the process of a targeted easing of
[the] ban on the export of U.S. financial services and investment
as part of a broader effort to help accelerate economic
modernization and political reform.
Today's announcement signals impending change in U.S.
sanctions policy, but should not be understood to mean that the
U.S. government will lift all or most investment-related sanctions
in the immediate future. Rather, the Obama Administration has noted
that it will lift sanctions in a stepwise process if Burma takes
more actions to demonstrate that it is moving toward a democratic
The Obama Administration and Congress will condition the further
lifting of sanctions on whether Suu Kyi comments positively on the
elections; her party's ability to operate freely in the
Parliament and institutionalize rule of law; and whether Burma
makes progress on resolving the myriad ethnic conflicts along its
borders. How, exactly, improvement in these areas will be measured
is not clear, but Burma is unlikely to make substantial progress on
them overnight, meaning that it will take time for the sanctions to
be lifted. Furthermore, Congress and the Obama Administration may
hold different views on what constitutes sufficient progress, which
will slow the lifting of sanctions because the process requires
coordination between the two branches of government.
In the meanwhile, companies should consider how they would
conduct business responsibly in Burma, were the investment-related
sanctions to be lifted. Widespread corruption, ethnic conflict, and
antiquated social and environmental regulations present significant
challenges. Companies will need to conduct robust social and
environmental due diligence that takes into account the specific
industry and location -- general country due diligence will not
Context matters enormously. For instance, infrastructure
projects even in central Burma raise significant human rights
concerns, given the Burmese government's resettlement
practices, but infrastructure projects in ethnic regions are even
more problematic. The central government is disliked and has
limited control in ethnic areas, and companies should not assume
that a government permit provides a social license to operate.
Companies that seek to operate in ethnic areas should consider the
risk that they will exacerbate conflict between ethnic groups and
the central government -- a determination that requires detailed
due diligence, taking into account the specific ethnic groups
In instances in which investments would not have a large
physical footprint, companies should still exercise caution.
Corruption is a significant problem, and the military and its
affiliates play an outsized role in the economy. Even if local
companies are not on sanctions lists, they may be associated with
notorious military officers who are linked to human rights abuses.
Accordingly, conducting business with such companies, even if
legal, could have negative reputational effects. Projects in Burma
face other challenges as well because Burma inadequately regulates
labor rights, privacy, freedom of expression, and the environment,
so companies that merely follow national law would fall well below
international standards for good practice.
In short, the United States will lift some sanctions on Burma in
the near future, but will not end most related to investment for
some time. This provides an opportunity for responsible companies
to consider what forms of due diligence they would carry out so
that their investments do not have negative social or human
impacts, and do not bring excessive corruption risks. Companies
should become familiar with Burma's complex political and
ethnic make-up so that if the investment-related sanctions are
lifted, they are prepared to conduct due diligence that is granular
and specific to avoid the myriad pitfalls related to operating in
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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While this clarification appears to open the door to FFIs maintaining U.S. dollar accounts on behalf of Iranian parties, the potential transfer of funds to or from such accounts continues to be severely constrained.
On December 11, 2013, the Department of the Treasury’s Office of Foreign Assets Control (OFAC), the Board of Governors of the Federal Reserve System (the Federal Reserve) and the New York State Department of Financial Services (NYDFS) each concluded regulatory actions against Royal Bank of Scotland Group plc (RBS or the Bank), based in the United Kingdom.
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