Ali Burney

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Overview

On August 9, 2023, the White House issued a long-awaited Executive Order, entitled Addressing United States Investments in Certain National Security Technologies and Products in Countries of Concern (“EO 14105”). The EO establishes a new national security regulatory regime, implemented principally by the US Department of the Treasury (“Treasury”), in consultation with other federal agencies including the US Department of Commerce, that will require the notification of, as well as prohibit, certain investment activity by US persons in named “countries of concern,” currently China.

EO 14105 does not restrict all US person investment activity regarding China, and is tailored to focus on specific products, technologies, and capabilities involving: (1) semiconductors and microelectronics (including advanced integrated circuits and supercomputers); (2) quantum information technologies (e.g., computers, sensors, networking, and systems); and (3) certain artificial intelligence systems (e.g., with certain military, intelligence, or surveillance end uses).…

Continue Reading Biden Administration Announces New Outbound Investment Regime Targeting China

On July 26, 2023, the US Department of Commerce’s Bureau of Industry and Security (BIS), the US Department of the Treasury’s Office of Foreign Assets Control (OFAC), and the US Department of Justice (DOJ) issued a joint compliance note (the Note) focusing on the voluntary self-disclosure (VSD) policies that apply to US sanctions, export controls, and other national security laws. The Note is the second collective effort by the three agencies to inform the private sector about civil and criminal enforcement trends, as well as to provide guidance to the business community and all persons regarding compliance with US sanctions and export laws. The first joint note, which focused on combatting third-party intermediaries used to evade Russia-related US sanctions and divert export-controlled items that are contributing to Russia’s foreign harmful activities, was issued on March 2, 2023.

The Note does not change the existing VSD policies of the three agencies, but highlights the benefits of their existing VSD policies to incentivize companies to promptly disclose and remediate.  Likewise, the Note highlights the risks companies face, in at least some instances, should they choose not to disclose.

The Note also encourages whistleblowers to report suspected violations of sanctions and anti-money laundering laws to the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN), for which persons that submit whistleblower tips may be awarded up to 10% to 30% of the monetary penalty collected for successful US government enforcement actions.…

Continue Reading Commerce, Treasury, and Justice Issue Joint Compliance Note on Voluntary Self-Disclosure

On February 24, 2023, the US government announced a range of new export controls, sanctions, and tariffs to coincide with the first anniversary of Russia’s ongoing war against Ukraine. These actions by the US Department of Commerce, Bureau of Industry and Security (BIS), the US Department of the Treasury, Office of Foreign Assets Control (OFAC), the US Department of State, and the White House reflect the continued efforts of the US – in coordination with its allies – to impose costs on Russia for the war.

Each successive round of US export controls and sanctions presents new compliance challenges, against the backdrop of heightened enforcement risk resulting from aggressive, well-coordinated US government actions. US and non-US entities and individuals who engage in transactions related to Russia or Belarus should pay close attention to this complex and evolving regulatory framework. Additionally, entities and individuals exporting to Iran should take note of the expanded scope of the US Export Administration Regulations (EAR) under a new Iran Foreign Direct Product (FDP) Rule.…

Continue Reading US Imposes Additional Export Controls, Sanctions, and Tariffs targeting Russia, Belarus, and Iran On First Anniversary of Russia’s War Against Ukraine

In this blog post, we update our earlier post regarding OFAC’s determination and guidance on implementing the price cap policy for Russian crude oil (see link), by incorporating the recently released determinations regarding the price cap policy for Russian petroleum products and the updated guidance on implementing the price cap policy for Russian-origin crude oil and petroleum products.

On November 22, 2022, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) published a determination targeting Russian-origin crude oil pursuant to section 1(a)(ii) of Executive Order 14071 (EO 14071), and guidance on the implementation of the price cap policy for Russian-origin crude oil. These followed OFAC’s preliminary guidance released on September 9 (see Steptoe’s earlier blog post here).

Further, on February 3, 2023, OFAC published a determination targeting Russian-origin petroleum products pursuant to section 1(a)(ii) of EO 14071, and updated guidance on the implementation of the price cap policy for Russian-origin crude oil and petroleum products (the Updated Guidance).

The two determinations (the Determinations) set forth the categories of services relating to the maritime transport of Russian-origin crude oil and petroleum products (Covered Services) that US persons are prohibited from providing directly or indirectly to a person located in Russia, unless these items are purchased at or below relevant price cap. The Updated Guidance addresses issues relating to the implementation of the price cap policy for Russian-origin crude oil and petroleum products.…

Continue Reading [UPDATED] OFAC Publishes Determinations and Guidance on Implementing the Price Cap Policy for Russian Crude Oil and Petroleum Products

In this blog post, we provide an overview of the updates to the Criminal Division’s Corporate Enforcement Policy (CEP) and discuss the impact of these changes on the corporate enforcement policies for criminal violations of sanctions and export controls, criminal violations of antitrust laws, and civil violations of the False Claim Act.

On January 17, 2023, Assistant Attorney General Kenneth A. Polite, Jr. announced changes to the Department of Justice’s (“DOJ”) Corporate Enforcement Policy (“CEP”), including applying the most recent FCPA Corporate Enforcement Policy to all corporate criminal cases handled by the DOJ’s Criminal Division. The FCPA Corporate Enforcement Policy, codified in § 9-47.120 of the Justice Manual, provides that if a company voluntarily self-discloses, fully cooperates, and timely and appropriately remediates, there is a presumption of declination absent certain “aggravating circumstances involving the seriousness of the offense or the nature of the offender.” The clear goal of this and other recent pronouncements from senior DOJ leadership is to tip the scales in favor of early disclosure by setting forth concrete incentives for corporations that discover potential criminal violations. 

Importantly, the CEP now explicitly states that a company presenting “aggravating circumstances,”1 while not eligible for a presumption of declination, may still obtain a declination if (1) the company had an effective compliance program and system of internal accounting controls at the time of the alleged misconduct, (2) the voluntary self-disclosure was made “immediately” upon the company becoming aware of the allegation of misconduct, and (3) the company provided “extraordinary cooperation” to DOJ investigators. For companies that do not receive a declination but do receive credit, the CEP also increases the available discounts from fines under the U.S. Sentencing Guidelines (“USSG”), both for companies that voluntarily self-disclose and those that do not.

Although the updated CEP heavily emphasizes the benefits of voluntary self-disclosure and cooperation, its implications for companies will largely depend upon the Criminal Division’s application of the policy, including through DOJ prosecutors’ interpretation of important, undefined terms such as “immediate” disclosure and “extraordinary” cooperation.

Moreover, although the CEP applies to the entire Criminal Division, it could potentially have ripple effects on the corporate enforcement policies in place in other DOJ components. For example, the CEP does not revoke or alter the DOJ National Security Division’s (“NSD”) Export Control and Sanctions Enforcement Policy for Business Organizations (the “Export Control and Sanctions Enforcement Policy”). That NSD policy is generally consistent with the CEP, but it does not spell out affirmatively, as the new Criminal Division policy does, the circumstances that a company must demonstrate to be considered for a non-prosecution agreement (“NPA”) rather than a criminal resolution in the face of aggravating factors. Similarly, the Antitrust Division and Civil Division have their own corporate enforcement policies in place, each of which has aspects uniquely tailored to those respective regimes. It therefore remains to be seen whether these other Divisions within DOJ will adjust their corporate enforcement policies to align more precisely with the CEP.  …

Continue Reading DOJ’s New Corporate Enforcement Policy for the Criminal Division and its Impact on Cases handled by other Divisions

On December 20, 2022, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued or amended general licenses (GLs) and FAQs to implement United Nations Security Council Resolution (UNSCR) 2664, which establishes humanitarian carveouts across UN sanctions regimes. The development of UNSCR 2664 was co-led by the United States and Ireland, and the Security Council adopted the Resolution on December 9, 2022. The amendments to OFAC’s regulations are set forth in OFAC’s Final Rule published in the Federal Register (see here and here).…

Continue Reading US Treasury Implements Humanitarian Authorizations Across Sanctions Programs to Comply with UN Resolution

On January 5, 2023, President Biden signed into law the Protecting American Intellectual Property Act of 2022 (the Act). The Act requires periodic reports to Congress identifying any “foreign persons” who are found to have engaged in significant theft of trade secrets of U.S. persons. The Act also requires menu-based sanctions against such persons, which may include blocking sanctions.

Although the Act does not specifically target any country, the press statement from Sen. Chris Van Hollen (D-Md.), the sponsor of the Act, clearly indicates that China is a primary intended target of the legislation.[1]…

Continue Reading New Sanctions Authority for Theft of U.S. Trade Secrets by Foreign Persons

On December 2, 2022, the G7, EU, and Australia (Price Cap Coalition) jointly agreed upon a cap on the price of seaborne Russian-origin crude oil at USD 60 per barrel as of December 5, 2022. The cap is subject to change based on the Coalition’s objectives and market fundamentals.

Upon reaching this consensus, the Treasury Department released a fact sheet on the same day providing additional details on the price cap policy, including its goals, how it works, and the compliance framework for the policy (the Fact Sheet). Most information has been previously discussed in the guidance released on November 22 (see our prior blog post at link). On December 5, the Treasury Department issued a Determination (the December Determination) pursuant to Executive Order 14071 and the prior Determination dated November 22 (the November Determination), to set the cap at USD 60 per barrel formally and to implement the policy.…

Continue Reading Price Cap Coalition Selects Level for Cap on Price of Seaborne Russian-Origin Crude Oil

On November 22, 2022, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) published a determination pursuant to Executive Order 14071 (EO 14071) (the Determination) and a guidance on the implementation of the price cap policy for Russian-origin crude oil (the Guidance). These followed OFAC’s preliminary guidance released on September 9 (see Steptoe’s earlier blog post here). The Determination sets forth the categories of services relating to the maritime transport of Russian-origin crude oil (Covered Services) that US persons are prohibited from providing directly or indirectly to a person located in Russia, unless the Russian crude oil is purchased at or below the price cap. The Guidance addresses issues relating to the implementation of the price cap policy for Russian-origin crude oil.…

Continue Reading OFAC Publishes Determination and Guidance on Implementing the Price Cap Policy for Russian Crude Oil

On October 7, 2022, in a move that was hailed by senior U.S. government officials as a paradigm shift in U.S. export controls policy toward China, the Department of Commerce’s Bureau of Industry and Security (BIS) issued an interim final rule that amends the Export Administration Regulations (EAR) to impose new and expanded controls on advanced computing integrated circuits (ICs), computer commodities that contain such ICs, and certain semiconductor manufacturing items. Transactions for supercomputer end-uses and transactions involving certain entities on the Entity List are now subject to additional export controls, as are certain semiconductor manufacturing items and transactions for certain IC end uses. U.S. person activities as they relate to certain semiconductor activities in China are also now restricted.

Certain aspects of the rule, specified below, including the availability of license exceptions, became effective immediately on October 7, 2022. The new restrictions on U.S. person activities under § 744.6 became effective on October 12, 2022. The remainder of the provisions with a delayed effective date are specified below and will become effective on October 21, 2022. BIS is also accepting public comments on the interim final rule through December 12, 2022.

Separately, also on October 7, 2022, BIS issued a final rule, which revised the Unverified List (UVL) and clarified the activities and criteria that may lead to the addition of an entity to the Entity List. BIS stated that a sustained lack of cooperation by the host government in a country where an end-use check is to be conducted, such as China, that effectively prevents BIS from determining compliance with the EAR, will be grounds for adding an entity to the Entity List.

The U.S. policy goals behind the new rules are ambitious and seek to degrade China’s advanced computing capabilities in an unprecedented manner. As summarized recently by National Security Advisor Jake Sullivan: “On export controls, we have to revisit the longstanding premise of maintaining ‘relative’ advantages over competitors in certain key technologies.  We previously maintained a ‘sliding scale’ approach that said we need to stay only a couple of generations ahead. That is not the strategic environment we are in today. Given the foundational nature of certain technologies, such as advanced logic and memory chips, we must maintain as large of a lead as possible.”

The broad implications of these new rules, along with their efficacy from a policy standpoint, may take some time to come fully in to focus. For now, it is clear that any U.S. or non-U.S. individuals or entities that play any role in the global semiconductor supply chain—whether as manufacturers, producers, consumers, or otherwise—need to carefully review the new rules to determine what is required to comply and, if necessary, seek guidance or a license from BIS.…

Continue Reading BIS Issues Expansive New Rules Targeting China