The year 2016 ushered in a flurry of activity in global anti-corruption and US Foreign Corrupt Practices Act (FCPA) enforcement. After 2015, when the US Department of Justice (DOJ) and US Securities and Exchange Commission (SEC) brought their lowest number of enforcement actions in a decade, 2016 not only saw the largest number and highest dollar-value of FCPA corporate enforcement actions in a single year, but reflected the impact of new policy directions as well. In 2015, the agencies instituted a combined total of 23 FCPA-related enforcement actions, 11 by the DOJ, and 12 by the SEC, accounting for a total of US $142.7 million in monetary sanctions. In contrast, 2016 saw 37 SEC and 24 DOJ enforcement actions resulting in US $2.43 billion in monetary penalties (including disgorgement) to be paid to the federal Treasury. The 2016 numbers were not just the result of a few, “blockbuster” matters as has occurred in some prior years, but instead a larger number of all types of settlements: large matters imposing monetary sanctions running into the hundreds of millions of dollars; prosecutions of individuals; and a number of smaller resolutions by the SEC where the DOJ either would not or could not prosecute. This increase in FCPA activity spilled into the first weeks of 2017 as well, with several corporate and individual enforcement actions announced just after the new year. For more information, please see our advisory.
In this age of heightened national security concerns, it might seem farfetched that an FBI field office was being housed in a foreign owned building. Yet, according to a new Government Accountability Office (“GAO”) report, it is not only true but a fairly common phenomenon. On January 30, 2017, the GAO released a new report entitled “GSA Should Inform Tenant Agencies When Leasing High-Security Space from Foreign Owners.” The report found that the General Services Administration (“GSA”) is leasing “high-security” space in 20 buildings with foreign owners. The leased space is used by 26 agencies and in some cases houses classified information, law enforcement evidence, and other sensitive data. The buildings in question are owned by entities from countries including Canada, China, Israel, Japan, and South Korea.
On February 3, 2017, a temporary restraining order (TRO) was issued in response to legal challenges to President Trump’s immigration and travel-related Executive Order (EO), “Protecting the Nation from Foreign Terrorist Entry into the United States.” The TRO halts the 90-day travel prohibition against citizens and nationals of seven designated countries. The TRO has survived an initial, emergency challenge filed by the US Department of Justice (DOJ); however, ongoing challenges to both the EO and TRO remain. Developments are moving quickly in the case currently pending with the United States Court of Appeals for the Ninth Circuit. For more information, please see our advisory.
The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated 25 additional individuals and entities on its list of Specially Designated Nationals and Blocked Persons (SDNs) on February 3, 2017. Alone the new designations do not constitute a departure from past policy or practice, but they could indicate the possibility of such a departure in the future. For more information, please see our advisory.
President Trump has made no effort to conceal his disdain for the Joint Comprehensive Plan of Action (JCPOA) agreement regarding Iran’s nuclear program, which he frequently has described as a “disaster” ranking among the worst deals in U.S. history. However, heated rhetoric notwithstanding, he often spoke on the campaign trail of improving the deal, rather than tearing it up. While the Administration has not yet advanced any specific policy regarding the JCPOA, and while future developments remain difficult to predict, the President may seek to ramp up pressure on Iran within the framework of the existing agreement, rather than repudiate the deal altogether. As the President himself explained when he was a candidate: “We have a horrible contract, but we do have a contract.”
This post focuses on how the Trump Administration may go about exerting pressure on Iran without pulling out of the JCPOA. However, it should be noted that on February 1, National Security Advisor Michael Flynn, in response to Iran’s recent ballistic missile launch and an attack on a Saudi vessel by Iran-backed Houthi rebels, stated: “Instead of being thankful to the United States for [its] agreements [with the Obama Administration], Iran is now feeling emboldened. As of today, we are officially putting Iran on notice.” President Trump followed this up with a series of tweets, including one remarking that Iran is “playing with fire.” And just today, the U.S. Department of Treasury, Office of Foreign Assets Control (OFAC) added 25 individuals and entities to the list of Specially Designated Nationals (SDNs) in response to the missile test, although notably none of them appear to be persons who were removed from the SDN List pursuant to the JCPOA—which likely would have been a violation of the agreement.
Thus, the situation remains as fluid as ever, and a more confrontational approach may yet be in the offing.
The US Treasury Department’s Office of Foreign Assets Control (OFAC) issued a General License today authorizing certain transactions with the Russian Federal Security Service (known as “FSB”) related to seeking licenses, notifications, and other authorizations with the FSB for the importation, distribution, or use of information technology products in the Russian Federation. The General License follows President Obama’s December 29, 2016 executive order regarding malicious cyber-enabled activities that had placed the FSB on OFAC’s list of specially designated nationals. Because commercial importers of encryption hardware and software into Russia must apply for FSB authorization to import, U.S. companies doing business in Russia were restricted in their import activities following the U.S. government’s designation of FSB. OFAC’s General License now allows regulatory customs-related interaction with FSB with certain limitations (such as that fees to FSB may not exceed $5,000 in a calendar year). A copy of the OFAC General License is available here. FSB is also on the Commerce Department’s “Entity List”. As a result, a separate Commerce Department license may be required for submission to the FSB of EAR-controlled technology as part of the FSB licensing or notification process.
On January 27, 2017, President Trump issued an Executive Order (EO) titled “Protecting the Nation from Foreign Terrorist Entry into the United States.” The order is one of three immigration-related EOs the President issued between January 25 and January 27. This particular EO has implications for ALL international travel to the United States by foreign nationals. Please see our advisory for more information on international travel implications.
The US-China relationship is conceivably the most significant and complex bilateral relationship of the early 21st century, largely because China is the greatest US trading partner that is not a strategic ally. US-China competition regarding security and global influence can drive innovative solutions or hamper trade and other areas of cooperation. Please see our advisory for more as we start to explore some key recent developments and discuss the path ahead.
On January 17, 2017 the Department of Homeland Security (DHS) issued a final regulation meant to facilitate entrepreneurship and job creation in the United States. The new regulation permits qualified founders of start-up companies to enter the US to establish and grow their businesses. It aims to help overcome the barriers entrepreneurs face in the early stages of business development. This regulation is expected to take effect on July 17, 2017. For more information, please see our advisory.
The US Treasury Department’s Office of Foreign Assets Control (OFAC) published an amendment to the Sudanese Sanctions Regulations (SSR), 31 C.F.R. Part 538, on January 17, 2017. The amendment authorizes all transactions that were previously prohibited under the SSR, including transactions involving the Government of Sudan. OFAC’s SSR amendment comes as a broad general license at Section 538.540. Additionally, the US Commerce Department’s Bureau of Industry and Security (BIS) amended the Export Administration Regulations (EAR) to set out a favorable licensing policy for certain exports or reexports to Sudan of items meant to protect the safety of civil aviation or the safe operation of fixed-wing, commercial passenger aircraft, as well as certain items related to railroads. The lifting of OFAC’s sanctions against Sudan and the new BIS licensing policy will open important new opportunities for business in the country, and will considerably simplify non-commercial activity there. For more information, please see our advisory.