Burma Sanctions Final Rule

The Department of the Treasury’s Office of Foreign Assets Control (OFAC) has issued a final rule amending the Burma Sanctions Regulations to more fully implement the directives of Executive Order (E.O.) 14014, issued on February 10, 2021.

This updated regulation expands on the abbreviated set of regulations previously issued in June 2021, incorporating additional guidance, definitions, general licenses, and directives, with the aim of providing further clarity to the public regarding sanctions on Burma (Myanmar).

Background

E.O. 14014 was issued in response to the military coup in Burma on February 1, 2021, where the military detained democratically elected leaders, undermined democratic institutions, and committed serious human rights abuses. The President declared a national emergency, citing the situation in Burma as an extraordinary threat to U.S. national security and foreign policy. The sanctions block property and interests of persons involved in actions that undermine democratic processes, threaten Burma’s stability, or engage in severe human rights abuses.

Key Provisions of E.O. 14014

Blocking of Property: The order blocks all property and interests in property in the U.S. or controlled by U.S. persons of individuals determined to be:

• Operating in key sectors of Burma’s economy (e.g., defense).
• Complicit in actions undermining democracy, threatening peace, limiting freedom of expression, or committing human rights abuses.
• Officials of the Burmese military or government.
• Providing support to blocked individuals or entities.
  Controlled or owned (50% or more) by blocked persons.

Sectoral Sanctions on Myanma Oil and Gas Enterprise (MOGE):

A directive issued under E.O. 14014 prohibits U.S. persons from providing financial services to MOGE, an entity identified as a key source of revenue for the military regime.

Amendments to the Burma Sanctions Regulations (31 CFR Part 525)

The final rule reissues the Burma Sanctions Regulations with substantial updates, organized into several subparts:

General Provisions (Subpart A):

Clarifies the relationship of these regulations to other existing laws, sets out recordkeeping and reporting requirements, and includes information on the delegation of authority.

Prohibitions (Subpart B):

Details prohibitions on transactions involving blocked property.
Specifies that the sanctions apply to sectors like defense and jet fuel in the Burmese economy.

Incorporates Directive 1, which specifically targets financial services to MOGE.
Requires holding blocked funds in interest-bearing accounts.
Prohibits evasion of sanctions and attempts to violate them.

Definitions (Subpart C): Introduces definitions of key terms such as "blocked account," "financial support," "foreign person," and "U.S. person" to ensure clarity throughout the regulations.

Interpretations (Subpart D): Provides guidance on specific scenarios, such as transactions involving blocked property and the treatment of entities owned by blocked persons.
Licensing and Authorizations (Subpart E):
Outlines procedures for obtaining general and specific licenses for transactions otherwise prohibited.
Includes provisions for legal services, humanitarian activities, and support for certain non-commercial activities, such as humanitarian aid and educational programs.

Penalties (Subpart G): Details the civil and criminal penalties for violations of the regulations, including procedures for enforcement and appeals.

Specific Authorizations

The regulation provides certain exemptions to support humanitarian activities and the operations of international organizations:

General Licenses: Allow transactions related to humanitarian relief, support for nongovernmental organizations (NGOs), and provision of agricultural commodities and medical supplies for personal use.

Legal Services: Legal representation for blocked individuals or entities is permitted under specific conditions, provided fees are paid from funds outside the U.S.

Emergency Services: Authorizes the provision of emergency medical services to blocked persons without requiring specific licenses.
Implementation and Compliance
The final rule emphasizes that:

Transactions involving blocked property must be reported and recorded in compliance with OFAC regulations.  Financial institutions are required to block funds that come into their possession related to designated persons and entities.

Specific licenses may be granted for activities that align with U.S. foreign policy objectives, including humanitarian and peacebuilding efforts.

Impact and Legal Framework

The updated regulations reflect a more robust approach to enforce the sanctions laid out in E.O. 14014. By clarifying definitions and procedures, the rule seeks to prevent the Burmese military regime from accessing resources and financial support, thereby exerting pressure to restore democratic governance.

OFAC’s rule also underscores that the sanctions do not broadly prohibit trade or financial services with Burma but target specific sectors and individuals contributing to the destabilization and repression in the country.

The regulations will be continuously updated as the situation in Burma evolves or as further Executive Orders are issued.