The Great Wall Against China: Washington’s Barriers to a Wave of Capital from the Far East

Reid WhittenBy Reid Whitten and Julien Blanquart* on Posted in CFIUS

Chinese investment in the United States plummeted in 2017 and is likely to continue to fall. According to the Wall Street Journal, Chinese foreign direct investment in the United States declined 36% last year, from $46.2 billion in 2016 to $29.4 billion in 2017. We expect the 2018 figures to be even lower. What could explain the precipitous decline?

Well, haven’t you heard? We’re building a wall.

The United States Government is frantically throwing up barriers to foreign investment, particularly from China. The result of that effort is clear in the swooning Chinese investment numbers. It appears that trend of tightening our defenses will only continue through 2018 and beyond. Continue Reading

Digital Cops and Cyber Robbers: OFAC Guidance on Crypto Currency

Fatema MerchantBy Fatema Merchant on Posted in Anti-Money Laundering, Sanctions

A lot of us in the sanctions compliance world were wondering whether and when OFAC would issue official guidance on its application of sanctions in the digital currency world. On March 18, OFAC issued five FAQs related to virtual currency. Those FAQs convey two important messages:

(1) OFAC sanctions regulations apply to virtual currency transactions just as they apply to “fiat” currency (here’s looking at you dark web crypto-user); and

(2) OFAC will use its existing authority to respond to the growing threat posed by the use of emerging payment systems by malicious actors, including adding digital currency addresses that are associated with blocked persons to the SDN List.

While the first point – that OFAC compliance obligations apply to virtual currency transactions – is not groundbreaking news, the second point is more interesting. Our key takeaway from the FAQs is: OFAC is clearly thinking about how it will enforce its regulations on virtual currency transactions and digital currency operators, so you should too. Continue Reading

5 Steps to Obtaining an Exemption under President Trump’s Steel and Aluminum Tariffs

J. Scott MaberryBy J. Scott Maberry on Posted in Import and Customs

If your company is a U.S. consumer of imported steel or aluminum, the new tariffs announced by President Trump on March 8, 2018 are bad news. The good news is that you can petition the government for exclusions of certain products. Formal procedures for such petitions won’t be published until March 19. But there are steps you can take now to prepare. Continue Reading

Chips on Their Shoulders: CFIUS Intervenes in Broadcom’s Hostile Takeover Bid for Qualcomm

Drew SvorBrian WeimerReid WhittenBy Drew Svor, Brian Weimer and Reid Whitten on Posted in CFIUS
  • CFIUS takes an unprecedented step to fend off a potential foreign acquisition
  • The threat that China will eclipse the U.S. in telecommunications infrastructure and technology is central to U.S. national security
  • Five key takeaways from the most recent CFIUS action

Since late 2017, Singapore-based semiconductor company Broadcom has been pursuing a $117 billion hostile takeover bid for Qualcomm, its U.S.-based rival whose chips are omnipresent in U.S. telecommunications infrastructure, including consumer devices like smartphones and tablets. As part of its hostile bid, Broadcom nominated its own slate of six directors who were to be voted on at Qualcomm’s annual stockholders meeting, originally scheduled for March 6th. However, earlier this week the Committee on Foreign Investment in the United States (CFIUS) announced that it “issued an interim order to Qualcomm directing it to postpone its annual stockholders meeting and election of directors by 30 days. This measure will afford CFIUS the ability to investigate fully Broadcom’s proposed acquisition of Qualcomm.” Continue Reading

Lurches, Leaps, Feints, and Flops: Movements Without Motion in Russian Sanctions Policy

Fatema MerchantReid WhittenBy Fatema Merchant, Reid Whitten and Julien Blanquart* on Posted in Sanctions

Since the U.S. Government determined that Russia interfered in the 2016 election[1], movement around Russia sanctions policy has been vigorous, if not unidirectional. In 2016, the United States implemented twice sanctions against Russia: In September, dozens of individuals and entities were sanctioned with regards to Russian operations in Crimea. In December, President Obama expelled 35 Russian intelligence agents from the U.S. and imposed sanctions on two major intelligence services, as a response to those interferences from Russia. In 2017, concerned that the new Administration might roll back certain sanctions on Russia, Congress overwhelmingly passed the Countering America’s Adversaries Through Sanctions Act, codifying and adding to sanctions on Russia already in place (which we reported on here).

In January, we anticipated two more moves mandated under CAATSA: 1) the publication of a List of Senior Political Figures and Oligarchs in the Russian Federation and 2) sanctions against entities and individuals that had conducted significant transactions with the defense and intelligence sectors in Russia. It appears that one was a feint and the other, a flop. Continue Reading

2018 EU Trade, Regulatory and Competition Trends

Curtis DombekReid WhittenJacques DerenneOliver HeinischRobert KlotzIsabelle RahmanSylvie RousseauWim VandenbergheYaniss AicheDimitris VallindasBy Curtis Dombek, Reid Whitten, Jacques Derenne, Oliver Heinisch, Robert Klotz, Isabelle Rahman, Sylvie Rousseau, Wim Vandenberghe, Yaniss Aiche and Dimitris Vallindas on Posted in European Union

Introduction

Our “trends for 2018” are only a selection of interesting developments to watch for in 2018.

Within the political and legislative cycle of the European Union, 2018 promises to be an eventful year, given that it is the last full year before the 2019 EU elections when a new European Commission will be appointed and the European Parliament will hold new elections. This means, in practice, that there will be pressure in 2018 on the current European Commission and European Parliament to act on all their initiatives and to complete their legislative agenda.

Our team of EU lawyers will continue to report on noteworthy developments including for instance, Brexit and its implications for competition and regulatory policies, the surge in foreign direct investment controls, the opening of new competition enforcement fronts, the practical implementation of the EU damages directive, as well as the development of alternative means of resolution in competition investigations and their impact on rights of defence.

We invite you to contact us directly should you have an interest in discussing any topic further or in obtaining additional information. We hope you will enjoy the read! Continue Reading

Could the Crypto-Rouble Spell Crypto-Trouble for Sanctions?

Fatema MerchantBy Fatema Merchant on Posted in Anti-Money Laundering, Sanctions

Russian President Vladmir Putin has directed his government to develop a state-backed cryptocurrency, according to a Financial Times report published on January 2nd. A Putin advisor says that the “Crypto-rouble” could be used to “settle accounts with our counterparties all over the world with no regard for sanctions.” He added that Russia’s cryptocurrency would be “the same rouble, but its circulation would be restricted in a certain way.”

There’s a lot to unpack there. Broadly, establishing a cryptocurrency that the Kremlin can track defeats two of the main purposes of cryptocurrency: to provide anonymity and to remove government central banks from transactions. Continue Reading

Seeking foreign investors for your tech startup? Congress says, “not so fast.”

J. Scott MaberryReid WhittenHwan KimBy J. Scott Maberry, Reid Whitten and Hwan Kim on Posted in CFIUS

The U.S. Congress is currently considering legislation that would tap the brakes on foreign direct investment in the United States, particularly on investments in sensitive industries like artificial intelligence, robotics, and semiconductors. We know: you’re saying we already have that in the form of the Committee on Foreign Investment in the United States (known as CFIUS). Continue Reading

In-fo’ a CFIUS Review: The Expanding Power of CFIUS through Data Security Scrutiny

Reid WhittenBy Reid Whitten on Posted in CFIUS

CFIUS is expanding its reach. Where the Committee on Foreign Investment in the United States has generally scrutinized foreign acquisition of U.S. “critical infrastructure,” it has now signaled that it may look closely at any deal where the target collects or maintains sensitive personal information. Continue Reading

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