In the April edition of the Aegis Journal we discussed a client who we felt was more or less “uncoachable”. But yet, in his defense, we can see many more things going on than meet the eye. The origins of the sanctions against Myanmar are detailed in five Congressional acts and four Presidential Executive Orders, which include bans on investment in the country, restrictions on money transfers and provision of banking services, asset freezes and the purchase of native gemstones.
The problem is this: If you currently wish to invest in business development in Myanmar, you either need to use cash and bypass their local banking system. So while there is a ban on investing in certain types of industries in Myanmar, even if you worked with a non-banned entity – you still have to encounter and work with their financial system.
From Bloomberg News, April 2012
“The U.S. will allow companies to invest in certain sectors of Southeast Asia’s fourth-smallest economy, Clinton said on April 4, without offering specifics. They may include telecommunications, agriculture, tourism and banking, according to two senior administration officials who briefed reporters the same day. Nothing has been decided, they said. European Union foreign ministers will meet April 23 to reconsider sanctions, which are less restrictive.”
April 24 the European Union confirmed it was suspending most of its sanctions to reward Myanmar’s recent wave of political reforms.
So while we can see a deliberate effort by Myanmar to open up to the world, an effort in the US and EU acknowledging this – the laws are still the laws… and as of this writing, are still in effect…
But, entrepreneurs are gamblers. As gamblers, entrepreneurs may be looking for “work-arounds”, which might include:
• Having a family member in Myanmar own everything.
• Working through an offshore company.
• Using a citizen of a county that does not have sanctions against Myanmar and work as a consultant.
We cannot tell you how much worse structuring makes a violation, but it is a bunch. Not only are you aware you are breaking the law, but by crafting elaborate structures of subterfuge to hide your violations you are demonstrating to the authorities by the act of creating the elaborate structures of subterfuge that you were in the wrong, knew it and tried to hide it.
Yet, you still – even if you get it right, have to know who the counterparties in Myanmar are to insure you are not doing something wrong.
In the end, we recommend compliance, and we are not encouraging anyone to violate the laws in place. Sanctions Compliance can be tricky, and if in doubt, we suggest that you check with OFAC first. We also suggest that you may be well served to check with proper legal counsel who specializes in these areas of practice before you enter into a business arrangement involving a government sanctioned entity.
But also, as entrepreneurs, we recognize that you want to have that edge. We understand that. Perhaps it may be time to schedule that trip to Myanmar and lay the foundations for future opportunities, because as we suspect, the day will likely come when sanctions against Myanmar are lifted. And you will be compliant and ready to strike.