On July 2, 2021, the US Government imposed sanctions on several military-affiliated entities and individual senior officials and certain family members in response to the February military coup in Burma (Myanmar). In a statement on the same day, the US State Department said that these “measures further demonstrate that [the US Government] will continue to take additional action against, and impose costs on, the [Burmese] military and its leaders until they reverse course and provide for a return to democracy.”
Entity List Designations
The US Commerce Department’s Bureau of Industry and Security (“BIS”) added four military-affiliated entities in Burma (Myanmar) to the Entity List. The four designated military-affiliated entities include King Royal Technologies Co. Ltd., a telecommunications company in Burma that BIS describes as providing services in support of the Burmese military, as well as Wanbao Mining and its subsidiaries, mining companies that BIS describes as having revenue-sharing arrangements with Myanmar Economic Holdings Limited (“MEHL”), a military-affiliated conglomerate added to the Entity List in March 2021.
The addition of the four military-affiliated entities to the Entity List restricts any person from exporting, reexporting or transferring in-country all items subject to US jurisdiction under the Export Administration Regulations (“EAR”) to those entities, or in any transaction to which they are a party. This would include exports, reexports and transfers of items subject to the EAR to other parties where the four military-affiliated entities are a purchaser or intermediary.
Specially Designated Nationals
In addition, the US Treasury Department’s Office of Foreign Assets Control (“OFAC”) designated 22 individuals in Burma as Specially Designated Nationals (“SDNs”) pursuant to Executive Order 14014 (“EO 14014”). The individuals are stated to be connected to Burma’s military regime, and include members of the State Administrative Council, several ministers, as well as the spouses or adult children of previously designated Burmese military officials “whose financial networks have contributed to military officials’ ill-gotten gains”. These SDN designations do not extend to the Government of Burma as a whole. The SDN designation means that:
- US Persons (i.e. entities organized under the laws of the United States, US citizens, US permanent resident aliens, and persons physically located within the United States) are prohibited from dealing directly or indirectly with the Burmese SDNs.
- In addition, under OFAC’s “50% Rule,” the prohibition extends to dealings by US Persons with any other entities in which the Burmese SDNs own, directly or indirectly, 50% or greater interest in the aggregate.
- Prohibited activities include exports (regardless of whether the item is subject to the EAR), imports, the provision or receipt of services, funds transfers, investments, etc. Any property and interests in property of these SDNs that come within the United States or within the possession or control of a US Person must be blocked and reported to OFAC.
- Non-US persons can also be directly liable for causing violations by US Persons involving these SDNs, such as by engaging in transactions with these SDNs via US financial institutions or in US dollars.
- Non-US persons also face the “secondary sanctions” risk of designation as an SDN themselves if found to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of the sanctioned Burmese individuals.
Please see also our prior blog post on EO 14014 and the Burma-related sanctions and export controls put in place by the Biden Administration in February 2021, and our prior blog post on the addition of MEHL and Myanmar Economic Corporation Limited to the Entity List and on other measures taken to tighten Burma-related export controls in March 2021.