E-2 Investor Visas: What Israeli Nationals Need to Know

On June 12, 2019, Steptoe will offer a complimentary webinar on the recent E-2 investor visas for Israeli nationals. The E-2 visa is an extremely valuable and long-awaited US immigration option for Israelis and is the culmination of years of effort by both the United States and Israel.

For more information and to register for the webinar, please click here.

If you are unable to participate live but would like to receive a link to a recording of the webinar, please submit a request here.

To read more about the E-2 visa, please see our previous blog post.

Surprisingly Not Surprising China’s Announcement of “Unreliable Entities List” Regime

At a press conference on May 31, 2019, China’s Ministry of Commerce (MOFCOM) announced that China is going to establish an “unreliable entities list,” to which “foreign entities or individuals that do not obey market rules, deviate from the spirit of contracts, blockade or stop supplying Chinese companies for non-commercial reasons, and/or seriously damage the legitimate rights and interests of Chinese companies” will be added.[1]

MOFCOM’s announcement does not explicitly refer to the US Department of Commerce’s recent additions of Chinese entities to its Entity List, but the language it used at its press conference closely echoes the US Department of Commerce’s press statements for some of the Entity List designations. For example, regarding the background for establishing the “unreliable entities list,” MOFCOM has stated that some foreign entities who have stopped supplying Chinese companies have “endangered China’s national security and interests and threated the global industrial chain and supply chain security.” Continue Reading

New EU Framework to Target Malicious Cyber-Attacks from Outside the Union

On 17 May 2019, the Council of the EU established a framework against external cyber-attacks which constitute an external threat to the EU or its Member States. The new rules, which reportedly follow a diplomatic push by the UK and the Netherlands, provide for a strong legal instrument to deter and respond to cyber-attacks against the EU or its Member States. The new framework enables the EU for the first time to impose sanctions against persons, entities and bodies because of cyber-attacks. While no names have been added to the sanctions list yet, the new mechanism is expected to allow the EU to move quickly in the future. However, the new framework does not help companies that are under attack. Victims of cyber-attacks are on their own when it comes to fighting off a cyber-attack.

Sanctions under the new framework are country neutral. In other words, they do not target specific third countries but specific malicious actors. Member States are free to make their own determinations with respect to the attribution of responsibility for cyber-attacks to third countries but such determinations have no impact on the EU sanctions. Continue Reading

Commerce Department Catches Up with Export Controls on Venezuela

After months of escalating US economic sanctions on Venezuela and its international partners, the US Commerce Department’s Bureau of Industry and Security (BIS) is implementing major changes to US export controls on Venezuela that will significantly restrict remaining trade between the US (and third countries) and Venezuela in US export-controlled products (including technology transfers).  These regulatory changes will also impose licensing requirements in many cases for the employment of or other interactions with Venezuelan nationals in the United States and third countries that need access to export-controlled technology.

Effective May 24, 2019, BIS is amending the Export Administration Regulations (EAR) to make the following changes:

  • Remove Venezuela from Country Group B (countries eligible for favorable treatment for certain exports of national security-controlled items);
  • Add Venezuela to Country Group D:1 (countries of national security concern);
  • Add Venezuela to Country Group D:2 (countries of nuclear proliferation concern);
  • Add Venezuela to Country Group D:3 (countries of chemical and biological weapons proliferation concern); and
  • Add Venezuela to Country Group D:4 (countries of missile technology proliferation concern).

Continue Reading

FinCEN Issues New Advisory on BSA/AML Obligations Related to Virtual Currency

On May 9, 2019, the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) published long-awaited guidance addressing how FinCEN regulations apply to what the agency calls “convertible virtual currency” (CVC), which covers most types of cryptocurrencies and crypto-tokens. The guidance focuses on:

  • Platforms engaged in exchange transactions involving securities, commodities, or futures contracts and fiat currency, CVC, or other value that substitute for currency;
  • Natural persons providing CVC money transmission as person-to-person (P2P) exchangers;
  • CVC wallets (differentiating among hosted, unhosted, and multiple signature wallet providers);
  • CVC provided through electronic terminals, kiosks, or automated teller machines;
  • CVC services provided through decentralized (software) applications (DApps), including anonymizing services;
  • Payment processing services;
  • Internet casinos;
  • Initial Coin Offerings (ICOs) and the status of creators of CVC;
  • DApp developers, users conducting financial activities, and DApps conducting CVC transactions; and
  • Mining pools and cloud miners.

Continue Reading

DOJ Revamps Corporate Compliance Program Guidance, Broadens Application

The US Department of Justice (DOJ) Criminal Division announced the publication of updated Guidance on Evaluating Corporate Compliance Programs (2019 Guidance) on April 30, 2019. As discussed in our 2017 FCPA Mid-Year Review, the original guidance, published on February 8, 2017 (2017 Guidance), essentially set forth a list of 11 topics and over 100 detailed questions that the Fraud Section of the DOJ’s Criminal Division stated it would consider when evaluating the effectiveness of a company’s compliance program in the context of corporate criminal investigations. The DOJ’s evaluation of the effectiveness of a company’s compliance program has long been listed as a factor relevant to charging decisions under the Principles of Federal Prosecution of Business Organizations in the US Attorney’s Manual (now known as the Justice Manual), as well as to a company’s eligibility to receive a reduction in criminal fines calculated under the US Sentencing Guidelines (USSG); it is also important to the DOJ’s assessment of whether a monitor is warranted.

In substance, the principles set forth in the 2019 Guidance do not significantly depart from prior available compliance program guidance, but the 2019 Guidance reorganizes and expands in some respects upon the DOJ’s 2017 Guidance. Importantly, while the 2017 Guidance applied only to the Criminal Division’s Fraud Section, in which the FCPA Unit is housed, the 2019 Guidance appears to apply to the Criminal Division more broadly. In this and other respects, the 2019 Guidance appears to signal that the DOJ’s assessment of corporate compliance programs will take on added importance in the resolution of a wider array of corporate criminal matters moving forward.

For more information, please see our advisory.

Sweeping New Metals Sector Sanctions on Iran with 90-Day Wind-Down Period

President Trump issued an executive order (EO) on May 8, 2019 imposing broad new sanctions against Iran’s metals industries that go beyond pre-existing sanctions on that sector.  President Trump issued a statement about the EO, which came on the one year anniversary of the US withdrawal from the Iran nuclear deal, calling Iran’s iron, steel, aluminum, and copper sectors “the regime’s largest non-petroleum-related sources of export revenue,” said to constitute 10% of Iran’s “export economy.”  The President said this EO “puts other nations on notice that allowing Iranian steel and other metals into your ports will no longer be tolerated.”  But the scope of the EO is actually quite a bit broader than that – it puts within the crosshairs of US sanctions enforcement not just third-country importers of Iranian metals products, but also exporters in Europe, Asia and elsewhere that provide raw materials and other inputs, along with industrial machinery and other capital goods used in the production of Iranian metals.  As usual, banks, insurers, shippers, traders, investors and other intermediaries and stakeholders in these industries would also be at risk.  It appears that the Trump Administration is continuing along a path of rising escalation, with President Trump noting in his statement that “Tehran can expect further actions unless it fundamentally alters its conduct.”

The EO provides for any person to be listed as a Specially Designated National (SDN) if they are determined: Continue Reading

New Jersey Software Company Settles with OFAC for Accepting Late Payments from Rosneft

On April 25, 2019, OFAC announced that Haverly Systems, Inc. (“Haverly”), a New Jersey software company, had agreed to pay $75,375 to settle apparent violations from 2014 related to Haverly’s collection of payments from JSC Rosneft (“Rosneft”), a Russian oil major on OFAC’s Sectoral Sanctions Identifications (“SSI”) list. The key issue was OFAC’s finding that Haverly accepted the payments from Rosneft outside of the then-applicable 90-day window and thereby dealt in the restricted “new debt” of Rosneft. This appears to be the first time OFAC has published a settlement involving violations of the SSI list Directives, and underscores the importance for companies subject to US jurisdiction of monitoring invoicing and payments with SSI list entities and their subsidiaries. Non-US companies may also face “secondary sanctions” risk under Section 228 of CAATSA, on which we have previously advised, for certain types of transactions with SSI list designees. See also our previous advisory on OFAC’s SSI list sanctions, along with our previous discussion of the CAATSA-mandated changes to those sanctions.

Pursuant to Directive 2 under Executive Order 13662 and § 589.201 of OFAC’s Ukraine-Related Sanctions Regulations, US persons are prohibited from transacting or otherwise dealing in “new debt” of longer than certain stated maturity periods of SSI list designees or any entities of which they own 50% or more. At the time of this apparent violation, the relevant maturity period was 90 days.[1] “Debt” is defined broadly to include any “extensions of credit.” OFAC has stated in FAQ guidance that open payment terms, such as the time permitted to pay commercial invoices, also fall within the scope of “new debt.” Continue Reading

E-2 Investor Visas Available to Israeli Nationals

Beginning May 1, 2019, Israeli citizens may apply for E-2, investor, visas. This long-awaited US immigration option for Israelis is the culmination of lengthy efforts by both the United States and Israel toward the goal of reciprocal US/Israeli investor visa options. This treaty-based, temporary, category creates options for Israelis to make business investments in the US in any industry and operate the businesses developed through investment. The new visa option is a welcomed development for a country known as the “start-up” nation. The E-2 visa will surely energize Israeli nationals with an entrepreneurial spirit to bring this business drive to the United States.

For more information, please see our advisory.

Recent Unverified List (UVL) Designations in China and Elsewhere – What is the UVL?

On April 11, 2019, the US Commerce Department’s Bureau of Industry and Security (BIS) added 50 names to the Unverified List (UVL) (of which 37 are located in China and 6 in Hong Kong), while also removing 10 names.  The UVL list is found at Supplement No. 6 to Part 744 of the US Export Administration Regulations (EAR).  BIS said that it added these 50 names “on the basis that BIS could not verify their bona fides because an end-use check could not be completed satisfactorily for reasons outside the US Government’s control.”  By “bona fides,” BIS means that it could not confirm whether items previously exported to these parties were used the way the exporting party said they would be used, or was unable to confirm information about the actual end-user in those transactions.  In other words, the US Government is concerned about possible diversion of the exported products to unauthorized end-users or end-uses, because it cannot obtain enough information about the UVL parties or about the ultimate disposition of the items that were sent to them. 

BIS’s export control regulations, the EAR, may impose licensing requirements for any one of three reasons: 1) the item and destination country, 2) the end-user, and 3) the end-use.  The US Government periodically conducts end-use checks to confirm that items exported under BIS’s regulatory authority are being used as stated by the exporter of the item subject to the EAR.  These are typically in the form of either a pre-license check (PLC) occurring before the export takes place, or a post-shipment verification (PSV) occurring afterwards.  If BIS is unable to confirm whether items that were certified upon export as being destined to a particular party for a particular application are in fact to be used by that party for the stated application, BIS may add one or more of the parties who received the export to the UVL and impose restrictions on future exports to the party(ies). Continue Reading