INITIAL MONEY LAUNDERING INVESTIGATIONS IN BURMA

C O N F I D E N T I A L SECTION 01 OF 02 RANGOON 001553

SIPDIS

STATE FOR EAP, INL AND EB
TREASURY FOR OASIA AND FINCEN
DEA FOR OF, OFF
NSC FOR BEERS
MANILA ALSO FOR USED/ADB

E.O. 12958: DECL: 12/03/2012
TAGS: SNAR EFIN BM
SUBJECT: INITIAL MONEY LAUNDERING INVESTIGATIONS IN BURMA

REF: RANGOON 908

Classified By: COM Carmen Martinez. Reason: 1.5 (d).


1. (C) Summary: Burma has begun at least two investigations
under its new money laundering law. It has frozen assets
worth hundreds of thousands of dollars and applied to the
courts for forfeiture of a variety of property connected with
two high-profile narcotics cases. End Summary.


2. (C) Burma has moved with extraordinary speed to deal with
problems of money laundering identified by the Financial
Action Task Force. On June 17, 2002, it enacted a powerful
new law which criminalized money laundering in connection
with virtually every kind of serious criminal activity. A
Central Control Board chaired by the Minister of Home Affairs
was established in July and training for financial
investigators was conducted in Rangoon and Mandalay in July
and August. Most importantly, the first investigations under
the new law were begun within weeks of its passage. Two
cases, in particular, stand out. The first involves the Gold
Uni Investment Company; the second is directed at Tuan Sin
Htan, one of the principals in the October 2000 Fiji drug
bust.

Gold Uni Investment Company


3. (C) On July 12, police officials in Hong Kong discovered
12.5 kilograms of heroin concealed within a shipment of raw
jade stones from Burma. They relayed information to Burma's
Central Committee for Drug Abuse Control (CCDAC),which
immediately opened up an investigation. Numerous arrests
followed. On July 19, Burma's new financial investigation
unit was also tasked with pursuing leads in regard to bank
accounts and currency transfers. As a result of the work of
the financial investigation unit, CCDAC has now filed under
the new money laundering law for forfeiture of assets worth
approximately Burmese Kyat 166 million (i.e., USD 166,000).
The assets include four residential buildings, one poultry
feed factory, five automobiles and one motorcycle, and five
raw jade stones. In addition, CCDAC has filed for a court
order freezing all savings and checking accounts of suspects
in the case, and is auditing eleven other accounts to
determine if there is any further cause for action against
other individuals.

Tuan Sin Htan


4. (C) On October 28, a multinational investigation team
seized 357 kilograms of heroin in Suva, Fiji. Shipping
documents pointed to a Burma-based trading company, KMT
Trading Enterprise. CCDAC opened an investigation and, using
powers granted under both its 1993 Narcotics Law and the new
money laundering law, identified the following assets for
forfeiture: 12 buildings, one golf course, one recreation
center, two ORANGE groves, two vehicles, three heavy
construction vehicles, and one plot of undeveloped land. It
also froze all of the checking and savings accounts of the
company and seized cash totaling approximately Burmese Kyat
31 million (i.e., USD 31,000).

Comment


5. (C) The Burmese police have not hesitated to use the
powers granted by the money laundering law. What is
surprising is that, at least to date, they have been careful
to ensure that the law is applied only in clearly criminal
cases. This is important, because the powers in the law are
truly extraordinarily. Basically, it states that the
government has the right to seize the funds or property of
anyone who cannot "clearly prove with valid evidence" how he
obtained the money or property in question. Since almost no
one can prove the source of funds in Burma, where
record-keeping is a lost art, this means, in effect, that all
funds on deposit in the banking system are potentially at
risk and any indiscriminate investigations could provoke a
panic. Sensitive to this, police have focused on clearly
criminal cases, at least to date. Nevertheless they have
produced some striking results and could produce more as they
become more familiar with financial investigations.
Martinez