As we have discussed in prior posts, the Trump Administration has threatened since January 2019 to permit claims under Title III of the Helms-Burton Act for “trafficking” in property claimed by Americans and expropriated by Cuba to proceed. Title III has been suspended since the Helms-Burton Act was enacted in 1996.
On April 17, 2019, the Trump Administration announced that it will no longer maintain the suspension of Title III. This means that as of May 2, 2019, it will be possible for former owners of properties expropriated by the Cuban government to bring claims before the U.S. courts against foreign companies alleged to have “trafficked” with those properties.

We have updated our memorandum on the potential impact of these changes in U.S. law, including measures that foreign companies involved in business related to Cuba may wish to consider.

On April 17, 2019, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced that the Central Bank of Venezuela has been designated as a specially designated national (SDN) under Executive Order 13850, banning all transactions within U.S. jurisdiction in which it has an interest. As a result, any party who materially assists, sponsors, or provides financial, material, or technological support for, or goods or services to or in support of, the Central Bank of Venezuela now risks designation, whether or not the transaction takes place within U.S. jurisdiction.   Continue Reading Venezuela Sanctions Tighten: OFAC Sanctions the Venezuelan Central Bank and Senators Propose Sanctions Legislation

On March 27, 2019, journalists affiliated with Reuters reported that the Kunlun Group (“Kunlun”), a China-based tech firm, was preparing to sell its wholly owned subsidiary, Grindr, after the Committee on Foreign Investment in the United States (“CFIUS”) informed the group that Kunlun’s continued ownership of Grindr constituted a national security risk.  This forced divestiture of Grindr is a pointed reminder that CFIUS remains focused on protecting the sensitive personal data of U.S. citizens, has the power to upend closed deals that have not been cleared by the committee, and is dedicating increased resources to the review of transactions that are not notified to CFIUS. Continue Reading CFIUS Forces Kunlun to Unwind 2016 Acquisition of Grindr Over Concerns About the Protection of Sensitive Personal Data

On January 31, 2019, France, Germany and the UK (the “E3”) announced the creation of the Instrument in Support of Trade Exchanges (“INSTEX”), a special purpose vehicle intended to facilitate legitimate trade between European companies and Iran, registered in France.  This initiative is supported by the European Union. The vehicle was created in the wake of the U.S.’ withdrawal in 2018 from the Iran nuclear deal (the  Joint Comprehensive Plan of Action (“JCPOA”)), in addition to the EU Blocking Regulation, and as part of the EU’s response to the re-imposition of U.S. secondary sanctions on Iran through the U.S. Executive Order 13846 (the “Executive Order”).  The Executive Order re-imposed the secondary sanctions regime against Iran that it have been suspended while it was a party to the JCPOA.  Continue Reading France, Germany, UK Launch INSTEX to Facilitate Trade With Iran

On March 8, 2019, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) further amended the general licenses governing secondary trading of pre-sanctions Government of Venezuela (GoV) debt and Petróleos de Venezuela, S.A. (PdVSA) debt and equity by issuing new General Licenses (GL) 3D and 9C.  In both, OFAC extended the authorization for all transactions and activities ordinarily incident and necessary to winding down financial contracts or other agreements entered into before January 28, 2019 (for transactions involving PdVSA debt and equity) or February 1, 2019 (for transactions involving certain GoV debt listed in GL 3D) to May 10, 2019.

OFAC has stated that these authorizations permit settling trades entered into prior to the relevant restrictions even where the related sale or transfer is to a U.S. person.  OFAC also revised previously issued FAQ guidance to reflect the extended expiration dates.

On February 13, 2019, a bipartisan group of senators introduced a draft bill that, if adopted, would significantly strengthen sanctions relating to the Russian Federation.  Introduced as the “Defending American Security from Kremlin Aggression Act of 2019” (“DASKA”), the wide-ranging bill covers a number of subjects, in particular a range of new cybersecurity provisions.  This note focuses on the sanctions provisions, which would: Continue Reading Russia Sanctions Bill Reintroduced by Bipartisan Group of Senators

The Office of Foreign Assets Control of the U.S. Treasury Department recently issued a series of instructive press releases regarding enforcement actions taken against several companies.  The decision to publicize these enforcement actions could signal a more activist and expansionist approach to sanctions enforcement matters and may evidence a broadening of OFAC’s enforcement priorities as the long run of enforcement against financial institutions begins to wind down.  The actions demonstrate a focus on acquisition due diligence and conduct by overseas entities, and in particular on aggressive action against U.S. companies who fail to terminate sanctioned business by their newly acquired overseas subsidiaries; indeed, in a number of these cases OFAC took enforcement action despite the fact that the U.S. acquiror explicitly directed the termination of the sanctioned business, was deceived by officials of the acquired entity, and voluntarily self-reported the violation after discovering it.  OFAC has also begun to spell out, in enforcement actions, the elements of sanctions compliance programs it imposes on violators (and, presumably, would consider a benchmark for other companies). Continue Reading OFAC Takes Aggressive Enforcement Action in Connection With M&A Transactions and Spells Out Compliance Expectations

As we have discussed in prior posts, the Trump Administration continues to threaten to permit claims under Title III of the Helms-Burton Act for “trafficking” in property claimed by Americans and expropriated by Cuba to proceed, but the Administration also continues to extend the suspension of Title III for short periods.  Most recently, on April 3, 2019, U.S. Secretary of State Mike Pompeo extended the suspension of actions under Title III of the Helms-Burton Act for another two weeks, until May 1, 2019.  We have updated our memorandum on the potential impact of a revival of Title III accordingly.

After brisk movement through the EU legislative process, the proposed EU Regulation on Foreign Direct Investment Screening (the “Regulation”) was approved by the European Parliament on February 14, 2019. This development comes amidst a global sprint to strengthen and establish foreign direct investment laws, including in France, UK, Germany, and Hungary, as well as the US and China.

Although individual Member States retain their authority to screen (i.e., investigate, condition, prohibit, or unwind) foreign direct investments (“FDI”), the Regulation introduces and formalizes numerous procedures and criteria for cooperation among Member States and with the Commission.  Specifically, it sets out an EU-wide framework on this process and grants competence to the European Commission (“EC”) to intervene with an official opinion on the grounds of “public order and security”.  Additionally, it provides an official forum for Member States to weigh in and potentially affect the course of foreign investment activities across the European Union. Continue Reading New EU-wide Foreign Direct Investment Screening System Approved

Today the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued new general licenses (GL) 3C (amending GL 3B) and GL 9B (amending GL 9A) and amended previously issued FAQ 661 and FAQ 662.  The changes clarify that U.S. persons remain prohibited from purchasing or investing in listed GL 3C (GL 3C Bonds) or pre-sanctions PdVSA debt and equity (PdVSA Securities) and that OFAC’s facilitation prohibitions apply to such purchases other than (in both cases) purchases or investments that are “ordinarily incident and necessary” for divestment or transfers to non-U.S. persons. In other words, U.S. persons may purchase, invest in, or facilitate purchases and investments in GL 3C Bonds and PdVSA Securities where doing so is a necessary part of a transaction involving divestment or transfer to a non-U.S. person.  OFAC further specifically noted in the revised FAQs that this authorization includes activities such as acting as custodian for U.S. and non-U.S. persons’ holdings in GL 3C Bonds and PdVSA Securities (including acting as custodian for a non-U.S. person after that person receives the securities from a U.S. person) and receipt and processing of principal and interest payments. See FAQ 661, FAQ 662.  The wording is not fully clear, but the changes appear designed to reassure U.S. intermediaries in particular that they are authorized to provide services such as custody, transfer, and payment so long as no prohibited acquisition by a U.S. person is involved.

OFAC also made minor corrections to the list of GL 3C Bonds and to the GL 9B list of PdVSA Securities and made non-substantive changes to FAQ 650 conforming it to the updated General Licenses.