On October 20, 2022, the U.S. Department of the Treasury released its first-ever Committee on Foreign Investment in the United States (CFIUS) Enforcement and Penalty Guidelines (the Guidelines). The Guidelines provide background and context regarding (1) the types of conduct that can result in CFIUS-related violations, (2) how CFIUS gathers information regarding potential CFIUS-related violations, and (3) the enforcement process CFIUS follows with respect to CFIUS-related violations, including the factors that CFIUS considers in determining whether a penalty is warranted and the calculation of any such penalty. Continue Reading U.S. Treasury Department Issues First-Ever Guidance on CFIUS Enforcement and Penalty Practices
On October 11, 2022, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) and Financial Crimes Enforcement Network (“FinCEN”) announced related enforcement settlements with Bittrex, Inc., a U.S.-based digital asset exchange and hosted wallet services company (the “Company”), to settle violations of U.S. sanctions and the Bank Secrecy Act (“BSA”) and related regulations, respectively. The OFAC Settlement, the largest of OFAC’s digital asset-related enforcement actions to date, and the FinCEN Consent Order collectively result in the Company paying a civil penalty of approximately $30 million. Following OFAC’s release of its “Sanctions Compliance Guidance for the Virtual Currency Industry” (which we wrote about here) and recent revelations regarding prosecution by the U.S. Department of Justice of digital asset-related U.S. sanctions violations (which we wrote about here), this joint OFAC-FinCEN enforcement action illustrates the U.S. government’s continued focus on the digital asset industry’s compliance with U.S. sanctions and the potentially significant penalties parties can face for U.S. sanctions and BSA violations. Continue Reading OFAC and FinCEN Announce Joint Enforcement Action Against U.S.-Based Digital Asset Exchange
On October 7, 2022, the U.S. Department of Commerce, Bureau of Industry and Security (“BIS”) announced an interim final rule and a final rule imposing new export controls designed to restrict China’s ability to obtain advanced computing chips, develop and maintain supercomputers, and manufacture advanced semiconductors. According to BIS, the rules, which reflected consultation with close allies and partners, as well as private industry, and are being issued pursuant to the Export Control Reform Act of 2018, are part of the U.S. government’s ongoing review of export control policies toward China and follow several other regulatory and enforcement actions announced earlier this year (e.g., implementing multilateral export controls on advanced semiconductor and gas turbine engine technologies, on which we wrote about here). Continue Reading The United States Tightens China-Related Export Controls on Advanced Computing and Semiconductor Manufacturing Items
Last week, the Financial Crimes Enforcement Network of the Department of the Treasury adopted a final rule (the “Final Rule”) to implement the beneficial ownership reporting requirements of the Corporate Transparency Act, part of the Anti-Money Laundering Act of 2020.
This legislation requires a range of U.S. legal entities, and non-U.S. legal entities registered to do business in the United States, to report information on their underlying beneficial owners to FinCEN. The Final Rule provides for a January 1, 2024, effective date.
Every company or other legal entity that has been formed or does business in the United States, either directly or through subsidiaries, and their corporate and legal advisors, should review the CTA and the Final Rule to understand whether it will impose reporting requirements on them. Going forward, the requirements of the Final Rule will need to be considered in any type of financial or corporate transaction that involves the creation or acquisition of legal entities in the United States, with relevance for mergers and acquisitions, private equity and private funds, structured finance and restructurings, among others.
Please click here to read the full alert memorandum.
On September 15, 2022, President Biden issued an Executive Order that provides direction to the Committee on Foreign Investment in the United States (“CFIUS”) regarding some of the factors it should consider when evaluating the national security risks posed by transactions within the jurisdiction of CFIUS. Although, in many ways, the Executive Order simply codifies the priorities and areas of interest on which people familiar with CFIUS understand CFIUS is focused, the Executive Order puts market participants on clear notice that CFIUS will scrutinize transactions that implicate such priorities and areas of interest. Continue Reading President Biden Issues CFIUS-Related Executive Order Regarding Evolving National Security Landscape
On September 9, 2022, the U.S. Department of the Treasury issued preliminary guidance (Preliminary Guidance) providing the initial outline of a long-anticipated price cap on Russian-origin crude oil and petroleum products (Price Cap), taking effect December 5, 2022 and February 5, 2023, respectively. The Price Cap is expected to be implemented by “a coalition of countries including the G7 and the EU” and follows an earlier statement of intent issued September 2, 2022 by G7 finance ministers. Continue Reading U.S. Treasury Department Issues Preliminary Guidance on Russian Oil Price Cap and Services Ban
Cleary Gottlieb partner Chase Kaniecki and associate Will Dawley co-authored an article titled, “3 Foreign Investment Issues Affecting Cross-Border Deals,” which was published by Law360.
In the article they provide a summary of the recent developments in the FDI review regimes in the EU and the U.K. and highlight three of the key recurring issues raised by these, and other, FDI review regimes.
To read the article, click here.
The U.S. Department of Commerce, Bureau of Industry and Security (“BIS”) recently published an interim final rule imposing export controls on additional technologies that satisfy the criteria pertaining to emerging and foundational technologies under the Export Control Reform Act of 2018 (“ECRA”). Continue Reading New Export Controls on Semiconductor and Gas Turbine Engine Technologies Expand CFIUS Mandatory Notification Requirements
The Committee on Foreign Investment in the United States (CFIUS) recently released its 2021 Annual Report, which provides important information and statistics about covered transactions reviewed by CFIUS in 2021 and the underlying implications for foreign investors. Continue Reading CFIUS 2021 Annual Report – Five Key Takeaways
Cleary Gottlieb partner Chase Kaniecki and associate Samuel Chang co-authored “Sanctions Compliance and Contingency Planning: Lessons From the Conflict in Ukraine,” a special expert briefing article in Financier Worldwide’s August 2022 issue.
Since 2001, Financier Worldwide has reported on corporate finance and board-level business issues.
To read the full article, click here.