The US has started enforcing its sanctions against two junta-owned banks in Myanmar by closing a window for businesses to wind down all transactions with them, according to the US Department of State.
The US designated sanctions on military-controlled Myanma Foreign Trade Bank and Myanma Investment and Commercial Bank on June 21 as they have been instrumental in facilitating the regime’s use of foreign currency to procure arms and jet fuel abroad, to access international markets using offshore accounts.
But the US Department of the Treasury’s Office of Foreign Assets Control issued a license to allow businesses and banks engaging with the banks an orderly “wind down”.
The license expired on August 5 and the sanctions will be enforced, according to a statement by the Department of State on Friday.
The US said the banks enable the regime to fund violence and it pledged to continue to engage with its partners in the international community to constrain the regime’s ability to exploit the international financial system.
Through offshore accounts, the two banks have facilitated the junta regime’s profiteering from Myanmar’s extractive industries, including oil and gas, teak and gemstones.
The banks have monopolized the country’s economy for decades as they have been the key financial institutions controlling the flow of foreign currency in Myanmar.
All the transactions made by Union of Myanmar Federation of Chambers of Commerce and Industry members and state-owned enterprises and even the salaries of seafarers are handled by the two banks.
To support its efforts to crush resistance forces, the regime has relied on foreign sources, including sanctioned Russian entities, to purchase and import arms.
Economist U Sein Htay, a former member of the economic committee of the National League for Democracy government, told The Irrawaddy in an interview that these new US sanctions against these banks will disrupt junta funding.
He said the state-owned enterprises will be hit by the sanctions and transactions made by two military-owned conglomerates, Myanma Economic Holdings and Myanmar Economic Corporation.
“Their associated business owners and cronies, also have to go through these two banks. So the transactions will impact them,” too he said.
After the sanctions were imposed in late June, the regime attempted to open secret bank accounts for Myanma Oil and Gas Enterprise and Myanma Timber Enterprise to bypass sanctions on international transactions.
On July 10, Singapore’s United Overseas Bank (UOB) announced that it will shut all of junta-linked Myanmar Airways International bank accounts by August 15. Despite the airline’s appeal to maintain the bank accounts, UOB has remained firm in closing the account.
Matthew Miller, a Department of State spokesman, said the US will monitor compliance and scrutinize the two banks’ transactions to counter evasion techniques.
“We will pursue enforcement actions … the United States will not waver in its support for the people of Burma as they seek peace, justice and an inclusive, democratic future for their country,” he said.
