The United States Foiled A USD 1 Billion Transaction By The Myanmar Military Regime

Leader of the Myanmar military regime General Min Aung Hlaing (Wikimedia Commons/Vadim Savitsky)

JAKARTA - United States authorities have succeeded in blocking the Myanmar military junta's attempt to carry out a transaction to transfer funds amounting to USD 1 billion.

This transaction is trying to be done through the Central Bank of the United States (Federal Reserve Bank) or The Fed's New York branch, after staging a coup on February 1.

The transaction is known to have been attempted on February 4 on behalf of the Central Bank of Myanmar. Security The Fed decided to block the transaction for a certain time.

"Until then President Joe Biden signs an executive order giving them (the Fed) legal authority to block the transaction indefinitely," a source with knowledge of this told Reuters.

The efforts, never previously reported, came after Myanmar's military installed a new central bank governor and detained reformist officials during a coup.

A New York Fed spokesman declined to comment on specific account holders. The US Treasury Department also declined to comment.

This marks an apparent attempt by Myanmar's generals to limit international sanctions after they arrested elected officials, including de facto leader Aung San Suu Kyi, who won national elections in November. The army seized power on charges of fraud, claiming that the election commission had been dissolved.

A spokesman for the Myanmar military government did not answer repeated phone calls seeking comment. Reuters was unable to contact officials at the central bank.

It is known that President Joe Biden approved an executive order to impose new sanctions on those responsible for the military coup in Myanmar.

In his statement Wednesday, February 10 local time, Joe Biden repeated demands that the generals give up power and release civilian leaders.

US officials did not elaborate on the statement at the time, but an executive order issued the following day specifically identified the Central Bank of Myanmar as part of the Myanmar government. The order allowed the confiscation of government assets in the aftermath of the Myanmar coup.

Two sources told Reuters that the executive order was designed to give the New York Fed the legal authority to hold the United States 1 billion in Myanmar deposits indefinitely.

The Myanmar deposit fund is managed by a section of the New York Fed known as the Central Bank and International Accounts Service (CBIAS), in which many central banks hold US dollar reserves for purposes such as completing transactions.

The attempt to vacate the account was made on February 4, but was blocked automatically by a process that had been put in place at the New York Fed before the coup, two sources said.

One source said it was because transactions involving Myanmar required extra scrutiny, as the country was last year placed on the gray list of the International Financial Action Task Force on money laundering issues, partly because of the risk of proceeds from the drug trade being laundered through banks.

The CBIAS compliance guidelines, published in 2016, say the New York Fed guidelines include provisions for responding to developments in account-holding countries.

"If necessary, the bank's legal division will communicate with the US State Department to clarify current events and any changes that could affect the central bank and controls related to the FRBNY account," explained the source.

Myanmar Coup. The VOI editorial team continues to monitor the political situation in that one of the ASEAN member countries. Casualties from civilians continue to fall. Readers can follow the news covering the Myanmar military coup by clicking this link.