Burma and Transnational Crime
Burma and Transnational Crime
Updated August 21, 2008
Liana Sun Wyler
Analyst in International Crime and Narcotics
Foreign Affairs, Defense, and Trade Division
Burma and Transnational Crime
Transnational organized crime groups in Burma (Myanmar) operate a multi-
billion dollar criminal industry that stretches across Southeast Asia. Trafficked
drugs, humans, wildlife, gems, timber, and other contraband flow through Burma,
supporting the illicit demands of the region and beyond. Widespread collusion
between traffickers and Burma’s ruling military junta, the State Peace and
Development Council (SPDC), allows organized crime groups to function with
impunity. Transnational crime in Burma bears upon U.S. interests as it threatens
regional security in Southeast Asia and bolsters a regime that fosters a culture of
corruption and disrespect for the rule of law and human rights.
Congress has been active in U.S. policy toward Burma for a variety of reasons,
including combating Burma’s transnational crime situation. At times, it has imposed
sanctions on Burmese imports, suspended foreign assistance and loans, and ensuredth
that U.S. funds remain out of the regime’s reach. Most recently, the 110 Congress
passed P.L. 110-286, the Tom Lantos Block Burmese JADE Act of 2008 (signed by
the President on July 29, 2008), which imposes further sanctions on SPDC officials
and prohibits the indirect importation of Burmese gems, among other actions. On the
same day, the President directed the U.S. Department of Treasury to impose financial
sanctions against 10 Burmese companies, including companies involved in the gem-
mining industry, pursuant to Executive Order 13464 of April 30, 2008.
This report analyzes the primary actors driving transnational crime in Burma,
the forms of transnational crime occurring, and current U.S. policy in combating
these crimes. This report will be updated as events warrant. For further analysis of
U.S. policy to Burma, see CRS Report RL33479, Burma-U.S. Relations, by Larry A.
Scope of the Problem...............................................1
Primary Actors and Motives.........................................2
Organized Crime, Ethnic Gangs, and Insurgent Groups................2
Peasants and Urban Poor........................................5
Illicit Economies in Burma..........................................5
Heroin and Opium.........................................6
Methamphetamine and Synthetic Drugs.......................10
Timber and Wildlife.......................................11
Sanctions and Special Measures.................................14
Regional Border Control Assistance..............................15
A New Approach?............................................16
List of Figures
Figure 1. Opium Poppy Cultivation in Burma’s Shan State, 2003-2007........9
Figure 2. Map of Burma............................................17
List of Tables
Table 1. Opium Cultivation, Production, and Price Trends in Burma,
Burma and Transnational Crime
Scope of the Problem
Transnational organized crime groups flourish in Burma, trafficking contraband
that includes drugs, humans, guns, wildlife, gems, and timber. Transnational crime
is highly profitable, reportedly generating roughly several billion dollars each year.
The country’s extra-legal economy, both black market and illicit border trade, is
reportedly so large that an accurate assessment of the size and structure of the
country’s economy is unavailable. Contraband trafficking also remains a low-risk
enterprise, as corruption among officials in Burma’s ruling military junta, the State
Peace and Development Council (SPDC), appears to facilitate trafficking and
effectively provide the criminal underground immunity from law enforcement and1
judicial action. Synergistic links connect various forms of contraband trafficking;
smugglers use the same routes for many forms of trafficking, following paths of least
resistance, where corruption and lax law enforcement prevail.
The continued presence of transnational crime in Burma and the illicit
trafficking routes across Burma’s borders share many features of so-called
“ungoverned spaces” — regions of the world where governments have difficulty
establishing control or are complicit in the corruption of the rule of law.2 Among the
commonalities that Burma’s border regions share with other ungoverned spaces is
physical terrain that is difficult to control. Burma’s long borders, through which
much smuggled contraband passes, stretch across vast trackless hills and mountains
that are poorly patrolled. In addition, continuing ethnic tensions with some ethnic
armed rebel groups hamper government control in some regions of the country,
which is another common feature of ungoverned spaces. Recent cease-fire
agreements in other border regions have not markedly improved the situation;
instead, these cease-fires have provided groups known for their activity in
transnational crime with near autonomy, essentially placing these areas beyond the
reach of Burmese law.
Congress has long been active in U.S. policy toward Burma for a variety of
reasons, including on issues related to transnational crime. Because the State
Department lists Burma as a major drug-producing state, the country is barred access
1 See discussion on “Official Corruption,” p. 3.
2 For example, the 2006 National Security Strategy of the United States (at
[http://www.whitehouse.gov/nsc/nss.html]) identifies addressing ungoverned areas as among
U.S. national security priorities because of concern that they could be used as safe havens
for terrorists. See also Angel Rabasa et al., Ungoverned Territories: Understanding and
Reducing Terrorism Risks (Santa Monica, CA: Rand Corporation, 2007).
from U.S. foreign assistance under several long-standing legislative provisions.3
Congress also authorizes sanctions against countries that the State Department deems
in non-compliance with the minimum standards for the elimination of trafficking in
persons, which includes Burma.4
Most recently, the 110th Congress has sought to strengthen unilateral sanctions
against Burma. In response to the Burmese government’s forced suppression of anti-
regime protests in August and September of 2007, as well as its internationally
criticized humanitarian response to destruction resulting from tropical cyclone Nargis
in May 2008, Congress passed P.L. 110-286, the Tom Lantos Block Burmese JADE
Act of 2008 (signed by the President on July 29, 2008). This law imposes further
sanctions on SPDC officials and prohibits the indirect import of Burmese gems,
among other actions. H.Rept. 110-418, which accompanies H.R. 3890, also cites
“Burma’s rampant drug trade” and “its role as a source for international trafficking
in persons and illicit goods” as additional reasons for these new sanctions.
Primary Actors and Motives
Organized Crime, Ethnic Gangs, and Insurgent Groups
The United Wa State Army (UWSA), Shan State Army-South (SSA-S), Shan
State Army-North (SSA-N), Democratic Karen Buddhist Army (DBKA), ethnic
Chinese criminal groups (including the Triads), and other armed groups have
criminal networks that stretch from India to Malaysia and up into China. Many of
the transnational criminal elements along Burma’s border are linked to past or
ongoing ethnic insurgencies. While not necessarily a threat to SPDC control, they
continue to constitute a transnational security threat for Burma and the region. The
State Department states that the UWSA is the largest of the organized criminal
groups in the region and operates freely along the China and Thailand borders,
controlling much of the Shan State with a militia estimated to have 16,000 to 20,000
members.5 Other criminal groups, including the 14K Triad, reportedly operate in the
north of the country and in major population centers.6 According to the Economist
Intelligence Unit (EIU), these criminal organizations remain nearly immune from
SPDC interference, because of widespread collusion with junta military, police, and
3 Laws under which drug-related sanctions are authorized include Section 489(a)(1) of the
Foreign Assistance Act of 1961 (P.L. 87-195), as amended (22 U.S.C. 2291j(a)(1)); the
Narcotics Control Trade Act (P.L. 99-570), as amended (19 U.S.C. 2491 et seq.); and
Section 138 of Title I, Subtitle D, of the Customs and Trade Act of 1990 (P.L. 101-382).
4 Pursuant to the Victims of Trafficking and Violence Protection Act of 2000 (P.L. 106-
5 U.S. Department of State, International Narcotics Control Strategy Report, vol. 1 (2008).
6 Jane’s Sentinel Security Assessment: Southeast Asia, April 30, 2008; Antonio Nicaso and
Lee Lamothe, Angels, Mobsters, and Narco-Terrorists: The Rising Menace of Global
Criminal Enterprises (Ontario, Canada: John Wiley & Sons, 2005).
political officials.7 Many analysts agree that much of this apparent collusion is part
of concerted SPDC efforts to coopt ethnic groups and avoid hostilities with them.
One possible consequence of this policy is that the influence of organized crime in
Burma and the region could remain virtually impossible to reduce.
The U.S. State Department and other observers indicate that corruption is
common among the bureaucracy and military in Burma. Burmese officials,
especially army and police personnel in the border areas, are widely believed to be
involved in the smuggling of goods and drugs, money laundering, and corruption.8
The 2006 EIU country report on Burma states that “corruption and cronyism” are
widespread “throughout all levels of the government, the military, the bureaucracy
and business communities.” Burma ties with Somalia as the most corrupt country in
the world according to Transparency International’s 2007 Corruption Perceptions
Index; this is a worsening from its 2006 position as the second-most corrupt country
in the world.9 In addition, the State Department states that Burma’s weak
implementation of anti-money laundering controls remains at the root of the
continued use by narcotics traffickers and other criminal elements of Burmese
financial institutions.10 Burma has signed, but not ratified, the United Nations
Convention against Corruption, which entered into force in December 2005.
Although there is little direct evidence of top-level regime members’
involvement in trafficking-related corruption, there is evidence that high-level
officials and Burmese military officers have benefitted financially from the earnings
of transnational crime organizations. In the case of the drug trade, reports indicate
Burmese military officials at various levels have several means to gain substantial
shares of narcotics trafficking earnings. Some reports indicate that the Burmese
armed forces, or Tatmadaw, may be directly involved in opium poppy cultivation in
Burma’s Shan state. Some local Tatmadaw units and their families reportedly work
the poppy fields and collect high taxes from the traffickers, as well as fees for
7 Economist Intelligence Unit, Myanmar (Burma) Country Profile (2006).
8 U.S. Department of State, International Narcotics Control Strategy Report, vols. 1 and 2
(2008); Jane’s Sentinel Security Assessment: Southeast Asia, April 30, 2008, op cit.;
Economist Intelligence Unit, op cit.; Transparency International, Corruption Perceptions
Index (2007). According to some analysts, corruption among police and border patrol
officials in Burma’s neighboring countries also eases the flow of trafficked goods out of
Burma. See also Nora Boustany, “Burmese Activist Urges Stronger U.S. Sanctions,” The
Washington Post, November 2, 2007. In this news article, Maung Maung, secretary general
of the National Council of the Union of Burma, stated that “the country’s revenue from gas,
rubies, teak, timber, rice, gas, uranium, and diamonds is being pilfered for the personal
enrichment of junta members or their families.”
9 Transparency International, op cit.; Transparency International, Corruption Perceptions
10 2008 International Narcotics Control Strategy Report, vol. 1, op cit.
military protection and transportation assistance.11 According to the State
Department, Burma has not indicted any military official above the rank of colonel
for drug-related corruption.12
The SPDC also reportedly allows and encourages traffickers to invest in an array
of domestic businesses, including infrastructure and transportation enterprises,
receiving start-up fees and taxes from these enterprises in the process. The traffickers
usually deposit the earnings from these enterprises into banks controlled by the
military, and military officers reportedly deposit much of their crime-related money
in foreign bank accounts in places like Bangkok and Singapore.13 In 2003, the
Secretary of the Treasury reported that some Burmese financial institutions were
controlled by, or used to facilitate money laundering for, organized drug trafficking
organizations.14 In the same report, the Secretary of the Treasury also stated that
Burmese government officials were suspected of being involved in the counterfeiting
of U.S. currency.
Possible links between drug trafficking operations and official corruption have
been raised recently in the context of SPDC reconstruction contracts in the aftermath
of cyclone Nargis. Specifically, some reports have pointed to SPDC’s reconstruction
contract with Asia World Company Ltd., a firm managed by Steven Law (Tun Myint
Naing), as a possible indication of continued links between drug traffickers and
official corruption.15 Steven Law, against whom the U.S. government has maintained
financial sanctions since February 2008, allegedly provides material support to the
Burmese junta, receives business concessions from the junta, facilitates the
movement of illicit narcotics, and launders drug profits through his firms, including
Asia World Company Ltd.16
The most frequent destinations for much of Burmese contraband — opium,
methamphetamine, illegal timber, endangered wildlife, and trafficked humans — are
11 Michael Black and Anthony Davis, “Wa and Peace: The UWSA and Tensions in
Myanmar,” Jane’s Intelligence Review, March 2008.
12 2008 International Narcotics Control Strategy Report, vol. 1, op cit.
13 See CRS Report RL33479, Burma-U.S. Relations, by Larry A. Niksch; Christopher S.
Wren, “Road to Riches Starts in the Golden Triangle,” New York Times, May 5, 1998;
Robert S. Gelbard, “Slorc’s Drug Links,” Far Eastern Economic Review, November 21,
1996; Anthony Davis, “The Wa Challenge Regional Stability in Southeast Asia,” Jane’s
Intelligence Review, January 2003.
14 “Imposition of Special Measures against Burma as a Jurisdiction of Primary Money
Laundering Concern,” Federal Register, Vol. 68, No. 227, November 25, 2003.
15 See for example Colin Freeman, “Burmese Drug Lord Lands Lucrative Reconstruction
Contracts,” Edmonton Journal (Alberta), May 25, 2008.
16 U.S. Department of the Treasury, “Treasury Sanctions Additional Financial Operatives
of the Burmese Regime,” Press Release, February 25, 2008; U.S. Department of the
Treasury, “Steven Law Financial Network,” Report, February 2008; and “Key Financial
Operatives of the Burmese Regime Designated by OFAC,” World-Check, March 3, 2008.
China and Thailand.17 Other destinations include India, Laos, Bangladesh, Vietnam,
Indonesia, Malaysia, Brunei Darussalam, South Korea, and Cambodia. Demand for
Burma’s contraband reaches beyond the region, including the United States. The
U.S. Drug Enforcement Administration (DEA), for example, reports that Burmese-
trafficked methamphetamine pills have been confiscated within the United States.18
The United States is also reputed to be among the world’s largest importers of illegal
wildlife;19 no concrete data exist, however, to link such transnational ties with
Peasants and Urban Poor
Ready recruits for organized crime activities can be found in both urban ghettos
and impoverished rural areas.20 According to the Asian Development Bank, 27% of
Burma’s population live below the poverty line, making the country one of the
poorest in Southeast Asia. Many analysts state that peasant farmers, rural hunters,
and other poor often serve at the base of Burma’s international crime network,
growing opium poppy crops, poaching exotic and endangered species in Burma’s
lush forests, and serving as couriers and mules for contraband. In addition, the State
Department and other observers have found that many victims of transnational crime
in Burma are the poor, becoming commodities themselves as they are trafficked to
be child soldiers for the junta or slaves for sexual exploitation.21
Illicit Economies in Burma
Burma is party to all three major United Nations international drug control
treaties — the 1961 Single Convention on Narcotic Drugs, as amended; the 1971
Convention on Psychotropic Substances; and the 1988 Convention against the Illicit
Traffic in Narcotic Drugs and Psychotropic Substances. Burma’s official strategy to
combat drugs aims to end all production and trafficking of illegal drugs by 2014, a
17 See United Nations Office on Drugs and Crime (UNODC), World Drug Report (2008);
2008 International Narcotics Control Strategy Report, op cit.; Global Witness, A Choice for
China: Ending the Destruction of Burma’s Northern Frontier Forests (2005); Jolene Lin,
“Tackling Southeast Asia’s Illegal Wildlife Trade,” Singapore Year Book of International
Law, vol. 9 (2005); and U.S. Department of State, Trafficking in Persons Report (2007).
18 U.S. Drug Enforcement Administration, “Methamphetamine: The Current Threat in East
Asia and the Pacific Rim,” Drug Intelligence Brief, September 2003.
19 U.S. Fish and Wildlife Service, Annual Report FY2006, August 2007; “Wildlife
Smuggling Boom Plaguing L.A., Authorities Say,” National Geographic News, July 26,
20 Michael Lyman, Organized Crime (Upper Saddle River, NJ: Prentice Hall, 2007).
21 2007 Trafficking in Persons Report, op cit.
goal that parallels the region’s ambition to be drug free by 2015.22 Many analysts,
however, consider the goal of achieving a drug-free Burma as unlikely. In September
2007, the Administration once again included Burma on the list of major drug transit
or major illicit drug producing countries.23 Located at the heart of the “Golden
Triangle” of narcotics trafficking, Burma is among the world’s top producers of
opium, heroin, and methamphetamine.24 Illicit narcotics reportedly generate between
$1 billion and $2 billion annually in exports. In addition, Burma’s drug trafficking
activities appear to be linked to the recent spread of HIV and AIDS in the region, as
drug users along Burma’s trafficking routes share contaminated drug injection
Some analysts warn that clashes between the government of Burma, rebel
groups in the border areas of Burma, and neighboring countries could be possible.
For example, should the SPDC begin to combat the drug trade more vigorously,
current ceasefire groups may choose to break their agreements with the SPDC in
order to protect their drug trade territories. Several ceasefire groups, including the
UWSA, have chosen not to heed calls by the SPDC to disarm and reportedly use
illicit drug proceeds to equip and maintain their paramilitary forces.25 Further, some
suggest that the continued flow of illicit drugs from Burma to Thailand may be a
source of tension between the two countries — especially in the face of Thailand’s
renewed war on drugs. The current campaign to combat illegal drugs, which began
in April 2008, is a reprise of a 2003 campaign. Though media reports indicate that
the current Thai war on drugs appears to be more restrained than the 2003 version,
which resulted in the deaths of several thousand people over a three-month period,
human rights activists remain on alert.26
Heroin and Opium. Burma is the world’s second-largest producer of illicit
opium, behind Afghanistan. Further, the DEA reports that Burma accounts for 80%
of all heroin produced in Southeast Asia and is a source of heroin for the United
States.27 Although poppy cultivation has declined significantly in the past decade,
production may once again be on the rise (see Table 1). Much of the decline in
recent years has been attributed to UWSA’s 2005 public commitment to stop its
22 Association of Southeast Asian Nations (ASEAN), “Cooperation on Drugs and Narcotics:
Overview,” at [http://www.aseansec.org/5682.htm]; 2008 International Narcotics Control
Strategy Report, vol. 1, op cit.
23 This annual list is required by section 706(1) of the Foreign Relations Authorization Act,
Fiscal Year 2003 (P.L. 107-228).
24 The “Golden Triangle” refers to an area of approximately 135,000 square miles of
mountains that surround the Burma-Laos-Thailand border region. In the 1980s and 1990s,
the Golden Triangle reigned as the world’s largest producer of opium poppy.
25 Jane’s Sentinel Security Assessment: Southeast Asia, April 30, 2008, op cit. Note,
however, that not all ceasefire groups are involved in the illegal drug trade.
26 See for example, Brian McCartan, “Despite Strong Rhetoric, Thailand’s Latest Drug War
a Restrained Campaign,” World Politics Review, May 2008; Daniel Ten Kate, “Thailand to
Restart War on Drugs,” Asia Sentinel, March 2008;
27 U.S. Drug Enforcement Administration, Drugs of Abuse, 2005, available at
activity in the opium and heroin markets, after prolonged international pressure to do
so. However, recent reports suggest that the UWSA’s self-imposed ban may be
short-lived. The UWSA has reportedly warned that alternative livelihood sources
will be necessary in order to sustain its ban against opium poppy cultivation — a
point with which many international observers agree.28
Most analysts acknowledge that opium production in certain parts of Burma is
one of the few viable means for small-scale peasant farmers to compensate for
structural food security shortages. A 2008 United Nations Office on Drugs and
Crime (UNODC) study supports this, finding that households in former poppy-
growing villages were unable to find sufficient substitutes for their lost income from
opium.29 According to the same UNODC study, the average annual cash income of
a household involved in opium poppy cultivation was approximately $501, while the
annual income of a household not involved in opium poppy cultivation was
approximately $445. In the meantime, reports indicate that opium poppy production
is shifting to areas controlled by other ceasefire ethnic groups, and to areas apparently
administered by Burma’s armed forces, the Tatmadaw, who tax the farmers and
traders for a portion of the farmgate value.30 The UWSA may also be organizing Wa
poppy farmers to seasonally migrate to nearby provinces, where the UWSA did not
commit to a ban, in order to continue their cultivation.31
28 Tor Norling, “Haven or Hell,” The Irrawaddy, July 11, 2008.
29 UNODC, World Drug Report (2008), op cit.; see also: Jane’s Sentinel Security
Assessment: Southeast Asia, April 30, 2008, op cit.
30 Black and Davis, op cit. See also: Central Intelligence Agency, World Factbook (2007);
Table 1. Opium Cultivation, Production, and Price Trends in
Significant OpiumPotentialTotal Potential Farm
Opium PoppyPoppy EradicationOpiumGate Value of Opium
Year(hectares)(hectares)(metric tons)(U.S. constant dollars)
Source: CRS calculations based on United Nations Office on Drugs and Crime (UNODC), World
Drug Report, 2004-2008; and UNODC, Global Illicit Drug Trends, 2003-1999.
Figure 1. Opium Poppy Cultivation in Burma’s Shan State,
Sources: UNODC, World Drug Report, 2004-2007; UNODC, Global Illicit Drug Trends, 2003-1999.
Graphics adapted by CRS.
Methamphetamine and Synthetic Drugs. In addition to producing heroin
and opium, Burma is reportedly the largest producer of methamphetamine in the32
world and a significant producer of other synthetic drugs. Methamphetamine is
produced in small, mobile labs in insurgent-controlled border areas, mainly in eastern
Burma (for export mainly to Thailand) and sometimes co-located with heroin
refineries.33 Burma’s rise to prominence in the global synthetic drug trade is in part
the consequence of UWSA’s commitment to ban opium poppy cultivation.
According to some, UWSA leadership may be intentionally replacing opium34
cultivation with the manufacturing and trafficking of amphetamine-type stimulants.
As a result, Burma has emerged as one of the world’s largest producers of
methamphetamine and other amphetamine-type stimulants. The State Department
states that this sharp increase in methamphetamine trafficking is “threatening to turn35
the Golden Triangle into an ‘Ice Triangle.’”
A July 2008 media report indicates that international assistance for relief from
the cyclone Nargis may have been used as a cover to smuggle illegal drugs into
Burma. According to the Irrawaddy, an independent Burmese newspaper, several
customs officials were suspected of involvement in a scheme to smuggle ecstasy pills36
into Burma as part of shipments of relief aid from Burmese communities abroad.
Burma is a party to the United Nations Convention against Transnational
Organized Crime and its protocol on migrant smuggling and trafficking in persons.
However, Burma has been designated as a “Tier 3” state in every Trafficking in
Persons (TIP) Report ever published by the State Department. Tier 3 is the worst
designation in the TIP Report, indicating that the country does not comply with
minimum standards for combating human trafficking under the Trafficking Victims
Protection Act of 2000, as amended (Division A of P.L. 106-386, 22 U.S.C. 7101,
et seq.). As the TIP reports explain, laws to criminally prohibit sex and labor
trafficking, as well as military recruitment of children, exist in Burma — and the
penalties prescribed by these laws for those convicted of breaking these laws are
“sufficiently stringent.” Nevertheless, the State Department continues to report that
these laws are arbitrarily enforced by the SPDC and that cases involving high-level
officials or well-connected individuals are not fully investigated.
Victims are trafficked internally and regionally, and junta officials are directly
involved in trafficking for forced labor and the unlawful conscription of child
32 U.S. Department of State, 2008 International Narcotics Control Strategy Report, vol. 1,
op cit.; Jane’s Sentinel Security Assessment: Southeast Asia, April 30, 2008, op cit.; and
David Johnson, Assistant Secretary of State for International Narcotics and Law
Enforcement Affairs, News Briefing, February 29, 2008.
33 Jane’s Sentinel Security Assessment: Southeast Asia, April 30, 2008, op cit.
34 U.S. Department of State, 2008 International Narcotics Control Strategy Report, vol. 1,
36 “Intelligence: Drug Scam Suspected,” The Irrawaddy, July 2008.
soldiers, according to several reports.37 Women and girls, especially those of ethnic
minorities groups and those among the thousands of refugees along Burma’s borders,
are reportedly trafficked for sexual exploitation. Victims are reportedly trafficked
from rural villages to urban centers and commerce nodes, such as truck stops, border
towns, and mining and military camps.38 One incident in early 2008 revealed the
risks associated with migrant smuggling from Burma to Thailand, when 54 Burmese
migrants were found dead in the back of a seafood truck headed to Thailand after the
truck’s air conditioning failed. Based on media accounts, 67 migrants survived,
including at least 14 minors.39
Timber and Wildlife. Burma is rich in natural resources, including extensive
forests, high biodiversity, and deposits of minerals and gemstones. Illegal trafficking
of these resources is reportedly flowing to the same destination states and along the
same trafficking routes as other forms of trafficking. Global Witness, a London-
based non-governmental organization, estimates that 98% of Burma’s timber exports
to China, from 2001 to 2004, were illegally logged, amounting to an average of $200
million worth of illegal exports each year.40 Many analysts also claim that the
region’s illegal timber trade is characterized by complex patronage and corruption
Wild Asiatic black bears, clouded leopards, Asian elephants, and a plethora of
reptiles, turtles, and other unusual animals reportedly are sold in various forms —
whole or in parts, stuffed, ground, or, sometimes, alive — in open-air markets in42
lawless border towns. Growing demand in countries such as China and Thailand
has increased regional prices for exotic wildlife; for example, a tiger’s skin can be43
worth up to $20,000, according to media reports. One report suggests that valuable
wildlife is used as currency in exchange for drugs and in the laundering of other44
Gems. Rubies, sapphires, jade, and other gems have also been used as non-
cash currency equivalents for transborder smuggling. The legal sale of Burmese
37 2008 Trafficking in Persons Report; Sold to Be Soldiers: Human Rights Watch, The
Recruitment and Use of Child Soldiers in Burma, October 2007. See also “Burma/Myanmar:
After the Crackdown,” International Crisis Group, Asia Report No. 144, January 31, 2008.
38 2007 Trafficking in Persons Report, op cit., p. 71.
39 Kocha Olarn, “Myanmar Migrant Survivors Fined and Deported,” CNN, April 12, 2008.
40 Global Witness (2005), op cit.
41 See, for example, Vaudine England, “The Mekong Connection in Illegal Log Trade,”
Sunday Morning Post (Hong Kong), March 23, 2008.
42 Christopher Shepherd and Vincent Nijman, “An Assessment of Wildlife Trade at Mong
La Market on the Myanmar-China Border,” TRAFFIC Bulletin, vol. 21, no. 2 (2007).
43 “Factbox: Why Are Asia’s Endangered Animals So Sought After?” Reuters News,
September 3, 2007.
44 Lin, op cit.
gems is among the country’s most significant foreign currency earners — $297
million during the 2006-2007 fiscal year, according to Burma’s customs department;
more may be traded through illicit channels.45 Some observers claim that the junta
is heavily involved in both the legal and illegal trade of gemstones, as the regime
controls most mining operations and the sale of gems through official auctions and
private sales reportedly arranged by senior military officers.46 Congress has also
accused the Burmese regime of attempting to evade U.S. sanctions against the
import of Burmese gemstones by concealing the gems’ origin from potential buyers.47
Congress estimates that while 90% of the world’s rubies originate from Burma, only
AK-47s, B-40 rocket launchers, and other small arms are reportedly smuggled
into Burma along the Thai-Burmese border. These weapons reportedly go to the
Karen guerrillas, who continue to fight a decades-long insurgency against the
Burmese junta. Another report implicates the Shan State Army in trafficking in
military hardware.48 Although analysts say it is unlikely that the ruling junta benefits
from the criminal profits of small arms trafficking, reports indicate that the
government distributes such weapons to its cadre of child soldiers.49 Other less high-
profile markets for contraband reportedly exist, including trafficking in cigarettes,
cars, CDs, pornography, antiques, religious items, fertilizer, and counterfeit
documents — many of which are believed to involve at least the complicity of some
Burmese government officials.
In April 2008, Japan’s public broadcaster NHK reported that Burma has been
importing multiple-launch rockets from North Korea, raising international concerns
and speculation about why Burma would seek out such weapons in violation of U.N.
sanctions imposed on North Korea after its nuclear test in October 2006.50 Some
observers speculate that the Burmese military has been seeking to upgrade its artillery
to improve the country’s protection against potential external threats.51 Burma and
45 “Myanmar Rubies, Sapphires for Sale at Gems Fairs,” Reuters News, October 19, 2006.
46 See “Burma: Gem Trade Bolsters Military Regime, Fuels Atrocities,” Human Rights
Watch, November 12, 2007; “Burma and Blood Gems,” Leber Jeweler, Inc., available at
[ ht t p: / / www.l e ber j ewel er .com/ s t ones/ bur ma _bl oodgems.php3] .
47 See P.L. 108-61; U.S. House of Representatives, Block Burmese JADE (Junta’s Anti-
Democratic Efforts) Act of 2007, H.Rept. 110-418, Part 1, October 31, 2007.
48 Eric Tagliacozzo, “Border Permeability and the State in Southeast Asia: Contraband and
Regional Security,” Contemporary Southeast Asia, vol. 23, no. 2 (2001).
49 Human Rights Watch, Small Arms and Human Rights: The Need for Global Action; A
Human Rights Watch Briefing Paper for the U.N. Biennial Meeting on Small Arms (2003).
50 “N. Korea Exporting Multiple-Launch Rockets to Myanmar — Report,” CNBC, April 2,
2008; “North Korea Sells Rocket Launchers to Myanmar — Report,” Reuters News, April
51 See for example “Oslo-Based Website: Burma’s Purchase of North Korean Arms
North Korea are thought to have been involved in conventional weapons trade in
violation of U.N. sanctions since spring 2007, when North Korea and Burma
resumed diplomatic relations with each other. Observers further claim that “Western
intelligence officials have suspected for several years that the regime has had an
interest in following the model of North Korea and achieving military autarky by
developing ballistic missiles and nuclear weapons.”52
The State Department reports in 2008 that Burma is a money laundering risk
because of its underdeveloped financial sector and large volume of informal trade.
In 2001, the international Financial Action Task Force on Money Laundering (FATF)
designated Burma as a Non-Cooperative Country or Territory (NCCT) for deficient
anti-money laundering provisions and weak oversight of its banking sector.53 A year
later in 2002, the U.S. Department of Treasury’s Financial Crimes Enforcement
Network (FinCEN) issued an advisory to U.S. financial institutions to give enhanced
scrutiny to any financial transaction related to Burma.54 In 2003, two of Burma’s
largest private banks — Myanmar Mayflower Bank and Asia Wealth Bank — were
implicated by FATF as involved in laundering illicit narcotics proceeds and
counterfeiting. The Secretary of the Treasury in 2003 listed Burma as a “major
money laundering country of primary concern” and in 2004 imposed additional
countermeasures.55 Burma has since revoked the operating licenses of the two banks
implicated in 2003. However, the U.S. government and international bodies, such
as FATF, continue to monitor the widespread use of informal money transfer
networks, sometimes also referred to as “hundi” or “hawala.” Monies sent through
these informal systems are usually legitimate remittances from relatives abroad. The
lack of transparency and regulation of these money transfers remain issues of concern
for the United States. In other parts of the world, hawala or hawala-like techniques
Threatens Stability,” BBC Monitoring Asia Pacific, April 6, 2008; “Thai-Based Website:
U.S. Concerned over Reports of North Korean Weapons to Burma,” BBC Monitoring Asia
Pacific, April 6, 2008.
52 Michael Green and Derek Mitchell, “Asia’s Forgotten Crisis: A New Approach to
Burma,” Foreign Affairs, November/December 2007, Vol. 86, Issue 6.
53 Created in 1989, the Financial Action Task Force (FATF) is an inter-governmental body
whose purpose is the development and promotion of national and international policies to
combat money laundering and terrorist financing.
54 See 31 CFR Part 103, Department of the Treasury, Financial Crimes Enforcement
Network, Imposition of Special Measures against Burma.
55 Pursuant to 31 U.S.C. 5318A, as added by Section 311 of the USA PATRIOT Act (P.L.
107-56), these countermeasures prohibited U.S. banks from establishing or maintaining
correspondent or payable-through accounts in the United States for or on behalf of Myanmar
Mayflower and Asia Wealth Bank and, with narrow exceptions, for all other Burmese banks.
See 2007 International Narcotics Control Strategy Report, vol. 2, op cit.
have been used, or are suspected of being used, to launder proceeds derived from
narcotics trafficking, terrorism, alien smuggling, and other criminal activities.56
Sanctions and Special Measures
Burma is subject to a broad sanctions regime that addresses issues of U.S.
interest, which include democracy, human rights, and international crime.57
Specifically in response to the extent of transnational crime occurring in Burma, the
President has taken additional actions against the country under several different
legislative authorities. Burma is listed as a major drug-producing state, and because
of its insufficient effort to combat the narcotics trade, the country is barred access to
some U.S. foreign assistance.58 As an uncooperative, major drug-producing state,
Burma is also subject to trade sanctions.59 In 2005, the Department of Justice
indicted eight Burmese individuals identified in 2003 by the U.S. Treasury’s Office
of Foreign Assets Control for their alleged role in drug trafficking and money
Burma is characterized by the State Department’s 2007 Trafficking in Persons
report as a Tier 3 state engaged in the most severe forms of trafficking in persons; as
such, Burma is subject to sanctions, barring the country from non-humanitarian, non-
trade-related U.S. assistance and loss of U.S. support for loans from international
financial institutions.61 As a major money laundering country — defined by Section
481(e)(7) of the Foreign Assistance Act of 1961, as amended, as one “whose
financial institutions engage in currency transactions including significant amounts
of proceeds from international narcotics trafficking” — Burma is subject to several
“special measures” to regulate and monitor financial flows. These include
56 Patrick M. Jost and Harjit S. Sandhu, The Hawala Alternative Remittance System and its
Role in Money Laundering (Lyon, France: Interpol General Secretariat, 2000).
57 Notable sanctions among those not specifically related to international crime include the
Burmese Freedom and Democracy Act of 2003 (P.L. 108-61, extended by P.L. 108-272 and
P.L. 109-39); Executive Order 13047, issued May 20, 1997, under Section 570 of the
Foreign Appropriations Act, 1997 (P.L. 104-208); and Executive Order 13310, issued July
28, 2003, to implement P.L. 108-61 (the President announced additional modifications
September 25 and 27, 2007). See also CRS Report RS22737, Burma Sanctions:
Background and Options, by Larry A. Niksch and Martin A. Weiss.
58 Pursuant to Section 489(a)(1) of the Foreign Assistance Act of 1961, as amended.
59 Trade sanctions are pursuant to the Narcotics Control Trade Act (19 U.S.C. 2491-2495)
and the Customs and Trade Act of 1990 (P.L. 101-382).
60 The indictments were made using the Foreign Narcotics Kingpin Designation Act (21
U.S.C. 1901-1908). The indicted Burmese have yet to be arrested or brought to trial in the
61 Sanctions are pursuant to the Victims of Trafficking and Violence Protection Act of 2000
(P.L. 106-386). The decision to apply sanctions under P.L. 106-386 is left to presidential
Department of Treasury advisories for enhanced scrutiny over financial transactions,
as well as five special measures listed under 31 U.S.C. 5318A.62 The United States
does not apply sanctions against Burma in specific response to its activity in other
illicit trades, including wildlife.63 The Block Burmese JADE (Junta’s Anti-
Democratic Efforts) Act of 2007 (H.R. 3890), however, would prohibit the
importation of gems and hardwoods from Burma, among other restrictions.64
After more than a decade of applying sanctions against Burma, however, many
analysts have concluded that the sanctions have done little to change the situation.
The effectiveness of U.S. sanctions is limited by several factors.65 These include (1)
unevenly applied sanctions against Burma by other countries and international
organizations, including the European Union and Japan; (2) a booming natural gas
production and export industry that provides the SPDC with significant revenue; (3)
continued unwillingness of Burma’s fellow members in the Association of Southeast
Asian Nations (ASEAN) to impose economic sanctions against Burma; (4) Burma’s
historical isolation from the global economy; and (5) China’s continued economic
and military assistance to Burma. In addition, some analysts suggest that sanctions
are, in part, culpable for the flourishing black markets in Burma, including trafficking
in humans, gems, and drugs, because legal exports are barred.66 Several analysts
indicate that many Burmese women who lost their jobs in the textile industry as a
result of Western sanctions are among the victims of trafficking for sexual
ex ploitation. 67
Regional Border Control Assistance
The United States is assisting neighboring countries with stemming the flow of
trafficked contraband from Burma into their territories. Although most U.S.
assistance to combat transnational crime in Burma remains in suspension, the United
States is working to train law enforcement and border control officials in neighboring
62 These include (1) record-keeping and reporting of certain financial transactions, (2)
collection of information relating to beneficial ownership, (3) collection of information
relating to certain payable-through accounts, (4) collection of information relating to certain
correspondent accounts, and (5) prohibition or conditions on the opening or maintaining of
correspondent or payable-through accounts for a foreign financial institution. See Douglas
N. Greenburg, John Roth, and Katherine A. Sawyer, “Special Measures under Section 311
of the USA PATRIOT Act,” The Review of Banking and Financial Services, vol. 23, no. 6,
63 Notably, President Bill Clinton in 1994 used the 1971 Pelly Amendment to the
Fishermen’s Protective Act of 1967, as amended (22 U.S.C. 1978), as a means by which to
impose sanctions against Taiwan for its alleged insufficient progress toward eliminating the
country’s illegal trade in rhino and tiger parts and products. The sanction temporarily
banned the importation of certain fish and wildlife products from Taiwan.
64 Last major action to H.R. 3890: passed Senate with an amendment and an amendment to
the Title on December 19, 2007.
65 See CRS Report RL33479, op cit.
66 Fareed Zakaria, “Sleepwalking to Sanctions, Again,” Newsweek, October 15, 2007.
67 See, for example, “U.S. Sanctions ‘Hit Burma Hard,’” BBC News, October 3, 2003.
countries through anti-crime assistance programs.68 Currently, the bulk of funding
to Burma’s neighbors remains concentrated in counter-narcotics and anti-human
trafficking projects; no funding is allocated to the State Department for combating
“organized and gang-related crime” in the region. Overall funding to combat
trafficking has been in decline for several years; the Administration’s FY2008
appropriations request for Foreign Operations in the region represents a 24.2%
decrease from FY2006 actual funding.
A New Approach?
Despite Burma’s recent progress in reducing opium poppy cultivation, most
experts believe U.S. policies have not yielded substantial leverage in combating
transnational crime emanating from Burma. In light of the most recent displays of
junta violence against political demonstrators in September 2007, however, there are
indications of increasing political interest in re-evaluating U.S. policy toward Burma.
Among the considerations that policy makers have recently raised are (1) whether the
United States should increase the amount of humanitarian aid sent to Burma; (2)
what role ASEAN and other multilateral vehicles for dialogue could play in
increasing political pressure on the junta regime; (3) what role the United States sees
India, as the world’s largest democracy and Burma’s neighbor, playing in ensuring
that Burma does not become a source of regional instability; and (4) how the United
States can further work with China and Thailand, as the largest destinations of
trafficked goods from Burma, to address transnational crime along Burma’s borders.
68 Under authorities granted in Section 2291 of the Foreign Assistance Act of 1961, as
amended, the State Department is responsible for coordinating foreign assistance and law
enforcement training for counter-narcotics and anti-crime programming. According to the
Administration’s FY2008 Foreign Operations Budget Justification, such programs exist in
four of Burma’s neighbors: Thailand, Laos, India, and Bangladesh.
Figure 2. Map of Burma
Source: Map Resources. Adapted by CRS.