So this OFAC guidance was released today:

http://www.treasury.gov/resource-center/sanctions/Documents/licensing_guidance.pdf

And this was in the news recently:

http://news.yahoo.com/us-says-kerry-broke-no-sanctions-myanmar-hotel-214033821.html

State Department spokeswoman Marie Harf said that Kerry was assigned the hotel by Myanmar's foreign ministry and that, while Zaw Zaw himself was blacklisted, US law does not prohibit Americans from staying at accommodation owned by sanctioned companies.

"You can stay at this hotel no matter who you are, you just can't do business with it. So if you wanted to sell them towels, you could not do that. But you could stay there," Harf explained.

Is it me or does it seem like Kerry (and any other US citizen accompanying him on this trip and staying at the hotel) is in violation, according to today's OFAC guidance? And wouldn't utilizing the hotel's services/accommodations be considered "conducting business" with the hotel (assuming the US is paying this hotel for Kerry's/staff's stay)? Sure sounds like a business transaction to me.

One would think that paying for any services would be a violation unless licensed However using the OFAC search tool Lake Garden Hotel is not listed

Lake Garden Hotel is not specifically listed. It is owned by Max Myanmar Group, which is specifically listed. I don't see how you can pay the hotel with US funds without obtaining a license. I don't know if there's a general license in the Burma program that would apply.

I would not like to be the bank that is asked to defend a payment such as this.

The story would just get better if it turns out that Lake Garden Hotel's bank is itself specifically listed.

could it be that he just owns stock in this company (parent co). The official explanation does not make any sense.

No, that wouldn't matter. Max Myanmar Group, a listed entity, owns more than 50% of the hotel (I think they actually own 100%), so that's all that triggers the additional blocking.

There's something I just noticed in the article, though.

"You can stay at this hotel no matter who you are, you just can't do business with it. So if you wanted to sell them towels, you could not do that. But you could stay there," Harf explained."

If you read between the lines, Harf may be suggesting that Kerry didn't pay for staying at the hotel.

I could not locate the ownership.

I have already read between the lines and that may have been worse.

The Lake Gardens is a part of MGallery which is a worldwide co. you can book thru Accor Hotels which is another hotel booking conglomerate

From Max Myanmar Holding's website

"Our Hotels

Max Resort (Chaung Tha), formerly known us Hotel Max Chaung Tha Beach
Hotel Max (Nay Pyi Taw), formerly known as Royal Kumudra Hotel
Hotel Ayeyarwady
Novotel Yangon Max
The Lake Garden member of MGallery Collection"

I have seen that and went on to the MGallery Collection and then onto accor...

I have spent to much time on it.

Back to an important point in the guidance linked by the original poster; 50% ownership by 1 or more listed entities is now blockable. So, for example, 2 listed entities each own 25% of Company B. Company B would now be blocked as well as the 2 entities.

i think this administration has already shown disdain for laws, why would this one be any different? I just hope he asked for the government rate to save us a few bucks.

You probably will not find this in a US newspaper:

http://www.mmtimes.com/index.php/nationa...bassy-says.html

The Myanmar Times reported on August 10 that Mr Kerry stayed at the Lake Garden Hotel Nay Pyi Taw owned by sanctioned tycoon U Zaw Zaw and constructed by U Zaw Zaw's company Max Myanmar, which also appears on the US sanctions list.

The spokesperson said that the US delegation was assigned the hotel by the Ministry of Foreign Affairs and asked for the hotel to be changed when they became aware of the issue, but other accommodation could not be arranged.

"We recognised late the owner of the hotel assigned to us was on the list, but less problematic alternative hotels that also met our safety and security standards were not available," the spokesperson told The Myanmar Times on August 13.

From the same article and verified by website

The Lake Garden property where Mr Kerry and his delegation stayed is managed by French hotel chain Accor under its MGallery brand. Both U Zaw Zaw and his Max Myanmg group of companies were added to the Special Designated Nationals (SDN) list in 2009, according to the Treasury Department's website.

Max Myanmar and Accor signed a contract to develop three properties in Myanmar, including the Lake Garden, in 2013. Two other properties connected to U Zaw Zaw - the Max Hotel at Chaungtha Beach and the Royal Kumudra Hotel in Nay Pyi Taw - are on the SDN list.


I was under the impression that France followed the OFAC listing as well.


As BNP Paribas SA was cited.

http://www.treasury.gov/resource-center/sanctions/CivPen/Documents/20140630_bnp_settlement.pdf

No, France is not subject to OFAC, and does not adopt the OFAC list within their own sanctions program, and it is not part of the EU's sanctions lists.

BNP Paribas was fined for its activities involving other US banks, and for activities through its US branch. That was the hook for the penalty.

And then I found this in the Burma program:

"the receipt of any contribution or provision of funds, goods, or services from any person whose property and interests in property are blocked pursuant to paragraph (a) of this section."

So, even staying at the hotel is a violation of the program.

it also appears that the EU lifted most of the Burma/Myanmar sanctions last year.

But it was still an OFAC violation however they spin is.

It looks that way. I wonder if there's an exception under the Travel license.

It appears that the general licenses enable persons to use certain banks not hotels. He could have applied for a "SPECIFIC LICENSES

OFAC considers on a case-by-case basis applications for specific licenses to authorize transactions that are neither exempt nor covered by a general license. Requests for a specific license must be submitted to OFAC’s Licensing Division." but that should have been the answer the state department used when asked (it was not)

Great input, guys. I didn't want to be the only one recognizing our government's hypocrisy. If it was any other American citizen staying at this SDN's hotels, I doubt the government would be that forgiving.

What Happens in Nay Pyi Taw Doesn’t Always Stay in Nay Pyi Taw*

[excerpt]
That’s a fairly clumsy invocation of the travel exemption contained in the International Emergency Economic Powers Act (“IEEPA”), 50 U.S.C. § 1702(b)(4), which exempts from sanctions “any transactions ordinarily incident to travel to or from any country.” [/excerpt]

537.203, do not apply to transactions
ordinarily incident to travel to or from
any country, including exportation or
importation of accompanied baggage
(other than importation of baggage that
comes within the prohibition set forth
in
§
537.203) for personal use,
maintenance within any country,
including payment of living expenses
and acquisition of goods or services for
personal use, and arrangement or
facilitation of such travel, including
nonscheduled air, sea, or land voyages

Would you see staying at a hotel part of "payment of living expenses"?

I could see that, but purchases in the gift shop not so much.

If you read the linked article, you'll find that Clif shares your skepticism.

AIR BAGAN is a company in Burma who has hotels that are specific to the OFAC list. So possibly the travel exception does include hotel stays (at not sanctioned hotels).

There are not many hotels listed on the entire list.

I would think that the author of the article is more of skeptic than me.