The Bangladeshi state-owned bank at the center of bilateral trade with Myanmar has frozen the accounts of Myanma Foreign Trade Bank (MFTB) and Myanma Investment and Commercial Bank (MICB), which together had at last US$ 1.1 million deposited at the bank.

Afzal Karim, the chief executive officer of Sonali Bank, confirmed on Wednesday to Benar News that his bank had frozen the accounts of MFTB and MICB, but he did not say the exact date the accounts were frozen.

The accounts were frozen after the United States Embassy in Dhaka sent a letter to the Bangladeshi government requesting it to comply with its sanctions, reports say. In the August 3 letter from the US Embassy to the Bangladesh foreign ministry, the embassy reminded it of the sanctions on the two Myanmar banks and urged Dhaka to “take appropriate action.”

The ministry then sent a letter to the Sonali Bank, the Ministry of Finance and the Central Bank of Bangladesh informing them about the letter from the US Embassy.

According to an excerpt from the embassy’s letter reported by Benar News, it said, “These designations reinforced our objectives of denying the regime access to forging currency and further preventing the regime from purchasing arms that could be used to commit atrocities and other abuses.”

The US Treasury Department imposed sanctions on Myanmar junta-controlled MFTB and MICB on June 21, along with its Ministry of Defense. The US Treasury Department’s Office of Foreign Assets Control said that the two banks primarily function as foreign-currency exchange businesses and have allowed Myanmar’s state-owned enterprises access to international markets using offshore accounts, helping them transact more easily with foreign entities.

Sonali Bank told the media that MFTB and MICB had total deposits of US$ 1.1 million and the funds are frozen. It said the accounts of the two banks had not been used for any transactions for more than a month.

Karim told Benar News that Sonali Bank was relieved it did not have a large amount of funds deposited at the two sanctioned Myanmar banks. “We don’t have much money there. One bank has 17,000 euros, another has [200,000] dollars,” he was quoted as saying. “They have more money with us.”

After the accounts were frozen, the Myanmar junta asked Bangladesh to make accounts available for transactions, but Dhaka denied the request.

Dhaka-based Bdnews24 reported on Wednesday that two Myanmar banks had frozen accounts of Sonali Bank in retaliation. The junta, however, has not announced any retaliatory measures.

The reports said that the Myanmar regime is trying to find a way to withdraw the money, and that the Myanmar Ambassador in Dhaka had met with officials in an attempt to unfreeze the cash in the accounts at Sonali Bank.

Transactions for most of Bangladesh’s bilateral trade with Myanmar are done through Sonali Bank. Myanmar mainly exports wood, frozen fish, ginger and onions to Bangladesh. It imports potatoes, biscuits and plastic products from the neighboring country.

According to the figures from the junta’s Ministry of Commerce, trade between Myanmar and Bangladesh was US$ 16 million from April 1 to June 30. In fiscal year 2022-2023, trade reached US$ 180 million—the highest level in five years. Annual trade data shows Myanmar consistently having a substantial surplus with Bangladesh.

The United States is Bangladesh’s largest export market. Its exports to the US, primarily apparel, totaled US$ 8.3 billion in 2021, according to US trade data.

As the junta faces rising difficulties making transactions via banks with Bangladesh it will “definitely hit the regime’s budget” and damage its efforts to address its overall trade deficit, economists said.

Myanmar traders may also take a hit due to restrictions on Sonali Bank’s ability to conduct transactions with banks in Myanmar. Economists said the Bangladesh state-owned bank took action following Washington’s reminder early this month that transactions with MFTB and MICB had to be wound down by August 5.

Economist U Moe described Sonali’s move as “another action taken at the regional level after UOB in Singapore took action as a consequence of US sanctions on the junta-owned banks. The junta will face more troubles if more financial institutions take similar actions.”

Singapore’s United Overseas Bank completed its closure of every bank account of Myanmar junta-linked Myanmar Airways International on August 15, after beginning the process of imposing restrictions and heightened scrutiny on the airline’s accounts in early July.

According to a report by Nikkei Asia, UOB is also ending correspondent bank relationships with banks in Myanmar, a move that could further restrict the military regime’s access to the global financial system.

Source:
courtesy of THE IRRAWADDY

by Hein Htoo Zan

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