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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 ensured that U.S. funds remain out of the
regime’s reach. Most recently, the 110th 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. The 111th Congress may
choose to conduct oversight of U.S. policy toward Burma, including the country’s role in criminal
activity.
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. Niksch.

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Scope of the Problem ...................................................................................................................... 1
Primary Actors and Motives............................................................................................................ 2
Organized Crime, Ethnic Gangs, and Insurgent Groups ........................................................... 2
Official Corruption.................................................................................................................... 2
Regional Demand...................................................................................................................... 4
Peasants and Urban Poor........................................................................................................... 4
Illicit Economies in Burma.............................................................................................................. 5
Drugs ......................................................................................................................................... 5
Heroin and Opium............................................................................................................... 5
Methamphetamine and Synthetic Drugs ............................................................................. 9
Humans ..................................................................................................................................... 9
Natural Resources ................................................................................................................... 10
Timber and Wildlife .......................................................................................................... 10
Gems ................................................................................................................................. 10
Other Contraband .....................................................................................................................11
Money Laundering .................................................................................................................. 12
U.S. Policy..................................................................................................................................... 12
Sanctions and Special Measures ............................................................................................. 12
Regional Border Control Assistance ....................................................................................... 14
A New Approach? ................................................................................................................... 14

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Figure 1. Opium Poppy Cultivation in Burma’s Shan State, 2003-2007......................................... 8
Figure 2. Map of Burma ................................................................................................................ 15

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Table 1. Opium Cultivation, Production, and Price Trends in Burma, 1997-2007.......................... 6

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Author Contact Information .......................................................................................................... 16

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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 and judicial
action.1 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 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

1 See discussion on “Official Corruption.”
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).
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. 106-386), as amended.
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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. The 111th Congress may choose to continue
its interest in oversight of U.S. policy toward Burma, including the country’s role in criminal
activity.
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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 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.
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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 Burma has no laws on record specifically related to corruption and

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).
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.”
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has signed but not ratified the UN Convention against Corruption. 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 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

9 Transparency International, op cit.; Transparency International, Corruption Perceptions Index (2006).
10 2008 International Narcotics Control Strategy Report, vol. 1, op cit.
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
(continued...)
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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
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The most frequent destinations for much of Burmese contraband—opium, methamphetamine,
illegal timber, endangered wildlife, and trafficked humans—are 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 Burma.
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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

(...continued)
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.
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, 2007.
20 Michael Lyman, Organized Crime (Upper Saddle River, NJ: Prentice Hall, 2007).
21 2007 Trafficking in Persons Report, op cit.
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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 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 needles.
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 most recent campaign to combat illegal drugs, which began in April 2009, 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
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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

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, “Thai PM Launches New ‘War on Drugs,’” Agence France Presse, March 19, 2008; 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.
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source of heroin for the United States.27 Although poppy cultivation has declined significantly in
the past decade, prices have increased significantly in recent years, reflecting ongoing demand
despite production declines since a decade ago (see Table 1). Much of the decline in recent years
has been attributed to UWSA’s 2005 public commitment to stop its 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
Table 1. Opium Cultivation, Production, and Price Trends in Burma, 1997-2007
Significant Opium
Total Potential Farm
Opium Poppy Poppy Eradication
Potential
Gate Value of Opium
Cultivation
Reported
Opium Production
Produced
Year
(hectares)
(hectares)
(metric tons)
(U.S. constant dollars)
1997 155,150
1,938
1,676
$590
million
1998 130,300
3,093
1,303
$454
million
1999 89,500
3,172
895
$145
million
2000 108,700
9,824
1,087
$308
million
2001 105,000
1,643
1,097
$291
million
2002 81,400
9,317
828
$147
million
2003 62,200
7,469
810
$121
million
2004 44,200
2,820
370
$98
million
2005 32,800
3,907
312
$63
million

27 U.S. Drug Enforcement Administration, Drugs of Abuse, 2005, available at http://www.usdoj.gov/dea/pubs/abuse/
doa-p.pdf.
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); 2008 International
Narcotics Control Strategy Report, vol. 1, op cit.
31 Ibid.
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Significant Opium
Total Potential Farm
Opium Poppy Poppy Eradication
Potential
Gate Value of Opium
Cultivation
Reported
Opium Production
Produced
Year
(hectares)
(hectares)
(metric tons)
(U.S. constant dollars)
2006 21,500
3,970
315
$72
million
2007 27,700
3,598
460
$120
million
2008 28,500
4,820
410
$123
million
Source: CRS calculations based on United Nations Office on Drugs and Crime (UNODC), World Drug Report,
2004-2008; UNODC, Opium Poppy Cultivation in South East Asia, December 2008; and UNODC, Global Illicit Drug
Trends, 2003-1999.
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Figure 1. Opium Poppy Cultivation in Burma’s Shan State, 2003-2007

Sources: UNODC, World Drug Report, 2004-2007; UNODC, Global Illicit Drug Trends, 2003-1999. Graphics
adapted by CRS.
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In addition to producing heroin and opium, Burma is reportedly the largest producer of
methamphetamine in the world and a significant producer of other synthetic drugs.32
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 opium cultivation with the manufacturing and
trafficking of amphetamine-type stimulants.34 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 turn
the Golden Triangle into an ‘Ice Triangle.’”35
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 pills into Burma as part of shipments of relief aid from Burmese
communities abroad.36
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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 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.

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, op cit.
35 Ibid.
36 “Intelligence: Drug Scam Suspected,” The Irrawaddy, July 2008.
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.
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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
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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 systems.41
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 in lawless border towns.42 Growing demand in countries
such as China and Thailand has increased regional prices for exotic wildlife; for example, a
tiger’s skin can be worth up to $20,000, according to media reports.43 One report suggests that
valuable wildlife is used as currency in exchange for drugs and in the laundering of other
contraband proceeds.44
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Rubies, sapphires, jade, and other gems have also been used as non-cash currency equivalents for
transborder smuggling. The legal sale of Burmese 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

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.
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;
(continued...)
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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 3% of those entering the United States are claimed to have originated
there.
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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 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

(...continued)
“Burma and Blood Gems,” Leber Jeweler, Inc., available at http://www.leberjeweler.com/stones/
burma_bloodgems.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 3, 2008; and U.N. Security Council Resolution 1718
(2006).
51 See for example “Oslo-Based Website: Burma’s Purchase of North Korean Arms 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.
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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 have been used, or are
suspected of being used, to launder proceeds derived from narcotics trafficking, terrorism, alien
smuggling, and other criminal activities.56
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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

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.
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: Economic Sanctions, by Larry A. Niksch and Martin A. Weiss.
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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 (OFAC) for
their alleged role in drug trafficking and money laundering.60 On November 13, 2008, OFAC
named 26 individuals and 17 companies tied to Burma’s Wei Hsueh Kang and the UWSA as
Specially Designated Narcotics Traffickers pursuant to the Foreign Narcotics Kingpin
Designation Act (21 U.S.C. 1901-1908).61
Burma is characterized by the State Department’s 2008 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.62 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 Department of Treasury
advisories for enhanced scrutiny over financial transactions, as well as five special measures
listed under 31 U.S.C. 5318A.63 The United States does not apply sanctions against Burma in
specific response to its activity in other illicit trades, including wildlife.64 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.65
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.66 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

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 United States.
61 U.S. Department of State, International Narcotics Control Strategy Report, Vol. 2, March 2009. Kang was designated
by the President as a Foreign Narcotics Kingpin on June 1, 2000, and the UWSA on June 2, 2003.
62 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 discretion.
63 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, June 2007.
64 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.
65 Last major action to H.R. 3890: passed Senate with an amendment and an amendment to the Title on December 19,
2007.
66 See CRS Report RL33479, Burma-U.S. Relations, op cit.
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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.67 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 exploitation.68
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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 countries through anti-crime assistance
programs.69 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.
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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.

67 Fareed Zakaria, “Sleepwalking to Sanctions, Again,” Newsweek, October 15, 2007.
68 See, for example, “U.S. Sanctions ‘Hit Burma Hard,’” BBC News, October 3, 2003.
69 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.
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Figure 2. Map of Burma

Source: Map Resources. Adapted by CRS.

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Liana Sun Wyler

Analyst in International Crime and Narcotics
lwyler@crs.loc.gov, 7-6177

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