By Jeremy Mullins / YANGON | MyanmarTimes - June 20, 2015
American banks continue to hesitate on money transfers
to and from Myanmar, despite the removal of most sanctions on
finance in 2012 and 2013.
Businesspeople say that while there are now few explicit rules
preventing transfers, a fear of sanctions and a shallow
understanding of the local market prevents the movement of money
between Myanmar and the world’s largest economy.
Some say the continued existence of the Specially Designated
Nationals (SDN) blacklist may also be dissuading American banks
and companies from doing business with Myanmar. “US banks,
by-and-large, are steadfastly refusing to undertake any
transactions with Myanmar, with few exceptions,” said Eric Rose,
lead director at Herzfeld Rubin Meyer & Rose Law firm in Yangon.
The result has been that businesses and even non-governmental
organisations (NGOs) are having trouble getting bank transfers
to their Myanmar bank accounts, even to non-blacklisted banks,
A number of US small and medium businesses looking to do
business with non-SDN Myanmar entities have contacted Herzfeld
Rubin Meyer & Rose and followed its advice to check with their
banks before proceeding, said Mr Rose. “Subsequently, without
exception, they chose not to proceed even with sales
transactions, as US banks, including a large US bank which does
limited banking with Myanmar, will not transfer funds from
Myanmar to the US without an OFAC license, even where no SDN is
involved,” he said.
The main problem slowing transfers is not the letter of the law
or the remaining sanctions.
American financial exports to Myanmar’s non-sanctioned
institutions were specifically allowed under Burma General
License 16, issued in 2012.
Two of the country’s roughly 25 private banks, Ayeyarwady Bank
and Asia Green Development Bank, and five of the state-owned
banks are still on the American sanctions list. However,
Ayeyarwady, Asia Green Development, and state-owned Myanma
Economic Bank and Myanma Investment and Commercial Bank were
covered in a subsequent General Licence issued in February 2013,
which allowed Americans to open bank accounts and take part in
financial transactions with them.
A number of other American sanctions do remain in place.
Prominent entrepreneurs such as Steven Law and U Tay Za and
their businesses are still on the blacklist. Americans are also
forbidden from doing business with military-owned companies,
such as Myanmar Economic Holdings Limited and Myanmar Economic
Corporation, two of the country’s largest conglomerates.
The US State Department also requires businesses investing more
than US$500,000 in the Myanmar economy to file an annual report
disclosing a range of different actions in the country. So far,
about 15 companies have filed the reports, including Coca-Cola,
Colgate Palmolive and Western Union. Some, like Gap, do not meet
the requirements to file, but do so voluntarily.
Although the sanctions have been drastically scaled back since
2012, Mr Rose said their continued existence may have a
“chilling effect” on inbound investment.
A US embassy spokesperson said the banks themselves are
best-placed to reply to a question on their activities, but
according to the bank representatives they have spoken with, the
reluctance does not stem from a misunderstanding of US
“Rather, banks, like other foreign investors, are taking into
account the various political and economic factors that form
their cost-benefit analysis and risk profile of Myanmar,” the
“The Foreign Commercial Service Officer at the US Embassy in
Yangon is actively engaging American businesses, including US
banks that are considering entering the market here. The State
Department has also provided information to the international
banking associations to educate the industry about the current
state of play regarding sanctions.”
Separately, at a briefing last month, American officials also
pointed to concerns over anti-money laundering that entered the
risk calculation of foreign banks. Myanmar routinely shows up on
watch lists put out by anti-money laundering and anti-terrorism
finance organisation the Financial Action Task Force (FATF).
They added that doing business with Myanmar is an internal
decision made by banks, not one made by the embassy.
Some say American officials may be underestimating the impact of
the sanctions. Mr Rose said that while FATF’s reports do
represent a concern, there are number of other countries listed
in their reports alongside Myanmar that do not face the same
restrictions. “I don’t remember any banks having issues dealing
with either Algeria or Ecuador,” he said.
“It is the enormous fines that banks dealing with SDN countries
are being subjected to which have scared them, and not FATF’s
position versus Myanmar,” he said.
Mr Rose added that if one looks at the bank due diligence
requirements and combines this with OFAC’s strengthening of the
SDN rules issued on August 13, 2014, “you can easily see how the
banks will run the other way if Myanmar money is involved,
considering the huge fines potential if one makes a mistake, and
the small transactions US companies engage in with Myanmar at
Philippe May, chief business officer at Ayeyarwady Bank, said
some international banks go way beyond the level of scrutiny
required by US rules. “If the country has the SDN list, the
banks don’t do any business there,” he said.
Part of the problem is a lack of awareness about the nature of
sanctions. Often, legal and compliance officials are tasked with
running inward and outbound Myanmar transactions past computer
These database queries can return partial checks. “Often, the
people doing this have no clue about Burmese names,” said Mr
May. “If a person on the list is named Maung Maung, and the bank
is querying the name Aung Maung, it will receive a partial
match, even though these two people are entirely unrelated.”
Banks are also able to go beyond the law. If their compliance
officials are nervous about Myanmar, they may skip the country
“Banks don’t say this openly,” said Mr May. “Customers may get
upset when they transfer money [and it falls foul of the bank’s
compliance measures]. The money kind of disappears, and it can
take months to solve.”
The best way to avoid this problem is to avoid US banks, and use
Singaporean dollars instead of the greenback.
“That’s 95 percent of the trouble,” he said. “People are too
fixated on USD.”
Instead of moving the entire amount at once and hoping it does
not get held up by overzealous banks, a person could instead do
a test transfer of $100 or so. Although the amount is small,
banks still follow the same procedures when testing to see
whether or not it will be allowed.
On the whole, though, Mr May said the continued existence of
sanctions does more harm to US companies than to Myanmar.
“The existence of the remnants of the SDN list adds to the
country’s risk profile,” he said.
Still, there appears to be no immediate end in sight for Myanmar
sanctions. US President Barack Obama last month renewed the
remaining sanctions for another year, and any decision on their
total removal must likely wait for the Myanmar election later
American elected officials such as senate majority leader Mitch
McConnell have said US officials will be closely watching the
election. “If the Burmese government gets this right – if it
ensures a transparent, inclusive, and credible election, with
results accepted by the competing parties – that would go a long
way toward reassuring Burma’s friends around the globe that it
remains committed to political reform,” he said in a speech on
June 4, according to website Roll Call.
“But if we end up with an election not accepted by the Burmese
people as reflecting their will, it will make further
normalisation of relations – at least as it concerns the
legislative branch of our government – much more difficult.”
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