WorldECR Publishes Article on EAR License Exceptions

Steptoe’s Ed Krauland and Anthony Rapa authored an article on Export Administration Regulations (EAR) license exceptions published in WorldECR’s July 2017 issue. The article discusses the pros and cons of license exceptions, which can offer exporters a host of cost, time, and efficiency benefits. They argue that, when mastered, these license exceptions can be a useful tool for a company’s compliance department.

More information is available here.

A Detailed Look at the Countering America’s Adversaries Through Sanctions Act

President Trump signed the Countering America’s Adversaries Through Sanctions Act into law on August 2, 2017, targeting Russia, North Korea, and Iran.  The law serves as a forceful, bipartisan statement that the US Congress continues to view robust economic sanctions as a foundation of US foreign policy, in which Congress will play a leading role in restricting trade, at times in conflict with the president’s authority to conduct diplomacy.  The Russia portion of the law significantly expands the scope of the US sanctions regime and requires careful review by both US and non-US companies.  The North Korea and Iran sections do not materially affect most US companies, which already face broad restrictions in those countries, but the North Korea section specifically includes additional secondary sanctions that create new risk areas for non-US companies.

For more information, please see our advisory.

Significant FinCEN Action Against BTC-e, Implications for Virtual Currency Exchangers

The US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) assessed a civil monetary penalty of $110,003,314 against Canton Business Corporation (BTC-e) as well as a $12,000,000 penalty against Alexander Vinnik on July 26, 2017.  BTC-e is one of the largest virtual currency exchanges by volume in the world and Vinnik is a Russian national who allegedly controlled, directed, and supervised the company’s operations, finances, and accounts.  In addition to the FinCEN assessments, a 21-count criminal indictment against BTC-e and Vinnick was unsealed and Vinnick was arrested in Greece.

This supervisory action is the second FinCEN has taken against a virtual currency exchanger, and the first against a foreign entity operating as a money services business (MSB) with activities in the United States. The action also imposes the second highest civil monetary penalty to ever be assessed against an MSB. FinCEN has increasingly brought enforcement actions against MSBs and other non-traditional financial institutions, and these actions seem likely to continue.

For more information, please see our advisory.

UPDATE: Congress Passes Sweeping Iran, Russia, and North Korea Sanctions Legislation

On July 27, the Senate passed 98-2 the Countering America’s Adversaries Through Sanctions Act (HR 3364), which previously passed the House 419-3 on July 25, setting up  a showdown with President Trump. This bill is an omnibus of three separate sanctions measures: the Countering Iran’s Destabilizing Activities Act (“CIDAA”), the Countering Russian Influence in Europe and Eurasia Act (“CRIEEA”), and the North Korean Interdiction and Modernization of Sanctions Act (“NKIMSA”).  Together, they make a forceful, bipartisan statement that Congress supports the application of robust sanctions as a cornerstone of US foreign policy.  However, they also may put President Trump in the difficult position of receiving a strong Russia sanctions bill as he seeks to repair relations with Russia and members of his administration are embroiled in Russia-related controversies.

Russia Sanctions: Congress Flexes its Muscle

As Steptoe has previously discussed in our alert and on the blog, CRIEEA would authorize – and at times require – the President to impose significant new sanctions on the Russian energy, financial, and defense sectors. The Senate has previously passed two versions of this bill, and the House version includes further amendments designed to allay some concerns from the US energy industry and EU allies.  In particular, CRIEEA would do the following: Continue Reading

Lawsuits for Cuban Confiscated Property Still Suspended, For Now

On Friday, July 14, 2017, the Trump administration joined the administrations of Presidents Clinton, Bush, and Obama in suspending Title III of the Cuban Liberty and Democratic Solidarity (LIBERTAD) Act of 1996, also known as the Helms-Burton Act, a controversial provision that would authorize lawsuits in U.S. courts to recover damages related to confiscated property in Cuba.

When the Castro regime came to power in Cuba in the late 1950s, it confiscated property from thousands of U.S. and other foreign individuals and companies. The U.S. Foreign Claims Settlement Commission (FCSC) evaluated the validity of claims for losses resulting from the expropriation and nationalization of property owned by U.S. nationals.  In total, the Commission considered 8,821 claims and certified 5,913 claims to be compensable for a value of $1.9 billion (most, but not all, claims related to confiscated property).

Cuba has resolved claims for confiscated property with several other countries, including Canada, France, Italy, Mexico, Spain, Switzerland, and the United Kingdom, but it has not resolved claims with the United States. After July 2015, when the United States re-established diplomatic relations with Cuba, both governments have held information-sharing discussions regarding the outstanding claims.  However, no funds have yet been made available for the claims, nor has a settlement with the Cuban government been reached. Continue Reading

Supreme Court to Decide Whether Firms can be Sued in Human Rights Cases

The unsettled question of whether corporations may be held liable for international human rights abuses may finally, after a tortuous deviation, be addressed by the Supreme Court in the case of Jesner v. Arab Bank.

The case, on appeal from the United States Court of Appeals for the Second Circuit in New York, contains allegations that the Arab Bank processed financial transactions on behalf of groups linked to terrorism. The plaintiffs are victims of terror attacks.  Among other things, plaintiffs alleged that the Jordan-based bank “knowingly used its New York branch to collect donations, transfer money, and serve as a ‘paymaster’ for international terrorists.”

Central to the case is the Alien Tort Statute, a 1789 law that allows United States federal district courts to hear “any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.” The phrase “violations of the law of nations” has been construed by federal courts to cover human rights violations that are “obligatory and universal.” Examples of such acts have included extrajudicial killing, genocide, war crimes, crimes against humanity, cruel, inhuman or degrading treatment, forced labor, and other similarly peremptory norms. Continue Reading

Icebreaker: Two Pilot Program Declinations Are First FCPA Resolutions Under the New Administration

In June 2017, the DOJ released the first two corporate FCPA resolutions since the new administration took office. In both cases, the DOJ issued declination letters “consistent with” the FCPA Pilot Program and required the disgorgement of associated gains.  In one of the two instances, the declination letter also required the forfeiture of funds withheld by the company from foreign government officials involved in the alleged wrongdoing.  Neither company is a U.S. “issuer”; thus, unlike in some of the early Pilot Program declinations, there was no SEC disgorgement.

Many FCPA commentators have speculated on the reasons for the slowdown in corporate FCPA enforcement since the new administration took office. We do not intend to enter into that debate here, except to note that we continue to see robust DOJ and SEC activity at the investigation stage.  And, as we noted in our 2017 FCPA Mid-Year Review, final resolutions of ongoing matters may be delayed as a result of the slow pace to date of confirming senior DOJ and SEC officials to permanent enforcement posts.

Despite the slowdown in certain aspects of enforcement, however, the recent declinations are interesting for a number of reasons. First, the DOJ appears at least to remain committed to clearing longstanding investigations out of its inventory.  The DOJ issued the first declination, dated June 16, 2017, to Linde North America Inc. and Linde Gas North America Inc. (collectively “Linde”) relating to conduct that dated to 2006 and had been under investigation for a substantial period of time.  Continue Reading

The CFIUS Calculus Has Changed — In More Ways Than One

On July 19, 2017, Steptoe’s Stephen Heifetz authored an article titled “The CFIUS Calculus Has Changed — In More Ways Than One” for Law360.  The piece reviews how changes to CFIUS in the Trump administration, including stricter calculation of national security risk, may in turn impact the decision that companies make when determining whether to file with the committee.  What was originally designed as a process to assure a company that it poses no threat to national security may now do the opposite.

For more information, please see our advisory.

Recent Settlements Reveal the Hidden ABAC Risks and Rewards of Internal Audits

On July 19, 2017, Steptoe’s Matthew Herrington and Brady Cassis co-authored a piece titled “Recent Settlements Reveal the Hidden ABAC Risks and Rewards of Internal Audits” for The Anti-Corruption Report.  In the article, the authors unpack the recent settlements revealing several strategies for successfully managing internal audits.

For more information, the full article can be read at The Anti-Corruption Report (subscription required).