Skirting over financial crime due diligence when considering a quick transaction in an emerging market can cost you dearly down the line when regulators or shareholders discover issues with regulatory compliance after your transaction. The safer and ultimately more cost-effective course may be an independent assessment of the financial crimes compliance risks before completing cross-border

On July 31, The Commerce Department’s Bureau of Industry and Security (BIS) will publish a notification in the Federal Register amending the Export Administration Regulations (EAR) to suspend the availability of all License Exceptions for Hong Kong that provide differential treatment as compared to those available to China.  This EAR change implements the announcement made

Beginning August 13, 2020, executive agencies will be prohibited from contracting with companies that use “covered telecommunications products or services” (i.e., technologies from certain China-based companies) – even if the use is unrelated to performance of federal contracts.

On July 13, 2020, the FAR Council issued an interim rule amending the Federal Acquisition Regulation (FAR)

On July 14, President Trump issued an Executive Order (EO) strengthening and expanding sanctions mandated by Congress under the Hong Kong Autonomy Act (HKAA), which the president also signed into law on July 14. In particular, the EO introduces blocking sanctions against foreign persons pursuant to the International Emergency Economic Powers Act in response to

On July 1, 2020, the US Departments of State, Treasury, Commerce, and Homeland Security jointly issued an advisory, “Risks and Considerations for Businesses with Supply Chain Exposure to Entities Engaged in Forced Labor and other Human Rights Abuses in Xinjiang” (the “Advisory”). Although this Advisory does not set out any new laws, it was published shortly after the Uyghur Human Rights Policy Act of 2020 (the “Act”) was signed into law on June 17, 2020. These developments suggest a shift in enforcement focus on the Xinjiang Uyghur Autonomous Region (“XUAR”), including imports from XUAR, exports and technology transfers to XUAR, and other business activity in China that may implicate XUAR.

The Advisory urges US and non-US businesses, academic institutions, research service providers, and investors with connections to XUAR to implement appropriate human rights due diligence policies, procedures, and internal controls to mitigate reputational, economic, and legal risks. The Advisory suggests that the failure to take appropriate due diligence steps may increase the risk of sanctions or law enforcement activity by the US government.

Continue Reading US Agencies Issue Xinjiang Business Advisory Targeting Tech and Other Industries Along with Supply Chains

The US Department of Commerce’s Bureau of Industry and Security (“BIS”) has issued new FAQs on its website addressing the new military end use / military end user rule (“MEU Rule”) and the expansion of the MEU controls for China, Russia, and Venezuela. For a summary of the MEU rule changes, please see our prior blog post detailing the changes to Section 744.21 and other related provisions in the Export Administration Regulations (“EAR”).

There are 32 FAQs, which provide a summary of the new MEU Rule, guidance on specific scenarios, and interpretations of the key terms, including, “military end use” and “military end user.” Below we discuss a few of the key points from the BIS FAQs regarding military end users, military end uses, and due diligence.

Continue Reading BIS Issues New FAQs Regarding the Expansion of the Military End Use / Military End User Rule

On June 29, 2020, the US Department of State announced that the US government “will today end exports of US-origin defense equipment and will take steps toward imposing the same restrictions on US defense and dual-use technologies to Hong Kong as it does for China.”

The US Department of Commerce also announced on June 29, 2020, that, as part of the “revocation of Hong Kong’s special status,” the “Commerce Department regulations affording preferential treatment to Hong Kong over China, including the availability of export license exceptions, are suspended. Further actions to eliminate differential treatment are also being evaluated. We urge Beijing to immediately reverse course and fulfill the promises it has made to the people of Hong Kong and the world.”

Continue Reading Developing: US Announces Tightened Export Controls on Hong Kong

On June 24, 2020, the US Department of Defense (“DoD”) sent a letter to Senator Tom Cotton enclosing a list of twenty companies headquartered in the People’s Republic of China (“PRC”) which DoD determined are operating directly or indirectly in the United States and are “Communist Chinese military companies.”  Titled “Qualifying Entities Prepared in Response to Section 1237 of the National Defense Authorization Act for Fiscal Year 1999 (PUBLIC LAW 105-261),” the “DoD List” includes some Chinese companies frequently associated with the Chinese military, and others that may not have been previously associated with the Chinese military.

For companies doing business with the US government, the US government may consider the inclusion of any of the listed companies in a government contractor’s supply chain as a “supply chain risk” that must be assessed, particularly in connection with information technology.  DoD contractors are already prohibited by their contracts from acquiring certain items and services from “any Communist Chinese military company.”

While not a sanctions list itself, the DoD List may lead to sanctions actions by the US government, as well as reactions from business partners assessing the risk of further action against the listed companies by the US government, particularly for listed companies that are not currently subject to US sanctions.  Pressure from Congress may continue for the administration to continue to update this list, and to impose restrictions on the companies on this list.

Continue Reading US Department of Defense Publishes List of “Communist Chinese Military Companies” Operating Directly or Indirectly in United States Pursuant to Section 1237 of the National Defense Authorization Act for Fiscal Year 1999 (the “Act”)

On May 29, President Trump announced in a White House news conference the US government would “begin the process” to revoke the “full range of agreements” providing the Hong Kong Special Administrative Region of China separate treatment from mainland China under US law on topics including “export controls on dual use technologies,” among others, “with

On Friday, May 1, President Trump issued an Executive Order declaring a national emergency with respect to the threat posed to the United States bulk-power system by certain equipment potentially liable to exploitation by “foreign adversaries.” Under the Executive Order, certain foreign-supplied equipment used in the US bulk-power system will be subject to US government