Records from Innwa Bank recently released by the international transparency group Distributed Denial of Secrets revealed transactions with Australian, Singaporean and Vietnamese financial institutions that continue to operate branches in Myanmar.
Innwa Bank is owned by the Myanmar Economic Commission (MEC), a military conglomerate subject to US, EU and UK sanctions. As the transactions in question relied on local currency and involved international banks from countries that have not sanctioned MEC, the banks did not violate sanctions.
However, in a Wednesday report on the issue published by Justice For Myanmar, the activist group said that continued international engagement with Innwa Bank illustrated “a failure of governments to take a coordinated approach to isolated military conglomerates and cutting off the junta’s sources of revenue.”
The newly released transaction files highlighted payments between Innwa Bank and Australian bank ANZ’s office in Myanmar. They involved the telecommunications tower company edotco, as well as AIA Myanmar Life Insurance. Payments made after the February 2021 military coup ranged from 500,000 to 2.5m kyat (US$237-$1,185).
An ANZ spokesperson told Myanmar Now that the bank “complies with all applicable laws in all of the jurisdictions in which it operates” including the requirements of international organisations such as the UN and the EU.
While the spokesperson refrained from commenting on the transactions in question, they stated that ANZ had “robust processes in place to ensure all activities undertaken are compliant with the applicable regulations.”
Transactions involving Singapore’s UOB included dealings between MEC and Chinese shipping company COSCO. Among them were two payments from MEC to COSCO in July last year that totalled more than 76m kyat ($36,000).
A spokesperson for UOB would not comment on the bank’s business with Innwa.
Vietnamese state-owned bank BIDV received payments from MEC and its subsidiary, Star High, to Telecom International Myanmar, the company that operates Mytel. Mytel is a joint venture between MEC, Viettel and Myanmar National Telecom Holdings. The leaked records show that Telecom International Myanmar has an active account with BIDV in Myanmar. The records include five transactions in August 2021 worth 435m kyat ($206,230).
BIDV did not respond to questions about their business in Myanmar or their relationship with Innwa Bank.
Calls for further sanctions
The latest leaked files were made public after Myanmar was blacklisted earlier this month by the Paris-based Financial Action Task Force (FATF) due to its lack of progress concerning measures intended to counter money laundering and the financing of terrorism.
When asked about the FATF ruling, a UOB spokesperson told Myanmar Now that it was “closely monitoring the situation” and would “apply enhanced due diligence on client relationships and transactions involving Myanmar where applicable.”
ANZ’s spokesperson also said the bank’s processes to ensure regulatory compliance were also in line with FATF recommendations.
Still, banks continuing to do business with Innwa face major risks even in cases where they do not violate sanctions, sources said.
“Financial institutions that continue to do business with US, UK, and EU-sanctioned entities, especially those which are linked to a brutal military regime that commits atrocities against its own people, take on substantial reputational risk,” Justyna Gudzowska, director of illicit finance policy with US based non-profit The Sentry, told Myanmar Now.
“If this conduct persists, it could also raise issues with correspondent partner banks, as compliance with US, UK, and EU sanctions is part of standard correspondent banking due diligence,” she added.
In order to manage these risks, it is common for international banks to implement US, UK and EU sanctions, even if they are not legally required to do so.
Justice For Myanmar recommended such action, and urged ANZ, UOB and BIDV—as well as all other companies and investors—to cut ties with Innwa.
“Business with Innwa Bank supports the Myanmar military, its illegal coup attempt and its ongoing war crimes and crimes against humanity,” said the group’s spokesperson, Yadanar Maung.
“We call on Australia and Singapore to immediately sanction the junta and its businesses, including MEC, its directors and the directors of Innwa Bank.”
