New sanctions and export restrictions imposed targeting Burma

The Burma-related sanctions space is very active and changes are made frequently. This publication is current as of April 26, 2021.

United States position

On February 11, 2021, the United States authorized a new sanctions regime in response to the military's coup against the democratically elected civilian government of Burma. This coup – which occurred on February 1, 2021 – resulted in the detention of civilian leaders, journalists, human rights activists, a nationwide internet shutdown and a return to full military rule. The sanctions were issued pursuant to Executive Order 14014 (EO) and target persons determined by the US government to:

• Operate in the defense sector or such other sectors (as shall later be identified).
• Be involved in certain specified actions or policies contributing to the situation in Burma.
• Be a leader or official of the Government of Burma on or after February 2, 2021 or the Burmese military or security forces.
• Be a political subdivision, agency, or instrumentality of the Government of Burma.
• Be a spouse or adult child of a blocked party.
• Have materially assisted, sponsored, provided financial material, technological support for, goods or services to in support of a blocked party. 

US Department of the Treasury

Concurrently, the US Department of the Treasury, Office of Foreign Assets Control (OFAC) designated ten current and former military officials responsible for the coup or associated with the Burmese military regime and three entities owned, controlled by, acting or purporting to act for or on behalf of the Burmese military as blocked persons (adding them to the List of Specially Designated Nationals and Blocked Persons (SDN List)). On February 22, 2021, OFAC amended this list to include two additional individuals pursuant to EO 14014 considered "foreign persons who are or were leaders or officials of the military or security forces of Burma." On March 10, 2021, the list was again amended to include an additional two individuals, who are spouses or adult children of a person whose property and interests in property are blocked pursuant to E.O. 14014, and six entities owned by family members. On March 22, 2021, OFAC designated two additional individuals associated with the military regime and two military units that engaged in excessive force against the people of Burma. Finally, OFAC added two military holding companies utilized by the Burmese military to control significant segments of the Burmese economy, including trading, natural resources, alcohol, cigarettes and consumer goods on March 25, 2021 and in April 2021 added three enterprises from the gem, timber and pearl industry considered to be key economic resources in Burma. The currently blocked individuals include:

1. Mya Tun Oo, appointed Minister of Defense
2. Tin Aung San, appointed Minister for Transport and Communications
3. Ye Win Oo, appointed Joint Secretary of the SAC
4. Aung Lin Dwe, appointed Secretary of the SAC
5. Min Aung Hlaing, Commander-in-Chief of the Burmese military
6. Soe Win, Deputy Commander-in-Chief of the Burmese military
7. Than Hlaing, Chief of the Burma Police Force and Deputy Home Affairs Minister
8. Myint Swe, First Vice President and retired Lieutenant General
9. Sein Win, Lieutenant General
10. Soe Htut, Lieutenant General
11. Ye Aung, Lieutenant General
12. Maung Maung Kyaw, General
13. Moe Myint Tun, Lieutenant General
14. Aung Soe, Lieutenant General
15.  Khin Thiri Thet Mon
16.  Aung Pyae Sone

The currently blocked entities include:

1. Myanmar Ruby Enterprise
2. Myanmar Imperial Jade Co., Ltd.
3. Cancri (Gems and Jewellery) Co. Ltd.
4. Seventh Sense Company Ltd.
5. A&M Mahar Company Ltd.
6. Everfit Company Ltd.
7. Sky One Construction Company Ltd.
8. The Yangon Gallery
9. The Yangon Restaurant
10. 33rd Light Infantry Division of the Burmese Army (33 LID)
11. 77th Light Infantry Division of the Burmese Army (77 LID)
12. Myanma (or Myanmar) Economic Holdings Public Company Limited (MEHL)
13. Myanmar Economic Corporation Limited (MEC)
14. Myanma Gems Enterprise
15. Myanma Timber Enterprise
16. Myanmar Pearl Enterprise

Two of the above-listed individuals, Min Aung Hlaing and Soe Win were already SDNs as a result of EO 13818, issued on December 10, 2019, for their participation in serious human rights abuses as a leader or official of the Burmese military forces. 33 LID was also previously designated under EO 13818 for serious human rights abuses.

As a result of OFAC's action, all assets of these blocked persons, including entities owned 50 percent or more by such persons that are subject to US jurisdiction are frozen, transactions by US persons and/or within the US involving these blocked persons are prohibited, and frozen or rejected transactions need to be reported to the US government. Non-US persons may also face exposure under the EO to the extent they engage in a transaction involving blocked persons that have a US nexus (e.g. the processing of funds through the US financial system or a US financial institution, which often occurs with US dollar denominated transactions). Further, even in the absence of a US nexus, non-US persons may find themselves subject to designation as a SDN for any material support provided to persons designated or blocked pursuant to the EO.

Note, however, that on March 25, 2021, OFAC issued the following four general licenses that offer some limited exceptions to these sanctions: (1) "Official Business of the United States Government," (2) "Official Activities of Certain Other International Entities," (3) "Certain Transactions in Support of Nongovernmental Organizations' Activities," and (4) "Authorizing the Wind Down of Transactions Involving Myanmar Economic Corporation and Myanma Economic Holdings Limited." General License 4 authorizes, through 12:01 am eastern daylight time, 22 June 2021, all transactions and activities prohibited by EO 14014 that are ordinarily incident and necessary to the wind down of transactions involving MEH or MEC, or any entity in which MEH or MEC own, whether individually or in the aggregate, directly or indirectly, a 50 percent or greater interest. OFAC has indicated in its FAQs that for the duration of General License 4, non-US persons may wind down transactions involving, directly or indirectly, MEH or MEC, or any entity in which MEH or MEC own, directly or indirectly, a 50 percent or greater interest, without exposure to sanctions under EO 14014, provided that such wind down activity is consistent with General License 4. Individuals or entities that are unable to wind down transactions prohibited by EO 14014 in which such blocked individuals or entities have an interest before June 22, 2021 at 12:01 am eastern daylight time should seek formal guidance.

While these initial rounds of sanctions do not currently apply to the entire Government of Burma, the EO allows for the designation of persons determined to be officials of the Government of Burma or political subdivisions of the Government of Burma. Thus, the US may continue to impose additional sanctions if the situation in Burma continues or worsens. As many recall, the Venezuela sanctions regime began as targeted sanctions applying to certain persons and transactions, then expanded to a blocking order against the entire Venezuelan government. The US could take a similar approach against Burma if the situation persists or deteriorates.

US Department of Commerce

The US Department of Commerce also took action in February to limit the export of sensitive goods to the Burmese military and other entities associated with the coup, including Burma's Ministry of Defense, Ministry of Home Affairs, armed forces and security services. Additionally, the Commerce Department's Bureau of Industry and Security (BIS) "will apply a presumption of denial for items requiring a license for export and re-export" and "is revoking certain previously issued licenses" to these departments and agencies. In addition, BIS will suspend certain license exceptions previously available to Burma.

On March 8, 2021, BIS announced two rules that further expanded restrictions on exports, re-exports and transfers within Burma of sensitive items subject to the Export Administration Regulations (EAR) in response to continued violence in Burma against peaceful protestors of the military coup. Under the first rule, BIS removed Burma from Country Group B and placed it in the more restrictive Country Group D:1 for license application reviews. This action not only means that license applications for exports and re-exports of items subject to EAR to end users in Burma will be reviewed more strictly, but also that certain Burmese end users are now ineligible for certain license exceptions that would otherwise have been available to Burma as part of Country Group B. This includes but is not limited to, Shipments of Limited Value (LVS), Shipments to Group B Countries (GBS) and Technology and Software under Restriction (TSR).

BIS has also added Burma to the countries subject to BIS's licensing policy for "military end use" and "military end users" (MEU) as well as its licensing policy for national security-controlled items (NS). Under these policies, BIS will review all applications for items destined for Burma involving "military end use" and "military end users" using a presumption of denial standard. Similarly, for national security-controlled exports and reexports, BIS will now apply a presumption of denial licensing review standard when the items destined for Burma would "make a material contribution to the 'development,' 'production,' maintenance, repair or operation of weapons systems, subsystems and assemblies, such as but not limited to, those described in supplement no. 7 to part 742 of the EAR, of Burma." Exporters should note, however, that a presumption of approval will apply when an export, re-export or transfer (in-country) is destined for a civil end-user for civil end-uses. These national security restrictions align with those applied by BIS to similar transactions involving the People's Republic of China, Russia and Venezuela. BIS has set forth several factors that it will consider when reviewing national security-related license applications for these countries that provide exporters with helpful guidance on how to advocate in support of national security-related license applications involving Burma. These factors include:

• The appropriateness of the export, re-export or transfer for the stated end-use;
• The significance of the item for the weapons systems capabilities of the importing country;
• Whether any party is a military end-user as defined in § 744.21(g) of the EAR;
• The reliability of the parties to the transaction, including whether:
  • An export or re-export license application has previously been denied;
  • Any parties are or have been engaged in unlawful procurement or diversion activities;
  • The parties are capable of securely handling and storing the items; and
  • End-use checks have been and may be conducted by BIS or another US government agency on parties to the transaction;
• The involvement of any party to the transaction in military activities;
• Government strategies and policies that support the diversion of exports from their stated civil end use and redirection towards military end use; and
• The scope and effectiveness of the export control system in the importing country.

The second rule added four entities to BIS's Entity List, which are described by BIS as "two Burmese military and security services entities responsible for the coup and two commercial entities that are owned and operated by one of those entities." The targeted entities are:

1. Burma's Ministry of Defence
2. Burma's Ministry of Home Affairs
3. Myanmar Economic Corporation
4. Myanmar (or Myanma) Economic Holding Limited (MEH)

Designation on BIS's Entity List means that exports, re-exports and in-country transfers of items subject to the EAR to these entities are restricted. In announcing these tightened export restrictions, the US Commerce Department stated that it is "reviewing potential additional measures as warranted by the military's actions" and "will continue to hold perpetrators of the coup responsible for their actions."

On March 4, 2021, the US Department of State also stated that the US will continue to take actions to promote accountability from the Burmese military and support the democratically-elected Burmese government and democratic principles.

EU position

In response to the escalating violence in Myanmar/Burma on February 22, 2021, the Council of the European Union (Council) adopted conclusions (Conclusions) condemning, in the strongest terms, the military coup that took place on February 1, 2021. The Council called for the de-escalation of the current crisis, the restoration of the legitimate civilian government and the immediate and unconditional release of everyone detained or arrested in connection with the coup.

A month after adopting the Conclusions, on March 22, 2021, the EU announced its decision to impose restrictive measures (asset freeze and travel ban) on ten high-ranking Myanmar/Burma military officials and the new Chairperson of the Union Election Commission, for his role in cancelling the results of the 2020 Myanmar elections. On April 19, 2021, the EU sanctioned another group of ten individuals responsible for undermining democracy and the rule of law in Burma/Myanmar, and for their repressive decisions and serious human rights violations.

The EU also imposed sanctions against two military-controlled conglomerates, Myanmar Economic Holdings Public Company Limited (MEHL) and Myanmar Economic Corporation Limited (MEC). According to the press release, these two entities "operate in many sectors of Myanmar's economy and are owned and controlled by the Myanmar Armed Forces (Tatmadaw), and provide revenue for it".

The EU sanctions were imposed under the recently expanded Myanmar/Burma sanctions regime (Council Regulation (EU) No 401/2013, as amended). As a result, the following persons have been added to the EU Consolidated Asset Freeze List:

1. Min Aung Hlaing
2. Myint Swe
3. Soe Win
4. Sein Win
5. Thein Soe (a.k.a. U Thein Soe)
6. Mya Tun Oo
7. Dwe Aung Lin
8. Ye Win Oo
9. Maung Maung Kyaw
10. Moe Myint Tun
11. Than Hlaing
12. Mahn Nyein Maung (aka P'do, Phado Man Nyein Maung)
13. Thein Nyunt
14. Khin Maung Swe
15. Aye Nu Sein
16. Jeng Phang Naw Htaung
17. Maung Ha
18. Sai Long Hseng
19. Saw Daniel
20. Dr Banyar Aung Moe; and
21. U Chit Naing (a.k.a. Sate Pyin Nyar).

The currently designated entities include:

1. Myanmar Economic Holdings Public Company Ltd
2. Myanmar Economic Corporation Limited.

In its press release, the EU emphasized that the pre-existing EU restrictive measures in relation to Myanmar/Burma remain in place. The measures include an embargo on arms and equipment that can be used for internal repression, an export ban on dual-use goods, and certain other export restrictions on military and communications monitoring equipment.

The EU has also suspended any financial assistance to the Burma/Myanmar government and froze all assistance to government bodies that may be seen as legitimizing the coup. The EU has not ruled out imposing additional restrictive measures against entities owned or controlled by the Myanmar/Burma military.

UK sanctions

On February 18, 2021, the UK Foreign Secretary announced the imposition of asset freezes and travel bans on three members of the Burmese military regime for serious human rights violations during the February 1, 2021 coup. On February 25, 2021, the UK imposed a second tranche of sanctions, targeting members of the State Administration Council for their role in overseeing and directing serious human rights violations following the coup. As a result, nine individuals have now been added to the Office of Financial Sanctions Implementation's (OFSI) Consolidated List of asset freeze targets:

1. Lt General Soe Htut (Group ID: 14056)
2. Lt General Than Hlaing (Group ID: 14057)
3. General Mya Tun Oo (Group ID: 14058)
4. General Min Aung Hlaing (Group ID: 13897) (amendment to an existing entry)
5. General Tin Aung San (Group ID: 14059)
6. General Maung Maung Kyaw (Group ID: 14060)
7. Lt Gen Aung Lin Dwe, Secretary of the SAC (Group ID: 14061)
8. Lt Gen Moe Myint Tun (Group ID: 14062)
9. Lt Gen Ye Win Oo (Group ID: 14063)

The designations were made under the UK Burma (Sanctions) (EU Exit) Regulations 2019 (S.I. 2019/136), which came into force on December 31, 2020 and provide for, among other things, the freezing of funds and economic resources of certain persons, entities or bodies involved in the commission of serious human rights violations in Burma.

The UK Foreign Office and Department for International Trade has also announced that they are conducting "an enhanced due diligence process to mitigate the risk of [Burmese] military businesses operating in the UK and associated illicit money flows" and will "work to ensure that UK companies in Myanmar are not trading with military-owned businesses".

Separately, the UK imposed asset freezes on Myanmar Economic Holdings Public Company Ltd (Group ID: 14080) (on March 25, 2021) and Myanmar Economic Corporation (Group ID: 14081) (on April 1, 2021). These two designations were made under the Global Human Rights Sanctions Regulations 2020 (S.I. 2020/680), which provide for the freezing of funds and economic resources of certain persons, entities or bodies responsible for or involved in serious violations of human rights.

Canadian position

On February 18, 2021, in response to the coup d'état in Myanmar, Canada's Minister of Foreign Affairs announced the addition of nine individuals to Canada's existing sanctions regime by amending the Special Economic Measures (Burma) Regulations (the Regulations). The Canadian government identified nine military officials, also included on the US and/or UK lists, as designated individuals:

1. Min Aung Hlaing
2. Soe Win
3. Sein Win
4. Soe Htut
5. Ye Aung
6. Mya Tun Oo
7. Tin Aung San
8. Aung Lin Dwe
9. Ye Win Oo

Canada already had a sanctions regime in place against Myanmar since December 13, 2007, and decided to simply update and expand the list of individuals sanctioned under the Regulations. Amongst other things, the Regulations prohibit persons in Canada and Canadians outside of Canada from dealing in any property with individuals or entities listed in the Regulations. Other measures imposed by the Regulations include a freeze on assets in Canada of any designated Myanmar nationals, as well as an arms embargo, including prohibitions on exporting and importing arms and related material to and from Myanmar.

The total number of individuals designated under the Regulations are now 45. There are also 44 entities designated under the Regulations.

While the Minister of Foreign Affairs issued a further statement on the situation on February 28, 2021, no further measures were announced. This could change at any time, and Canada's regime could be further aligned with that of the US and/or UK.

Parties contemplating transactions involving the above-designated individuals or entities should perform rigorous due diligence to ensure they are not engaging in prohibited transactions and keep in mind the potential for future actions against the Government of Burma. We will continue to monitor events and provide additional updates accordingly.