We have updated The Irrawaddy Research Pages with the new addition of this special feature on money laundering in Burma.
Burma’s economic miseries are compounded by its collapsing banking sector and the military government’s lack of transparency, as well as its half-hearted efforts to eliminate illegal financial transactions in Burma. International governments and independent financial task forces have condemned Burma for failing to meet international standards in combating money laundering. Drug money is widely suspected of keeping Burma’s struggling economy afloat.
Below is a chronology of events concerning money laundering in Burma and the full text of the laws enacted by Burma’s military junta, which first appeared in the state-run daily, the New Light of Myanmar, in December 05, 2003 and June 17, 2002.
Chronology of Money Laundering Events
January 27, 1993—Burma’s ruling junta enacts the Narcotic Drugs and Psychotropic Substances Law that includes legal tools to address money laundering, such as seizure of drug-related assets and prosecution of drug conspiracy cases. It repealed the Narcotics and Dangerous Drugs Law of 1974. But critics say that the government didn’t exercise the Law. Burmese drug officials themselves said that they don’t have enough expertise to deal with money laundering and financial crimes.
July 17, 1995—The junta issues rules for the Narcotic Drugs and Psychotropic Substances Law.
March 1998—US State Department puts Burma as a country of primary concern in medium priority in its report on Money Laundering and Financial Crimes, 1997. The Department’s Bureau for International Narcotics and Law Enforcement Affairs refers to the report issued by the US Embassy in Rangoon that charges that the regime systematically encourages major drug traffickers to invest in large-scale development projects which are of high priority to the ruling junta. The Embassy adds that an underdeveloped banking system and lack of enforcement against money laundering has created a business and investment environment conducive to the use of drug-related proceeds in legitimate commerce.
The lack of vigorous enforcement efforts against money laundering leaves Burma vulnerable to the growing influence of drug traffickers and abuse of the financial system by criminals. Burma needs to develop and enforce an adequate anti-money laundering system to protect its financial system and economy from criminal activity, concludes the report.
June 22, 2001—The Financial Action Task Force on Money Laundering, or FATF, an independent international body based in Paris, France, identifies Burma as non-cooperative in the fight against money laundering in its Non-Cooperative Countries and Territories 2000-2001 report.
June 17, 2002—Burma’s military government enacts the Control of Money Laundering Law. Minister of Home Affairs Col Tin Hlaing announces that the purpose of the Law is to protect public interests.
(see 1.Control of Money Laundering Law)
The government forms the Central Control Board, or CCB, to administer the Control of Money Laundering Law. Minister of Home Affairs Col Tin Hlaing is appointed Chairman of the Board.
June 20, 2003—The FATF lists nine countries, including Burma, as Non-Cooperative Countries and Territories. Others listed are Cook Islands, Egypt, Guatemala, Indonesia, Nauru, Nigeria, Philippines and Ukraine.
November 03, 2003—The FATF decides to impose counter-measures on Burma for the government’s failure to address major deficiencies in its anti-money laundering since the FATF first identified the country as a non-cooperative country in June 2001. The FATF calls upon its members to apply counter-measures to Burma.
November 19, 2003—The US Treasury Department names two Burmese commercial banks, Myanmar Mayflower Bank and Asia Wealth Bank, to be of "primary money laundering concern," under Section 311 of the USA Patriot Act. The Act is enacted to fight terrorism after Sept 11, 2001, attacks on the US. The Department’s report notes that the two banks have been linked to narcotics trafficking organizations in Southeast Asia. It also mentions the military government’s failure to remedy serious deficiencies in its anti-money laundering system, and announces plans to impose a ban on US financial institutions having correspondent accounts with all Burmese banks, allowing exemptions in certain cases.
November 2003—An official from Asia Wealth Bank denies the US allegations.
November 21, 2003—Burma’s military government releases a statement that denounces US government sanctions against its banking industry, remarking that any financial sector problems were partly the fault of developed nations that failed to provide aid. The statement reads, "The US government has been criticizing and condemning almost every institution in existence in Myanmar, and now is the time and the turn for Myanmar financial institutions to be accused of wrongdoing."
December 04, 2003—Burma’s Ministry of Home Affairs issues the Control of Money Laundering Rules to implement the provisions of the Control of Money Laundering Law that was enacted on June 17, 2002.
(see 2.Control of Money Laundering Rules)
December 05, 2003—Burma’s ruling junta sets up an investigation body to investigate the Myanmar Mayflower Bank and Asia Wealth Bank and uncover any possible links to drug trafficking organizations. The Investigative Body was under the Central Control Board of the Ministry of Home Affairs. Finance Minister Maj-Gen Hla Tun says it would take three months and be carried out under new regulations for controlling money laundering, effected today. Col Tin Hlaing also states that the measures are aimed at prevention of the laundering of any proceeds of national and transnational crimes, including drug and human trafficking and dealing in weapons and cultural artifacts.
(see 3.Investigation Body)
UPDATED IN FEBRUARY 2004
