On May 20, 2020, panelists from the DOJ, SEC, and FBI participated in a virtual town hall to discuss the state of play of FCPA and healthcare fraud enforcement as the United States and the rest of the world navigate the wide-ranging challenges wrought by the Covid-19 pandemic.

Government panelists included:

  • Robert Zink (Chief of the Fraud Section, Criminal Division, DOJ);
  • Daniel Kahn (current Senior Deputy Chief of the Fraud Section, and former FCPA Unit Chief, DOJ);
  • Joe Beemsterboer (current Senior Deputy Chief of the Fraud Section, and former Chief of the Health Care Fraud Unit, DOJ);
  • Charles Cain (Chief of the FCPA Unit of the SEC’s Division of Enforcement); and
  • Leslie Bakschies (Unit Chief at the FBI).

Key takeaways from the town hall discussion include:

  • Government investigations and multi-lateral cooperation continue, supported by remote investigative tools. All of the panelists confirmed that both ongoing and new investigations continue.  The U.S. Government, like private companies, has been affected by Covid-19-related travel restrictions, shutdowns (including of courts in some districts, delaying trials and grand juries), and other remote-work constraints.  But panelists emphasized that they are able to continue much of their investigative work.  This includes, for example, issuing subpoenas and other document requests, reviewing document submissions, and communicating with counsel.  Ms. Bakschies noted that the FBI is also obtaining search and arrest warrants through remote conferences with judges, and finding other “creative ways” around impediments.  The agencies also continue to collaborate with their counterparts outside the United States to move forward, de-conflict, and resolve cases.

Continue Reading Key Investigation and Compliance Take-Aways from May 20, 2020 DOJ, SEC, and FBI Joint Town Hall Discussing FCPA and Healthcare Fraud Enforcement Efforts During Covid-19 Emergency

A newly published proposed rule would make two important modifications to the mandatory filing requirements of the Committee on Foreign Investment in the United States (CFIUS), the US government interagency committee responsible for reviewing inbound foreign direct investments for national security risks. The proposed rule would change the scope of the mandatory filing requirement for covered transactions involving US critical technology companies, and would clarify how “substantial interest” is calculated for certain transactions involving foreign government investors.

Continue Reading Proposed CFIUS Rule Would Change and Clarify CFIUS Mandatory Filing Requirements

The European Commission has published a Guidance Note on how humanitarian aid related to COVID-19 can be provided to countries and areas that are subject to EU sanctions. The Note provides practical help, in the form of questions and answers (Q&As), on how to comply with EU sanctions when providing humanitarian aid, such as medical assistance and supplies, to fight the COVID-19 pandemic. The first version of the Guidance Note covers Syria. The Commission will update it with further information on other countries subject to EU sanctions, including Yemen, Somalia and North Korea.

EU sanctions targeting Syria are set out in Council Regulation (EU) No 36/2012 – as periodically amended – and consist of a number of sectoral restrictions, such as a prohibition on exporting goods or technology which might be used for internal repression, including chemicals used in chemical attacks, and a prohibition on the local purchase and import of petroleum products. The EU framework provides for a number of exceptions, notably for humanitarian purposes. It also includes individual designations entailing notably the freezing of funds or economic resources of certain persons, entities and bodies (“designated persons”).

Continue Reading European Commission publishes Guidance on the provision of humanitarian aid to fight the COVID-19 pandemic in countries subject to EU sanctions

The ink may barely be dry on (most) Member States’ national legislation transposing the EU’s Fifth Anti-Money Laundering Directive but the European Commission is pressing ahead with ever-more ambitious plans to tackle money laundering and terrorism financing with the aim of ensuring EU anti-money laundering laws are enforced consistently across all Member States.  On 7 May, the Commission adopted a new action plan, together with a parallel public consultation, with a view to delivering on the proposed actions by early 2021.

The new action plan is built on six specified pillars:

  • Effective implementation of existing rules;
  • A single EU rulebook;
  • EU-level supervision;
  • A support and cooperation mechanism for financial intelligence units;
  • Better use of information to enforce criminal law; and
  • A stronger EU in the world.

Continue Reading Trust, but Supervise – European Commission Sets Out New AML/CTF Action Plan

On Friday, May 1, President Trump issued Executive Order (EO) 13920, “Securing the United States Bulk-Power System.” In EO 13920, the President declared a national emergency under the International Emergency Economic Powers Act (IEEPA) with respect to the threat posed to the US bulk-power system (BPS) by equipment liable to exploitation by “foreign adversaries.”

The EO directs the secretary of energy, in coordination and consultation with other heads of agencies, to impose restrictions on transactions involving bulk power system electric equipment that could raise national security concerns. Furthermore, the EO broadly delegates implementation authority to the secretary of energy, who is required to publish rules and regulations to implement the EO within 150 days, or by September 28.

Continue Reading Client Advisory: Trump Administration Pursues Restrictions to Secure US Electricity Grid

On May 4, 2020, the US Department of Commerce (Commerce) announced in a press release that it will initiate an investigation pursuant to Section 232 of the Trade Expansion Act of 1962 (the TEA) into whether laminations for stacked cores for incorporation into transformers, stacked and wound cores for incorporation into transformers, electrical transformers, and transformer regulators are being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security.

According to the Commerce press release, “{l}aminations and cores made of grain-oriented electrical steel are critical transformer components” and “{t}ransformers are part of the U.S. energy infrastructure.”

Continue Reading Department of Commerce Initiates National Security Investigation into Transformer Components

Following the COVID-19 outbreak, the EU introduced measures requiring that exports to non-EU countries of some personal protective equipment (PPE) be subject to authorization (see our previous alert). The European Commission now announced the prolongation of these measures until 25 May 2020 and issued a modified Implementing Regulation. The adjustments result from a careful evaluation of needs signaled by EU Member States and include the following:

Continue Reading EU Prolongs and Adjusts Export Authorization Scheme for Personal Protective Equipment

According to the European Commission, fraud offences against the European Union (EU) budget cost the EU and its member states over €1 billion in losses in 2018, in addition to the annual losses of around €150 billion resulting from VAT fraud. With current criminal enforcement efforts across the EU apparently failing to effectively tackle such offences, the EU established the European Public Prosecutor’s Office (EPPO) to act as an independent and decentralized office with the power to investigate and prosecute crimes against the EU budget, such as fraud, corruption, misappropriation and cross-border VAT-related fraud.

Set to become fully operational in November 2020, based in Luxemburg, with its funding for 2020 increased by nearly 50%, the EPPO is expected to ramp up prosecutions of corporate crime concerning the EU’s financial interests and facilitate the recovery of misused EU funds. Previously, only national authorities could investigate and prosecute such offences within the scope of their own borders.

Continue Reading Client Advisory: European Public Prosecutor to Take EU Finance Fraudsters to Task?

Update: On May 1, 2020, the U.S. Department of State’s Directorate of Defense Trade Controls (“DDTC”) will publish a Federal Register notice that updates DDTC’s April 23 web notice, providing certain types of flexibility in licensing, registration, disclosures and other matters under the International Traffic in Arms Regulations (“ITAR”) in light of the COVID-19 epidemic.  Most notably, the April 23 web notice did not mention any leniency for ITAR agreements, such as Technical Assistance Agreements (“TAAs”) and Manufacturing License Agreements (“MLAs”).  But the Federal Register notice does address TAAs and MLAs, saying it will “extend any license or agreement that expires between March 13, 2020 and May 31, 2020 – for six (6) months from the original date of expiration so long as there is no change to the scope or value of the authorization and no Name/Address changes are required.”   

On April 23, 2020, the U.S. Department of State’s Directorate of Defense Trade Controls (“DDTC”) announced on the DDTC home page that, because of the COVID-19 epidemic, it would provide limited relief with respect to certain deadlines and fees for registration, licensing and disclosures under the International Traffic in Arms Regulations (“ITAR”).  DDTC is also providing limited additional flexibility to account for remote work by employees and contractors and communication with DDTC by email.

Continue Reading Update: More Flexible Policies Announced under the ITAR due to COVID-19

In a Federal Register notice published on April 10, 2020, the US Department of the Treasury, Office of Foreign Assets Control (OFAC), amended its North Korea Sanctions Regulations (NKSR) to extend their application to non-US entities owned or controlled by US financial institutions. The change was mandated by Congress in Section 7121 of the National Defense Authorization Act for Fiscal Year 2020.

This jurisdictional expansion involving US sanctions on North Korea is noteworthy. With the exception of the Cuba and Iran sanctions programs, US sanctions prohibitions typically do not apply directly to non-US entities owned or controlled by US persons. Historically, the extension of US sanctions prohibitions to foreign subsidiaries of US companies has been one of the most controversial “extraterritorial” aspects of US sanctions programs. (So-called “secondary sanctions” do generally apply to non-US entities, but they do not impose “prohibitions” under US law.)

Continue Reading Under Congressional Mandate, OFAC Asserts Jurisdiction Under North Korea Sanctions Regulations Over Non-US Entities Owned or Controlled by US Financial Institutions