III. REAL ESTATE AND CONSTRUCTION PROJECTS BENEFITING THE MILITARY
Burma lacks both the necessary government regulation and oversight, and the strong banking and financial sector to adequately monitor for money laundering risks in the real estate, development, and construction sectors. Historically, the military has seized land, forced evictions, and displaced peoples while offering little to no compensation.13 Additionally, the large presence of foreign-owned properties heightens the risks to legitimate real estate agents and developers of knowingly or unknowingly engaging in cross-border money laundering.
The return of the military regime exacerbates these risks, as the military has significant interests in the real estate sector as an owner, lessor, and seller of properties within the country. The 2019 UN Fact Finding Mission reported receiving credible information that the Pyinmabin Industrial Zone, the Golden City residential development in Rangoon, and the Sule Shangri-La Hotel and Sule Square Commercial Project are owned or controlled by the military. The report also highlighted that the military is potentially receiving payments through MEC and MEHL from foreign companies that rent spaces to maintain a physical presence in Burma. MEHL and MEC were also identified as joint venture partners for foreign firms looking to develop and build on properties within Burma.
U.S. businesses maintaining a physical presence in Burma, including leasing or purchasing facilities for corporate offices, retail, wholesale, warehousing, and related physical infrastructure, should investigate as appropriate to determine whether payments are benefiting designated entities, and should take appropriate measures to ensure their compliance with applicable requirements related to U.S. sanctions and money laundering controls. U.S. businesses maintaining a physical presence are also encouraged to conduct heightened due diligence around land tenure to identify, mitigate, and redress issues regarding possible land seizures.
Warning signs of real estate-based money laundering include, but are not limited to:
□ Significant and unexplained geographic distance between agent, customer, and property.
□ Customers with unclear true beneficial ownership or controlling interest.
□ High-value cash payments.
□ Counterparties, government or otherwise, that are not subject to monitoring or supervision.
□ The speed of the transaction.
□ Successive transactions.
□ Introduction of unknown or substitute parties at the late stage of a transaction.
□ Third party vehicles (e.g., newly established corporations) used to obscure the ownership of
□ Extremely over- or under-valued transactions.
In addition, the Department of Labor’s reporting on goods and products produced by child labor, forced labor, and/or forced child labor in Burma includes numerous construction materials, such as bamboo, bricks, palm thatch, and teak.14 Businesses and individuals involved in construction and development in Burma involving these materials should take the necessary steps to mitigate risks of exposure to these human rights abuses.
If any of these warning signs are detected, businesses and individuals are encouraged to conduct increased know-your-customer practices to ensure that customers provide satisfactory responses to address concerns and to file suspicious transaction reports to the relevant authorities as required. For U.S.-based financial institutions and money service businesses, suspicious activity reports should be submitted to FinCEN, the financial intelligence unit of the United States.
13 In 2016, a Burmese government official, citing the finding of a parliamentary committee, indicated as many as two million acres of land across Burma could be considered confiscated.
14 For additional information, refer to Annex 1: U.S. Department of Labor.