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U.S. President Biden’s executive order freezing U.S. $1 billion of Central Bank of Myanmar foreign currency reserves at the Federal Reserve Bank of New York on Feb. 10 was a first step to keep cash out of the hands of the military that requires other countries to follow up, activists said.
With further reserves estimated at U.S. $5.7 billion stored in other countries, activists campaigning for justice and accountability for the Feb. 1 coup in Myanmar say other countries should follow the Fed and stop the junta from using state funds to blunt the impact of economic sanctions.
“The military now has control over the Central Bank and the Treasury, and they can repurpose the legitimate revenues of the government for their own use,” said Paul Donowitz, Global Witness’s campaign leader for Myanmar. He noted that soon after the coup, the army detained the Central Bank governor and replaced the bank leadership with their own people.
“The question for the international banks and banking regulators is how they can ensure that Myanmar’s state revenues held in the account of the State cannot be misappropriated by the military,” he added.
A Washington-based trade and commerce expert told RFA that Biden’s executive order cleared the way to target the bank following an attempt to access the $1 billion on Feb. 4 that was blocked by Fed safeguards after triggering a red flag.
“They made it a point to clarify that entities within the government of Myanmar after the coup d’etat include the Central Bank. That was a very deliberate addition,” the source added, speaking on condition of anonymity.
Reuters news agency cited two sources familiar with the transaction in a report on Thursday that said Biden’s executive order was designed to grant the New York Fed the legal authority to hold the $1 billion of Myanmar reserves indefinitely.
The International Monetary Fund (IMF) estimated the country’s gross reserves at $6.7 billion in January.
The Washington banking expert said three Singaporean banks hold the Central Bank of Myanmar’s remaining foreign reserves.
“The Central Bank of Myanmar manages its foreign reserves through its reserve accounts in the Federal Reserve Bank of New York and the three main commercial banks of Singapore, namely DBS [Development Bank of Singapore], UOB [United Overseas Bank], and OCBC [Overseas Chinese Banking Corporation],” said the expert.
The Monetary Authority of Singapore (MAS) in a Feb. 23 statement said that its “regular surveillance of the banking system has not found significant funds from Myanmar companies and individuals in banks in Singapore.”
“MAS expects financial institutions to remain vigilant to any transactions that could pose risks to the institution, including dealings with companies and individuals subject to financial sanctions by foreign jurisdictions,” MAS said.
RFA sought further comment from the MAS on the three banks, but received no reply.
RFA’s expert called the statement by MAS “evasive” – saying it covers only “Myanmar companies and individuals” and not Myanmar government funds or the Central Bank, which is a government entity whose independence and integrity were compromised by the coup and military appointments.
“If Singapore’s monetary authorities and banks are seeing suspicious transactions, they should definitely take action to prevent the looting of the State resources from Myanmar. They should respond to these suspicious transactions by flagging them, freezing the account, and investigating them,” said Donowitz.
Yadanar Maung—a spokesperson for the rights group Justice For Myanmar—said “Without an immediate response now, the military will continue to commit atrocities against the people and transfer assets into their private hands.”
“The international community and the banking industry must support the people’s struggle by taking immediate action,” she said.
Attempts to contact the newly appointed officials of Central Bank of Myanmar for comment were unsuccessful.
Reported and translated by Ye Kaung Myint Maung for RFA’s Myanmar Service. Written in English by Richard Finney.
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