Myanmar’s military rulers attempted to move about US$1 billion held at the Federal Reserve Bank of New York (FRBNY) just days after seizing power, prompting US officials to freeze the funds, according to Reuters.
The transaction on Feb 4 in the name of the Central Bank of Myanmar was first blocked by bank safeguards, then an executive order issued by President Joe Biden gave them legal authority to block the transfer indefinitely, Reuters’ sources said.
Announcing a new executive order paving the way for sanctions on the generals and their businesses, Biden said on Feb 10 that the US was taking steps to prevent the generals from “improperly having access” to US$1 billion in Myanmar government funds.
The attempt, which has not been previously reported, came after Myanmar’s military installed a new central bank governor and detained reformist officials during the coup.
It marked an apparent effort by Myanmar’s generals to limit exposure to international sanctions. The US, Canada, the EU and UK have all issued fresh sanctions following the coup and the army’s subsequent deadly crackdown on demonstrators.
Myanmar’s reserves would be managed by part of the New York Fed known as Central Bank and International Account Services (CBIAS), where many central banks keep US dollar reserves for purposes such as settling transactions.
One source told Reuters that transactions involving Myanmar require extra scrutiny as the country last year was placed on the international Financial Action Task Force’s “grey list” for money laundering concerns, in part because of the risk of proceeds from drug trafficking being washed through its banks.
CBIAS’ compliance manual says New York Fed guidelines include provisions for responding to developments in account-holding nations.
“When appropriate,” it says, the bank’s legal department “will be in communication with the US Department of State in order to clarify current events and any changes that may affect the central bank and corresponding control of the FRBNY account”.