On January 26, 2024, the US Departments of State, Treasury, Commerce, Homeland Security, and Labor, and the Office of the US Trade Representative published a Supplemental Business Advisory (“Supplemental Advisory”) intended to highlight additional high-risk sectors and activities and update guidance for individuals, businesses, financial institutions, and other persons (e.g., investors, consultants, non-governmental organizations, due diligence service providers) regarding continued risks of doing business in Myanmar/Burma. The Supplementary Advisory incorporates significant sanctions developments against Myanmar since the previous advisory on similar topics was issued in 2022. Our blog post on the 2022 advisory is available here.
Additional Sectors and Activities of Concern
The Supplemental Advisory primarily identifies additional sectors and activities of concern in Myanmar identified as generating revenue for the military (often via state monopolies or monopoly-like concessions) and as being linked with corruption and human rights or labor rights abuses. The sectors of concern include: (i) rare earth elements; (ii) base metals and gold; (iii) timber; and (iv) aviation services, components, and fuel. The activities of concern include: (i) potential diversion to military end uses and end users; (ii) financial and related services to state-owned banks; and (iii) abuses of workers’ labor rights. Below, we summarize the risks and mitigation recommendations provided by the Supplementary Advisory.
| Sectors/Activities of Concern | Risks Identified by the Supplemental Advisory | Risk Mitigation Recommendations Provided by the Supplemental Advisory |
| Rare earth elements | Extraction and export of rare earth elements, including heavy rare earths, to neighboring countries; mislabeling rare earth elements from Myanmar as originating from mines in other nearby countries. | Businesses procuring rare earth elements and products from the Myanmar region should conduct enhanced due diligence to reduce the risks that such products (potentially marketed as Chinese-origin) originated in Myanmar. Businesses should request documentation of products’ origin. |
| Base metals and gold | Money laundering, corruption, and human rights and labor rights abuses, including forced labor, due to the lack of regulation, transparency, and accountability in Myanmar’s metal mining sector. | Importers should undertake heightened due diligence to better understand their supply chains and avoid sourcing from or brokering through Myanmar military-owned or affiliated entities, even if their supply chains appear to be completely outside of Myanmar. |
| Timber | Regime control of the seaports and ties to timber brokers in neighboring countries; Myanma Timber Enterprise sanctioned in April 2021. | Businesses sourcing timber products from Myanmar or its immediate neighbors should be aware of direct/indirect linkages to Myanmar’s regime and to sanctioned individuals and entities, including banks. |
| Aviation services, components, and fuel | Nearly impossible for suppliers to ascertain the end user of aviation kerosene destined to Myanmar; sanctions imposed on any foreign individual or entity determined to operate in the jet fuel sector of Myanmar’s economy. | Businesses that supply spare parts for ATR aircraft in Myanmar, or for common models of Bell, Alouette, and PZL-Swidnik rotary aircraft, should be aware of potential diversion, use by the military, and any reputational and regulatory risks. |
| Potential diversion to military end uses and end users | Computer chips in ICT equipment, including routers and servers, and mature-node computer chips embedded in appliances and vehicles, diverted to China and Russia for military use. | Businesses must adhere to military end use and end user controls, and military-intelligence end use and end-user controls maintained by the US Department of Commerce’s Bureau of Industry and Security (“BIS”). |
| Financial and related services to state-owned banks | Regime control over state banks to generate revenue; inadequate anti-money laundering and counter financing of terrorism (“AML/CFT”). | Businesses should examine all transactions and services for state banks, and the sale and support of financial software and IT hardware for central banking activities. |
| Abuse of workers’ labor rights | Myanmar’s state-owned enterprises are significantly involved in industries that have been tied to human trafficking, child and forced labor, and the targeting of labor unions. | Businesses employing workers in Myanmar, including through subcontractors and affiliates, should take appropriate measures to identify practices and labor conditions that may not comply with international standards. |
Further US and Multilateral Actions Taken Since January 2022
The Supplemental Advisory also highlights additional US and international regulatory actions taken since the 2022 advisory against individuals and entities linked to Myanmar’s military regime, including:
- The US Department of the Treasury’s Office of Foreign Assets Control has designated dozens of individuals and entities connected to the military regime, including two state-owned banks, Myanma Foreign Trade Bank and Myanma Investment and Commercial Bank, that were found to have facilitated the military regime’s use of foreign currency to procure weapons and jet fuel, and access international markets using offshore accounts.
- BIS has added several Burmese and Russian entities to the Entity List based on their support for Myanmar’s military regime, including three Burmese entities for providing surveillance equipment to the military that facilitated tracking and identification operations, and additional entities for selling, procuring, and servicing military equipment that enabled aerial attacks.
- Partners and allies have coordinated sanctions actions with the United States since the 2022 advisory, including the European Union, Australia, Canada, New Zealand, the Republic of Korea, and the United Kingdom.
- The Financial Action Task Force placed Myanmar on its “blacklist” in October 2022 due to gaps in its AML/CFT legal framework.
