Information Sharing Leads Banks to Reduce Burma Trade Finance, Says Reuters

November 11, 2015

According to a November 8, 2015 article published by Reuters, a number of western banks have significantly curtailed trade finance activity in Burma (Myanmar) based on intelligence shared among financial institutions indicating that a major trade terminal at the Port of Yangon is operated by a subsidiary of a Specially Designated National (SDN) targeted by U.S. sanctions.
  
According to other sources, Asia World Company, which is subject to U.S. sanctions based on its owner’s ties to the Burmese military, owns and operates the Asia World Port Terminal (AWPT), which is reportedly the cheapest, fastest and most frequently-used of four container terminals in the Port of Yangon. This information was recently discovered in trade documents by a member of the Bankers Association for Finance and Trade, and then shared among other financial institutions. According to Reuters, several banks, including Citigroup Inc, Bank of America, HSBC and PNC Financial, have curtailed their trade finance activities with Burma, leading to a reduction of U.S. exports to Burma to $5.5 million in September from over $50 million in June.

Beginning in July 2012, the United States Treasury’s Office of Foreign Assets Control (OFAC) began the process of lifting broad-based sanctions that prohibited most dealings with Burma.  OFAC retained, however, what are intended to be targeted sanctions on a number of SDNs. The United States eased financial and investment sanctions on Burma in response to historic reforms in that country, but retained more targeted sanctions out of concern regarding the protection of human rights, corruption and the role of the military in the Burmese economy. As these reports confirm, even though the United States may offer sanctions relief or liberalize trade and investment policies in respect of a targeted jurisdiction, risks remain where the objects of continuing targeted sanctions conduct significant business or wield significant power in the jurisdiction.
 
In addition, the Reuters article highlights the importance to financial institutions of keeping current on risk-related intelligence. For example, failing to incorporate publicly reported information about the ownership of AWPT may put an institution in the position of having participated in transactions routinely declined by peer institutions which had incorporated this information.