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.
Two entities, Xiaomi Corporation and Luokung Technology Corp., which were identified as CCMCs on January 14, 2021, were both granted preliminary injunctions by the District Court for the District of Columbia against enforcement of EO 13959, in March and May 2021, respectively. The Department of Defense has since informed the court that they support the court’s issuance of an order lifting the designation against Xiaomi.
The updated general license comes as the Biden administration undertakes a top-down review of the US government’s policies toward China, including EO 13959. We expect OFAC to issue an update to the Non-SDN CCMC List and/or provide additional clarity on the scope of EO 13959 between now and June 11, 2021.