January 26, 2015
In light of the increased interest that Myanmar is currently generating among international investors, we have prepared this brief overview of applicable international sanctions measures, with a focus on the United States. As further discussed below, the U.S. has suspended most of its Myanmar sanctions and kept only a few in effect, while other countries have generally revoked all sanctions in full (again with a few exceptions).
Persons Restricted by U.S. Sanctions. The U.S. sanctions against Myanmar generally restrict actions by "U.S. persons", which term is defined as any U.S. citizen or permanent resident, any entity organized under U.S. federal, state or local law (including foreign branches) and any person in the U.S. The U.S. sanctions also apply to activities and transactions from or within the U.S.
Authorized Transactions under U.S. Sanctions. Subject to certain limitations, a number of activities and transactions previously prohibited under U.S. sanctions towards Myanmar have been authorized under general licenses, including:
- Transferring funds directly or indirectly to Myanmar or providing financial services directly or indirectly to persons in Myanmar.
- Making new investments in Myanmar.
Currently, U.S. persons are generally allowed to engage in these types of transactions, so long as (i) the counterparty is not the Myanmar Ministry of Defense, an armed group or an associated entity (determined using a 50% ownership threshold), or a Myanmar specially designated national as discussed below or (ii) it does not involve debit to a blocked account.
If such a transaction involves one of these counterparties, then not only are U.S. persons still prohibited from entering into the transaction, but they are also barred from financing or facilitating the performance of the transaction by a non-U.S. person.
Prohibited Transactions Under U.S. Sanctions. The following transactions are prohibited under U.S. sanctions:
- A general arms embargo on the export or import of defense articles and defense services to or from Myanmar.
- A general ban on importing jadeite or rubies mined or extracted from Myanmar and any articles of jewelry containing such jadeite or rubies into the U.S.
- A general prohibition on dealing with Myanmar-related specially designated individuals and persons.
Specially Designated Nationals. Under the current sanctions regime, U.S. persons are generally blocked from dealing with certain designated individuals and entities associated with or deemed supportive of the Myanmar military or the former military government (known as "specially designated nationals and blocked persons" or "SDNs"), or any of their property interests that are or come within the U.S. or within the possession or control of a U.S. person. A list of SDNs can be found on the website of The U.S. Office of Foreign Assets Control ("OFAC") at www.treasury.gov/sdn.
In addition, if one or more SDNs directly or indirectly own a 50% or greater interest in an entity in the aggregate, then that entity is also treated as an SDN and U.S. persons are thus generally prohibited from dealing with the entity or its property. This is the case even if the entity is not itself included in OFAC’s SDN list.
OFAC Licenses. OFAC has issued a number of general licenses to authorize the transactions noted above and to allow U.S. persons to engage in certain additional transactions that would otherwise be prohibited, such as account transactions involving specified Myanmar banks. In addition, U.S. persons can apply to OFAC for a specific license to engage in prohibited transactions if not already allowed under a general OFAC license (except for transactions prohibited under the arms embargo, which fall under a separate regulatory regime). OFAC may grant or deny an application for a specific license in its discretion.
U.S. Reporting Requirements. U.S. persons making new investments in Myanmar that exceed US$500,000 in the aggregate or that are made pursuant to an agreement with Myanmar Oil and Gas Enterprise are subject to certain reporting requirements.
Other Country Sanctions. Other countries have generally lifted any previously imposed sanctions relating to Myanmar. However, an arms embargo remains effective in some instances, such as the European Union and Australia. In addition, Canada continues to impose not only an arms embargo but also an asset freeze and dealings prohibition on certain designated persons. Myanmar has not been the target of any United Nations sanctions to date.
We would be pleased to assist in answering any questions you may have about Myanmar sanctions or doing business in Myanmar generally. Gibson, Dunn & Crutcher’s lawyers are available to assist in addressing any questions you may have regarding these developments. Please contact the Gibson Dunn lawyer with whom you usually work, or the following:
Saptak Santra – Singapore (+65 6507 3691, [email protected])
Judith Alison Lee – Washington, D.C. (+1 202-887-3591, [email protected])
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