10 December 2021

Additional Myanmar Sanctions “On the Table” Says US

Increasing pressure from the US could result in additional sanctions being imposed on Myanmar, a US diplomat has confirmed.

“All options are on the table, and I think it is our responsibility not just as the US, but as the international community, to do whatever we can to affect change and the unacceptable coup d’état and violence that has been carried out against the Burmese people,” Daniel Kritenbrink, US Assistant Secretary of State for East Asian and Pacific Affairs, told media outlets during a four-day visit to Southeast Asia.

Mr. Kritenbrink also touched on wider tensions with China, stating that the US-China relationship was “complex” and could be characterized as “responsible competition”. He said that threats from China against Taiwan had led to an “appropriate” response from the US.

Mr. Kritenbrink’s statements are further evidence of the US working to coordinate its Myanmar sanctions program with ASEAN  to maximize its impact while working more closely with its allies globally to combat China’s attempts to grow its sphere of influence.

Global Relationships With Myanmar

The US, EU, and other countries have imposed a range of sanctions against individuals and entities in Myanmar since the military seized power in February 2021. The military coup prevented Aung San Suu Kyi’s National League for Democracy party from starting a second five-year term in office.

This month, the United Nations delayed making a decision on admitting the chosen representative of Myanmar’s junta to the world body, keeping in place an envoy appointed by the ousted government.

The decision came just hours after Suu Kyi was convicted on charges of incitement and breaching coronavirus restrictions and handed a four-year sentence. A joint statement on Myanmar signed by the governments of Australia, New Zealand, the Republic of Korea, Canada, Norway, the UK, and the US in November, condemned the increasing violence.

Australia’s autonomous Myanmar sanctions regime involves an arms embargo, prohibitions on the provision of financial services, asset freezes for certain individuals and entities, trade restrictions, and travel bans. It also recently updated its sanctions regime, widening the scope to target human rights abusers and cyberattacks, a crime particularly relevant after Chinese hackers hit a major energy network in Queensland earlier this month. 

Meanwhile, the 10 members of the Association of Southeast Asian Nations (ASEAN) have yet to impose sanctions on Myanmar, but excluded the junta from its bi-annual summit and agreed to a “five-point consensus” at a special summit in April. Leaders said the regime had only itself to blame for its absence from the gathering

But there is a growing recognition among regional powers like Cambodia that the military government is likely here to stay. Cambodia’s government, which takes over the chair of ASEAN in 2022, says it will push to engage directly with Myanmar’s military government “seeking ways to restore good cooperation and solidarity in ASEAN.” 

Cambodian Prime Minister Hun Sen, who has said junta officials should be invited to ASEAN meetings, has also confirmed he will travel to Myanmar in January to engage in “quiet diplomacy”.  

This view is already creating tension in the region, signaling divergence from the US and undermining attempts to coordinate sanctions programs.

For example, Japan, a top foreign investor in Myanmar, is under pressure domestically to distance itself from military-backed business relationships. Japanese brewer Kirin has tried to exit two joint ventures with Myanmar Economic Holdings Public Company Ltd (MEHL) which is the subject of US and EU sanctions under pressure from human rights activists. The matter is now under arbitration in Singapore, after MEHL filed a petition against liquidating the joint ventures.

Actions for Compliance Teams

The latest Myanmar developments are a reminder that compliance teams will need to continue to navigate a fast-changing, often contradictory picture in the country, with international sanctions led by the US conflicting with economic relationships within the Asia-Pacific region. This is compounded by the wider growing geopolitical tensions with China.

Compliance teams need to be particularly aware of transaction screening risks in relation to Myanmar – with the military deeply embedded in the economy, there may be a wide number of industries where sanctions breaches are high risk. Companies may also try to hide their military connections and beneficial ownership structures in supply chains or via the use of shell companies and proxies to trade and transact. Businesses in Germany, the Netherlands, and Italy for example have flouted EU sanctions by illicitly importing timber from Myanmar, often via other Asian countries. 

It may also be wise for firms to keep an eye on Cambodia’s developing relationship with Myanmar. Extra due diligence measures could be required in some instances if particular transactions or trade relationships have a nexus, albeit indirect, to Myanmar via Cambodia.

Read more about global sanctions in our 2021 guide and our overview on Myanmar sanctions

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