March 14, 2017

A compilation of recent and topical MassPoint publications and updates on compliance, governance, and the climate around foreign investment in the United States.


Identifying UAE “Foreign Officials” for Anti-Corruption Compliance Purposes

Companies doing business in the UAE or with enterprises owned directly or indirectly by a UAE Government party at any level should be aware that under UAE law, the definition of “public official” (i.e., government official) includes employees and directors of enterprises in which a UAE Government party holds less than a majority ownership stake and does not, formally or
effectively, exercise control. This UAE law classification has potential implications for U.S. and other businesses subject to the Foreign Corrupt Practices Act or similar anti-bribery and anti-corruption laws.

Issues: State-Owned Enterprises | FCPA | Anti-Corruption Compliance |UAE 

Senate Bill to Combat ISIS Targets “Jurisdictions of Terrorism Financing Concern”

On February 13, 2017, Senator Bob Casey (D-PA) introduced in the Senate the “Stop Terrorist Operational Resources and Money Act” (the “STORM Act”). The purpose of the STORM Act is to “establish a designation for jurisdictions permissive to terrorism financing, to build the capacity of partner nations to investigate, prosecute, and hold accountable terrorist financiers, to impose restrictions on foreign financial institutions that provide financial services for terrorist organizations, and for other purposes.”

Issues: Anti-Money Laundering | Counter-Terrorism Financing | Banking | Correspondent Banking | Derisking 

Event- Money Laundering and Lawyers’ Obligations After the Panama Papers

As Co-Chair of the Middle East Committee of the American Bar Association Section of International Law, Hdeel Abdelhady organized and will moderate a program, “Has the Legal Profession Lost its Moral Compass? The Panama Papers, Lawyers’ Professional Ethics and Due Diligence Obligations.” The program features a distinguished panel and is scheduled to take place at the ABA Section of International Law Spring Meeting in April 2017.

Issue: Anti-Money Laundering | Panama Papers | Ethics

Trump’s Foreign Policy May Further Strain Foreign Correspondent Banking

Donald Trump’s “America First” foreign policy and stated commitment to working multilaterally to combat terrorism financing may further strain foreign correspondent banking relationships (FCBRs), which have suffered from de-risking as major global and regional banks have exited FCBRs that have posed (or have been perceived to pose) more legal risk and administrative costs than commercial benefits. Banks in regions affected by derisking, such as the Middle East and Caribbean, should take note and consider the steps outlined here.

Issues: Anti-Money Laundering | Counter-Terrorism Financing | Correspondent Banking | Derisking | Middle East Banks | Caribbean Banks 

Public Hearing: Chinese Investment in the United States: Impacts and Issues for Policymakers

On January 26, 2017, the U.S.-China Economic and Security Review Commission held a public hearing on “Chinese Investment in the United States: Impacts and Issues for Policymakers.” The hearing followed the Commission’s November 2016 Annual Report to Congress, in which the Commission recommended, among other things, a bar on investment in the United States by Chinese state-owned enterprises. MassPoint has covered these issues, such as in: Proposals to Curb Foreign Investment in the United States Gaining Steam After the Election and Foreign Investment in U.S. Agriculture Under Scrutiny).

Issues: State-Owned Enterprises | Foreign Investment in the United States 

After Election 2016: 5 Legal and Business Issues to Watch in 2017

The dismantling of Obama-era laws and regulations, broader deregulation, and economic and political nationalism were themes of the 2016 U.S. Election. Donald Trump and members of the 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. Such 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. On January 2, 2017, Hdeel Abdelhady outlined five legal and business issues to watch in 2017 (infographic available here).

Issues: Regulation | Financial Services Regulation | Private Sector ESG/CSR/Ethics | Sanctions

Event- Iran After Partial Sanctions Relief and U.S. Elections: Legal, Risk, and Practical Issues for Business 

In November 2016, MassPoint co-sponsored a program with the ABA Section of International Law and the law firm of Bryan Cave on the Iran Nuclear Deal and sanctions following U.S. Presidential and Congressional Elections. The program featured a multi-disciplinary panel, garnered over 190 registrants, and was written and principally organized by Hdeel Abdelhady. Participants represented a wide range of industries, from financial services to healthcare to higher education, and participated live and via the web from the United States and abroad.

Issues: Iran | Iran Nuclear Deal | OFAC |Sanctions | Middle East |Foreign Policy  

Proposals to Curb Foreign Investment in the United States May Be Gaining Steam After the U.S. Election

Major acquisitions of U.S. businesses by foreign firms have in recent years garnered increasing attention and push back in the United States. Acquisitions of U.S. businesses by state-owned enterprises and their subsequent commercial activities have generated the most attention and backlash. In response to high value takeovers of U.S. businesses in sectors that have national security value or otherwise touch national interests—such as technology and agriculture—members of Congress, industry associations, and others have demanded modifications to the U.S. national security-based foreign investment review process, carried out by the Committee on Foreign Investment in the United States (CFIUS).

Issues: Foreign Investment in the United States | CFIUS  | National Security | Food Security | Agriculture  

Senate Bill Makes it Easier to Litigate Against State-Owned Enterprises in U.S. Courts

To deprive state-owned enterprises of the tactical advantage of asserting sovereign immunity in U.S. courts, Senator Chuck Grassley (R-IA) introduced the State-Owned Entity Transparency and Accountability Reform (STAR) Act of 2016, “a bill to improve the Foreign Sovereign Immunities Act of 1976, and for other purposes.” Specifically, the STAR Act would remove a level of specificity required to link a specific legal entity to commercial activity by amending the FSIA to make “commercial activity . . . attributable to any corporate affiliate of the agency or instrumentality that (A) directly or indirectly owns a majority of shares . . . and (B) is also an agency or instrumentality of a foreign state.”

Issues: Sovereign Immunity State-Owned Enterprises 

Information Has Democratized Business Conduct Regulation. Adjust Risk and Compliance Thinking Accordingly.

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.

Issues: Corporate Governance | Business Conduct ESG/CSR | Business Ethics | Social Media Risk | Legal Risk | Reputation Risk