On February 10, 2021, after four years of negotiations, text revisions, compromise proposals, and back and forth, the Council of the European Union agreed on its negotiating position on the EU draft regulation concerning the respect for private life and the protection of personal data in electronic communication (the ePrivacy Regulation).

The reactions to the deal from EU supervisors (i.e., the future enforcers) are mixed. On one side of the spectrum, proponents are celebrating the agreement on the ePrivacy Regulation. On the other side, critics are arguing for a higher level of data protection.

Those voices set the tone for the upcoming discussions, and explain why, for now, a deal is not “THE” deal.

For more on this issue, click here to read the full Client Alert from Steptoe.

Two important anti-corruption due diligence tools published their 2020 results in November 2020 and January 2021. While the results are largely consistent, there are some important differences and some key improvements and declines in the Transparency International 2020 Corruption Perceptions Index and the TRACE 2020 Bribery Risk Matrix.

To comprehensively understand the risks and take advantage of the opportunities offered in the Asia-Pacific region, a review and understanding of both tools is helpful.

To learn more about this issue and to compare the latest Asia-Pacific rankings, click here to read the full Client Advisory from Steptoe.

On February 18, 2021, the US Department of the Treasury’s Office of Foreign Assets control (OFAC) announced a $507,375 settlement with BitPay, Inc. (BitPay).  This civil settlement resolved apparent violations of multiple sanctions programs related to digital currency transactions, and is the second OFAC enforcement case brought against a business in the blockchain industry.  This case follows OFAC’s December 2020 civil enforcement action against another blockchain industry company, BitGo, Inc. (BitGo), for alleged violations of multiple US sanctions programs related to digital currency transactions.  See our prior blog post on the BitGo action here.

BitPay, based in Atlanta, Georgia, offers a payment processing solution for merchants to accept digital currency as payment for goods and services.  The apparent sanctions violations relate to digital currency transactions on the BitPay platform between individuals located in Cuba, North Korea, Iran, Sudan, Syria, and the Crimea region of Ukraine (annexed by Russia) and merchants in the United States and elsewhere.  OFAC acknowledged that BitPay screened its customers, the merchants, against US sanctions lists, but stated that BitPay had reason to know that purchasers dealing with the merchants were located in comprehensively sanctioned jurisdictions because the company had location information, including Internet Protocol (IP) address data, about those persons.  This case was not voluntarily disclosed, but OFAC found that the violations were not egregious.

According to OFAC, BitPay allowed persons in comprehensively sanctioned jurisdictions to conduct approximately $129,000 worth of digital currency transactions with BitPay’s merchant customers.  As described in OFAC’s enforcement release, between approximately June 10, 2013, and September 16, 2018, BitPay processed 2,102 transactions from individuals with IP addresses located in the sanctioned jurisdictions.  The transactions related to BitPay’s payment processing service.  BitPay allegedly received digital currency payments on behalf of its merchant customers from those merchants’ buyers, who were located in sanctioned jurisdictions.  BitPay then converted the digital currency into fiat, and then relayed that currency to its merchant customers.

Continue Reading OFAC Announces Second Enforcement Action Targeting a Digital Asset Company

On January 19, 2021, the Department of Commerce published an Interim Final Rule (the “Rule”) setting out a more detailed regulatory structure to implement Executive Order 13873, which authorizes Commerce to prohibit or otherwise regulate transactions involving information and communications technology or services (“ICTS”) with a nexus to “foreign adversaries” that pose an “undue or unacceptable risk” to US national security.  See also our post on the predecessor proposed rule.  The stated purpose of the Rule, which bears some resemblance to (though differs in many ways from) the foreign investment review and mitigation process administered by the Committee on Foreign Investment in the United States (“CFIUS”), is to protect US national security through a focus on the ICTS supply chain.

The Rule identifies for the first time the following as covered “foreign adversaries”:

  1. China (including Hong Kong)
  2. Russia
  3. Cuba
  4. Iran
  5. North Korea
  6. “Venezuelan politician Nicolás Maduro (Maduro Regime)

Continue Reading Insights on the Information and Communications Technology and Services (“ICTS”) Rule

On February 11, 2021, the White House issued an Executive Order (EO) authorizing sanctions in response to the February 1, 2021, military coup in Myanmar (Burma). The US Treasury Department’s Office of Foreign Assets Control (OFAC) named ten individuals and three entities as Specially Designated Nationals (SDNs) pursuant to the EO. At the same time, the US Commerce Department’s Bureau of Industry and Security (BIS) announced new restrictions on certain exports to Myanmar of items subject to the Export Administration Regulations (EAR).

This is the first new sanctions program adopted under the Biden administration, less than one month after the inauguration. Prior US sanctions and export controls targeting Myanmar were terminated in October 2016. Since then, the United States continued to maintain targeted sanctions against certain individuals and entities under other sanctions programs, including a number of SDNs named under the Global Magnitsky Sanctions program.

Continue Reading Biden Administration Announces Sanctions and Export Controls in Response to Myanmar Coup

The Chinese government has enacted new “blocking” rules to counteract extraterritorial application of certain foreign laws that it deems unjustifiable. On January 9, 2021, China’s Ministry of Commerce issued its No. 1 order of 2021— the Rules on Counteracting Unjustified Extraterritorial Application of Foreign Legislation and Other Measures (the Blocking Rules).

This Client Alert outlines key aspects of the Blocking Rules, including their scope and how they may work, and suggestions on compliance strategies to address these risks.

Two important actions by US Citizenship and Immigration Services (USCIS) have provided clarity on the process and time frame for employers to register for the Fiscal Year 2022 (FY 22) “cap” lottery on H-1B temporary work visas. The H-1B visa classification is familiar to many US employers, as it is used for a multitude of professional positions across many industries, most notably IT and other STEM-based positions.

Employers who need to sponsor recent college graduates or other foreign nationals under the H-1B cap must prepare now for the March 2021 limited registration period. The demand in the H-1B, temporary professional worker category, greatly outpaces annual limits.

Continue Reading Client Alert: Biden Administration Clarifies Process for H-1B Work Visa Cap

In a Federal Register notice dated February 5, 2021, the US Department of State provided notice that the Secretary of State has determined that six individuals sanctioned by the US Treasury Department’s Office of Foreign Assets Control (“OFAC”) on January 15, 2021 fulfilled the criteria for being designated as Specially Designated Nationals (SDNs) under Section 4(a)(iii) of Executive Order (EO) 13936, which authorizes the Treasury and State Departments to impose blocking sanctions in relation to certain events in Hong Kong.

The State Department issued similar notifications on January 22, 2021 (here and here) with respect to a total of 18 individuals designated as SDNs under EO 13936 on December 7 and November 9, 2020. No such determination appears in the Federal Register for 11 individuals designated under EO 13936 on August 7, 2020.

The Secretary of State’s recently issued determinations do not alter OFAC’s SDN designations, which took effect on January 15, 2021, December 7, 2020, and November 9, 2020, respectively, nor has the State Department added the individuals to its report under Section 5(a) of the Hong Kong Autonomy Act.

Continue Reading US State Department Issues Notices on Prior Hong Kong Sanctions Designations

Peter Jeydel and Brian Egan from Steptoe’s Economic Sanctions group published an article in the American Society of International Law’s “ASIL Insights” on the recent decisions by two US District Courts to bar the U.S. government temporarily from restricting transactions with Chinese mobile app TikTok under the International Emergency Economic Powers Act (IEEPA). As they write, this recent litigation “is arguably the most important legal development in many years of U.S. efforts to regulate global technology in the name of national security.”

To read more about this issue, click here for the full article on ASIL Insights.

On January 29, 2021, the European Commission put in place a temporary authorization scheme for exports to non-EU countries of COVID-19 vaccines covered by Advanced Purchasing Agreements (APAs). Under the APAs, the vaccine producers concerned have committed to deliver a number of vaccines. In return, the EU has provided upfront funding to companies to strengthen their manufacturing capacity, necessary to produce vaccines and to ensure their roll-out as soon as conditional authorization is granted by the European Medicines Agency.

As of early January 2021, the EU had concluded APAs with AstraZeneca, Sanofi-GSK, Johnson and Johnson, BioNTech-Pfizer, CureVac, Moderna, Novavax which meant securing a portfolio of more than 2.3 billion doses. Most recently, the Commission concluded talks with Valneva opening-up the possibility of purchasing up to 60 million doses. Given the fact that the European Union has concluded such Agreements with practically all COVID 19 vaccine producers, most exports of COVID-19 vaccines will be affected.

Under the new rules, which will apply for the next two months, companies will have to notify their intention to export EU manufactured COVID-19 vaccines covered by APA’s to third countries. The competent authorities of the Member State where the vaccines are manufactured are responsible for granting or refusing export authorizations. However, the authorization requirement does not apply to exports to a number of third countries, such as Switzerland and Norway, various low and middle-income countries, as well as countries supplied under certain humanitarian aid schemes.

Crucially, an export authorization may only be granted if the volume of exports is not such that it poses a threat to the execution of EU APAs concluded with vaccine manufacturers. To make such an assessment, companies will have to disclose information on the exports, destinations, and quantities for the period covering three months prior to the new legislation entering into force. Given that the new legislation entered into force on January 30, this means that those vaccines producers concerned will have to disclose information back to the beginning of November 2020.

Further, the authorization scheme provides for an important coordination and supervision role for the Commission. The competent Member State’s authority shall notify the Commission of its draft decision on whether or not to grant an export authorization. In case of disagreement over such draft decision, the Commission will issue an opinion to the competent authority within one working day. In the opinion, the Commission shall evaluate the impact of exports for which an authorization is requested on the execution of the relevant APAs with the EU. The Member States’ authorities will then make a decision on the request for authorization in accordance with the Commission’s opinion.

Additionally, the authorization scheme provides for increased transparency. The Commission is tasked with making the information on the authorizations granted and those refused publicly available while taking account of the confidentiality of the data.

The EU’s export authorization scheme aims to ensure that all EU citizens can access the COVID-19 vaccine as a matter of priority and to overcome the current lack of transparency around vaccines production and exports outside the EU. The new rules were adopted in a context of uncertainty as AstraZeneca, the first company with whom the Commission contracted to produce vaccines and one of the biggest contractors, announced delays in delivering vaccines. The basic problem results from the fact that AstraZeneca supplied the UK facilities with products from the EU when there were production issues in the UK but absolutely refused to supply the EU from UK facilities when the problem was reversed. The Commission has stated that no exports of COVID-19 vaccines have been blocked under this framework to this date. This could be an indication that the new tool effectively allows to control and restrict the flow of vaccines to third countries depending on the ability of EU manufacturers to meet the production targets previously agreed under the APAs.