Government Enforcement

On June 22, 2016, the Department of Commerce, Bureau of Industry and Security (BIS), finalized a new enforcement policy for administrative (i.e., non-criminal) matters called the Guidance on Charging and Penalty Determinations in Settlement of Administrative Enforcement Cases (Guidance).  The Guidance, which is effective immediately, lays out the factors that BIS and its Office of

In its second enforcement action this year, on June 20th, the State Department’s Directorate of Defense Trade Controls (DDTC) reached a $100,000 settlement with Massachusetts-based Microwave Engineering Corporation.  Despite the small penalty amount, this case is noteworthy in several respects. 
Continue Reading Massachusetts Company Hit with ITAR Penalty for a Single Individual Deemed Export Violation; Settlement Highlights Importance of Timely Disclosure

A recent 60 minutes report about an ill-conceived criminal case against Xiaoxing Xi, the chair of Temple University’s physics department, carries important lessons for individuals who operate in the high-tech space, along with universities and other government contractors.  The US Attorney for the Eastern District of Pennsylvania brought criminal charges against Dr. Xi, alleging that he unlawfully transferred controlled technology when he shared designs for a piece of equipment with scientists in China.  The government alleged that the designs related to a “pocket heater,” which is used in semiconductor research.  In fact, the designs related to something else entirely.  But it wasn’t until Dr. Xi was put through an ordeal of arrest, questioning and criminal defense, with the personal and professional consequences that go along with it, that the government appears to have looked carefully at the technical aspects of the case.

Continue Reading 60 Minutes Report on Bungled Chinese-American Espionage Case Highlights Criminal Risk Faced by Individuals and Government Contractors

If submitting a voluntary disclosure to OFAC, BIS, DDTC or one of the many other agencies involved in export controls and sanctions enforcement was not enough, it is becoming increasingly clear that it will soon be necessary to consider whether to disclose possible criminal wrongdoing to the DoJ as well. David Laufman of the DoJ’s

On April 29, 2016 the Canadian Supreme Court ruled that the Ontario Superior Court of Justice could not compel the World Bank to produce records or require its personnel to testify in court. The case, World Bank Group v. Wallace, challenged the immunities granted to the Bank that cover its archives and employees. Over

On February 25, 2016, the US Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) announced that it concluded an enforcement action against Halliburton Atlantic Limited (“HAL”) and its affiliate Halliburton Overseas Limited (“HOL”) for alleged violations of the Cuban Assets Control Regulations (“CACR”).

HAL and HOL are both Cayman Islands-headquartered subsidiaries of US company Halliburton Energy Services, Inc. (collectively, “Halliburton”).  Combined, they exported $1,189,752 worth of goods and services in support of oil and gas exploration and drilling activities in Angola’s Cabinda Onshore South Block oil concession, which is controlled by an oil and gas exploration joint venture consisting of five energy companies.  None of the companies has a 50 percent or greater ownership stake, and the largest minority owner – Pluspetrol Angola Corporation (45 percent stake) – is the operator, to whom HAL issued nineteen invoices and for whom HOL primarily performed the invoiced services.

Most importantly, in late 2009 the original majority shareholder of the consortium – Roc Oil (Cabinda) Company – assigned a 5 percent participating interest to Cuba Petroleo (“Cupet”), which is Cuba’s state-owned oil company.  This participating interest in the consortium also gave Cupet a beneficial interest in the concession and any oil or gas procured from it.
Continue Reading Halliburton Settlement Shows Risks of Dealing with Entities Partially Owned by Sanctioned Entities

On March 25, 2016, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) announced that it is reissuing a final rule against FBME Bank Ltd. (FBME).  Under Section 311 of the USA PATRIOT Act, FinCEN has authority to designate a foreign financial institution as a “primary money laundering concern” and promulgate a rule imposing “special measures” on the bank. Here, the reissued final rule confirms the findings of the original rule and imposes the “fifth special measure” – the most severe available – which prohibits US financial institutions from opening or maintaining a correspondent account for, or on behalf of, FBME, effectively precluding FBME’s access to the US financial system.

Continue Reading FinCEN Reissues Final Rule Against FBME Bank

The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued a Finding of Violation to MasterCard on March 16 for failing to report accounts in which blocked entities held interest. The Finding of Violation represents a rare instance of enforcement of the Reporting, Procedures, and Penalties Regulations (RPPR). Although MasterCard had restricted

In 2015, enforcement of the Foreign Corrupt Practices Act (FCPA) continued to evolve as US government agencies focused their investigations and other countries ramped up their own involvement. While enforcement statistics and monetary penalties remained steady, or even lower than previous years, 2015 trends pointed towards a more complex compliance environment going forward, with increasing