US embassy cable - 05RANGOON462

C O N F I D E N T I A L RANGOON 000462 
 
SIPDIS 
 
STATE FOR EAP/BCLTV, EB 
COMMERCE FOR ITA JEAN KELLY 
TREASURY FOR OASIA, EOTF/FC PAUL DERGARABEDIAN 
USPACOM FOR FPA 
 
E.O. 12958: DECL: 04/20/2015 
TAGS: EFIN, SNAR, ECON, PGOV, BM 
SUBJECT: BURMA: MONEY LAUNDERING LAW NOT BEING USED TO SHUT 
CRIMINAL BANKS 
 
REF: A. RANGOON 402 
 
     B. 04 RANGOON 631 AND PREVIOUS 
 
Classified By: COM CARMEN MARTINEZ FOR REASONS 1.4 (B,D) 
 
1. (C) Summary: Three weeks after the GOB's closure of two 
banks suspected of money laundering, there is still no 
official indication of whether the banks were shut due to 
money laundering offenses.  Indeed, the GOB's public posture, 
and the opinion of the banking community, indicate that the 
law has not been used due to regime concerns about bad 
publicity.  Instead, administrative provisions of the banking 
law are apparently being invoked.  If true, this erodes 
confidence in the government's will to enforce its own 
anti-money laundering regime.  The USG -- through FATF -- 
should maintain pressure on the GOB to clarify its legal 
action and release to FATF the report on its 16-month 
investigation of the banks.  End summary. 
 
2. (C) A senior officer of Asia Wealth Bank (AWB), one of the 
two banks the GOB ordered shut on April 1 (ref A), told us 
April 19 that he did not think the authorities had found any 
evidence of money laundering or affiliation with 
narco-trafficking at his bank.  Though he admitted he had not 
seen the GOB's official report of the investigation into AWB 
and Myanmar Mayflower Bank (MMB), he said he was drawing his 
conclusion from the fact that the government was not using 
the 2002 "Control of Money Laundering Law" (CMLL) to close 
the banks.  Instead, they were being wound up under more 
general banking and company statutes. 
 
3. (C) The AWB official's claim is difficult to verify as he 
is clearly a biased source and the GOB has refused to show 
anyone a copy of the report of the 16-month investigation. 
At the time of the GOB closure order, law enforcement 
contacts noted informally that the banks were shut to respond 
to Financial Action Task Force (FATF) and USG concerns and 
due to "allegations" of money laundering at these banks by 
ethnic Wa leaders.  However, there has been no subsequent 
public or senior-level verification of these assertions. 
Private banking sources now are telling us they think the GOB 
will not use the CMLL, despite findings of malfeasance, to 
avoid admitting or revealing that money laundering and 
unlawful ties to criminal elements existed at GOB-supervised 
private banks.  Also, we speculate that a true investigation 
could reveal several high-level GOB hands in the cookie jar 
-- something the SPDC would be loath to publicize. 
 
4. (C) Comment: AWB's and MMB's links to narco-traffickers, 
and their money laundering activities, are indisputable.  If 
the GOB had carried out a genuine investigation of these 
banks, it would have found evidence to close them, and 
prosecute a number of senior executives, under the CMLL and 
the 1993 anti-narcotics law.  This is especially the case 
with the FATF pressing Burma to improve its anti-money 
laundering regime, and the SPDC's relative responsiveness to 
FATF expectations (ref B).  It is peculiar, then, that the 
GOB would not trumpet a first successful use of the CMLL if 
it was using the law to close the banks.  We urge Treasury 
and the U.S. delegation to FATF to press the GOB at the next 
Plenary session to release the investigation report and 
clarify whether or not the CMLL law is being used.  If the 
Burmese delegation refuses, FATF must remain skeptical of the 
Burmese dedication to fighting pervasive money laundering and 
the infiltration of drug money into the economy.  End comment. 
Martinez