When is the Right Time to Make a CFIUS Filing?

Foreign investors in US companies often must consider multiple regulatory issues.  Among those is whether to seek clearance from the Committee on Foreign Investment in the United States, or CFIUS.  A related question is when to file with CFIUS.  Comparatively little guidance is available on the latter question.  To learn more about whether and when to make a CFIUS filing, read the full Law360 article here.

“Egregious” Sale of Flower Seeds to Iran Shows No Sector is Immune from OFAC

The Treasury Department’s Office of Foreign Assets Control (OFAC) reached a $4,320,000 civil settlement with PanAmerican Seed Company (PanAm Seed) for alleged violations of the Iranian Transactions and Sanctions Regulations (ITSR) that occurred between 2009 and 2012. OFAC treated this as an “egregious case,” which may raise eyebrows because it involved the export of seeds, primarily for flowers, which is not a focus of US national security concerns related to Iran. OFAC says that it likely would have granted licenses for these shipments had the company applied for them. This case demonstrates that the process of resolving a case with OFAC is a factor to keep in mind that can impact the settlement, along with the agency’s assessment of the underlying conduct itself. Companies operating in less sensitive fields such as agriculture, food, and medicine should not discount the importance of maintaining a sanctions compliance program and responding prudently to any inquiries from OFAC. See our advisory for more detail.

White House Announces Termination of Myanmar (Burma) Sanctions Administered by OFAC

The White House announced on September 14, 2016, during the state visit to Washington by Myanmar’s State Counsellor and de facto leader, Aung San Suu Kyi, that the United States will terminate the national emergency with respect to Myanmar and revoke the Executive Orders that impose trade and investment restrictions on Myanmar.  A new OFAC FAQ confirms the White House statement.  Although all current sanctions remain in place until this policy is implemented, and some of the details about how it will be implemented remain to be determined, we expect that this will lead to the lifting of the major remaining U.S. trade and investment sanctions on Myanmar. Some restrictions related to Myanmar, however, are expected to remain in place.  See our advisory for more detail.

EU Prolongs Sanctions Over Actions Against Ukraine’s Territorial Integrity

The Council of the European Union has decided to prolong by 6 months the application of EU restrictive measures targeting actions against Ukraine’s territorial integrity, sovereignty and independence. These sanctions consist of an asset freeze and a travel ban against 146 persons and 37 entities  They have been extended until 15 March 2017.

The measures had been introduced in March 2014 and were last extended in March 2016.The assessment of the situation did not justify a change in the regime of sanctions nor in the list of persons and entities under restrictive measures. Information and statement of reasons for maintaining listing related to these persons and entities were updated as necessary.

The legal acts are available in the EU Official Journal of 16 September 2016.  Both the Council Decision and the Council Implementing Regulation are available online.

 

The comprehensive list of targeted individuals and entities is included as an annex to both the Decision and the Implementing Regulation.

Côte d’Ivoire Sanctions Program Terminated

Yesterday President Obama issued an Executive Order removing the U.S. sanctions program on Côte d’Ivoire.  As we stated in a previous post, this move has been anticipated since April, when the UN Security Council passed Resolution 2283 terminating the UN arms embargo and travel and financial sanctions on Côte d’Ivoire based on improvements in the political and security situation.  The U.S. followed in May by only lifting the arms embargo and leaving the targeted sanctions in place.     Continue Reading

DDTC’s Definitions of Export, Reexport, and Retransfer: Important Compliance Considerations

The State Department’s Directorate of Defense Trade Controls (DDTC) recently published a final rule amending the International Traffic in Arms Regulations (ITAR) to finalize and clarify changes from a June 3, 2016 interim final rule related to the definitions of “export,” “reexport,” and “retransfer.”  For additional information on the interim final rule, see our previous advisory

In the preamble, DDTC confirms “that theoretical or potential access to technical data is not a release,” and a release occurs only “if a foreign person does actually access technical data.”  That represents a significant change in DDTC policy and will be relevant for a future DDTC final rule on the treatment of controlled technical data in an encrypted, cloud-based environment. Click here to read more.

Potential Changes to the EU Dual-Use Export Control Regime, Including Cybertechnology

A European Commission proposal to amend the European Union’s dual-use export control regime was leaked recently, exposing significant changes to current EU policy. The proposal includes new controls on cyber-surveillance technology exports, including intrusion software. This proposed enhancement of export controls on cyber-surveillance technologies comes as the EU dual-use export control system as a whole has been under review. The review highlighted the need to develop and clarify the EU’s approach to “the use of cyber-space for proliferation activities.” Click here to read more.

Treasury’s Cold Comfort Message Regarding Correspondent Banking and AML/Sanctions

For several years, banks have been bludgeoned with anti-money laundering (AML) and sanctions penalties. These twin hammers, increasingly wielded simultaneously and synergistically by regulators and prosecutors, have produced multi-billion dollar penalties.  The Treasury Department now has released a message seemingly intended to provide some comfort to the bruised and wary banking community.  But that comfort seems pretty cold.

Treasury’s August 30 statement is focused on risks arising from correspondent banking relationships.  These relationships provide many foreign financial institutions with access to the U.S. financial system and the ability to access and trade in U.S. dollars.  Many of the most severe AML/sanctions penalties have been imposed on foreign institutions for helping their customers, specifically those customers subject to U.S. sanctions, evade those sanctions by using correspondent relationships to provide concealed access to the U.S. financial system. Continue Reading

BIS Adds Russian Companies to Entity List

Tomorrow, September 7, the U.S. Department of Commerce, Bureau of Industry and Security (BIS) will issue a final rule adding 81 entities to the BIS Entity List (15 C.F.R. Part 744, Supplement No. 4) under the Export Administration Regulations (EAR).  BIS is designating the companies, which are based in Russia, the Crimea region of Ukraine, India, and Hong Kong, pursuant to authorities granted to it under Executive Orders 13660, 13661, 13662, and 13685, which respectively authorize the imposition of sanctions targeting (among others) persons destabilizing Ukraine; persons operating in the Russian arms or related materiel sector; persons operating in the Russian energy sector; and persons operating in the Crimea region of Ukraine.  Most of the designations target entities affiliated with Gazprom, which already is on the Entity List.

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New Russia Sanctions Designations

Yesterday, the U.S. Treasury Department, Office of Foreign Assets Control (OFAC) designated several new Russian and Ukrainian Specially Designated Nationals (SDNs) and Sectoral Sanctions Identification (SSI) List entities under the Ukraine-Related Sanctions Regulations (31 C.F.R. Part 589).  The designations are explained in a press release and set out in detail in a web notice.  The new SDNs, which must be “blocked” by U.S. persons, consist of separatist leaders, entities engaged in sanctions evasion, and Crimean entities.  The new SSI entities, which consist of subsidiaries of Gazprom, Gazprombank, and Bank of Moscow, are subject to certain restrictions on U.S. financing (in the case of the Gazprombank and Bank of Moscow subsidiaries) and exports (in the case of Gazprom subsidiaries) that we previously have summarized.   Notably, the newly designated SSI entities were all previously subject to sanctions, since they are owned 50 percent or greater by sanctioned entities.  OFAC now has formalized those restrictions by specifically designating the entities on the SSI List.

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