New U.S. Restrictions on Russia: OFAC Guidance and Industry-Specific Sanctions

OFAC Expands the 50 Percent Rule

Last month, the Department of Treasury’s Office of Foreign Assets Control (OFAC) released new guidance related to entities owned or controlled by persons designated as a Specially Designated National (SDN) on OFAC’s SDN list.  Although the guidance leaves intact the current meaning “50 percent rule,” the rule will now allow OFAC to take a far broader approach in determining when the 50 percent rule applies.

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Who’s a “Foreign Official”? Supreme Court Could Clarify Key FCPA Term

On August 14, 2014, Joel Esquenazi and Carlos Rodriguez filed a Petition for a writ of certiorari in the U.S. Supreme Court seeking clarification of a key term in the Foreign Corrupt Practices Act.  Among other arguments, Esquenazi and Rodriguez (the “Petitioners”) state that the FCPA “leaves open the pivotal question of who qualifies as a ‘foreign official’” because the law does not define what it means to be an “instrumentality” of a foreign government.  The Department of Justice has waived its right to respond to the Petition, possibly signaling that the government believes the issue does not warrant the Court’s review.  Last week, the Washington Legal Foundation and the Independence Institute, a pro-business policy group and think-tank respectively, filed a friend-of-the-court brief in support of the Petition, arguing that the case is of exceptional importance to the business community.

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EU Strengthens Economic Sanctions Against Russia

The European Union (EU) put into effect on Friday (September 12, 2014) a new round of economic sanctions against Russia over its role in Ukraine.  The new measures include further restrictions on (i) dual-use goods and technology to specified entities; (ii) the provision of services in relation to projects regarding deep water oil exploration and production, arctic oil exploration and production, or shale oil projects in Russia; (iii) services related to goods and technology listed in the EU’s Common Military List (CML); and, (iv) access to capital markets.  They also introduce a new prohibition on certain types of loans and credit to specific Russian entities.  Finally, 24 individuals (but not entities) have been added to the EU’s list of those subject to a travel ban and an asset freeze. A brief summary of the main changes implemented by Council Regulation No. 960/2014 (amending Council Regulation 833/2014) follows below.

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Shedding Light on CFIUS: Appeals Court Holds That CFIUS Review Lacks Constitutional Due Process

In a stunning ruling issued on July 15, 2014, the U.S. Court of Appeals for the D.C. Circuit held that review by the Committee on Foreign Investment in the United States (“CFIUS”) and the subsequent unwinding of the investment deprived the foreign investor of due process under the 5th Amendment to the U.S. Constitution.  Ralls Corp. v. Comm. on Foreign Investment in the United States, No. 12-cv-01513 (D.C. Cir. Jul. 15, 2014) (a copy of the opinion is here).  If upheld, the ruling may require fundamental changes in how CFIUS conducts its reviews and may enhance foreign investors’ ability to influence or challenge the outcome of a review.

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CLIENT ALERT: United States Imposes New Sanctions and Export Restrictions Against Russian Banks, Companies, and Individuals

On July 16, the U.S. Department of Treasury, Office of Foreign Assets Control (OFAC) imposed new sanctions against Russia, which target the country’s financial, energy and defense sectors.  In a parallel action, the U.S. Department of Commerce, Bureau of Industry and Security (BIS) added 11 parties to its Entity List based on their role in the destabilization of eastern Ukraine and the ongoing occupation of Crimea and Sevastopol.

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Shelter from the Coming Storm: Anti-Corruption Compliance in European Public Procurement

A red sky at morning is the traditional harbinger of ill weather. From our vantage point in Brussels, we’ve scanned the horizon for signs of the future of anti-bribery enforcement activity in Europe. We’ve identified four factors that are starting small, but may build into heavy seas.

In particular, there are signs that companies that sell to governments in Europe may be well advised to shore up compliance procedures so they can remain dry if a wave of anti-corruption sentiment breaks over the public procurement sector.

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Don’t try this at Home or Abroad: Export Controls and Sanctions Violations Lead to $21 Million in Penalties for Dutch Company Fokker Services B.V.

We frequently discuss enforcement actions in this blog, because understanding enforcement is a key aspect of trade compliance.  From a fifty-thousand foot view, each enforcement case serves as a cautionary tale about the overall need for compliance.  On a more granular level, enforcement actions provide valuable insight into how the government thinks about and targets violations of law.  These cases also showcase key details about international business practices that might pose “red flags,” and let us learn from others’ mistakes.  Effective compliance requires companies to commit high-level attention and large dollar amounts, but also requires entities to critically respond to the facts and details of particular markets on the ground.

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Uganda Be Kiddin’ Me: United States Slaps On Sanctions in Response to Anti-Gay Law

Last month, the United States announced new sanctions against Uganda in response to human rights violations, targeted discrimination, and draconian criminal penalties.  Specifically, on June 19, the Obama administration quietly revealed plans to cancel a U.S. military-sponsored exercise in Uganda, to prevent entry into the United States by certain Ugandan officials, and to discontinue or divert funds earmarked for certain aide programs involving the Ugandan Police Force, Ministry of Health, and National Public Health Institute.

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BNP Paribas and La Résistance: Why Compliance is not Capitulation and Cooperation Could Save an Economy

I will start by saying I am a proud Francophile. I love many things about French culture; from the just-right draw of their espresso (sorry, Italy, that ristretto is just too short and bitter) to the sacrosanct treatment of time for leisure and family. Indeed, most attempts by the country to preserve la vie Française are idealistic efforts to protect what I see as a beautiful way of life (perhaps excluding some of the Académie Française’s more laughable efforts to provide French alternatives to borrowed English words). And some of the country’s biggest companies represent not only the economic engines of France but also embody national pride in global market power.

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Where Two Worlds Collide: The Impact of Sanctions in Space

As we continue to find new ways to look at the implications of the Ukraine-related sanctions introduced by the United States over the past few months, we have shifted our perspective to the extra-terrestrial to focus on the significant effects sanctions may have in space.  And from that vantage point, we note that the unintended beneficiary of the United States’ crumbling relationship with Russia may be the U.S. space industry, since the Russians have signaled a desire to end U.S.-Russia space collaboration.

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