Bangladesh Bank has instructed local banks to refrain from doing financial transactions with Myanmar Foreign Trade Bank (MFTB) and Myanmar Investment and Commercial Bank (MICB) as the USA has recently imposed sanctions on these two Burmese banks.

The banking regulator through letters to all scheduled banks on August 20 said the two are now under sanctions issued by the Office of Foreign Assets Control, a financial intelligence and enforcement agency of the US Treasury Department.

The banking watchdog issued the letter months after the US embassy in Dhaka informed Bangladesh's foreign ministry about the sanction on the banks in Myanmar.

The US embassy also requested the ministry to take steps as MFTB and MICB have correspondent accounts with state-owned Sonali Bank.

After receiving letter from the US embassy, the foreign ministry sent a letter to the Financial Institutions Division under the finance ministry on August 3 informing about the two banks' accounts with Sonali Bank.

Sonali Bank has frozen the accounts of the two Burmese banks following sanctions imposed by the USA, Sonali Bank Managing Director and CEO Md Afzal Karim recently told The Daily Star.

"Further steps will be taken based on Bangladesh Bank's opinions," he said.

In June this year, the US imposed sanctions on MFTB, MICB and the defence ministry of Myanmar.