FinCEN Advisory

Banks and other financial institutions operating in the United States are advised to give enhanced scrutiny to all financial transactions originating in or routed to orthrough Burma, or involving entities organized or domiciled, or persons maintainingaccounts, in Burma. The need for such enhanced scrutiny is discussed in the remainderof this Advisory.
Burma is a developing, agrarian country ruled by a military regime. It has apopulation of approximately 41 million people. Burma’s economy is heavily dependentupon agriculture, light industry and transport. The state controls substantialactivity in energy, other heavy industry, and the rice trade. According to the 2001International Narcotics Control Strategy Report (“INCSR”), issued by the U.S.Department of State, Burma’s economy continues to be vulnerable to drug moneylaundering because of its under-regulated financial system, weak anti-money launderingregime, and policies that facilitate the funneling of drug money into commercialenterprises and infrastructure investment.
The counter-money laundering regime embodied in the legal, supervisory, andregulatory systems of Burma suffers from serious systemic problems as follows:

• Burma lacks a basic set of anti-money laundering provisions.
• Money laundering is not a criminal offense for crimes other than drug trafficking in Burma.
• The Burmese Central Bank has no anti-money laundering regulations for financial institutions.
• Banks licensed by Burma are not legally required to obtain or maintain identification information about their customers.
• Banks licensed by Burma are not required to maintain transaction records of customer accounts.
• Burma does not require financial institutions to report suspicious transactions.

These deficiencies, among others, have caused Burma to be identified in June2001 by the Financial Action Task Force on Money Laundering (the “FATF”) asnon-cooperative “in the fight against money laundering.” The FATF, created at the1989 G-7 Economic Summit, is a 31 member international group that works tocombat money laundering.
Burma is considering legislative changes that could remedy at least some of thedeficiencies described above. Nonetheless, the legal, supervisory, and regulatorysystems of Burma at present create significant opportunities and tools for thelaundering and protection of the proceeds of crime, and allow criminals who makeuse of those systems to increase significantly their chances to evade effectiveinvestigation or punishment. Burma’s absence of sufficient supervisory or enforcementmechanisms aimed at preventing and detecting money laundering increasesthe possibility that transactions involving Burmese financial institutions and accountswill be used for illegal purposes.
Thus, banks and other financial institutions operating in the United Statesshould give enhanced scrutiny to any transaction originating in or routed to orthrough Burma, or involving entities organized or domiciled, or persons maintainingaccounts, in Burma. A financial institution subject to the suspicious transactionreporting rules contained within 31 C.F.R. Part 103, and in corresponding rules ofthe federal financial institution supervisory agencies, should carefully examine theavailable facts relating to any such transaction to determine if such transactionrequires reporting in accordance with those rules. Institutions subject to the BankSecrecy Act but not yet subject to specific suspicious transaction reporting rulesshould consider such a transaction with relation to their reporting obligations underother applicable law.
It should be emphasized that the issuance of this Advisory and the need forenhanced scrutiny does not mean that U.S. financial institutions should curtaillegitimate business with Burma.
To dispel any doubt about application of the “safe harbor” to transactionswithin the ambit of this Advisory, the Treasury Department will consider any reportrelating to a transaction described in this Advisory to constitute a report of asuspicious transaction relevant to a possible violation of law or regulation forpurposes of the prohibitions against disclosure and the protection from liability forreporting of suspicious transactions contained in 31 U.S.C. 5318(g)(2) and (g)(3).

James F. Sloan
Director