On November 21, 2023, the U.S. Office of Foreign Assets Control (OFAC) announced its largest settlement in history with the virtual currency exchange Binance. This almost-billion dollar settlement is a part of a larger comprehensive settlement with the Department of Justice, FinCEN, and the CFTC, totaling over $4 billion. OFAC found that Binance had allowed 1.6 million transactions in violation of multiple sanctions regimes while Binance’s C-Suite was complicit. Binance’s blunders that led to this enforcement action highlight the importance of management commitment to compliance programs.Continue Reading Binance’s Paper Compliance Program Crumples Under OFAC Scrutiny in Largest OFAC Settlement in History
Fatema Merchant is a partner in the Governmental and White Collar Defense and Corporate Investigations Practice Groups in the firm's Washington, D.C. office. Fatema is the Office Managing Partner of the firm's Washington, D.C. office and leads the Sanctions Team at Sheppard Mullin.
- Advanced Computing and Supercomputing ECCNs are expanded.
- Controls applied to exports to countries other thanChina; countries from where items may be reexported to China.
- Chipmaking equipment controls are expanded and the de minimis rule reduced.
- New entities are added to the U.S. Entity List with the Footnote 4 (FN4) FDPR designation.
- More U.S.-person activity is controlled.
On August 9, 2023, President Biden issued an Executive Order (E.O.) ordering the issuance of outbound investment restrictions. This E.O. comes after nearly a year of anticipation (as we have documented on several occasions over the past year). This is the start of the reverse Committee on Foreign Investment in the United States (CFIUS) process that has been mostly speculation (and blog articles) until yesterday. In conjunction, the Treasury Department issued a press release, fact sheet, and Advance Notice of Proposed Rulemaking (ANPRM) seeking comments from the public on the proposed restrictions by September 28.Continue Reading Reverse CFIUS Unveiled: Focus on China, Semiconductors, Artificial Intelligence, and Quantum Computing
Recently, the Department of Commerce issued a memo, emphasizing that “technology protection is a core national security priority” and how companies that choose not to disclose significant violations of export regulations may have to bear concrete costs for non-disclosure. This memo highlights the continued focus to control U.S. technology security breaches, especially in the semiconductor and advanced computing industries.Continue Reading Technology Protection is a Core National Security Priority: BIS Strengthens Its Policy on Disclosures
On March 31, 2023, the Office of Foreign Assets Control (OFAC) announced a $72,230.32 settlement agreement with Uphold HQ Inc. (Uphold), a global multi-asset digital trading platform, in connection with 152 apparent violations of the Iranian Transactions and Sanctions Regulations, the Cuban Assets Control Regulations, and Executive Order (E.O.) 13884. OFAC continues to focus on the virtual currency ecosystem which we have discussed here (Kraken) and here (Bittrex). This settlement provides another look at important compliance considerations for companies operating in the digital asset industry and a few practical tips.Continue Reading OFAC Finds Digital Assets Trading Platform in Violation of Sanctions
On March 2, 2023, Deputy Attorney General Lisa Monaco delivered remarks to the ABA’s National Institute on White Collar Crime. Unsurprisingly, her remarks focused heavily on inspiring a culture of compliance – including highlighting the DOJ’s new policy to incentivize companies to self-report criminal activity (which our Organizational Integrity Group discusses here). But, her remarks also emphasized an emerging priority for DOJ enforcement: the intersection of corporate crime and national security.Continue Reading “Sanctions Are The New FCPA”: DOJ Increases Focus on Sanctions and Export Control Enforcement
In response to Russia’s ongoing aggression in Ukraine, both the United States and the European Union have imposed additional sanctions and further restricted exports to Russia and Iran. These new controls span many industries.Continue Reading Friday Development: New Sanctions and Export Controls to Address Russia’s Ongoing Aggression in Ukraine (Including the use of Iranian UAVs)
As we close out a wild year for international trade regulation, after hearing much talk about outbound investment review mechanisms, we may see a final dramatic change before the ball drops. Since the summer, we have talked here about potential outbound investment reviews (reverse CFIUS? SUIFC?). And while there have been reports of potential action by both Congress and the Biden Administration on outbound investment, it is all the more possible to see executive action before a new Congress takes seat.Continue Reading Will We Ring in the New Year with Outbound Investment Restrictions?
On November 28, 2022, the Office of Foreign Assets Control (OFAC) announced a $362,158.70 settlement agreement with Payward, Inc. (Kraken), an online virtual currency exchange, in connection with 826 apparent violations of the Iranian Transactions and Sanctions Regulations. This enforcement action highlights the OFAC compliance risks for virtual currency platforms and comes on the heels of the Bittrex settlement which we discussed here. Again, it is critical to assess your risks and take steps to make sure you’re addressing them with smart compliance and screening measures.Continue Reading OFAC Continues Focus on Virtual Currency Industry with Announced Settlement with Payward, Inc.
On Monday, October 24, 2022, the Department of Justice (DOJ) announced charges against two alleged Chinese intelligence officers for bribing and stealing documents to obstruct the criminal investigation of, reportedly, Huawei (while the complaint does not name Huawei, it is the company according to multiple reports).Continue Reading Bribes, Bitcoin and Obstruction: DOJ Announces Charges Against Chinese Agents for Trying to Impede Investigation of Huawei
Settlement Agreement with Bittrex, Inc.
Today, on October 11, 2022, the Office of Foreign Assets Control (OFAC) announced a $24,280,829.20 settlement agreement with Bittrex, Inc., an online virtual currency exchange and hosted wallet service provider, in connection with 116,421 apparent violations of multiple sanctions programs. This enforcement action highlights the OFAC compliance risks for virtual currency platforms. So, assess your risks and take steps to make sure you’re addressing them with smart compliance and screening measures.Continue Reading OFAC Announces Hefty Settlement with Virtual Currency Exchange / Hosted Wallet Services Provider