What Exporters Should Know About Financial Institution Export Compliance
Although the BIS Guidance is a directive to FIs, it very much affects exporter customers of FIs. Here’s what exporters should know.
Nippon’s CFIUS Case Tests Limits of Presidential Power
President Biden blocked Nippon’s acquisition of U.S. Steel under Section 721 of the Defense Production Act, a law born of opposition to a Japanese investment decades ago. The case offers an opportunity to challenge the President’s Section 721 authority, and limits of judicial review.
BIS Guidance to Financial Institutions on Export Administration Regulations Compliance
BIS advises financial institutions to guard against EAR violations through: (1) screening against export lists, (2) enhanced due diligence for high-risk transactions, (3) derisking, and (4) reporting and self-disclosing EAR violations. The BIS guidance reiterates FIs’ obligation to file suspicious activity reports (SARs) as directed in three prior FinCEN-BIS alerts.
OFAC Updates Unblocked Property Reporting Rule
The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) released an advance version of its Final Rule on October 7, 2024, amending parts of 31 C.F.R. § 501.603. The Final Rule governs reports on unblocked property. The Final Rule will take effect 30 days after its publication in the Federal Register.
Global Magnitsky Sanctions- FAQs
The Global Magnitsky Sanctions target corruption and serious human rights abuse worldwide, without need for a U.S. jurisdictional nexus. MassPoint’s Global Magnitsky FAQs answers frequently asked questions about the Global Magnitsky Sanctions program (GloMag).
OFAC Sanctions Paraguayan Company for Material Support
OFAC Sanctions Paraguayan Tobacco Firm Ties to Sanctioned Ex-President By Hdeel Abdelhady The Treasury’s Office of Foreign Assets Control (OFAC) re-imposed sanctions on…
U.S. Sanctions Fly Baghdad
Fly Baghdad, CEO, and Aircraft as “Specially Designated Global Terrorists” Author: Hdeel Abdelhady The United States sanctioned Fly Baghdad, a privately owned commercial…
China Restricts Rare Earths Exports
China’s restrictions on rare earths processing technology exports take a page from the U.S. export controls playbook.
Foreign Agents Registration Act Charge Highlights China, Academia Nexuses
Foreign Agents Registration Act Charge Against U.S.-Israel Citizen Highlights FARA-China-Academia Nexuses Introduction The DOJ charged a dual U.S.-Israel citizen with offenses related to…
Swedbank Latvia Settlement: Sanctions Compliance Lessons
OFAC – Swedbank Latvia Settlement Settlement Highlights Importance of Integrating Geolocation and Know Your Customer Data By Hdeel Abdelhady | June 23, 2023…
Hdeel Abdelhady to Speak on Russia Sanctions at Georgetown National Security Event
Hdeel Abdelhady to speak on sanctions, Georgetown Law National Security & Policy Event Hdeel Abdelhady will speak at the Georgetown Law School Journal…
U.S. sanctions on Russia likely to be felt widely – Hdeel Abdelhady
In this Reuters commentary, Hdeel Abdelhady discussed U.S. blocking and non-blocking Ukraine-related sanctions on Russia, and their likely impacts.
Russia Sanctions in Response to Invasion of Ukraine
Russia Sanctions in Response to Ukraine Invasion, by Hdeel Abdelhady February 28, 2022 ▪ Author: Hdeel Abdelhady ▪ Topics: Russia Sanctions, Sanctions In…
Hdeel Abdelhady to Speak on Tech & Trade at American University Law
MassPoint Principal Hdeel Abdelhady will participate in the American University Law Review Federal Circuit Symposium, as a panelist on international trade and technology.
OFAC Authorizes Humanitarian Aid to Afghanistan
OFAC issued two general licenses authorizing certain Afghanistan humanitarian aid and activities involving the Taliban or the Haqqani Network. The licenses authorize transactions otherwise prohibited by the Global Terrorism Sanctions Regulations, 31 C.F.R. part 594 (GTSR); the Foreign Terrorist Organization Sanctions Regulations, 31 C.F.R. part 597 (FTOSR); or, Executive Order 13224 of September 23, 2001, “Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten To Commit, or Support Terrorism,” as amended (EO 13224).
Senate Bill Would Extend CFIUS to Academia
Hdeel Abdelhady’s recent article on the Strategic Competition Act’s proposed expansion of CFIUS’ jurisdiction to foreign funding of U.S. colleges and universities is available at Law360.
New U.S. Law Targets China’s Financial Diplomacy, Belt & Road Initiative, World Bank Borrowing
With the passage of the NDAA for FY 2021, we are reminded that the United States views as an issue of “great power competition” China’s financial and infrastructure diplomacy, particularly China’s lending to developing nations and its Belt and Road Initiative (BRI). Congress provided a reminder of the United States’ concerns as to China’s cross-border lending and the BRI. The massive annual defense spending legislation includes two provisions directly on point.
Corruption, Human Rights, and Geostrategy: U.S. Sanctions Belt & Road Project Company
The United States has targted a Belt& Road project with Global Magnitsky Sanctions. The move is significant, and might signal a ratcheting up of U.S. opposition to the BRI, which has largely comprised rhetoric, diplomatic lobbying, and relatively tepid competition, such as by the establishment of the U.S. International Development Finance Corporation (DFC).
TikTok: China’s Export Controls Set in Motion Unprecedented Legal Scenario
On August 14, President Trump ordered ByteDance to divest its assets and interests in TikTok. What happens if ByteDance does not comply? The question may seem academic, given historical compliance with divestment orders and ByteDance’s talks with U.S. companies about TikTok’s sale. But a recent legal move by China—its expansion of a list of technologies that require government approval for export, including apparently in a sale of TikTok—renders real the issue of non-compliance with the August 14 divestment order, and potentially raises unprecedented issues.
Hdeel Abdelhady-Accuity Q&A: COVID, Supply Chains & Sanctions
In the second part of her Q&A with Accuity, Hdeel Abdelhady shared her thoughts on the current and potential impacts of the COVID-19 pandemic on global supply chains, sanctions, and financial crime
Iran Sanctions: OFAC Exempts Medicine, PPE Manufacturers (EO 13902)
In guidance issued on June 5, 2020, OFAC explained that manufacturers in Iran of medicine, PPE, childcare items, and other essential supplies will be exempt from sanctions targeting Iran’s manufacturing sector pursuant to EO 13902.
Hdeel Abdelhady- Sanctions Compliance in a State of Flux
MassPoint Legal and Strategy Advisory PLLC’s Hdeel Abdelhady discussed sanctions trends and guidance, as well as issues related to the COVID-19 pandemic, in a live event presented by the Association of Certified Financial Crime Specialists (ACFCS) and Accuity.
U.S. Restrictions on International Tech Transfer in Academia, Business, Trade
U.S. Controls Over Foreign Access to and Influence on Technology and Research in 2020: A Quick Guide U.S. companies, academic and research institutions,…
OFAC Asserts Sanctions Jurisdiction Over US-Origin Technology
OFAC’s sanctions enforcement against SITA, the Switzerland-based provider of global air transport technology and services, premised U.S. sanctions jurisdiction on the provision of U.S.-origin technology and the involvement in transactions of networking hardware and servers located in the United States.
National Security Panel Urges AI Semiconductor Hardware Export Controls
Perceiving China’s technological ascendance as a threat, the United States has imposed defensive legal measures, including export controls, to curb foreign access to U.S. technology by illicit and lawful means. The approach has bipartisan backing across the U.S. government.
U.S. Sanctions on Nord Stream 2 and TurkStream Pipeline Projects (PEESA)
On December 20, 2019, the President signed into law the National Defense Authorization Act for Fiscal Year 2020 (NDAA), which authorizes the President to impose sanctions on foreign persons that knowingly sell, lease, or provide vessels for the construction of the Nord Stream 2 or TurkStream pipeline projects. The policies advanced by the NDAA are consistent with prior U.S. policy and legislation, particularly the Countering America’s Adversaries Through Sanctions Act. This MassPoint publication discusses PEESA’s policies, sanctions mechanics, the relationship between PEESA and CAATSA, and key takeaways.
OFAC Cosco Shipping Tanker (Dalian) Co., Ltd. General License K: Analysis
General License K authorizes, until 12:01 eastern time on December 20, 2019 (essentially, through the end of December 19 eastern time), the above-listed prohibited transactions where they directly or indirectly involve Cosco or entities owned 50% by Cosco and are “ordinarily incident and necessary to the maintenance or wind down of transactions.”
U.S. Sanctions Chinese Shipping Companies: Legal and Practical Points
The imposition of sanctions on the Chinese companies and executives—particularly on units of the high-profile, state-owned COSCO at a critical juncture in the U.S.-China trade war and shortly after both countries took conciliatory steps—reinforces the Trump Administration’s stated posture of aggressively enforcing Iran secondary sanctions in furtherance of its policy objectives.
Hdeel Abdelhady Talked to Payments Source on U.S. Dollar Alternatives
Hdeel Abdelhady shared her insights with PaymentsSource on a Russia-led effort to build a non-U.S. dollar payments system, to insulate against U.S. sanctions and U.S. control more broadly. Ms. Abdelhady has for years worked on the U.S.-dollar and financial system links to U.S. sanctions enforcement jurisdiction. Her work on the topic of U.S. dollar and financial system tied legal jurisdiction has been quoted, leveraged, and consulted frequently in the United States and abroad.
Hdeel Abdelhady Elected American Bar Foundation Fellow
Hdeel Abdelhady has been named a Fellow of the American Bar Foundation, a “global honorary society of attorneys, judges, law faculty, and legal scholars. Membership in the Fellows is limited to one percent of lawyers licensed to practice in each jurisdiction. Fellows are recommended by their peers and elected by the Board of the American Bar Foundation.
OFAC Expands Reporting Requirements
On June 21, the Office of Foreign Assets Control (OFAC) issued an interim final rule (IFR) substantially revising sanctions reporting regulations. The most significant amendment was to OFAC’s rejected transactions reporting rule, which now, for the first time, applies not just to U.S. financial institutions, but also to U.S. businesses, nonprofits, and individuals. The rule also appears to apply to foreign entities owned or controlled by U.S. persons. Public comments on the IFR are due by July 22, 2019.
Huawei and the U.S.-China Tech War
After talks with China’s president at the G20 summit in Japan, President Trump announced on June 29 that “he would allow” U.S. companies to continue to sell “product” to Huawei. The statement, construed by some as a “concession” or “reversal” of U.S. policy toward Huawei, has generated confusion and disagreement from China “hawks” in Congress and elsewhere. This rundown of Huawei legal and policy issues discusses the presidential statement, its lack of legal effect to date, its context, and why technology industry stakeholders need to understand the complete U.S.-China technology picture to navigate developments and mitigate risk.
CFIUS Orders Grindr’s Chinese Owner to Divest
Is a dating app a national security asset? Yes, in some cases. Foreign investment in U.S. businesses that collect and maintain U.S. citizens’ sensitive personal data is subject to national security reviews by CFIUS. From social networking to financial services to healthcare to consumer retail, companies across sectors collect, maintain, and have access to the sensitive personal data of U.S. citizens. The implications of the personal data-national security nexus are potentially wide-ranging for foreign investment in U.S. businesses.
China’s Rare Earths Export Controls: A Page From U.S. Law?
China might take a targeted approach to any restrictions on rare earth elements that echoes, or effectively duplicates, the approach of the United States, which is to control exports based on “end use” and “end user” where one or both conflict with or potentially undermine U.S. national security interests (which include technological leadership and economic security).
Hdeel Abdelhady on NPR: United States Ratchets Up Iran and North Korea Sanctions
MassPoint’s Hdeel Abdelhady spoke with NPR about the ratcheting up of U.S. sanctions, secondary sanctions, and the potential consequences of sanctions overuse. To learn more about the mechanics of U.S. sanctions, and particularly about the role of the American dollar, financial system, and economy in extending the global reach of U.S. sanctions, read Hdeel Abdelhady’s Reuters insight piece, Reimposed U.S. anti-Iran sanctions leverage American economic power.
U.S.-China Tech War: Whole of Government Legal Strategy
The U.S. government has adopted and is implementing a “whole-of-government” strategy to counter China. The whole-of-government approach entails a range of legal and policy measures to curb China’s access to U.S. technology, by lawful and unlawful means. These measures include, but are not limited to, stricter curbs on foreign investment in U.S. technology; restrictions on exports of “emerging technologies” like artificial intelligence; exclusions of Chinese firms from U.S. government and private supply chains through company bans; prosecutions of intellectual property theft; measures to counter “academic espionage” in American academic and research institutions; and, indirectly, and, indirectly, sanctions enforcement.
Russia Sectoral Sanctions Directives Apply to Trade-Based Debt
The Haverly case is instructive as it clarifies OFAC’s position, with respect to Haverly and likely more broadly, as to the meaning of “debt” under Directive 2, which prohibits, by U.S. persons and within the United States, dealings in “new debt” issued by parties that are listed on the OFAC-maintained Sectoral Sanctions Identifications List (SSIL) or not so listed but are owned 50% or more by one or more sanctioned parties.
Huawei Ownership and the Foreign Agents Registration Act
The United States has adopted a whole-of-government approach to counter China’s “economic aggression” or “economic espionage,” umbrella terms that encompass a range of conduct including IP theft, forced technology transfer, academic espionage, and influence operations in the United States. The whole-of-government approach illustrates that the most strategically significant and complex confrontation between the United States and China is not the “trade war.” Rather, the race to dominate future technologies like artificial intelligence and 5G underpins the most complex legal and policy issues between the two nations. The U.S.-China tech war, and the United States’ whole-of-government strategy, has put Chinese technology companies under the hot light of U.S. legal and political scrutiny. Companies like Huawei and ZTE, relative unknowns in the United States until recently, have found themselves on the wrong side of U.S. law enforcement.
Nonprofit Organizations and the Foreign Agents Registration Act
FARA was enacted in 1938, but only recently entered the public consciousness through the Special Counsel’s investigation of Trump campaign and administration officials. Following the indictment of Paul Manafort for FARA and other violations, and Michael Flynn’s remedial registration under FARA after his previously undisclosed work on behalf of foreign governments came to light, lobbyists, public relations professionals and law firms, among others, reportedly were moved to register as foreign agents or assess their FARA registration obligations
DOJ China Initiative: Academia, Research & Tech
On national security grounds, the United States is developing and implementing a whole-of-government approach to maintain the country’s technological edge through legal and policy measures to restrict Chinese access to U.S. technology and intellectual property, including by: (1) limiting or prohibiting certain foreign investment and commercial transactions; (2) adopting export controls on emerging technologies; (3) instituting supply chain exclusions; (4) curbing participation in academic and other research; and (5) combating cyber intrusions and industrial and academic espionage.[2] Additionally, concerns about Chinese government influence have spurred proposals to regulate the activities of entities viewed as Chinese government influence operators.
U.S.-China Trade, Technology & Global Policy Issues: INFOGRAPHIC
This graphic depicts key issues between the United States and China, as identified by the United States as of January 26, 2019. This is not an exhaustive depiction, but captures key categories and sub-categories of Chinese state and private practices, state policies, and state structural characteristics that are the subject of U.S. government complaints (as raised from within and outside of the Trump Administration).
Critical Minerals, National Security & Supply Chains (Audio)
Listen to the program on Critical Minerals, National Security, & Supply Chains featuring MassPoint’s Hdeel Abdelhady, Dr. Roderick Eggert. and Jared Wessel. The program was hosted by the American Bar Association and developed and co-sponsored by MassPoint PLLC.
Event: Critical Minerals, National Security, and Supply Chains
Now that the Trump Administration has declared a policy to reduce dependency on foreign sources for critical minerals, how will the Administration go about achieving its stated objective? What legal consequences—including in the areas of national security, trade, anti-corruption, and environmental law—might flow? Our multi-disciplinary panel will discuss the science and practical importance of “critical minerals,” recent and potential U.S. legal and policy developments, and the potential impacts of U.S. actions on minerals on manufacturing, supply chains, and the markets.
US-China Risks to American Academia Are So Real They Are Insurable
If there remain doubts that the U.S.-China trade war and technology war present real risks for U.S. colleges and universities, a recent report that a U.S. university has secured insurance against the risk of material reductions in Chinese student enrollment should put those doubts to bed. The risks are so real that they are insurable.
DOJ China Initiative Tackles “Chinese Economic Espionage:” Legal Issues for Academia
The Department of Justice (DOJ) recently launched an initiative to “Combat Chinese Economic Espionage.” Announced on November 1, 2018 by former Attorney General Jeff Sessions, the China Initiative acts on the Trump Administration’s previous findings “concerning China’s practices” and “reflects the Department’s strategic priority of countering Chinese national security threats and reinforces the President’s overall national security strategy.” The China Initiative presents emerging issues for academia, the technology industry, and the private sector broadly.
Hdeel Abdelhady Discussed Outer Space Property Rights at the Galloway Symposium
MassPoint’s Principal, Hdeel Abdelhady, presented on Rule of Law in the Exploration and Use of Outer Space at the annual Galloway Symposium on Critical Issues in Space Law. Ms. Abdelhady, along with her co-panelists, engaged in a comparative law discussion.
Brain Drain: Emerging Technologies Export Controls Could Spur Tech Inversions
The Department of Commerce, Bureau of Industry and Security, has begun the process of identifying “emerging technologies” that are essential to national security and, consequently, require export control. New export controls on emerging technologies could be burdensome, depending on the content of regulations and the manner of their enforcement. If the new regulatory regime is burdensome to the point that it prohibits (legally or practically) some emerging technology transfers to foreign parties, companies and others involved in emerging technologies– particularly their development–may seek arrangements, without evading or otherwise violating ECRA or applicable regulations, to ease collaborations and other engagement with foreign parties, including by some form of technology inversion.
Hdeel Abdelhady Briefed Chinese Delegation on Trade, Investment & Tech Ventures
Hdeel Abdelhady briefed a delegation of officials from China on U.S. legal and policy developments in the areas of trade, investment, and technology ventures and transfers. The event, hosted by the International Incubator in Maryland, provided mutual learning opportunities.
American Economic Power Fuels Sanctions
America’s economic and financial heft facilitates the extraterritorial reach of U.S. sanctions and other law, writes Hdeel Abdelhady. For example, global transactions denominated in U.S. dollars and processed through the U.S. financial system create a jurisdictional nexus between the United States and foreign parties, property, and events.
Tech Wars: Restrictions on Foreign Access to U.S. Technology
Measures to curb foreign access to U.S. technology have taken and will likely take various forms that will cut across industries and legal disciplines. Among them, as discussed below, are restrictions on foreign access to and influence on U.S. technology through (1) foreign investment, (2) supply chain exclusions, (3) limits on participation in academic and other research, (4) legal or political curbs on U.S. technology access or transfers through third countries, and (5) countermeasures against foreign control of raw materials essential to technological manufacturing and innovation.
U.S. Law as Trade War Weapon
The ZTE case puts into focus the Trump Administration’s apparent strategy to use U.S. sanctions, along with anti-corruption and anti-money laundering laws, as trade war weapons, specifically as “economic tools” and “tools of economic diplomacy” that “can be important parts of broader strategies to deter, coerce, and constrain adversaries.”
Critical Minerals: National Security, Trade, and Environmental Law Nexus
Against the Trump Administration’s ideological backdrop, a range of conventional and unconventional trade, economic and other measures have been and likely will continue to be taken on “national security” grounds, including domestically. These include measures to increase domestic production of “critical minerals” (among them rare earth elements)–essential to the production of consumer electronics, electric vehicles, defense articles, medical devices, and other manufactured articles. Such actions can be seen on the horizon, if one connects the dots between national security authorities under trade laws, the Administration’s stated goals and actions favoring increased domestic mining of critical minerals, and environmental laws that contain national security/national defense exceptions and are viewed by the Administration and extractives industry interests as prohibitive to domestic production of critical minerals and commercially viable terms.
Global Magnitsky Sanctions: The Swiss Army Knife
The Global Magnitsky Sanctions apply worldwide, without any requirement of a jurisdictional nexus with the United States. They define corruption broadly enough to capture a wide range of conduct and persons. The sanctions target “serious human rights abuse,” but do not define the term. Moreover, the sanctions are readily deployable. No tailored legislation, executive order, or other administrative process—other than a sanctions determination by the Secretary of Treasury in consultation with the Secretary of State—is required to impose sanctions anywhere, anytime. Given their global reach, substantive breadth, and wide applicability, the Global Magnitsky Sanctions have distinct utility value as they can be readily employed for multiple legal, policy and strategic objectives. They are the Swiss Army Knife of sanctions. To date, 78 individuals and entities have been sanctioned for corruption and human rights abuses. The most recent of these sanctions actions, against Turkey, has triggered speculation as to its motives and objectives. This is discussed below, as are some of the provisions that suggest the Global Magnitsky Sanctions were formulated for sweeping applicability and enforcement latitude.
A Localized Approach to Anti-corruption in Afghanistan’s Mining Sector
Thinking beyond the parameters of standard “international development” and industry playbooks, the lack of progress (or, in some cases, regression) in developing Afghanistan’s mining sector should induce interested government, industry and nongovernmental actors to consider if and how laws, policies and technical assistance can be formulated, modified and implemented in ways that might enhance their effectiveness in practice, rather than just on paper. Afghanistan, as is well known, is a Muslim majority nation in which Islamic law (as locally interpreted and implemented formally and informally) plays a significant role. Islamic law (Shari’ah), provides rules and precedents applicable not only to family matters and ritual worship, but also to business transactions, public governance, market regulation, and limitations on government dominion over private property. in these areas, and others, Islamic law and historical practices provide rules and precedents applicable to the regulation, administration and conduct of mining and other extractives businesses. These laws and precedents are just as robust, and more so in some cases, as international and foreign laws and standards.
Personal Remittances and Proceeds of Inheritances from Iran After U.S. Withdrawal from Iran Deal
For U.S. persons seeking to engage in permitted noncommercial, personal remittance or inheritance-related transactions, the higher risk sensitivity of some third country (and U.S.-based) financial institutions may complicate (or thwart in some cases), legal transactions. In light of this, persons seeking to engage in such legal transactions in the post-U.S. JCPOA withdrawal environment should exercise extra care in initiating and executing legal transfers with third country financial institutions.
Canary in the Cobalt Mine: Glencore Corruption Probe May Not Be a One Off
The U.S. arm of Glencore, the global commodities trading and mining giant, has been served a subpoena by the U.S. Department of Justice, according to news accounts. The DOJ’s subpoena reportedly seeks documents and information pertaining Glencore’s business in the Democratic Republic of Congo (DRC), Nigeria and Venezuela to assess potential violations of U.S. anti-money laundering laws and the Foreign Corrupt Practices Act (FCPA), the principal U.S. law essentially prohibiting the bribery of foreign officials for business gain by U.S. companies and others subject to United States’ jurisdiction (broadly construed and applied).The Glencore subpoena may not be a one-off and it should be viewed– at least for risk assessment and compliance improvement purposes– as potentially part of a larger U.S. strategy to proactively target corruption and, by extension, money laundering, in Africa and Africa’s extractives industries. (The wider context is that the Trump Administration views U.S. anti-corruption, anti-money laundering and sanctions laws and their enforcement as “tools of economic diplomacy”, including to advance trade and other policy objectives).
Global Magnitsky Regulations: U.S. Multinationals and Dual Citizens Have Heightened Sanctions Exposure
U.S. multinational companies/entities as well as dual citizens/nationals should understand their heightened sanctions exposure under the Global Magnitsky Act, EO 13,818 and the GloMag Regulations. Multinational companies/entities would be well-advised to update their risk-based compliance programs and educate their relevant personnel to make compliance more likely, including by avoiding inadvertent violations of the Global Magnitsky Act, EO 13,818 and the GloMag Regs.
ZTE: Was the Export Ban the Right Penalty?
The sentiments expressed by Senator Rubio and others reflect commercial, competition, policy, and strategic concerns held by business, policy makers, defense and national security officials, and others about China and Chinese firms like ZTE and Huawei. But when raised in the context of and as a justification for a specific legal enforcement action, the sentiments blur the lines between what should primarily be an enforcement based on facts and applicable laws, rather than an instrument for advancing wider policy objectives that are not specifically advanced by the laws applicable to the conduct for which ZTE was penalized. And, while Secretary Ross’ stated rationale to impose the harsher penalty to change ZTE’s behavior may have been sound, the recommendation of the career professionals with expertise in sanctions and export controls enforcement should, perhaps, have carried the day. Secretary Ross’ description of the process leading to the export ban and the mess that has followed it give more reason to ask whether, in the first place, the export ban was the appropriate remedy as a matter of applicable laws and the objectives served by them.
A”Trump Trade Doctrine”? A Decades-Long Vision of Linking Economic Interests to U.S. Military Might
Is there a Trump trade doctrine? For decades, Trump has linked international trade to U.S. military dominance.
U.S.-China Trade and Tech War on Three Fronts
Much of the talk of trade war between the United States and China, and perhaps other countries, has focused on traditional trade measures and counter-measures like tariffs that strike at the core of international trade: most basically, the movement of goods and services across international borders. But there are two additional fronts of a U.S.-China trade war (thus far): intellectual property and the use of U.S. sanctions and other laws to “coerce and deter” economic rivals like China.
Trump Administration Supercharged Global Magnitsky Corruption and Human Rights Sanctions
Beyond the parameters of the Global Magnitsky Act, EO 13818 markedly enlarges the range of sanctionable conduct and persons. The differences between the language of EO 13818 and the Global Magnitsky Act are substantive and significant. In several instances, EO 13818 expands sanctions by omitting the Act’s qualifying language, adding new bases for sanctions, and/or leaving key terms undefined. Key instances of EO 13818’s broad and/or uncertain language are discussed below.
Iran Sanctions Update: U.S. Withdrawal From JCPOA
The United States today unilaterally withdrew from the Iran Nuclear Deal (the Joint Comprehensive Plan of Action (JCPOA)). The U.S. Treasury Department and the White House have announced that those sanctions that were lifted as part of the JCPOA framework will, as expected, be re-imposed. The Office of Foreign Assets Control at Treasury (OFAC) announced today that it will institute 90-day and 180-day “wind down” periods, after which previously lifted U.S. sanctions will again take effect. For example: Starting August 7, 2018, the import to the United States of Iranian carpets and certain foodstuffs will be prohibited, as will the export and re-export to Iran of commercial passenger aircraft and related parts and services. Starting on November 5, 2018, foreign financial institutions will be subject to U.S. sanctions for transactions with the Iran Central Bank and designated Iranian financial institutions.
Trump Administration Targets Chinese Dominance, Corruption in Africa
Notably, in the two pages of the NSS that are devoted to the National Security Strategy in the Africa context, none of Africa’s 54 nations are mentioned, but China is named twice. The NSS notes with concern China’s “expanding . . . economic military presence in Africa, growing from a small investor in the continent two decades ago into Africa’s largest trading partner today.” China’s methods and influence in Africa are described unflatteringly. “Some Chinese practices,” the NSS states bluntly, “undermine Africa’s long-term development by corrupting elites, dominating extractive industries, and locking countries into unsustainable and opaque debts and commitments.”
Trump Attorney’s Curiously Public Suspicious Activity Report
Federal law prohibits the disclosure of the existence of Suspicious Activity Reports. So how did the existence of a Suspicious Activity Report linked to the President’s lawyer become public?
United States Directly Sanctions Foreign Government Officials for Corruption
April 6, 2018 | By Hdeel Abdelhady United States Directly Sanctions Foreign Government Officials for Corruption On December 20, 2017, the U.S. President…
U.S. Multinationals, Dual Citizens Subject to Global Magnitsky Sanctions
The Global Magnitsky Act defines a “foreign person” as “any citizen or national of a foreign state (including any such individual who is also a citizen or national of the United States), or any entity not organized solely under the laws of the United States or existing solely in the United States.” Accordingly, under the Global Magnitsky Act, individuals who are dual (or more) nationals and companies that are organized under U.S. law(s) and foreign law(s) or exist (e.g., are present, authorized to conduct business) in the United States and one or more foreign jurisdictions, like “foreign persons” completely lacking U.S. status, are apparently subject to sanctions for committing or facilitating sanctionable corrupt acts and human rights abuses. Thus, these “U.S. Persons,” when regarded as “foreign persons” under the Global Magnitsky Act, have additional sanctions exposure that would not apply to, for example, individuals holding only U.S. citizenship or companies organized only under U.S. law(s) and existing only in the United States.
Global Magnitsky Sanctions Are a Powerful Weapon Against Corruption and Human Rights Abuse
EO 13818 directly targets foreign government officials and private parties who commit or enable human rights abuses and certain corrupt acts. The Order also employs extraordinary theories of liability. For example, EO 13818 holds current and former “leaders” of foreign entities (government and private) strictly and vicariously liable—and thus sanctionable—for the corrupt acts, during a leader’s tenure, of their entities. The Order also imputes the sanctioned status of a blocked private or government entity to its current or former “leaders,” if the entity was blocked “as a result of activities related to the leader’s or official’s tenure.” Additionally, EO 13818 treats as a corrupt act the transfer or facilitation of the transfer of corrupt proceeds by current or former foreign government officials and “persons acting for or on their behalf.” These three bases for liability, among others, are unique to EO 13818—they are not provided for by the Global Magnitsky Act.
Hostility Toward Iran Nuclear Deal May Have Chilling Effect on Legal Transactions Under U.S. Sanctions
The prospect of increasingly hostile policy and legal actions toward Iran may be enough to thwart or make more difficult Iran-related transactions that are (and might remain) legal. Parties planning to engage in such legal Iran-related transactions should take note and, if appropriate, action ahead of any changes in law or adjustments in Iran-related risk-assessments by banks and individual and commercial parties.
Ukraine/Russia Sanctions: Prohibited Debt and Equity Under OFAC Directives 1, 2 or 3
As discussed in an earlier MassPoint Business Update on OFAC Directive 1, it was expected that OFAC would issue, by November 28, 2017, a general license authorizing derivative transactions in prohibited debt and equity (see table below), consistent with the debt maturity limitations imposed by CAATSA. General License 1B does not authorize primary transactions by U.S. persons (wherever located) or in the United States in assets subject to the prohibitions of Directives 1, 2, or 3.
MassPoint Named “Corporate Law Firm of the Year” USA in Finance Monthly Global Awards 2017
MassPoint Legal and Strategy Advisory PLLC (“MassPoint PLLC“), a boutique Washington. D.C. law and strategy firm, was named 2017 Finance Monthly’s Global Awards “Corporate Law Firm of the Year” for the United States.Finance Monthly is a “global publication delivering news, comment and analysis to those at the centre of the corporate sector.” “The Finance Monthly Global Awards recognise and commend financial organisations and advisors worldwide who have performed in the highest level possible and celebrate the success, innovation and quality of firms working in, and with, the financial and legal sectors across the globe.”
OFAC DIRECTIVE 1 AS AMENDED SEPTEMBER 29, 2017
As required by the Countering Russian Influence in Europe and Eurasia Act of 2017 (CRIEEA), the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) on September 29, 2017 amended and reissued OFAC Directive 1 (Directive 1). As amended, Directive 1 continues to prohibit certain “new” debt, equity, and related transactions involving entities subject to U.S. Sectoral Sanctions targeting Russia’s financial services sector. This Business Update discusses the background to and mechanics of Directive 1 as amended and reissued.
Banks, Credit Unions and Other Financial Insitutions as Deputized Law Enforcement
The logic and law enforcement value of imposing anti-financial crime obligations on financial intermediaries are clear. Nevertheless, a reassessment is now appropriate, particularly given (1) increasing legal and regulatory demands on financial intermediaries; (2) the exclusion, through “derisking,” from the financial system of small and medium businesses (SMEs), nonprofit organizations, money services businesses (MSBs), and correspondent relationship-dependent banks; and, (3) overarching questions as to whether the financial and administrative costs of compliance within the current legal framework—generally or at specific points—yield commensurate law enforcement benefits without unduly harming the legitimate interests of individuals, businesses and other financial system stakeholders.
Hdeel Abdelhady Discussed the NYDFS Habib Bank Enforcement Action
MassPoint’s Founder and Principal, Hdeel Abdelhady, discussed the legal significance and potential commercial implications of the NYDFS’ enforcement action against Habib Bank at a time of correspondent banking derisking.
Dana Gas Deems its Own Sukuk Unlawful: Parsing the Dana Gas Statement
Dana Gas PJSC, the Sharjah, UAE-based gas producer, has unilaterally declared “unlawful” sukuk[2] instruments issued by the company in 2013 [3] (through, as issuer, Dana Gas Sukuk Limited, a Jersey public company with limited liability). This post discusses some of the Shari’ah, UAE law, and factual issues triggered by the Dana Gas statement on the unlawfulness of its sukuk.
China’s One Belt One Road Could Disrupt U.S. Legal Dominance
The OBOR, even if partially successful, would, as many analysts and commentators have noted, alter the global trade landscape, if not “shake up” the global economic order in place since the end of World War II. Less discussed (except, for example, in this 2015 MassPoint Occasional Note) is one likely secondary effect of the OBOR and other trade and finance initiatives that are not centered on the U.S. dollar or the Bretton Woods system: the likely curtailment of the global reach of U.S. law.
Hdeel Abdelhady to Speak on Emerging Markets Social Impact Investment at NYU Law’s Grunin Center
MassPoint News
Hdeel Abdelhady is due to speak about planning for and managing uncertainty in social impact investment, particularly in emerging markets. Ms. Abdelhady, who is MassPoint’s Founder and Principal, has 15 years of experience in transactions, disputes, and regulatory matters in and involving emerging and developing markets in Africa, Asia, the Middle East, and Latin America.
Congressional Hearing on Terrorism Financing Probes Bank Secrecy Act Data Effectiveness, Potential BSA Amendments
On April 27, 2017, I attended a Congressional hearing on “Safeguarding the Financial System from Terrorist Financing,” held by the House Committee on Financial Services’ Subcommittee on Terrorism and Illicit Finance (the “Subcommittee”). The sole witness was Mr. Jamal El-Hindi, Acting Director of the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury charged with protecting the financial system from money laundering, terrorism financing and other illicit activities. The hearing’s purposes were to examine the methods and efficacy of FinCEN data collection, processing and information sharing and whether the Bank Secrecy Act (BSA) and USA PATRIOT Act should be amended to improve FinCEN’s anti-money laundering (AML) and counter-terrorism financing (CFT) capacities and performance. In this brief MassPoint update, I highlight BSA data collection and usage numbers and some of the questions and issues that appeared to be of particular interest and/or concern to Congress members in attendance, taking into account the nature and frequency of the questions asked, the tone of questions, and related requests for additional or clarifying information from FinCEN.
Nonfinancial Risk for Banks: Environmental Social and Governance (ESG)
As banks continue to manage regulatory and risk complexity, they should add Environmental, Social, and Governance (ESG) and general business conduct issues to their nonfinancial risk matrices. ESG and business conduct issues—whether or not the subject to legal prescriptions— are no longer ancillary to risk and reputation management. Nor can ESG and business conduct awareness be regarded as merely ornamentation to enhance corporate appearance (or conceal corporate blemishes).
Hdeel Abdelhady Appointed ABA Liaison to Dubai International Financial Centre Courts (DIFC Courts)
Hdeel Abdelhady has been appointed to serve as the American Bar Association (ABA) Section of International Law’s Liaison to the Dubai International Financial Centre Courts (DIFC Courts). Ms. Abdelhady, who is MassPoint’s Founder and Principal, has lived and worked in Dubai and previously worked in the DIFC and collaborated with DIFC entities. Ms. Abdelhady currently serves as a Co-Chair of the ABA Section of International Law’s Middle East Committee, which she has led for three years as a Co-Chair. She also serves on the Board of the American Bar Association Rule of Law Initiative’s Middle East and North Africa Council and as the ABA Section of International Law’s Liaison to the Organisation for Economic Co-operation and Development (OECD).
After Election 2016: 5 Legal Issues to Watch in 2017
The dismantling of Obama-era laws and regulations, broader deregulation, and economic and political nationalism were and remain themes of the 2016 U.S. Election and presidential transition period. Donald Trump and members of the incoming Republican-controlled Congress have singled out for repeal or significant modification the Affordable Care Act (aka “Obamacare”) and the Dodd-Frank Wall Street Reform and Consumer Protection Act, along with trade, immigration, foreign affairs, and environmental laws, regulations, and policies. If taken, these actions will not only effect legal changes in specific areas, they will create legal and policy voids that may be filled by U.S. states and localities, foreign governments and multilateral and non-governmental organizations, and the private sector. Five legal and business issues and dynamics to watch in 2017 are highlighted here.
Do State Regulators Have Authority to Enforce OFAC Sanctions?
The enforcement of OFAC-administered sanctions by a state agency—even against banks by a banking regulator operating in a dual banking system—raises fundamental constitutional and other legal questions. Chief among them is the overarching question of whether U.S. states have authority to directly or effectively enforce OFAC-administered sanctions, particularly independently and prior to enforcement by competent federal authorities—namely OFAC. This question and some of the legal issues and policy and practical considerations appertaining to it are discussed in detail in a forthcoming publication. This document provides a summary preview of some of the key legal issues discussed in that publication. Additional summary previews may be provided separately.
Non-Dollar Trade Could Curtail the Global Reach of U.S. Sanctions and Other Laws
American economic and financial heft facilitates the extraterritorial reach of U.S. law. For example, global transactions that are denominated in U.S. dollars and processed through the U.S. financial system “touch” the United States, come within its jurisdiction and create a jurisdictional nexus to foreign parties, property and events associated with those transactions.
BNY Mellon to Pay $14.8 Million to Settle FCPA Corrupt Hiring Charges
BNY’s internships for sovereign wealth fund officials were bribes. Key SEC findings and takeaways for compliance.
Weaponized Law as a Trade Tool
The ZTE case illuminates a potentially transformative shift in how the United States deploys its legal and regulatory authority in the international economic arena—a development with profound implications for global commerce, compliance practices, and the rule of law.
Hdeel Abdelhady Quoted in FinOps Report
Hdeel Abdelhady was quoted in FinOps Report on the AML/compliance implications of President Trump’s designations of drug cartels as FTOs.
Consumer-Oriented Insolvency Risk Allocation in Islamic Retail Banking
Hdeel Abdelhady proposed consumer-oriented insolvency risk allocation in Islamic retail profit sharing investment account reflecting the operation of those accounts in practice.
Hdeel Abdelhady in Law360: Nippon Steel-U.S. Steel CFIUS Challenge
MassPoint Principal Hdeel Abdelhady analyzes Nippon Steel and U.S. Steel’s CFIUS challenge in Law360, examining key questions of presidential authority to prohibit foreign investment on national security grounds.
Hdeel Abdelhady, Who’s Who Legal
Who’s Who Legal recognized Hdeel Abdelhady for Corporate M&A and Governance. Hdeel Abdelhady is MassPoint’s founder and principal.
Hdeel Abdelhady Discussed Islamic Finance at Harvard Law School
MassPoint’s Founder and Principal, Hdeel Abdelhady, will speak at a program on Islamic Finance at Harvard Law School. Ms. Abdelhady, who has acted as legal counsel to financial institutions, companies, and non-profit organizations on Islamic Finance, banking, and governance matters, teaches a course in Transactional Islamic Law at The George Washington University Law School in Washington, D.C.
Hdeel Abdelhady to Speak at UNCITRAL’s Spring Meeting in South Korea
Hdeel Abdelhady is scheduled to speak at UNCITRAL’s Asia Pacific spring conference in Incheon, South Korea, on global sales and business. More information about the conference is available here (and in Korean here).