On August 5, President Trump issued executive order (EO) 13884 expanding sanctions in Venezuela by blocking the property of the Government of Venezuela as a whole. In connection with this step, OFAC issued 12 amended and 13 new general licenses and published interpretive guidance pertaining to the provision of humanitarian assistance and support for the Venezuelan people. According to an OFAC press release, the new EO and general licenses “allow U.S. persons to continue to provide humanitarian support to the Venezuelan people” while putting pressure on the Maduro regime. Continue Reading
US Sanctions Chinese Company for Buying Oil from Iran
On July 22, 2019, Secretary of State Mike Pompeo announced that the US Government would impose sanctions on Chinese state-owned oil trading company Zhuhai Zhenrong Company Limited and its chief executive Youmin Li for knowingly purchasing or acquiring oil from Iran. Zhuhai Zhenrong was previously sanctioned in 2012 due to alleged dealings with Iran, but those sanctions were far less extensive, and were removed in 2016 pursuant to the Iran nuclear deal. This action announced by Secretary Pompeo involves the addition of these parties to the Specially Designated Nationals (SDN) list, as a result of which any transactions or dealings involving US persons with these parties or their “interests in property” are prohibited, and US persons are required to freeze any such property pursuant to specific rules promulgated by the US Treasury Department’s Office of Foreign Assets Control (OFAC). In addition, Youmin Li is subject to a US visa ban.
According to the Department of State, these sanctions resulted from Zhuhai Zhenrong’s purchase or acquisition of crude oil from Iran after the expiration of China’s Significant Reduction Exception (SRE), which we have previously discussed and which allowed China to continue buying oil from Iran until May 2, 2019 without the risk of sanctions for companies and financial institutions involved in that trade. These sanctions were imposed under Executive Order (EO) 13846. Section 3(a)(ii) of EO 13846 authorizes the imposition of different types of sanctions, ranging from less severe measures to the most severe measure of designation on the SDN list, for persons determined to have, “on or after November 5, 2018, knowingly engaged in a significant transaction for the purchase, acquisition, sale, transport, or marketing of petroleum or petroleum products from Iran.” Section 3 also authorizes sanctions on a person determined to be a “successor entity to,” or, if there is some knowledge or participation in the relevant activity, a person that “owns or controls” or “is owned or controlled by or under common ownership or control with,” a person designated under Section 3 of EO 13846. Continue Reading
E-2 Investor Visa Webinar
On June 12, 2019, Steptoe’s immigration practice offered a webinar on the recent E-2 treaty investor visas for Israeli nationals. The E-2 investor visa is the culmination of lengthy efforts by both the United States and Israel, allowing Israelis to obtain a non-immigrant visa when they make business investments in the US.
If you missed the webinar, you can request a recording here.
For more information on the E-2 Investor Visas, please see our previous blog post.
E-2 Investor Visas: What Israeli Nationals Need to Know
On June 12, 2019, Steptoe will offer a complimentary webinar on the recent E-2 investor visas for Israeli nationals. The E-2 visa is an extremely valuable and long-awaited US immigration option for Israelis and is the culmination of years of effort by both the United States and Israel.
For more information and to register for the webinar, please click here.
If you are unable to participate live but would like to receive a link to a recording of the webinar, please submit a request here.
To read more about the E-2 visa, please see our previous blog post.
Surprisingly Not Surprising China’s Announcement of “Unreliable Entities List” Regime
At a press conference on May 31, 2019, China’s Ministry of Commerce (MOFCOM) announced that China is going to establish an “unreliable entities list,” to which “foreign entities or individuals that do not obey market rules, deviate from the spirit of contracts, blockade or stop supplying Chinese companies for non-commercial reasons, and/or seriously damage the legitimate rights and interests of Chinese companies” will be added.[1]
MOFCOM’s announcement does not explicitly refer to the US Department of Commerce’s recent additions of Chinese entities to its Entity List, but the language it used at its press conference closely echoes the US Department of Commerce’s press statements for some of the Entity List designations. For example, regarding the background for establishing the “unreliable entities list,” MOFCOM has stated that some foreign entities who have stopped supplying Chinese companies have “endangered China’s national security and interests and threated the global industrial chain and supply chain security.” Continue Reading
New EU Framework to Target Malicious Cyber-Attacks from Outside the Union
On 17 May 2019, the Council of the EU established a framework against external cyber-attacks which constitute an external threat to the EU or its Member States. The new rules, which reportedly follow a diplomatic push by the UK and the Netherlands, provide for a strong legal instrument to deter and respond to cyber-attacks against the EU or its Member States. The new framework enables the EU for the first time to impose sanctions against persons, entities and bodies because of cyber-attacks. While no names have been added to the sanctions list yet, the new mechanism is expected to allow the EU to move quickly in the future. However, the new framework does not help companies that are under attack. Victims of cyber-attacks are on their own when it comes to fighting off a cyber-attack.
Sanctions under the new framework are country neutral. In other words, they do not target specific third countries but specific malicious actors. Member States are free to make their own determinations with respect to the attribution of responsibility for cyber-attacks to third countries but such determinations have no impact on the EU sanctions. Continue Reading
Commerce Department Catches Up with Export Controls on Venezuela
After months of escalating US economic sanctions on Venezuela and its international partners, the US Commerce Department’s Bureau of Industry and Security (BIS) is implementing major changes to US export controls on Venezuela that will significantly restrict remaining trade between the US (and third countries) and Venezuela in US export-controlled products (including technology transfers). These regulatory changes will also impose licensing requirements in many cases for the employment of or other interactions with Venezuelan nationals in the United States and third countries that need access to export-controlled technology.
Effective May 24, 2019, BIS is amending the Export Administration Regulations (EAR) to make the following changes:
- Remove Venezuela from Country Group B (countries eligible for favorable treatment for certain exports of national security-controlled items);
- Add Venezuela to Country Group D:1 (countries of national security concern);
- Add Venezuela to Country Group D:2 (countries of nuclear proliferation concern);
- Add Venezuela to Country Group D:3 (countries of chemical and biological weapons proliferation concern); and
- Add Venezuela to Country Group D:4 (countries of missile technology proliferation concern).
FinCEN Issues New Advisory on BSA/AML Obligations Related to Virtual Currency
On May 9, 2019, the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) published long-awaited guidance addressing how FinCEN regulations apply to what the agency calls “convertible virtual currency” (CVC), which covers most types of cryptocurrencies and crypto-tokens. The guidance focuses on:
- Platforms engaged in exchange transactions involving securities, commodities, or futures contracts and fiat currency, CVC, or other value that substitute for currency;
- Natural persons providing CVC money transmission as person-to-person (P2P) exchangers;
- CVC wallets (differentiating among hosted, unhosted, and multiple signature wallet providers);
- CVC provided through electronic terminals, kiosks, or automated teller machines;
- CVC services provided through decentralized (software) applications (DApps), including anonymizing services;
- Payment processing services;
- Internet casinos;
- Initial Coin Offerings (ICOs) and the status of creators of CVC;
- DApp developers, users conducting financial activities, and DApps conducting CVC transactions; and
- Mining pools and cloud miners.
DOJ Revamps Corporate Compliance Program Guidance, Broadens Application
The US Department of Justice (DOJ) Criminal Division announced the publication of updated Guidance on Evaluating Corporate Compliance Programs (2019 Guidance) on April 30, 2019. As discussed in our 2017 FCPA Mid-Year Review, the original guidance, published on February 8, 2017 (2017 Guidance), essentially set forth a list of 11 topics and over 100 detailed questions that the Fraud Section of the DOJ’s Criminal Division stated it would consider when evaluating the effectiveness of a company’s compliance program in the context of corporate criminal investigations. The DOJ’s evaluation of the effectiveness of a company’s compliance program has long been listed as a factor relevant to charging decisions under the Principles of Federal Prosecution of Business Organizations in the US Attorney’s Manual (now known as the Justice Manual), as well as to a company’s eligibility to receive a reduction in criminal fines calculated under the US Sentencing Guidelines (USSG); it is also important to the DOJ’s assessment of whether a monitor is warranted.
In substance, the principles set forth in the 2019 Guidance do not significantly depart from prior available compliance program guidance, but the 2019 Guidance reorganizes and expands in some respects upon the DOJ’s 2017 Guidance. Importantly, while the 2017 Guidance applied only to the Criminal Division’s Fraud Section, in which the FCPA Unit is housed, the 2019 Guidance appears to apply to the Criminal Division more broadly. In this and other respects, the 2019 Guidance appears to signal that the DOJ’s assessment of corporate compliance programs will take on added importance in the resolution of a wider array of corporate criminal matters moving forward.
For more information, please see our advisory.
Sweeping New Metals Sector Sanctions on Iran with 90-Day Wind-Down Period
President Trump issued an executive order (EO) on May 8, 2019 imposing broad new sanctions against Iran’s metals industries that go beyond pre-existing sanctions on that sector. President Trump issued a statement about the EO, which came on the one year anniversary of the US withdrawal from the Iran nuclear deal, calling Iran’s iron, steel, aluminum, and copper sectors “the regime’s largest non-petroleum-related sources of export revenue,” said to constitute 10% of Iran’s “export economy.” The President said this EO “puts other nations on notice that allowing Iranian steel and other metals into your ports will no longer be tolerated.” But the scope of the EO is actually quite a bit broader than that – it puts within the crosshairs of US sanctions enforcement not just third-country importers of Iranian metals products, but also exporters in Europe, Asia and elsewhere that provide raw materials and other inputs, along with industrial machinery and other capital goods used in the production of Iranian metals. As usual, banks, insurers, shippers, traders, investors and other intermediaries and stakeholders in these industries would also be at risk. It appears that the Trump Administration is continuing along a path of rising escalation, with President Trump noting in his statement that “Tehran can expect further actions unless it fundamentally alters its conduct.”
The EO provides for any person to be listed as a Specially Designated National (SDN) if they are determined: Continue Reading
