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 China under the Foreign Agents Registration Act (FARA), sanctions, and export controls. FARA is a law from 1938 that…
OFAC - Swedbank Latvia Settlement Settlement Highlights Importance of Integrating Geolocation and Know Your Customer Data Hdeel Abdelhady | June 23, 2023 | PDF The recent settlement between the Office of Foreign Assets Control (OFAC) and Swedbank Latvia for apparent violations…
Sanctions Event: Hdeel Abdelhady Hdeel Abdelhady will speak at the Georgetown Law School Journal of National Security Law and Policy's National Security and the Economy in the 21st Century: Foreign Investment, Supply Chains, and Sanctions. The event, scheduled for March 8,…
The United States and its allies have unleashed a barrage of sanctions on Russia, in response to the invasion of Ukraine. Here, we discuss some of the blocking and non-blocking sanctions imposed on VTB, VEB, the Russian Direct Investment Fund, and Russia's Central bank.
Sanctions Update ▪ October 4, 2021 ▪ PDF OFAC Authorizes Afghanistan Humanitarian Aid and Activities Otherwise Prohibited by Counter-Terrorism Sanctions, Publishes FAQs On September 24, 2021, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued two general licenses…
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.
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).
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.
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.
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. Controls Over Foreign Access to and Influence on Technology and Research in 2020: A Quick Guide U.S. companies, academic and research institutions, and individuals are facing greater scrutiny and regulation of their activities with foreign parties involving U.S. technology and…
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.
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.
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.
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.”
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.
MassPoint Legal and Strategy Advisory's Hdeel Abdelhady spoke about FARA enforcement mechanisms, recent and historical enforcement, recent developments and their implications, and questions that might arise in the near future. Ms. Abdelhady's presentation materials are provided here as a resource.
Ms. Abdelhady addressed how the CFTC's current investigation of Glencore and its broader anti-corruption plans might fit with the Trump Administration's wider anti-corruption strategy targeting the extractives industry globally, as well as the how the CFTC, which lacks direct FCPA enforcement authority, might take a page from the NYDFS' playbook and indirectly enforce an anti-corruption agenda under the Commodities Exchange Act.
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 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.
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.
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.
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 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).
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.
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.
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.
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.
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).
The “Protect Our Universities Act of 2019” is a a bill “to create a task force within the Department of Education to address the threat of foreign government influence and threats to academic research integrity on college campuses, and for other purposes." Among other things, the Bill would restrict foreign student participation in federally funded academic research deemed "sensitive" to national security.
Under amended Section 560.543 of the ISTR, individuals who are U.S. citizens and permanent residents “are authorized to engage in transactions necessary and ordinarily incident to the sale of real and personal property in Iran and to transfer the proceeds to the United States,” but only if the real and personal property was (1) “acquired before the individual became a U.S. person” or (2) was “inherited from persons in Iran.
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
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. Additionally, concerns about Chinese government influence have spurred proposals to regulate the activities of entities viewed as Chinese government influence operators.
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).
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.
The Trump Administration's newly released Africa Strategy is likely to bring greater anti-corruption enforcement, particularly against Chinese state-owned and private firms, as well as against African officials, and African and third country private parties. Extractives industries, particularly involving nonfuel minerals like cobalt, are likely to be of particular interest.
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.
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.
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.
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 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.
America's economic and financial heft facilitates the extraterritorial reach of U.S. sanctions and other law. 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.
The Global Magnitsky Act and Global Magnitsky Sanctions (GMS) are in the public discourse as a result of recent events, such as the case of U.S.-based journalist Jamal Khashoggi and the imposition of Global Magnitsky Sanctions on two Turkish officials in August. To help the public understand the Global Magnitsky framework, MassPoint Legal and Strategy Advisory has published the Global Magnitsky Sanctions FAQs
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.
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.”
Some Congress members are lobbying the Administration to impose human rights sanctions on Chinese officials and companies responsible for or complicit in abuses against China’s Uighur Muslim minority and other minorities. Two companies named, Dahua Technology and Hikvision, are very large, China-based global firms that produce surveillance products and systems. The bottom line is that the tech industry should take note of the development (even if no sanctions are imposed), as it foreshadows the legal and reputation risk issues they will, without doubt, face in connection with tech-enabled abuses, privacy encroachments, and other conduct by consumers of tech products and services.
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.
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.
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.
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.
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).
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.
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.
Other of Mr. Trump’s statements, including dating back decades, hint that he views trade as “unfair” when other nations fail to compensate the United States for providing the secure conditions under which they trade and prosper. In 1987, Citizen Trump took out full page ads in three major newspapers criticizing U.S. “foreign defense policy” for its lack of “backbone.” Why, asked Mr. Trump, were foreign nations like Japan “not paying the United States for the human lives and billions of dollars we are losing to protect their interests?” In a 1988 interview with Oprah Winfrey, Mr. Trump wondered why Kuwait, “where the poorest people live like kings,” was not paying the United States “25 percent of what they’re making” from oil sales when “we make it possible for them to sell their oil.” More recently, to extract trade concessions, the President reminded South Korea of its reliance on the United States for its security.
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.
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.
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.
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.”
Magnitsky Laws and Sanctions Series, No. 4 | April 6, 2018 | By Hdeel Abdelhady Departing from Prevailing Legal Standards, United States Directly Sanctions Foreign Government Officials for Corruption On December 20, 2017, the U.S. President issued Executive Order 13818 “Blocking the…
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.
As the above description indicates, the Sergei Magnitsky Act targets persons and places tied to specific events that occurred in one country. Moreover, the Sergei Magnitsky Act can be read to have been adopted or operate as an alternative or last recourse for justice and accountability, following Congress’ findings that there was a denial of “any justice or legal remedies” to Mr. Magnitsky by “all state bodies of the Russian Federation” and “impunity since his death of state officials.” In contrast, the Global Magnitsky Act contains no analogous Congressional findings, nor does it expressly state or imply that it is a last or alternative resort where adequate legal processes to adjudicate corruption or human rights abuses are unavailable in foreign countries where relevant events took place or parties are located, or before foreign tribunals to which relevant states have submitted to jurisdiction. Instead, the Global Magnitsky Act’s default position is the applicability of U.S. sanctions (supported by “credible evidence”) without the requirement of a jurisdictional nexus with the United States. Accordingly, the Global Magnitsky Act asserts U.S. universal jurisdiction over the corrupt acts and human rights abuses it targets. EO 13818 goes much further.
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.
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.
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. The program, entitled “Islamic Finance: Principles and Strategies,” will take place on March 6, 2018 at the Harvard Law School in Cambridge, Massachusetts. Program information is available via Harvard Law School.
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 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.”
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.
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.
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.
This post discusses these issues in Dana Gas sukuk matter and offers some observations and lessons that can be drawn from the governing law and forum selection questions raised by the Dana Gas sukuk matter. As this post entails post hoc discussion of the Dana Gas sukuk offering based on publicly available information, there is an element (or more) of Monday morning quarterbacking, and this should be borne in mind. Nevertheless, the general observations and potential lessons—which are not unique to the Dana Gas sukuk or Islamic transactions—should be read for their generality.
Dana Gas PJSC, the Sharjah, UAE-based gas producer, has unilaterally declared “unlawful” sukuk instruments issued by the company in 2013  (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.
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 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.
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.
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 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).
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.
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.
Traditionally businesses have looked to contractual terms, industry groups, legislatures, regulators and other conventional authorities to identify and manage commercial, legal, and compliance requirements and risks. In today’s interconnected, information rich, and reputation-conscious business world, this model is outdated and insufficient. It creates blind spots that can expose businesses to commercial, legal, and compliance risks from sources that traditional models ignore, misunderstand, or underestimate. In the same ways that the internet and social media have enabled non- “establishment” actors to communicate and amplify political messages, these and other tools of the information/new media age have enabled non-traditional actors to effectively influence business conduct standards. As a result, constituencies and issues that not so long ago were marginal or viewed as niche or inconsequential are now relevant, and for some businesses and industries they are integral.
May 2016 Who’s Who Legal has recognized Hdeel Abdelhady for Corporate: M&A and Governance, in its 2016 listing of the world’s leading lawyers. Who’s Who Legal is a global listing of top lawyers who are selected for inclusion by surveying private practitioners,…
Hdeel Abdelhady was a guest on WVON Radio Chicago's African Diaspora Today. She and fellow guest Dr. John Mbaku of the Brookings Institution took part in an engaging discussion of the Grand Ethiopian Renaissance Dam, the Egyptian and Ethiopian positions, and related issues.
The imposition of Global Magnitsky anti-corruption sanctions on two Cambodian related to the Ream Naval Base is strategically significant in the context of U.S. concerns about China's activities and influence in Cambodia.
Several pieces of legislation are pending in Congress to more comprehensively shore up the U.S. position in the U.S.-China technology race. The Strategic Competition Act of 2021 illustrates clearly the official U.S. view of academia’s role in the U.S.-China technology race, and the links between U.S. policies and legal measures to regulate foreign access to U.S. science and technology within and across the private, public, and academic sectors.