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Brian Egan

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Brian Egan advises on a number of international legal issues that affect US and foreign clients, including economic sanctions, export controls, and anti-money laundering programs; national security trade and investment reviews; international arbitration and other cross-border disputes; international cybersecurity and data privacy; and issues of public international law. He has worked in various senior legal positions for the US government, giving him keen insight into domestic and international legal matters that influence US government national security and foreign relations policies and programs. Before joining Steptoe, Brian served as the Legal Adviser to the US Department of State, the Legal Adviser to the National Security Council, Deputy White House Counsel, and Assistant General Counsel for Enforcement and Intelligence with the US Department of the Treasury. Brian has regularly appeared in public fora to speak on international legal issues, including testifying before Congress, public speaking engagements, and panel presentations.

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On September 24, 2021, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued General License 14 (GL-14) and General License 15 (GL-15), authorizing certain types of humanitarian transactions involving Afghanistan that could relate to the Taliban or the Haqqani Network that would otherwise be prohibited by the Global Terrorism Sanctions Regulations (GTSR), the Foreign Terrorist Organizations Sanctions Regulations (FTOSR), or Executive Order (EO) 13224.

Both the Taliban and the Haqqani Network are designated by OFAC as Specially Designated Global Terrorists (SDGTs) pursuant to EO 13224. The Haqqani Network is also designated by the US Department of State as a Foreign Terrorist Organization (FTO) under section 219 of the Immigration and Nationality Act.  Furthermore, several of the individual members of the Taliban and the Haqqani Network are designated by OFAC as SDGTs.

These groups have recently taken control of, and appointed officials (including at least one individual designated as an SDGT) to administer, the Government of Afghanistan and its associated agencies and organizations.  As a result, there are concerns that interactions with the Government of Afghanistan could be prohibited to the extent they involve a person subject to US sanctions or expose parties to broader risks under US counter-terrorism financing laws.Continue Reading OFAC’s New Afghanistan-Related Humanitarian Licenses: Opportunities and Challenges

On June 9, 2021, the White House issued a new Executive Order (EO) that revokes three Executive Orders issued in 2020 and early 2021 that were aimed specifically at TikTok, WeChat, and eight other China-linked communications and financial technology software applications.

In place of these EOs, the new EO, “Protecting Americans’ Sensitive Data from Foreign Adversaries,” builds on steps the US Commerce Department has already taken under EO 13873 of May 15, 2019, to protect the information and communications technology and services (ICTS) supply chain against threats from China and other identified foreign adversaries.

As a result of the new EO, the US government will further analyze the risks arising from the use of applications such as TikTok and WeChat – including risks related to the security of Americans’ sensitive data — and could take further steps to mitigate those risks, either through existing ICTS regulations or through additional executive and legislative actions.Continue Reading Biden Administration Revokes TikTok and WeChat Executive Orders, Revises Framework on Security Threats from Foreign Apps

On June 3, 2021, the White House issued an Executive Order (EO) amending EO 13959 of November 12, 2020, which imposed restrictions on US persons transacting in publicly traded securities of companies identified by the US Department of Defense (DoD) as “Communist Chinese military companies” (CCMCs). The new EO, “Addressing the Threat from Securities Investments that Finance Certain Companies of the People’s Republic of China,” reformulates and recasts the prior EO, by providing important clarifications on the scope of the restrictions, revising the criteria for designating Chinese companies under the EO, and shifting responsibility for designations from the DoD to the US Treasury Department.  As a result of these changes, the EO creates a securities-related sanctions regime for so-called “Chinese Military-Industrial Complex Companies” that is effectively separated from the CCMC list maintained by DoD pursuant to Section 1237 of the Fiscal Year 1999 National Defense Authorization Act (NDAA) as amended.  The new EO takes effect on August 2, 2021, at 12:01 a.m. eastern daylight time.

In conjunction with the new EO, the US Treasury Department’s Office of Foreign Assets Control (OFAC) published several new and revised Frequently Asked Questions (FAQs) explaining the new EO and addressing questions raised by the securities industry since the issuance of EO 13959 in November 2020. Finally, as evidence that the Biden Administration is pursuing a comprehensive effort across the relevant agencies, the DoD released for the first time a “Chinese Military Companies” (CMC) list under Section 1260H of the Fiscal Year 2021 NDAA.Continue Reading White House Issues Amended Executive Order on Chinese Military-Industrial Securities

On May 18, 2021, the US Treasury Department’s Office of Foreign Assets Control (OFAC) issued an updated general license under Executive Order (EO) 13959 authorizing US persons to transact in publicly traded securities of entities whose names “closely match” the name of any company previously identified as a Communist Chinese military company (CCMC). The general license (now called General License No. 1B), which was due to expire on May 27, 2021, now expires on June 11, 2021.

For the time being, the restrictions under EO 13959 apply only to entities whose names appear on OFAC’s Non-SDN CCMC List as well as seven entities who are yet to be formally added to OFAC’s Non-SDN CCMC List but were identified by the Department of Defense on January 14, 2021.Continue Reading OFAC Extends General License for “Close Name Matches” under Executive Order 13959 as Biden Administration Reviews Communist Chinese Military Company Sanctions

On April 19, 2021, OFAC effectively reactivated longstanding sanctions against nine Belarussian companies and their subsidiaries, revoking a general license that had authorized transactions involving those entities since 2015.  These sanctions may impact a significant number of Belarussian companies, as several of the listed entities are large conglomerates.

US sanctions on Belarus were first imposed in 2006 under Executive Order 13405, with similar EU sanctions beginning in 2004, in response to concerns about the electoral process and human rights abuses in Belarus.  However, in 2015, OFAC had issued a general license broadly authorizing transactions with these nine companies and their subsidiaries, but without actually lifting the underlying sanctions.  This limited and conditional sanctions relief in 2015 was part of a coordinated US/EU policy brought about by an improved political and human rights climate in Belarus at the time.  Until now, this general license had regularly been extended since it was first issued in 2015 (as we previously discussed, along with a more detailed history of this sanctions program).Continue Reading OFAC Reactivates Sanctions against Belarussian Companies and Provides 45-day Wind Down Period

On February 18, 2021, the US Department of the Treasury’s Office of Foreign Assets control (OFAC) announced a $507,375 settlement with BitPay, Inc. (BitPay).  This civil settlement resolved apparent violations of multiple sanctions programs related to digital currency transactions, and is the second OFAC enforcement case brought against a business in the blockchain industry.  This case follows OFAC’s December 2020 civil enforcement action against another blockchain industry company, BitGo, Inc. (BitGo), for alleged violations of multiple US sanctions programs related to digital currency transactions.  See our prior blog post on the BitGo action here.

BitPay, based in Atlanta, Georgia, offers a payment processing solution for merchants to accept digital currency as payment for goods and services.  The apparent sanctions violations relate to digital currency transactions on the BitPay platform between individuals located in Cuba, North Korea, Iran, Sudan, Syria, and the Crimea region of Ukraine (annexed by Russia) and merchants in the United States and elsewhere.  OFAC acknowledged that BitPay screened its customers, the merchants, against US sanctions lists, but stated that BitPay had reason to know that purchasers dealing with the merchants were located in comprehensively sanctioned jurisdictions because the company had location information, including Internet Protocol (IP) address data, about those persons.  This case was not voluntarily disclosed, but OFAC found that the violations were not egregious.

According to OFAC, BitPay allowed persons in comprehensively sanctioned jurisdictions to conduct approximately $129,000 worth of digital currency transactions with BitPay’s merchant customers.  As described in OFAC’s enforcement release, between approximately June 10, 2013, and September 16, 2018, BitPay processed 2,102 transactions from individuals with IP addresses located in the sanctioned jurisdictions.  The transactions related to BitPay’s payment processing service.  BitPay allegedly received digital currency payments on behalf of its merchant customers from those merchants’ buyers, who were located in sanctioned jurisdictions.  BitPay then converted the digital currency into fiat, and then relayed that currency to its merchant customers.Continue Reading OFAC Announces Second Enforcement Action Targeting a Digital Asset Company

Peter Jeydel and Brian Egan from Steptoe’s Economic Sanctions group published an article in the American Society of International Law’s “ASIL Insights” on the recent decisions by two US District Courts to bar the U.S. government temporarily from restricting transactions with Chinese mobile app TikTok under the International Emergency Economic Powers Act (IEEPA). As they…

On January 15, 2021, the Financial Crimes Enforcement Network (“FinCEN”) announced that Capital One, National Association (“CONA”) had been fined $390,000,000 for “willful” and “negligent” violations of the Bank Secrecy Act (“BSA”) and its anti-money laundering implementing regulations. CONA is a wholly owned subsidiary of Capital One Financial Corporation (“COFC”).  As part of the agreement, CONA will pay $290,000,000 to the U.S. Department of Treasury (it previously paid $100,000,000 to The Office of the Comptroller of the Currency (“OCC”) in 2018 for similar violations).

The fine, which was one of the larger fines in FinCEN’s history, was imposed even though CONA had taken substantial remedial measures including enhancing its anti-money laundering (“AML”) budget, voluntarily commencing an extensive lookback into years of potentially suspicious transactions, and voluntarily exiting the cash checking business, which was the source of its violations.

From 2008 to 2014, CONA owned and operated the Cash Checking Group (“CCG”) which was a check cashing service for small businesses in the New York- and New Jersey-area.  According to FinCEN, during this time, CONA and CCG’s BSA violations were “significant” and “willful.”Continue Reading FinCEN Announces $390,000,000 Civil Penalty Against Capital One for Bank Secrecy Act Violations

On January 19, 2021, President Trump issued Executive Order (EO) 13984, “Taking Additional Steps To Address the National Emergency With Respect to Significant Malicious Cyber-Enabled Activities” (86 Fed. Reg. 6,837 (Jan. 25, 2021)), taking further action under the national emergency declared by President Obama in Executive Order 13694 of April 1, 2015.  EO 13984 directs the US Department of Commerce (Commerce) to: (1) promulgate know-your-customer (KYC)-type identification and recordkeeping obligations on US “Infrastructure as a Service” (IaaS) providers engaging in foreign transactions, and (2) consult with other US government agencies to impose “special measures,” i.e., restrictions, on foreign jurisdictions and persons, i.e., actors, determined to be using US IaaS to engage in significant malicious cyber activities.

The EO describes IaaS as “products to provide persons the ability to run software and store data on servers offered for rent or lease without responsibility for the maintenance and operating costs of those servers,” and includes a lengthy definition of different types of IaaS products that are covered by the EO. Although some reports have focused on the impact that EO 13984 may have on cloud service providers, the EO’s broad definition for IaaS could sweep in other information technology service providers operating in the US.

The EO is not effective immediately, and may not go into effect for several months or longer.  The EO directs Commerce “to propose for notice and comment” regulations within 180 days implementing the KYC and “special measures” directives described above.  In addition, EO 13984 was issued by President Trump at the very end of his administration, and it is possible that the Biden Administration will delay implementation for a longer period of time as it reviews the legal and policy implications of the EO.Continue Reading US Infrastructure as a Service Providers (IaaS) – New Know-Your-Customer Requirements?

On January 14, 2021, the White House issued an Executive Order (EO) to amend EO 13959 of November 12, 2020, which prohibits US persons from transacting in securities related to so-called “Communist Chinese military companies” (CCMCs).

The amended EO 13959 makes clear that US persons must divest their holdings in such securities within designated wind-down periods, after which possessing the securities will also be prohibited. For CCMCs identified in the Annex to EO 13959, on November 12, 2020, the wind-down period will end on November 11, 2021. The amended EO also clarifies that prohibited transactions include both “purchase for value” and “sales” of covered securities.

Meanwhile, the US Department of Defense (DoD) identified an additional nine entities as CCMCs, bringing the total number to 44. Restrictions under EO 13959 will take effect with respect to the newly named CCMCs after 60 days, on March 15, 2021.

Shortly thereafter, the US Treasury Department’s Office of Foreign Assets Control (OFAC) published four new Frequently Asked Questions (FAQs) and General License No. 2 (GL-2) authorizing securities exchanges operated by US persons to engage in transactions involving covered securities through the relevant wind-down periods.Continue Reading Updated: Amended Executive Order Makes Clear US Persons Must Divest Securities of Chinese Military Companies as Defense Department Identifies Nine More Entities