CFIUS Proposes Dramatic Expansion of US Foreign Investment Review, Seeks Public Input

The US Department of the Treasury (“Treasury”) published two proposed rules on September 24, 2019 that would significantly expand the jurisdiction of the Committee on Foreign Investment in the United States (“CFIUS”) to review inbound U.S. foreign investment for national security risks.  The proposed rules, which have been in the works for months, would implement the Foreign Investment Risk Review Modernization Act of 2018 (“FIRRMA”) by expanding CFIUS’s jurisdiction over transactions involving foreign government-controlled investors, U.S. critical infrastructure and critical technology companies, companies that hold significant amounts of sensitive personal data, and certain U.S. real estate.  The rules would also make relatively modest changes to CFIUS’s procedures.  Interested parties must submit written comments to Treasury on or before October 17, 2019.

For more information, please see our advisory.

China as a Currency Manipulator: What Does It Mean for US Businesses?

On August 5, 2019, the Trump Administration labeled China a “currency manipulator” after the US-China exchange rate fell below 7 RMB per 1 USD. This was the first time in more than a decade that the RMB had broken through this level, and it was viewed by President Trump as a direct response to his administration’s decision to impose additional tariffs on imports from China under the ongoing Section 301 investigation into China’s industrial practices.

In this client alert, we review the legal, political, and economic implications of the US Treasury Department’s decision to label China a currency manipulator. In short, while the direct legal implications of this move are limited, this decision sends a clear signal that a resolution of the US-China trade dispute is unlikely to be achieved soon, and that US businesses should prepare for more commercial disruption.

Read the alert here.

Treasury tightens remittances to Cuba and prohibits “U-turn” transactions

Today the Treasury Department’s Office of Foreign Assets Control (“OFAC”) issued new restrictions on remittances and “U-turn” transactions to Cuba, which will come into effect on October 9, 2019.  These restrictions are intended to further implement President Trump’s June 2017 National Security Presidential Memorandum, in which he outlined US policy toward Cuba under his administration and various policy actions to be taken by a number of agencies and departments.

These new restrictions build upon those announced on June 4, 2019, in which the US government prohibited US travelers from going to Cuba under the previous ‘group people-to-people educational’ travel authorization and further restricted travel by no longer permitting visits to Cuba via passenger and recreational vessels, including cruise ships and yachts, and private and corporate aircraft.

In addition to amending the Cuban Assets Control Regulations, OFAC issued 46 updated or new FAQs on Cuba. Although many of the changes were either cosmetic or to provide the relevant regulatory citations, some are worth noting.  In particular, FAQs 1, 40, 44, and 65 provide guidance on today’s amendments.  Additionally, FAQ 12 provides guidance on OFAC’s June 5 amendments related to “people-to-people travel.”

The amendments to OFAC regulations on remittances and U-turn transactions to Cuba represent the reinstatement of certain restrictions that were eased under the Obama administration as we described in our 2016 advisory. Continue Reading

OFAC Issues regulations implementing Nicaragua sanctions

On September 5, OFAC issued regulations to implement Executive Order (EO) 13851 related to the situation in Nicaragua.  Signed on November 27, 2018, EO 13851 blocks the property of persons who served as Nicaraguan government officials at any time on or after January 10, 2007, persons who are responsible or complicit in serious human rights abuses, undermining democracy, threatening peace and security, or corruption and expropriation.  It also blocks leaders or officials of entities that have engaged in such practices, as well as entities owned by persons blocked by the EO.

EO 13851 does not restrict general exports or imports involving Nicaragua.  Rather it is targeted at prohibiting US persons from engaging in transactions with designated persons and entities, and any undesignated entities that are owned 50 percent or more by one or more designated entities or persons.

The order also authorizes the US government to block the property of any persons, including non-U.S. persons, that materially assist, or provide financial, material, or technological support for, or goods or services in support of, persons and entities blocked by the order, as well as persons that provide support for human rights abuses, threats to peace and security, corruption and other activities described in the order. Continue Reading

New Round of Sanctions Block Government of Venezuela, Issue General Licenses

On August 5, President Trump issued executive order (EO) 13884 expanding sanctions in Venezuela by blocking the property of the Government of Venezuela as a whole. In connection with this step, OFAC issued 12 amended and 13 new general licenses and published interpretive guidance pertaining to the provision of humanitarian assistance and support for the Venezuelan people. According to an OFAC press release, the new EO and general licenses “allow U.S. persons to continue to provide humanitarian support to the Venezuelan people” while putting pressure on the Maduro regime. Continue Reading

US Sanctions Chinese Company for Buying Oil from Iran

On July 22, 2019, Secretary of State Mike Pompeo announced that the US Government would impose sanctions on Chinese state-owned oil trading company Zhuhai Zhenrong Company Limited and its chief executive Youmin Li for knowingly purchasing or acquiring oil from Iran.  Zhuhai Zhenrong was previously sanctioned in 2012 due to alleged dealings with Iran, but those sanctions were far less extensive, and were removed in 2016 pursuant to the Iran nuclear deal. This action announced by Secretary Pompeo involves the addition of these parties to the Specially Designated Nationals (SDN) list, as a result of which any transactions or dealings involving US persons with these parties or their “interests in property” are prohibited, and US persons are required to freeze any such property pursuant to specific rules promulgated by the US Treasury Department’s Office of Foreign Assets Control (OFAC). In addition, Youmin Li is subject to a US visa ban.

According to the Department of State, these sanctions resulted from Zhuhai Zhenrong’s purchase or acquisition of crude oil from Iran after the expiration of China’s Significant Reduction Exception (SRE), which we have previously discussed and which allowed China to continue buying oil from Iran until May 2, 2019 without the risk of sanctions for companies and financial institutions involved in that trade. These sanctions were imposed under Executive Order (EO) 13846. Section 3(a)(ii) of EO 13846 authorizes the imposition of different types of sanctions, ranging from less severe measures to the most severe measure of designation on the SDN list, for persons determined to have, “on or after November 5, 2018, knowingly engaged in a significant transaction for the purchase, acquisition, sale, transport, or marketing of petroleum or petroleum products from Iran.” Section 3 also authorizes sanctions on a person determined to be a “successor entity to,” or, if there is some knowledge or participation in the relevant activity, a person that “owns or controls” or “is owned or controlled by or under common ownership or control with,” a person designated under Section 3 of EO 13846.  Continue Reading

E-2 Investor Visa Webinar

On June 12, 2019, Steptoe’s immigration practice offered a webinar on the recent E-2 treaty investor visas for Israeli nationals. The E-2 investor visa is the culmination of lengthy efforts by both the United States and Israel, allowing Israelis to obtain a non-immigrant visa when they make business investments in the US.

If you missed the webinar, you can request a recording here.

For more information on the E-2 Investor Visas, please see our previous blog post.

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

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