In one of a series of lame-duck sanctions and export control actions rushed into place before the transition to the Biden Administration, on January 5, 2021, President Trump issued an Executive Order Addressing the Threat Posed by Applications and Other Software Developed or Controlled by Chinese Companies (the Executive Order)[1] authorizing the Commerce Department to regulate or prohibit any transaction involving a U.S. person or within the jurisdiction of the United States with persons that develop or control the following Chinese connected software applications, or with their subsidiaries:

  • Alipay
  • CamScanner
  • QQ Wallet
  • SHAREit
  • Tencent QQ
  • VMate
  • WeChat Pay
  • WPS Office

Contrary to some press reports, the Executive Order does not impose any restrictions itself, nor does it indicate a complete ban on transactions will be imposed.  Instead, it authorizes the Commerce Department to implement restrictions on dealings with these companies, providing that “[n]ot earlier than 45 days after the date of this order, the Secretary shall identify the transactions and persons that develop or control the Chinese connected software applications subject to subsection (a) of this section [which contains the broad authority to prohibit].”[2]  Unless and until Commerce implements the Executive Order, no restrictions are in place and their precise future scope is unknown.

That being said, assuming the restrictions imposed under the Executive Order resemble the restrictions imposed under the similarly worded TikTok and WeChat orders from last year,[3] the restricted transactions are likely to be on services supporting the apps on U.S. networks, such as app stores and local hosting services.  In the case of TikTok and WeChat, the government was quite clear that they were not attempting to directly prevent U.S. persons from using the apps, even in the United States (much less in China).  The government’s focus to date has been on U.S. network integrity, not prohibiting all business with the app providers.  It therefore appears unlikely that use of the apps outside the United States will be prohibited.

Although Commerce is delegated expansive authority typical of sanctions designations, up to prohibiting all transactions touching U.S. jurisdiction directly or indirectly involving or benefiting persons that develop or control the identified apps and their subsidiaries, the delegation to Commerce (as opposed to the simple imposition of an OFAC blocking order) indicates that a more tailored restriction relying on Commerce’s technical expertise is likely.  This is borne out by the prefatory language of the Executive Order, which (like the TikTok and WeChat orders) emphasizes “the pace and pervasiveness of the spread in the United States of certain connected mobile and desktop applications and other software developed or controlled by persons in the People’s Republic of China” and “access to Americans’ personal and proprietary information.”  While there is no guarantee, it appears that the primary focus of the initiative is likely to be blocking support for and availability of the apps within the United States, rather than prohibiting use of the apps globally.

In addition to authorizing the imposition of restrictions on persons that develop or control the identified apps, the Executive Order also requires the Secretary of Commerce, in consultation with the Attorney General and the Director of National Intelligence, to provide the National Security Advisor with a report containing recommendations to prevent the sale or transfer of United States user data to, or access of such data by, foreign adversaries, including through the establishment of regulations and policies to identify, control, and license the export of such data, by February 19, 2021 (45 days after the Executive Order was issued).  Given the impending change of administrations, it is unclear whether this deadline will be enforced and what approach the Biden Administration might take.

Implementation of the Executive Order will be administered by the incoming Secretary of Commerce (reportedly Gina Raimondo, the current Governor of Rhode Island).  As a general  matter, based on the identities of the transition staff, we anticipate the Biden Administration to be more focused on narrow targeting from a sanctions perspective.


If you have any questions about the above or sanctions issues generally, please do not hesitate to contact the listed authors or any of your regular Firm contacts.

[1] Executive Order 13971 on Addressing the Threat Posed by Applications and Other Software Developed or Controlled by Chinese Companies (Jan. 5, 2021).

[2] Executive Order, § 1(e).  However, in an apparent drafting error, the Executive Order also provides that the Commerce Department’s restrictions will go into effect no later than 45 days after the Executive Order was issued, leaving the only possible date for both announcement and effectiveness February 19, 2021 (and leaving market participants with no advance notice of the restrictions).  To address this, the Commerce Department may be able to define the prohibited transactions as those occurring after a specified future date.

[3] For more information, see our earlier blog posts about those orders here and here.

As noted in our previous blog post, Executive Order (EO) 13959 introduced novel sanctions prohibiting U.S. persons from purchasing publicly traded securities (debt or equity) issued by companies designated by the U.S. Government as “Communist Chinese military companies” (CMCs), as well as an ill-defined group of securities “designed to provide economic exposure” to the targeted Chinese securities. These restrictions go into effect on Monday, January 11. While over the last two weeks, the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) has begun to issue guidance regarding the implementation of EO 13959, significant uncertainties and market confusion remain. This memorandum summarizes the current status.

Please click here to read the full alert memorandum.

As part of the National Defense Authorization Act for 2021 (the “NDAA”), Congress has passed the most significant U.S. anti-money laundering (“AML”) legislation since the USA PATRIOT Act of 2001, the “Anti-Money Laundering Act of 2020” (“AMLA 2020”).

Although President Trump has threatened to veto the NDAA, the majorities supporting the legislation would be sufficient to override the veto if members do not change their votes.

The legislation requires U.S. corporations and LLCs and non‑U.S. corporations and LLCs registered to do business in the United States to disclose information on their underlying beneficial owners to the Financial Crimes Enforcement Network (“FinCEN”) of the Department of the Treasury, if there is no applicable exemption. After implementation, we expect financial institutions no longer to bear the primary burden of establishing the underlying beneficial ownership of many customers as they will have access to the disclosures (with customer consent).

AMLA 2020 also makes sweeping changes to other areas of the U.S. AML regime, including by: (i) providing more guidance and feedback to financial institutions on AML compliance programs required under the Bank Secrecy Act, (ii) increasing resources and enhancing enforcement tools to police AML compliance, and (iii) implementing initiatives to strengthen and modernize FinCEN and AML supervision writ large.

Please click here to read the full alert memorandum.

Abu Dhabi and Dubai have recently issued their first Foreign direct investment licenses allowing foreign investors to own up to 100% of UAE companies engaged in certain types of activities. Abu Dhabi has also recently adopted its own positive list of economic activities eligible for an FDI License in the emirate, featuring a generous total of 1586 activities across the agricultural, industrial and service sectors.

These developments substantively complete the implementation, in the largest two of the UAE’s seven emirates, of the foreign direct investment regime which was first established by a law dated September 2018.

Further, the positive list recently adopted by Abu Dhabi is a corroboration of the Abu Dhabi Economic Vision 2030 and, more generally, delivers on several promises in terms of reinforcing the UAE’s commitment and continued efforts to attract foreign investment and achieve non-oil economic diversification.

This memorandum provides an overview of the Abu Dhabi positive list and outlines the process that foreign investors must follow to obtain an FDI License in the UAE.

Yesterday, President Trump issued an Executive Order[1] that will, following an initial two-month grace period and a further ten-month wind-down period in which only dispositions are permitted, prohibit U.S. persons (including citizens and U.S. legal entities acting outside the United States and foreign citizens and legal entities acting inside the United States)[2] from engaging in any transactions in publicly traded securities (debt or equity) issued by companies that the U.S. government designates as tied to the Chinese military (Designated Entities), as well as in any securities linked (in an undefined manner) to the targeted Chinese securities.  The 31 current Designated Entities are listed at the end of this note.[3] Continue Reading Trump Administration Bans Transactions in Securities of Military-Linked Chinese Companies: Potentially Far-Ranging Consequences Remain Unclear

On November 11, the UK Government proposed a new national security screening regime that would allow the Government to intervene in “potentially hostile” foreign investments that threatened UK national security while “ensuring the UK remains a global champion of free trade and an attractive place to invest.”

If approved by Parliament, the National Security and Investment Bill would introduce a mandatory and suspensory CFIUS-like regime. We expect the new regime will come into force in the first half of 2021, assuming it receives Parliamentary approval. Given its broad scope and retrospective application, foreign investors considering transactions that may raise national security issues should already consider engaging with the Government and taking account of the new regime in deal negotiations and transactional documents.

Please click here to read the full alert memorandum.

This trade summary provides an overview of WTO dispute settlement decisions and panel activities, and EU decisions and measures on commercial policy, customs policy and external relations, for the second quarter of 2020.

If you have any questions regarding the above, do not hesitate to contact or

The EU Foreign Direct Investment Regulation came into force this week. It establishes a European framework for the screening of foreign investments into the European Union. In this memorandum we provide an overview of the legislation, and its expected practical impact on foreign investment review in the EU.

Please click here to read the full alert memorandum.

Yesterday afternoon, the U.S. Department of State issued the first of two mandatory reports under the Hong Kong Autonomy Act (HKAA), identifying 10 Hong Kong and mainland China officials as materially contributing to the erosion of Hong Kong’s autonomy (the “Section 5(a) Report”).[1]  Because the same individuals were already designated on the List of Specially Designated and Blocked Persons (“SDN List”) maintained by the U.S. Department of the Treasury, Office of Foreign Assets Control (“OFAC”) on August 7, 2020,[2] the practical effect of the report is limited to setting a deadline of 30 to 60 days for the U.S. administration to issue the second required report under the HKAA identifying foreign financial institutions that knowingly conduct a “significant” transaction with the 10 individuals listed in yesterday’s Section 5(a) Report (the “Section 5(b) Report”).[3]  We discussed the reports required under the HKAA and the potential impact of those reports in our earlier blog post.[4] Continue Reading State Department Releases Hong Kong Autonomy Act Persons Report, Starts the Clock for Foreign Financial Institutions Report

Between July 28, 2020 and September 1, 2020, the National Venture Capital Association (NVCA) released updates to its model legal documents for use in venture capital financing transactions. This memorandum will explain the changes to these model forms and some of the reasons for, and implications of, such changes.

As background, the NVCA is an organization based in the U.S. whose members include venture capital firms, investors and professionals involved in investing private capital in early-stage companies. In an effort to promote consistent, transparent investment terms and efficient transaction processes, the NVCA has created model legal documents for venture financing transactions, and these models have been widely used in the U.S.

This update to the model forms has been driven by developments in: (i) CFIUS rules and other applicable laws, (ii) market practice in venture capital financing and (iii) “best practices” in the industry.

Please click here to read the full alert memorandum.