calls for action by its members as well as urged Burma to take urgent actions to resolve AML/CFT deficiencies.

 
Businesses and individuals are advised to consider Burma’s AML/CFT deficiencies in their risk analysis, including evaluating their potential exposure to economic and legal risks that may include violations of U.S. AML laws and sanctions.

This advisory is explanatory only and does not have the force of law. It does not supplement or modify statutory authorities, executive orders, or regulations. Its sole intent is to provide information to businesses and individuals that they may consider in assessing their potential exposure to involvement with entities engaged in human rights abuses, as part of a risk- based approach to due diligence.

[USTR Release]