By: Judith Alison Lee, Audi Syarief and Claire Yi
On 25 March 2021, the US Treasury Department’s Office of Foreign Assets Control (OFAC) imposed additional sanctions in response to the ongoing crisis in Myanmar by designating the country’s two largest military conglomerates: Myanmar Economic Holdings Public Company Limited (MEHL) and Myanmar Economic Corporation Limited (MEC).
Because Myanmar’s military controls significant segments of the country’s economy, including trading, natural resources and consumer goods, through these two companies, these designations are the most consequential sanctions measures the Biden administration has taken to date in response to the situation. By operation of OFAC’s ‘Fifty Percent Rule’, the sanctioned status of MEHL and MEC automatically flows to the dozens of their majority-owned subsidiaries that play critical roles throughout the country’s economy, implicating the Myanmar-based operations of numerous foreign companies that have touchpoints with the US, and over which the US government has enforcement jurisdiction. Recognising the far-reaching impact, OFAC has concurrently issued four general licences or regulatory exemptions that provide blanket authorisation to engage in certain categories of activities that would otherwise be prohibited, including the winding down of any existing transactions involving MEHL, MEC or their majority-owned subsidiaries.
