The Myanma Timber Enterprise (MTE) is allegedly working to open secret bank accounts at the Myanmar Economic Bank (MEB) weeks after the United States imposed sanctions on two banks with links to the military.
In June, the US imposed sanctions on Myanma Foreign Trade Bank (MFTB) and Myanma Investment and Commercial Bank (MICB).
According to Brian Nelson, the US Treasury Under Secretary for Terrorism and Financial Intelligence, “Burma’s military regime has leveraged state-run access to international markets to import weapons and materiel, including from sanctioned Russian entities, to continue its violence and oppression.”
The US alleges that the military facilitated international trade by revenue-generating state enterprises such as MTE and the Myanma Oil and Gas Enterprise (MOGE).
MOGE provides the regime with its biggest single source of revenue by selling oil and gas abroad.
In addition, the MTE generates large sums in US dollars by selling timber abroad.
Now Wood Central reports that the regime plans to open secret bank accounts to smuggle conflict timber.
The revelations come from the Irrawaddy, a news website run by Burmese exiles living in Thailand overnight.
They allege that the MET, already sanctioned by the European Union, the United States and the UK, is working to use MEB bank accounts to bypass international financial sanctions.
“As they can no longer use the MFTB and MICB, the MTE is planning to make transactions through the MEB,” an informant told Irrawaddy.
“It will be able to make transactions by linking through 15 foreign banks.”
The publication alleges that “the secret bank account will be linked with banks in Singapore, Thailand, Japan, India and China for international transactions, with local banks used for domestic transactions.”
However, Wood Central or Irrawaddy could not verify this information.
“No other bank in Myanmar can match the MFTB in terms of international acceptance for transactions,” said a local economist and banking expert.
“All the other [domestic] banks still operate as subsidiaries of MFTB, so the sanction against MFTB will also restrict the operations of other banks.”
According to an unnamed economist, “The regime can shift accounts of state-owned enterprises to other banks to bypass financial sanctions, but it will inevitably incur higher transaction costs.”
Despite sanctions imposed on MTE, Myanmar timber, now recognised as “conflict timber” by PEFC and FSC, continues infiltrating international supply chains.
According to the US-based Forest Trends, Myanmar exported USD 190 million worth of timber to the US, EU and other Western countries following the February 2021 coup.
The country also exported USD 154 million worth of timber to China, India, Thailand and other countries.
According to the military-controlled government, Myanmar exported USD 235.6 million worth of timber from October 2021 to May 2023.
Like Russian and Belarussian timber, Myanmar timber has plagued international markets for imported timber products.
As reported by Wood Central, Myanmar-sourced teak continues to be a high sort after product in luxury items such as boat building.
Indeed, between February and November 2021, it was alleged that illegal private brokers or intermediaries were used to acquire USD 37 million through the European Union and the US alone.
And according to the Irrawaddy informant, this could be the beginning.
“I heard transactions regarding tenders can be made soon [through the new account],” they said.
“If the account set up by MTE succeeds, other government departments will likely follow suit.”
In early July, Myanmar Now reported that EU sanctions led to more than USD 500 million being frozen in overseas banks.
Following the asset freeze, the regime’s Ministry of Energy asked the Central Bank of Myanmar to set up a secret bank account for MOGE at the MEB to handle international transactions, Myanmar Now reported.
Following the Myanmar Now report, the military raided the MOGE head office in Naypyitaw’s Zabuthiri Township and detained senior officials for interrogation.
