DOJ Launches Procurement Collusion Strike Force

The Department of Justice (DOJ) recently announced the formation of the Procurement Collusion Strike Force, which will focus on one of the DOJ’s top priorities: protecting public funds from bid rigging and fraud. As DOJ’s Deputy Assistant Attorney General for Criminal Enforcement stated in a speech just before the announcement, it is DOJ’s view that public procurement is “particularly vulnerable to collusion” because the predictable and repetitive nature of the procurement process, and the availability of few qualified sellers for any given procurement render the system particularly susceptible to manipulation. The Strike Force, therefore, seeks to deter, detect, investigate and prosecute antitrust crimes, such as bid-rigging conspiracies and related fraudulent schemes, which undermine competition in government procurement, grant, and program funding.

For more information on the DOJ Procurement Collusion Strike Force, see our advisory.

DIY Justice?

In November 2016, a tram in Croydon, England derailed on a sharp bend and resulted in the death of seven passengers and injuries to a further 62.  The tram was travelling in excess of the speed limit when it derailed and the tram driver was initially arrested by British Transport Police on suspicion of manslaughter before subsequently being released on bail.  While a subsequent report from the Rail Accident Investigation Branch concluded that driver error was the cause of the accident, on 31 October 2019 the U.K. Crown Prosecution Service (CPS) declined to pursue charges against the driver.

According to the CPS, the evidence did not support prosecution of the driver for the offence of gross negligence manslaughter.  Additionally, the CPS declined to pursue charges of corporate manslaughter against Transport for London or the tram operator, Tram Operations Ltd.

Families of the victims have vowed to fight for further answers and commentators have noted that the decision of the CPS not to pursue any prosecution does not prevent a private prosecution being pursued by those affected by the crash. Continue Reading

Public Charge Health Insurance Mandate and Self-Sufficiency Declarations Enjoined

On November 2, the Trump Administration issued a 28-day Temporary Restraining Order (TRO) in an effort to revamp “public charge” financial immigration provisions. The TRO halts a Presidential Proclamation conditioning immigration eligibility upon health insurance coverage. The Proclamation is part of an effort to restrict legal US immigration through reinterpretation of long-established provisions which tie financial self-sufficiency and/or financial support to immigration eligibility. Under these restrictions, individuals who are likely to be a financial burden to the US government are inadmissible to the US and, accordingly, not permitted to immigrate.

For more information on the scope and status of the efforts to control US immigration levels through changes to the public charge provisions, see our advisory.

EU Issues Guidance on Internal Compliance Programs for Dual-Use Trade Controls

The European Commission recently published a non-binding Guidance with recommendations on internal compliance programs for dual-use trade controls under the EU Dual-Use Regulation. The Guidance aims to provide a framework to help exporters identify, manage and mitigate risks associated with dual-use trade controls and to ensure compliance with the relevant EU and national laws and regulations.

For more information on the EU Guidance on internal compliance programs for dual-use trade controls, see our advisory.

 

The Speed of (In)Justice

Earlier this year, a committee of the UK House of Lords criticized the UK Serious Fraud Office (SFO) and Crown Prosecution Service (CPS) for the slow pace of its investigations, noting also that “the evidence we have received suggests that there are excessive delays even in the majority of more straightforward domestic bribery investigations”.  The Committee implored the SFO and CPS to do “everything in their power” to ensure cases progress as quickly as possible.  The HM Crown Prosecution Service Inspectorate (HMCPSI) recently picked up on this issue again, noting that the SFO has at times struggled to appropriately staff cases and process digital materials.

An SFO investigation can take several years to complete (with periods in excess of 3 years not being unusual), with long periods of time where the subject under investigation receives no updates and is in a period of legal limbo.  This says nothing of the immense stress that an investigation can cause and the disruption to daily life including damaged reputations, restrictions on travel and restricted access to assets.

Figures recently published by the UK Ministry of Justice (MOJ) show that the slow pace of investigations by the SFO and CPS also infects other UK law enforcement agencies.  Figures for the first quarter of 2019 showed that a contested Financial Conduct Authority (FCA) case took almost six years to reach a resolution.

Continue Reading

World Bank Highlights Continued Enforcement Focus in Second Annual Sanctions System Report

The World Bank Group (the Bank) published a joint Sanctions System Annual Report for fiscal year 2019 on October 10. This report, which reflects on the Sanctions System’s growth since its implementation twenty years ago, provides an overview of activities undertaken by the Bank’s Integrity Vice Presidency (INT), Office of Suspension and Debarment (OSD), and the Sanctions Board.

For more information on the 2019 Sanctions System Annual Report, see our advisory.

 

U.S. Regulators Issue Joint Statement on AML Compliance Involving Digital Assets

On October 11, the leaders of the Commodities Futures Trading Commission (CFTC), Financial Crimes Enforcement Network (FinCEN), and the Securities and Exchange Commission (SEC) issued a joint statement regarding anti-money laundering (AML) compliance for persons engaged in certain activities involving digital assets.  While the statement largely reaffirms known agency guidance and existing regulations, it is noteworthy for a number of reasons.

Continue Reading

More Sanctions on Iran’s Central Bank – What’s New This Time?

On September 20, 2019, OFAC announced the designation of the Central Bank of Iran (“CBI”), the National Development Fund of Iran (Iran’s sovereign wealth fund), and an Iran-based company allegedly involved in concealing financial transactions on behalf of Iran’s military.  These designations were made under Executive Order 13224, as recently amended, which is OFAC’s main counterterrorism sanctions authority.  OFAC said in its press release that “Iran’s Central Bank has provided billions of dollars to the Islamic Revolutionary Guards Corps (IRGC), its Qods Force (IRGC-QF) and its terrorist proxy, Hizballah.”  These designations were announced in response to aerial strikes against oil facilities in Saudi Arabia, although a designation of the CBI may not come as a complete surprise given the multiple U.S. sanctions designations in the past several months of senior CBI officials including the CBI Governor for alleged involvement in financial support to the IRGC-QF and Hizballah.  President Trump tweeted that, in response to the strikes in Saudi Arabia, he had directed Secretary of the Treasury Steven Mnuchin “to substantially increase Sanctions on the country of Iran.”  Secretary of State Mike Pompeo called the attacks an “act of war.”   At a press event President Trump characterized these sanctions as “[t]he highest sanctions ever imposed on a country. We’ve never done it to this level.”  Secretary of the Treasury Steven Mnuchin specified that “this is very big — we’ve now cut off all source of funds to Iran.”

So what do these new sanctions against the CBI actually do?  To be clear, the CBI was previously subject to U.S. sanctions, including secondary sanctions that apply to non-U.S. persons.  However, these previous sanctions against the CBI were imposed only under OFAC’s authority targeting parties associated with the Government of Iran.  Now an additional layer of sanctions have been imposed on the CBI – this time under OFAC’s counterterrorism authority in EO 13224.  The conventional wisdom seems to be that this added layer of counterterrorism sanctions against the CBI will now make it unlawful or sanctionable to deliver humanitarian goods to Iran.  In practice, that could be the way things develop, as this additional sanctions designation against the CBI could heighten the already considerable level of anxiety many international banks face in considering whether to engage with Iran, by creating yet more complexity and uncertainty.  However, it is worth examining more closely the extent to which U.S. law still contemplates lawful humanitarian trade with Iran in agricultural commodities, medicine and medical devices.

Continue Reading

OFAC’s Case Against British Arab Commercial Bank and Offshore Use of the US Dollar

On September 17, 2019, OFAC released a settlement with UK-based British Arab Commercial Bank (BACB) in a case regarding offshore use of the dollar, demonstrating how challenging and complex it can be to assess whether offshore transactions in US dollars (USD) that involve US sanctions targets are in all respects outside of OFAC’s enforcement jurisdiction. This case indicates that OFAC expects non-US institutions like BACB to look comprehensively at their USD funding arrangements, including investigating whether other non-US banking partners are themselves transacting with the US financial system, prior to concluding that OFAC’s jurisdiction does not apply. When transacting in USD with US-sanctioned countries (or sanctioned parties), even if those transactions themselves do not touch the US financial system, this case shows that banks may be at risk if they limit their diligence into the provenance of such offshore USD pools and fail to confirm that the funds did not pass through the United States. This is a complex and novel case, but one worthy of careful analysis by non-US banks engaged in potentially higher risk transactions in USD that rely on a determination that the arrangements are outside of OFAC’s jurisdiction.

For more information, please see our advisory.

US to Impose Tariffs on $7.5bn of European Goods

On October 2, 2019, an arbitrator of the World Trade Organization (WTO) issued a decision on the level of countermeasures the United States (US) is authorized to impose to offset European Union (EU) subsidies in support of aircraft manufacturer Airbus. The arbitral award concluded the nearly 15-year-old dispute between the two parties, in which the United States challenged various subsidies provided by the European Communities and the governments of France, Germany, Spain, and the United Kingdom to Airbus. The award authorized the United States to impose duties of up to 100% on $7.5bn worth of goods from the European Union per year – less than the $10.5bn requested by the United States, but still the largest award granted in the history of the WTO.

On the same day, the Office of the United States Trade Representative (USTR) announced the list of goods on which duties will be assessed and that the duties will be imposed effective October 18, 2019. Although the list targets principally goods from France, Germany, Spain, and the United Kingdom, merchandise from every EU member country is affected. The list includes products such as French wine, British sweaters and whiskies, Spanish olives, German coffee and industrial goods, and a range of agricultural products from across the EU member states. Notably, aircraft parts will not be subject to the additional duties. A 10% duty will be applied to large civil aircraft, the subject of the dispute, while a 25% duty will be applied to all other goods listed – far less than the 100% duty rate authorized by the arbitral award. The list is expected to be published in the Federal Register in the coming days.

Although the United States can impose the countermeasures as soon as they are authorized by the WTO’s Dispute Settlement Body (which is likely to occur by mid-October), the question of whether the EU subsidies have, in fact, been removed, which is currently being examined by a WTO compliance panel, could cause the additional duties to be short-lived. Should the compliance panel determine that the EU has appropriately removed the subsidies in question, the United States would be forced to remove the countermeasures.

The European Union’s parallel case against US subsidies in support of Boeing is still underway, and is expected to conclude in the first half of 2020. A favorable outcome in the case for the European Union would permit the EU to impose its own set of duties on US goods at this time. Government officials from the US and the EU have expressed some interest in a negotiated settlement of the Boeing – Airbus subsidization issue, though to date those negotiations have not been fruitful.

LexBlog