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On June 15, 2022, the United Kingdom will introduce a strict civil liability standard for violations of UK financial sanctions committed after that date.  In anticipation of this important change to the enforcement powers of HM Treasury’s Office of Financial Sanctions Implementation (OFSI), the OFSI enforcement and monetary penalties for breaches of financial sanctions guidance (Monetary Penalties Guidance) has been updated and will take effect from June 15.  OFSI Director, Giles Thomson, also has outlined OFSI’s enforcement approach in light of these imminent changes in a blog post.

For more information on how these developments could impact your organization, contact the author of this post, Alexandra Melia, in Steptoe’s Economic Sanctions team in London.…

Continue Reading UK Updates Sanctions Enforcement Guidance in Readiness for Imminent Introduction of Strict Civil Liability for Financial Sanctions Breaches

As of March 20, 2022, a new Executive Order (EO) prohibited certain imports, exports, the transfer of US dollar banknotes to Russia, and new investments involving certain sectors of the Russian economy.  The US Office of Foreign Assets Control (OFAC) also issued new General Licenses and Frequently Asked Question (FAQ) guidance. Additionally, the US Department of Commerce’s Bureau of Industry & Security (BIS) announced new regulations to control the export, reexport, and transfer (in country) of certain luxury goods to or within Russia and Belarus. BIS also identified numerous aircraft subject to US export controls jurisdiction that had flown to Russia without a license, and issued a reminder regarding the restrictions under General Prohibition 10 under the Export Administration Regulations (EAR) of servicing such aircraft.

Key points of these US sanctions developments and export controls are summarized below.

For a summary of US sanctions and export controls adopted between February 21 and March 8, 2022, see this Steptoe blog post.…

Continue Reading Update: New US Sanctions on Russia Target Certain Imports, Exports, Dollar Banknotes, and Investments

This past year saw a significant dip in the number of Foreign Corrupt Practices Act (FCPA) enforcement actions, but at the same time a series of new and important policy initiatives emanating from the White House and from the Department of Justice (DOJ) that signal a substantial commitment to investigating and prosecuting corruption-related crimes and…

On December 23, 2021, and following strong bipartisan support in Congress, President Biden signed the Uyghur Forced Labor Prevention Act (“UFLPA” or “Act”) into law.  P.L. 117-78 (2021).  The UFLPA builds on previous congressional and executive branch actions aimed at responding to allegations of forced labor and other human rights concerns in China’s Xinjiang Uyghur Autonomous Region (“XUAR”).  In particular, the UFLPA introduces a rebuttal presumption that “any goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in” the XUAR were made with forced labor and are therefore ineligible for entry into the United States.  In addition, the UFLPA details Congressional expectations for a whole of government enforcement strategy with respect to allegations of XUAR-related forced labor and expands economic sanctions introduced under the Uyghur Human Rights Policy Act of 2020 to cover “{s}erious human rights abuses in connection with forced labor” in the XUAR.

In recognition of the compliance challenges related to the above-described rebuttable presumption, the Forced Labor Enforcement Task Force (“FLETF”) is soliciting comments on how best to ensure that “goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part with forced labor in the People’s Republic of China are not imported into the United States.”  These comments are due no later than March 10, 2022.  As discussed further below, importers should consider submitting comments to the FLETF concerning this set of issues, which will ultimately inform the enforcement strategy employed by U.S. Customs and Border Protection (“CBP”) at the border.  Additionally, importers should begin top-to-bottom reviews of their supply chains to ensure compliance with the newly-introduced rebuttable presumption prior to its implementation in June of this year.…

Continue Reading Understanding the Uyghur Forced Labor Prevention Act and What Comes Next

On December 8, 2021, the UK government announced a package of measures to revise certain aspects of the UK’s export control regime following the completion of a regime review by the government.  The measures include revisions to the licensing criteria for strategic export controls, an expansion in the scope of the military end-use control and a tightening of controls on exports to China.  Taken together, the measures represent a significant reworking of the UK export control regime.  Affected businesses should carefully analyze the new requirements to ensure that they remain compliant, particularly given substantial revisions to the licensing criteria for strategic export controls, which have been applied with immediate effect.
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Continue Reading UK Announces Measures To Rework Export Control Regime

They have been almost a decade in the making, but have finally arrived: new U.S. export controls on “cybersecurity items,” including products and technology involving “intrusion software” and IP network communications surveillance.  Published today but effective January 19, 2022, the interim final rule from the U.S. Commerce Department’s Bureau of Industry and Security (“BIS”) amends the Export Administration Regulations (“EAR”) to add these new cybersecurity export controls.  The interim final rule is highly technical and complex, but ultimately contains a mix of good news and bad for the cybersecurity community.  BIS states in its press announcement that the rule is only intended to restrict “malicious cyber activities,” but it nonetheless imposes compliance obligations and costs even when activities ultimately are not restricted.  At least in this sense, the rule will impact the entire cybersecurity sector.
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Continue Reading Cybersecurity Community Beware: US Finally Enacts “Intrusion Software” Rule

On June 9, 2021, the White House issued a new Executive Order (EO) that revokes three Executive Orders issued in 2020 and early 2021 that were aimed specifically at TikTok, WeChat, and eight other China-linked communications and financial technology software applications.

In place of these EOs, the new EO, “Protecting Americans’ Sensitive Data from Foreign Adversaries,” builds on steps the US Commerce Department has already taken under EO 13873 of May 15, 2019, to protect the information and communications technology and services (ICTS) supply chain against threats from China and other identified foreign adversaries.

As a result of the new EO, the US government will further analyze the risks arising from the use of applications such as TikTok and WeChat – including risks related to the security of Americans’ sensitive data — and could take further steps to mitigate those risks, either through existing ICTS regulations or through additional executive and legislative actions.…

Continue Reading Biden Administration Revokes TikTok and WeChat Executive Orders, Revises Framework on Security Threats from Foreign Apps

In a little-noticed provision of the annual US military authorization law, which took effect on January 1, 2021, the US Congress issued yet another push for the US Commerce Department to grant eligibility to Israel for a key authorization under US export controls.  Israeli companies in the tech, aerospace/defense, and other sectors that are regulated under military and “dual-use” (i.e., military/commercial) export controls should watch these developments closely and consider engaging with the US government and/or the Israeli government regarding the implementation of this regulatory change.  The same is true for US and other global companies in these sectors that trade with Israel, maintain facilities in Israel, cooperate with Israeli partners on R&D, or employ or contract with Israelis who are not US citizens or green card holders.  The export controls authorization in question applies to a broad array of dual-use products/technologies, and even certain military products/technologies, and allows companies to operate without the need to obtain specific licenses from the US Commerce Department in certain instances and thereby may help avoid the added costs, delays and uncertainties that can result from the licensing process.  In short, if the Commerce Department granted this regulatory authorization to Israel, trade and technology cooperation in these sectors with Israel and Israelis would be much simpler.

Looking at the details, Section 1276 of the National Defense Authorization Act for Fiscal Year 2021 (the “NDAA”) requires the State Department to brief Congress during the first few months of the Biden administration “by describing the steps taken to include Israel in the list of countries eligible for” a key authorization under US export controls, License Exception Strategic Trade Authorization (“STA”), which is administered by the US Commerce Department under the Export Administration Regulations (“EAR”).   Specifically, this congressional mandate relates to so-called “STA-37,” or paragraph (c)(1) of STA, which is by far the broadest and most relevant part of STA that currently applies to 37 countries (as listed in “Country Group A:5” of the EAR).  That includes many European countries, the UK, Canada, Japan, S. Korea, Australia, and New Zealand, along with India (which was recently added), Argentina and Turkey.  Israel is already eligible for a much narrower STA provision (applicable to “Country Group A:6” of the EAR), along with Albania, Cyprus, Malta, Mexico, Singapore, South Africa, and Taiwan.  Congress is pushing Commerce to include Israel in the former group that benefits from the much broader regulatory authorization.…

Continue Reading Congress Continues to Push for Key US Export Controls Authorization for Israel

On August 27, 2020, the U.S. Commerce Department’s Bureau of Industry and Security (“BIS”) published an advance notice of proposed rulemaking (“ANPRM”) to solicit comments from industry and other stakeholders about how BIS should approach the establishment of new export controls on “foundational technologies” under the U.S. Export Administration Regulations (“EAR”).   Comments must be received by October 26, 2020.   This is an important opportunity for both U.S. and non-U.S. companies, industry groups, academic institutions and others to have a role in shaping this new U.S. regulatory process at an early stage.

The U.S. government is required under Section 1758 of the Export Control Reform Act of 2018 (“ECRA”) to “identify emerging and foundational technologies” that are “essential to the national security of the United States” and that are not yet subject to export controls for most countries, and then to “establish appropriate controls” on such technologies, which “at a minimum” are to include restrictions on providing such technologies to China and other U.S. arms-embargoed countries.  Therefore, the end result of this process may be new U.S. export controls on China and other countries that are viewed as more sensitive from the perspective of U.S. national security.  Any controls ultimately established for foundational technologies will be relevant not just for export controls, but also other regulatory areas.  Notably, “emerging and foundational technologies” controlled pursuant to Section 1758 of ECRA will be treated as “critical technologies” for the purpose of foreign investment national security reviews led by the Committee on Foreign Investment in the United States (“CFIUS”), as we previously advised.…

Continue Reading Export Controls on “Foundational Technologies” – Opportunity for Public Comment

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