Samuel H. Chang

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Global FDI enforcement continued to evolve rapidly in Q4 2024, as shown by the range of developments summarized in this newsletter.

Continue Reading Global FDI Newsletter: October – December 2024

The following is part of our annual publication Selected Issues for Boards of Directors in 2025. Explore all topics or download the PDF.

The second Trump Administration is expected to mark the return of a more transactional foreign policy approach, with an openness to dealmaking supported by the aggressive use (or threat) of trade controls. Boards should, therefore, expect the U.S. government to continue to rely on trade controls as a key foreign policy tool. Although specific actions remain uncertain, significant change is possible on a number of fronts, including sanctions relating to China, Russia, Iran, Syria and Venezuela.  

Continue Reading Trade Controls: Recent Developments and Changes on the Horizon for 2025

On January 10, 2025, the U.S. Department of the Treasury, Office of Foreign Assets Control (“OFAC”) issued sweeping new sanctions targeting Russia’s energy sector, including the imposition of a new petroleum services ban, expanded secondary sanctions authority, and designations of certain Russian oil producers, insurance providers, and more than 180 so-called “shadow fleet” vessels.  Until this time, U.S. sanctions specific to the Russian energy sector generally were limited to a ban on maritime services for oil and petroleum products sold at or below the relevant price caps, designations of specific projects, traders, or vessels, and certain pre-2022 targeted sectoral sanctions and secondary sanctions authorities. 

Continue Reading OFAC Expands Sanctions against Russian Energy Sector

On December 5, 2024, the U.S. Department of Commerce, Bureau of Industry and Security (“BIS”) issued a final rule (the “Final Rule”) implementing the procedures BIS will follow when reviewing information and communications technology (“ICTS”) transactions that may pose a risk to U.S. national security pursuant to Executive Order (E.O.) 13873.[1]  In particular, the Final Rule authorizes the Secretary of Commerce (the “Secretary”) (or the Secretary’s designee, e.g., the Under Secretary of Commerce for Industry and Security) to review, prohibit, or impose mitigation measures on certain types of transactions (“Covered ICTS Transactions”) that involve ICTS designed, developed, manufactured, or supplied by persons owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary and that pose an undue or unacceptable risk to U.S. national security.  We consider each of these concepts below, after which we discuss the review, prohibition, and mitigation processes associated with covered transactions.

Continue Reading Commerce Issues Final ICTS Rule; Takes Steps to Implement the Program

The Russian financial services sector remains a key target of U.S., UK, and EU sanctions.  As discussed below, a number of recent such sanctions against Russia and countermeasures by the Russian government  have further complicated efforts for investors seeking to divest listed securities from Russia.

Continue Reading Sanctions on Russian Securities Infrastructure Create Additional Hurdles to Divesting from Russia

On November 21, 2024, the U.S. Department of the Treasury, Office of Foreign Assets Control (“OFAC”) designated additional entities operating in the Russian financial services sector, including Gazprombank Joint Stock Company (“Gazprombank”), the largest and, until November 21, most significant remaining non-sanctioned Russian bank that has served as the primary conduit for processing payments for Russian gas sold to third countries since March 2022.  Specifically, OFAC designated Gazprombank pursuant to Executive Order 14024 (“E.O. 14024”) for operating or having operated in the financial services sector of the Russian Federation economy, and noted that Gazprombank had served as a “conduit for Russia to purchase military materiel,” and also was used by the Russian government to pay military personnel and their families.

Continue Reading OFAC Sanctions Gazprombank, Continues to Target Russian Financial Sector and Foreign Financial Institutions

On October 28, 2024, the U.S. Department of the Treasury (“Treasury”) issued a long-awaited Final Rule (the “Final Rule”) implementing the U.S. Outbound Investment Security Program (the “Program”).[1] Under the Program, effective January 2, 2025, U.S. persons will be prohibited from engaging in, or required to notify Treasury regarding, a broad range of transactions involving entities engaged in certain activities relating to semiconductors and microelectronics, quantum information technologies, and artificial intelligence (“AI”) systems in “countries of concern” (presently limited to China, Hong Kong, and Macau).

Please click here to read the full alert memorandum.

Continue Reading Long-Awaited U.S. Outbound Investment Regime Published, Will Become Effective January 2, 2025

On October 21, 2024, an international coalition consisting of the G7 countries—Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States[1]—as well as the European Union, Australia, and New Zealand (the “Price Cap Coalition”) issued an updated advisory containing new recommendations and best practices for the maritime oil industry and related sectors[2] relating to promoting responsible practices in the industry, disrupting sanctioned trade, and enhancing compliance with the oil price cap on Russian oil and petroleum products.  We previously wrote about the oil price cap here.

Continue Reading Price Cap Coalition Issues Updated Advisory for Maritime Oil Industry

On September 12, 2024, the U.S. Department of the Treasury, Office of Foreign Assets Control (“OFAC”) June 12, 2024 determination entitled “Prohibition on Certain Information Technology and Software Services” entered into effect.  The determination prohibits the direct or indirect provision to Russia from the United States or by U.S. persons of (1) information technology (“IT”) consultancy and design services and (2) IT support services and cloud-based services for enterprise management software and design and manufacturing software (collectively, the “IT Services Prohibition”).  On September 16, 2024, similarly focused export controls took effect, prohibiting the export, reexport, or transfer (in-country) to Russia and Belarus of certain EAR99 software relating to enterprise resource planning (ERP) and other commercial functions, which were issued earlier by the U.S. Department of Commerce, Bureau of Industry and Security (“BIS”) on June 12, 2024.

Continue Reading U.S., UK, and EU Sanctions Alignment: U.S. IT and Software Sector Service Bans and Export Controls Take Effect as Russia Sanctions Continue to Expand

On May 20, 2024, President Putin signed Decree No. 430 (the “Decree”), effective the same day.  The Decree establishes restrictions on the acquisition of IP rights by Russian persons from so-called “unfriendly” jurisdictions.  The term “unfriendly” jurisdiction has been used in other countersanctions regulations and includes all foreign states that commit unfriendly acts towards the Russian Federation and Russian legal entities and natural persons (i.e., countries that have introduced sanctions against Russia, including the European Union, United Kingdom, and United States).

Continue Reading New Russian Decree Imposes Restrictions on Transfer of IP Rights