Sun. Apr 11th, 2021

Regulation HK

Financial Regulator

US Sanctions Holding Companies Backing Myanmar Military

2 min read

The new sanctions target the Myanmar military’s control of significant segments of the country’s economy, which is a vital financial lifeline for the military junta.

OFAC (the US Treasury Department’s Office of Foreign Assets Control) has issued new sanctions against two Myanmar military holding companies, Myanma Economic Holdings Public Company Limited (MEHL) and Myanmar Economic Corporation Limited (MEC).

In a notice, OFAC said the Myanmar military controls significant segments of the country’s economy through these holding firms, which “enjoy a privileged position in the Burmese economy”. Specifically, the two companies dominate the trading, natural resources, alcohol, cigarettes, and consumer goods sectors of the economy, it said.

MEHL and MEC are designated pursuant to Executive Order 14014 for being owned or controlled by the military or security forces of Burma.

OFAC says MEHL has 1,793 institutional shareholders, which include regional military commands and subordinate battalions, divisions, platoons, squadrons, and border guard forces. “Shares are distributed across the armed forces with no public accountability, creating secret slush funds that the military uses to augment its operational budget.”

Meanwhile, MEC is led by the Myanmar military’s Commander-in-Chief, Min Aung Hlaing, who OFAC designated in December 2019 pursuant to EO 13818 in connection with human rights abuses, and in February 2021 pursuant to EO 14014, the latter in connection with his role in leading the 1 February 2021 coup.

“These sanctions specifically target the economic resources of Burma’s military regime, which is responsible for the overthrow of Burma’s democratically elected government and the ongoing repression of the Burmese people,” OFAC said.

As a result of the action, all property and interests in property of the two entities that are in the US or in the possession or control of US persons are blocked and must be reported to OFAC. In addition, any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.

Concurrent with these designations, OFAC is issuing four general licences and related FAQs. The general licences allow for certain transactions for official US government business, official activities of certain other international entities, NGO activities, and the wind down of activities involving MEHL and MEC.

In February, the US sanctioned 10 individuals and three entities connected to Myanmar’s military, including Min. This month, it has also imposed sanctions against Min’s two adult children and six of their companies, as well as against two more individuals and two more entities connected to the Military military.

Leave a Reply

Your email address will not be published. Required fields are marked *