The Myanmar regime has established a fraudulent entity to replace the banking details of its oil and gas venture in an attempt to access sanctioned funds outside the country originally paid by foreign partners, according to an internal document leaked to Myanmar Now.
The letter, dated April 19, outlines a request by the regime’s energy ministry to the Central Bank of Myanmar (CBM) to create separate bank accounts in US dollars, Chinese yuan or renminbi, and Thai baht. It asks that the accounts be registered under the name “Kant Kaw”—a type of Burmese flower—at the state-owned Myanma Economic Bank (MEB) in the military capital of Naypyitaw.
The purpose of the move was to replace the previous banking information of the regime-controlled Myanmar Oil and Gas Enterprise (MOGE), which serves as the primary source of foreign revenue for Myanmar’s military junta, generating hundreds of millions of dollars from natural gas projects.
Since the European Union (EU) imposed sanctions on MOGE last February, more than US$504.3 million has been held in foreign bank accounts by the enterprise, the leaked letter explained. These funds represent the revenue generated from three projects: Shwe Gas, Myanmar-China Oil & Gas Pipelines and Yadana Gas, Myanmar Now has learned.
The creation of new bank accounts under the name of Kant Kaw could facilitate the receipt of the revenue in question, especially in light of EU sanctions on MOGE, the United States government’s sanctions on its managing and deputy managing directors, and the potential for future sanctions, according to the energy ministry.
Military officials arrested several officials in a raid on the planning department of MOGE on Thursday morning, two days after Myanmar Now published a report in Burmese about the leaked document in question, likely in an attempt to identify the source. However, the information was not obtained from within the enterprise.
Typically, most oil and gas revenue flows into MOGE accounts held outside Myanmar by two regime-controlled banks: the Myanma Foreign Trade Bank (MFTB) and the Myanma Investment and Commercial Bank (MICB).
However, more than two months after the energy ministry’s request, the US government imposed sanctions on these banks—without sanctioning MOGE as an entity—to obstruct the regime’s international transactions, including foreign currency exchanges. A corresponding statement by the US treasury noted that the junta relies heavily on these funding channels to sustain its violent repression of Myanmar’s people.
As a result of the EU sanctions on MOGE and the US sanctions on MFTB and MICB, the regime now faces significant obstacles in receiving oil and gas revenues in US dollars and euros. The $504m mentioned in the energy ministry’s letter represents a fraction of the junta’s revenue from the entire oil and gas industry, which could amount to more than $1.5 billion.
Several sources with significant knowledge of Myanmar’s financial policies, including a retired CBM officer and an analyst tracking the country’s natural resource revenue, told Myanmar Now that MEB has become the last option the regime can use to receive foreign currency while avoiding Western sanctions.
Operating under the junta’s ministry of planning and finance, the MEB has 315 branches nationwide and plays a key role in managing wage disbursements for various regime-controlled administrative departments and in facilitating border trade transactions. While MFTB and MICB have a greater role in handling foreign currencies, MEB also holds corresponding accounts with several foreign banks outside the country.
Tin Tun Naing, the Minister of Planning and Finance for the publicly-mandated National Unity Government (NUG), stated that the US sanctions on MFTB and MICB have significantly impacted the regime’s ability to receive funds generated by MOGE through state-owned banks, despite the sanctions not directly targeting the enterprise.
“In simpler terms, the military regime is facing a major upheaval,” he explained. “We have heard about their desperate situation from other sources—they have been trying a range of tactics to overcome the sanctions, but the situation is no longer as straightforward as before.”
A retired CBM officer echoed Tin Tun Naing’s observations, pointing out that the recent American sanctions on the two regime-controlled banks would cause significant harm to the regime due to the volume of transactions that they typically process.
“These two banks are responsible for most international transactions. Almost all government department transactions pass through them. Their deposits and withdrawals will be heavily affected,” the former central bank employee said.
He added that although private banks could potentially be granted licences to carry out major international transactions, implementing such a process would be challenging.
“It cannot be done in a matter of days. Building a mechanism like that is not easy. There would be different regulations and limitations,” he said.
The officer also noted that private banks are facing difficulties conducting business with overseas financial institutions due to the blacklisting of Myanmar by the Financial Action Task Force–a Paris-based intergovernmental monitoring organisation–earlier this year. The task force also recently urged its member countries to exercise enhanced due diligence, particularly when engaging in business relations and transactions involving Myanmar, Iran and North Korea.
“Correspondent banks worldwide are now proceeding cautiously with Myanmar, regardless of whether the bank on our side is private or state-owned. There are more stringent due diligence measures compared to before.”
The military regime has been actively attempting to replace US dollars with yuan, Russian rubles and Indian rupees since the 2021 coup, as dollar-denominated purchases ultimately require the involvement of American banks, and the junta is seeking to eliminate this dependency. In June, military commerce minister Aung Naing Oo described Myanmar as “suffering” under US sanctions and advocated for the immediate implementation of a “rupee-kyat trade agreement” for its exports to and imports from India.
Talks are also underway with Russia regarding the use of its MIR payment system, although implementation has not yet occurred.
At a June 30 meeting with members of his military council, coup leader Min Aung Hlaing stressed his disdain for sanctions imposed on his regime.
“When the State Administration Council assumed the State duties, the international community had come to impose sanctions,” he said, referring to the junta. “They resorted to various ways to prevent the country from spending its foreign currencies and getting the sales from its products.”
An employee working at a foreign bank in Yangon speculated that if Western countries were to impose sanctions on MEB, as the US did with MFTB and MICB, it would present an unprecedented challenge for the regime.
“There are Official Development Assistance programs and loans from foreign governments. The state’s remaining official international transactions would come to a halt,” she warned.
The resource revenue analyst added that new sanctions on MEB would also hinder the regime’s collection of jade revenue, since all income from the annual gems emporiums passes through the bank. She also said that such sanctions would also adversely affect the country’s overall economy.
While the military regime exhausts all available options to access its blocked oil and gas revenue, the NUG and anti-coup activists are also searching for new ways to cut off the military’s income.
“This is also a form of warfare,” NUG’s planning and finance minister Tin Tun Naing said. “We must obstruct, attack, and impede every possible revenue source of the regime. It is our duty.”
