US embassy cable - 04RANGOON239

C O N F I D E N T I A L SECTION 01 OF 02 RANGOON 000239 
 
SIPDIS 
 
STATE FOR EAP/BCLTV, EB 
PARIS FOR USOECD - PLEASE PASS US DELEGATION TO FATF PLENARY 
COMMERCE FOR ITA JEAN KELLY 
TREASURY FOR OASIA JEFF NEIL 
USPACOM FOR FPA 
 
E.O. 12958: DECL: 02/22/2014 
TAGS: EFIN, SNAR, ECON, PGOV, BM 
SUBJECT: BURMA: ANOTHER TENTATIVE STEP ON MONEY LAUNDERING 
 
REF: A. 2/23 WOHLAUER-DERGARABEDIAN EMAIL 
     B. RANGOON 174 AND PREVIOUS (NOTAL) 
     C. 03 RANGOON 1595 (NOTAL) 
 
Classified By: DCM Ron McMullen for Reasons 1.5 (B,D) 
 
1. (C) Summary: As is its custom, the GOB released with no 
warning news of three important steps toward the 
implementation of its anti-money laundering law.  It 
announced the setting of threshold amounts for banking and 
real estate transactions, and the naming of members to its 
nascent Financial Investigation Unit.  However, it refused to 
make public any specifics.  Though these are key moves in 
principle, the lack of openness and the GOB's dire lack of 
capacity to fight financial crime lead us to advise caution 
in giving Burma's money laundering regime a clean bill of 
health.  End summary. 
 
Oh, By the Way, We Reformed 
 
2. (C) With no prior warning, the Burmese Minister for Home 
Affairs on February 19 sent a letter to the Financial Action 
Task Force (FATF) secretariat informing the body of three 
significant anti-money laundering directives approved by the 
GOB cabinet on January 8.  First, the letter indicated the 
Minister, as chairman of the new money laundering Central 
Control Board (CCB), had set a "specific," though 
unmentioned, threshold amount for reporting requirements. 
Second, the CCB had set a "specific," though again 
unmentioned, threshold amounts for real estate transactions. 
Finally, the CCB formally named representatives to the 
Financial Investigation Unit (FIU). 
 
3. (C) The three January directives close several gaps that 
remained even after the GOB in December 2003 issued 
long-awaited regulations to promulgate its June 2002 Control 
of Money Laundering Law (CMLL; see ref C).  It was, in part, 
the lack of these regulations that led FATF last November to 
officially urge its member countries to impose 
countermeasures against Burma.  The other half of FATF's 
concern, the lack of a mutual legal assistance framework law, 
has not yet been addressed. 
 
Thresholds Set, But We're Not Telling 
 
4. (C) According to a close Embassy source, and member of the 
FIU, the specific contents of the three directives remain 
highly classified.  He said the CCB reported the threshold 
amounts only to the banks, the FIU, and Central Bank of 
Myanmar.  Likewise for the real estate transaction threshold. 
 We learned from other sources in the GOB and at private 
banks, though, that the threshold amount for banks was set at 
100 million kyat (roughly US$120,000).  However, private 
bankers told us, they had yet to receive any written 
notification on this new requirement.  We have not yet been 
able to verify the threshold amount set for real estate 
transactions. 
 
The FIU: Outfitted But Not Ready for Battle 
 
5. (C) The FIU membership announcement is also classified, 
however, our FIU contact was willing to tell us who was on 
the list.  The director of the FIU will be a police Colonel 
from the Myanmar Police Force's Central Committee for Drug 
Abuse Control (CCDAC).  He will have two deputies, one from 
the Police Force's Central Investigation Division (CID) and 
one from the Ministry of Home Affairs' Bureau of Special 
Investigation (BSI).  (Note: The Myanmar Police Force is also 
under the aegis of the Home Affairs Ministry.) 
 
6. (C) The rest of the committee is made up of a Lt. Colonel 
from CCDAC, and deputy director-level officials from BSI, the 
Central Bank, the Land Record Department, the Internal 
Revenue Department, the Customs Department, and the Auditor 
General's office.  There will also be three administrative 
staff from the CCDAC, the Police Force, and the BSI.  The 
investigative staff will be made up of various officers from 
the BSI, CID, CCDAC, and Customs. 
 
7. (C) In the context of asking for more international 
capacity building, our contact admitted that there was a real 
dearth of well-trained financial investigators in the Burmese 
law enforcement community.  This, he said, would be the 
primary barrier to enforcement of the money laundering 
statute.  He told us that since the FIU's formation in 
mid-January, there had not been any reports from banks and no 
investigations begun by the FIU.  This is not a good sign. 
Although private banks have been in shambles since a banking 
crisis struck in February 2003, and thus will not be engaging 
in major transactions (see ref B), the FIU's investigations 
were supposed to be retroactive to the passage of the CMLL in 
June 2002, when the private banks were at the peak of their 
freewheeling ways. 
 
Comment: Some Good, But No Credibility 
8. (C) The appointment of solidly professional, vice 
political, officials to the FIU is a reassuring step. 
Likewise, we concur that the lack international training on 
fighting money laundering and terrorist financing will be a 
large obstacle to the successful enforcement of Burma's now 
"complete" money laundering regime.  However, we are dismayed 
that once again the senior SPDC leadership is clearly having 
a hard time committing fully to a policy step.  This is too 
bad, as it will keep Burma from getting whatever credit is 
due from making important reforms, at least on paper.  It 
also makes us suspicious of the SPDC's motives, and leaves us 
to advise caution until there is evidence of real action 
taken.  The result of the ongoing investigation into two of 
Burma's most notorious private banks, due in early March, 
will be the first test of the SPDC's earnestness to combat 
money laundering.  End comment. 
Martinez