Myanmar Coup Leaders Tried To Drain $ 1 Billion From US Account: Sources | News from banks

An executive order from US President Joe Biden gave the green light to block the transfer indefinitely, Reuters reported.

Myanmar’s military rulers attempted to move around $ 1 billion held at the Federal Reserve Bank of New York (FRBNY) to the United States days after taking power on February 1, prompting U.S. officials to freeze funds, three people with knowledge of the matter, including a US government official, told Reuters news agency.

The February 4 transaction on behalf of the Central Bank of Myanmar was initially blocked by Fed safeguards. U.S. government officials then blocked approval of the transfer until an executive order issued by U.S. President Joe Biden gave them legal permission to block it indefinitely, sources told Reuters.

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

The attempt, which was not previously reported, came after the Myanmar military installed a new central bank governor and arrested reformist officials during the coup.

It marked an apparent effort by Myanmar generals to limit exposure to international sanctions after arresting elected officials, including de facto leader Aung San Suu Kyi, who won a national election in November. The military took power and allegations of fraud – allegations the electoral commission dismissed.

A spokesman for Myanmar’s military government did not respond to repeated calls for comment. Reuters news agency was unable to reach central bank officials.

The United States, Canada, the European Union and the United Kingdom have all issued new sanctions in the wake of the coup and the military’s deadly crackdown on protesters. The United Nations said Thursday that at least 54 people have been killed since the coup. More than 1,700 people were arrested, including 29 journalists.

Announcing a new executive order paving the way for sanctions against generals and their companies, Biden said on February 10 that the United States was taking action to prevent the generals from gaining “undue access” to $ 1 billion in government funds. government of Myanmar.

U.S. officials did not explain the statement at the time, but an executive order issued the next day specifically names the Central Bank of Myanmar as part of the Myanmar government. The ordinance authorizes the seizure of Myanmar government assets after the coup.

Two sources told Reuters news agency that the executive order was designed to give the New York Fed the legal authority to hold $ 1 billion in Myanmar reserves indefinitely.

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Myanmar’s reserves are said to be managed by a part of the New York Fed known as the Central Bank and International Account Services (CBIAS), where many central banks hold reserves in US dollars for purposes such as settling transactions. .

An attempt to empty the account was made on February 4 but was blocked automatically by processes that had been put in place at the New York Fed before the coup, two sources told Reuters.

A source told Reuters this was because transactions involving Myanmar require further scrutiny, as the country was placed on the International Financial Action Task Force’s “gray list” for money laundering issues last year. money, in part because of the risk of the proceeds of drug trafficking being washed through its banks.

The CBIAS Compliance Manual, released in 2016, states that the New York Fed guidelines include provisions to respond to developments in account holder countries.

“Where appropriate,” he said, the bank’s legal department “will be in communication with the US State Department to clarify current events and any changes that may affect the central bank and the corresponding control of the FRBNY account. . “

The State Department declined to comment for this story.

Myanmar’s generals appeared to have firm control over Myanmar’s Central Bank at the time of the pullout attempt.

When the military took office in Myanmar on February 1, it installed a new central bank governor and detained key economic officials, including Bo Bo Nge, reformist deputy governor and Suu Kyi ally, according to the Association. assistance to political prisoners.

Thursday, he is still in detention, according to the association.

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