NEW MONEY LAUNDERING SANCTIONS COULD BE USEFUL

C O N F I D E N T I A L RANGOON 001317

SIPDIS

STATE FOR EAP/BCLTV, EB/ESC
COMMERCE FOR ITA JEAN KELLY
TREASURY FOR OASIA JEFF NEIL
USPACOM FOR FPA

E.O. 12958: DECL: 10/20/2013
TAGS: EFIN SNAR KCRM PGOV BM
SUBJECT: NEW MONEY LAUNDERING SANCTIONS COULD BE USEFUL

REF: A. RANGOON 1313

B. RANGOON 1253

Classified By: COM CARMEN MARTINEZ FOR REASONS 1.5 (B,D)


1. (U) This is an action request. Please see paragraphs 5
and 6.


2. (C) For reasons laid out in Ref B, we think it unlikely
that the Burmese government will produce adequate money
laundering regulations and a draft mutual legal assistance
law by the November 3 deadline set by the Financial Action
Task Force (FATF). According to FATF, if the deadline passes
without action, the body will recommend that its members
impose certain "countermeasures" impacting their domestic
banks' dealings with Burma.


3. (C) Note: On October 16, during a regional drug task force
meeting in Rangoon (ACCORD) GOB officials reported that a
mutual legal assistance law had been drafted and was
undergoing ministerial-level review (see Ref A). However,
officials appealed to the UN Office on Drugs and Crime
(UNODC) for technical assistance in finalizing the process.
Our observation to the GOB's senior money-laundering expert
that this appeal appeared to be "too little, too late" was
met with stony silence. End note.


4. (C) We understand that the countermeasure options
available to the United States come under Section 311 of the
USA PATRIOT Act of 2001. Most of the alternatives presented
in this section would only reinforce the recently imposed ban
on financial transactions between a U.S. person and Burma,
and the freezing of assets of Burma's state-owned foreign
trade banks. However, we think that the Section 311
sanctions could nonetheless be used to put additional
pressure on the Burmese economy.


5. (C) Action request 1: If the Burmese fail to meet FATF
requirements, we suggest the Department work with the
Treasury Department to invoke part (b)(2) of Section 311,
which appears to compel U.S. banks to "obtain and retain
information concerning the beneficial ownership of any
account" opened by a Burmese person or his/her agent. This
requirement would dovetail with section 4(a) of the 2003
Burma Freedom and Democracy Act, and might help uncover the
degree to which SPDC members, government and military
officials, and others close to the regime, have assets inside
the United States. This is particularly the case as we've
heard that high-ranking Burmese officials keeping their money
in the United States may be doing so using the name of a
family member or other agent resident in the United States.


6. (C) Action request 2: We further urge State and Treasury
to push other FATF members -- particularly members of the
European Union, Japan, Singapore, and Hong Kong -- to impose
their own reporting requirements for Burma transactions.
Burmese business officials complain that many international
banks are reluctant now to engage in any transaction with a
Burmese party, even if such a transaction would not fall
afoul of U.S. law. However, some banks -- particularly in
Japan, Hong Kong, and Singapore -- are continuing to legally
facilitate settlements of international financial
transactions that include Burma. New, stricter guidelines
for transactions with Burma might encourage those banks still
legally working with Burma to stop. Likewise, EU
coordination could be beneficial, as the GOB is encouraging
businesses to use the euro as a replacement for the U.S.
dollar.
Martinez