VZCZCXRO7055
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHGO #1109/01 3190837
ZNR UUUUU ZZH
R 150837Z NOV 07
FM AMEMBASSY RANGOON
TO RUEHC/SECSTATE WASHDC 6825
RUCNASE/ASEAN MEMBER COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC
RUEAWJA/DEPT OF JUSTICE WASHDC
RHEHNSC/NSC WASHDC
RUEKJCS/SECDEF WASHDC
RUEKJCS/JOINT STAFF WASHDC

UNCLAS SECTION 01 OF 02 RANGOON 001109 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR EAP/MLS, INL, SCT, EEB 
DEPT OF JUSTICE FOR AFMLS, OIA, OPDAT 
TREASURY FOR FINCEN 
 
E.O. 12958:N/A 
TAGS: EFIN KCRM KTFN SNAR BM
SUBJECT: BURMA: INCSR II MONEY LAUNDERING AND FINANCIAL CRIMES 
 
REF:  STATE 137250 
 
RANGOON 00001109  001.2 OF 002 
 
 
¶1.  This report responds to reftel request for the INCSR II Money 
Laundering and Financial Crimes Report update. 
¶2.  Burma, a major drug-producing country, has taken steps to 
strengthen its anti-money laundering regulatory regime in 2006 and 
¶2007. The country's economy remains dominated by state-owned 
entities, including the military.  Agriculture and extractive 
industries, including natural gas, mining, logging and fishing 
provide the major portion of national income, with heavy industry 
and manufacturing playing minor roles.  The steps Burma has taken 
over the past several years have reduced vulnerability to drug money 
laundering in the banking sector.  However, with an underdeveloped 
financial sector and large volume of informal trade, Burma remains a 
country where there is significant risk of drug money being funneled 
into commercial enterprises and infrastructure investment.  The 
government has addressed most key areas of concern identified by the 
international community by implementing some anti-money laundering 
measures.  In October 2006, the Financial Action Task Force (FATF) 
removed Burma from the FATF list of Non-Cooperative Countries and 
Territories (NCCT), but advised the Burmese Government to enhance 
regulation of the financial sector, including the securities 
industry.  FATF will continue to monitor Burma's progress on 
anti-money laundering in 2007-2008. 
¶3.  The United States maintains other sanctions on trade, investment 
and financial transactions with Burma under Executive Order 13047 
(May 1997), Executive Order 13310 (July 2003); the Narcotics Control 
Trade Act, the Foreign Assistance Act, the International Financial 
Institutions Act, the Export-Import Bank Act, the Export 
Administration Act, the Customs and Trade Act, the Tariff Act (19 
USC 1307), and the 2003 Burmese Freedom and Democracy Act (P.L. 
108-61).   In September and October 2007, under Executive Order 
13310, the United States imposed additional sanctions on leaders of 
the Burmese regime, as well as key businessmen. 
¶4.  Burma enacted a "Control of Money Laundering Law" in 2002. It 
also established the Central Control Board of Money Laundering in 
2002 and a financial intelligence unit (FIU) in 2003.  It set a 
threshold amount for reporting cash transactions by banks and real 
estate firms, albeit at a fairly high level of 100 million kyat 
(approximately $75,000).  Burma adopted a "Mutual Assistance in 
Criminal Matters Law" in 2004, added fraud to the list of predicate 
offenses, and established legal penalties for leaking information 
about suspicious transaction reports.  The GOB's 2004 anti-money 
laundering measures amended regulations instituted in 2003 that set 
out 11 predicate offenses, including narcotics activities, human 
trafficking, arms trafficking, cyber-crime, and "offenses committed 
by acts of terrorism," among others.  The 2003 regulations, expanded 
in 2006, require banks, customs officials and the legal and real 
estate sectors to file suspicious transaction reports (STRs) and 
impose severe penalties for noncompliance. 
¶5.  The GOB established a Department Against Transnational Crime in 
¶2004.  Its mandate includes anti-money laundering activities.  It is 
staffed by police officers and support personnel from banks, 
customs, budget, and other relevant government departments.  In 
response to a February 2005 FATF request, the Government of Burma 
submitted an anti-money laundering implementation plan and produced 
regular progress reports in 2006 and 2007.  In 2005, the government 
also increased the size of the FIU to 11 permanent members, plus 20 
support staff.  In August 2005, the Central Bank of Myanmar issued 
guidelines for on-site bank inspections and required reports that 
review banks' compliance with AML legislation.  Since then, the 
Central Bank has sent teams to instruct bank staff on the new 
guidelines and to inspect banking operations for compliance. 
¶6.  In 2006-2007, the Burmese Government amended its "Control of 
Money Laundering Law" to expand the list of predicate offences.  In 
July 2007, the Central Control Board issued five directives to bring 
more non-bank financial institutions under the AML/CFT compliance 
regime. As of August 2007, 823 STRs had been received. One case 
related to trafficking in persons was filed for prosecution, 
resulting in the convictions of 20 individuals under the "Control of 
Money Laundering Law" and the Trafficking in Persons Law.  In the 
first eight months of 2007, seven cases have been identified as 
potential money laundering investigations. 
 
¶7.  Burma is scheduled to undergo a mutual evaluation by the FATF's 
Asia-Pacific Group on Money Laundering, with the on-site visit to 
take place in November 2007. 
¶8.  The United States maintains the separate countermeasures it 
adopted against Burma in 2004, which found the jurisdiction of Burma 
and two private Burmese banks, Myanmar Mayflower Bank and Asia 
Wealth Bank, to be "of primary money laundering concern."  These 
countermeasures prohibited U.S. banks from establishing or 
maintaining correspondent or payable-through accounts in the United 
 
RANGOON 00001109  002.2 OF 002 
 
 
States for or on behalf of Myanmar Mayflower and Asia Wealth Bank 
and, with narrow exceptions, for all other Burmese banks.  These 
rules were issued by the Financial Crimes Enforcement Network within 
the Treasury Department, pursuant to Section 311 of the 2001 USA 
PATRIOT Act. 
¶9.  Myanmar Mayflower and Asia Wealth Bank had been linked directly 
to narcotics trafficking organizations in Southeast Asia.  In March 
2005, following GOB investigations, the Central Bank of Myanmar 
revoked the operating licenses of Myanmar Mayflower Bank and Asia 
Wealth Bank, citing infractions of the Financial Institutions of 
Myanmar Law.  The two banks no longer exist.  In August 2005, the 
Government of Burma also revoked the license of Myanmar Universal 
Bank (MUB), and convicted the bank's chairman under both the 
Narcotics and Psychotropic Substances Law, and the Control of Money 
Laundering Law.  Under the money laundering charge, the court 
sentenced him to one 10-year and one unlimited term in prison and 
seized his and his bank's assets. 
¶10.  Burma also remains under a separate 2002 U.S. Treasury 
Department advisory stating that U.S. financial institutions should 
give enhanced scrutiny to all financial transactions related to 
Burma.  The Section 311 rules complement the 2003 Burmese Freedom 
and Democracy Act (renewed in July 2006) and Executive Order 13310 
(July 2003), which impose additional economic sanctions on Burma 
following the regime's May 2003 attack on a peaceful convoy of the 
country's pro-democracy opposition led by Nobel laureate Aung San 
Suu Kyi.  The sanctions prohibit the import of most Burmese-produced 
goods into the United States, ban the provision of financial 
services to Burma by any U.S. persons, freeze assets of the ruling 
junta and other Burmese institutions, and expand U.S. visa 
restrictions to include managers of state-owned enterprises as well 
as senior government officials and family members associated with 
the regime.  In August 2007, the U.S. Treasury amended and reissued 
the Burmese Sanctions Regulations in their entirety to implement the 
2003 Executive Order that placed these sanctions on Burma. 
¶11.  Burma became a member of the Asia/Pacific Group on Money 
Laundering in January 2006, and is a party to the 1988 UN Drug 
Convention.  Over the past several years, the Government of Burma 
has expanded its counter narcotics cooperation with other states. 
The GOB has bilateral drug control agreements with India, 
Bangladesh, Vietnam, Russia, Laos, the Philippines, China, and 
Thailand.  These agreements include cooperation on drug-related 
money laundering issues.  In July 2005, the Myanmar Central Control 
Board signed an MOU with Thailand's Anti-Money Laundering Office 
governing the exchange of information and financial intelligence. 
The government signed a cooperative MOU with Indonesia's FIU in 
November 2006. 
¶12.  Burma is a party to the UN Convention against Transnational 
Organized Crime and ratified the UN Convention on Corruption in 
December 2005 and the UN International Convention for the 
Suppression of the Financing of Terrorism in August 2006.  Burma 
signed the ASEAN Multilateral Assistance in Criminal Matters 
Agreement in January 2006. 
¶13.  The GOB now has in place a framework to allow mutual legal 
assistance and cooperation with overseas jurisdictions in the 
investigation and prosecution of serious crimes.  To fully implement 
a strong anti-money laundering/counterterrorist financing regime, 
Burma must provide the necessary resources to administrative and 
judicial authorities who supervise the financial sector, so they can 
apply and enforce the government's regulations to fight money 
laundering successfully.  Burma must also continue to improve its 
enforcement of the new regulations and oversight of its banking 
system, and end all government policies that facilitate the 
investment of drug money into the legitimate economy.  It also must 
monitor more carefully the widespread use of informal remittance or 
"hundi" networks, and should criminalize the funding of terrorism. 
¶14.  Embassy Rangoon's POC for Money Laundering and Financial Crimes 
issues is Economic/Commercial Officer Samantha Carl-Yoder; email: 
carl-yodersa@state.gov; phone: 95-1-650-006. 
 
VILLAROSA