Foreign Investment

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On October 15, 2021, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) issued “Sanctions Compliance Guidance for the Virtual Currency Industry” (the “Guidance”).  The Guidance follows recent guidance and advisory letters directed to the virtual currency industry relating to the risk of facilitating ransomware payments[1] and is OFAC’s most comprehensive virtual currency-specific advisory to date.  In particular, the Guidance directly addresses some simpler interpretive questions, discusses sanctions compliance programs and “best practices,” and provides hints about OFAC’s enforcement priorities going forward.
Continue Reading OFAC Issues Sanctions Guidance to Virtual Currency Industry

The Committee on Foreign Investment in the United States (“CFIUS” or the “Committee”) is a U.S. government interagency committee that has the authority to review investments that provide a foreign person with control or, in some cases, certain non-controlling rights over a U.S. business and evaluate the extent to which such transactions raise national security concerns.  For decades following the establishment of CFIUS, the Committee largely only reviewed transactions that parties proactively submitted to CFIUS.  This primarily was due to CFIUS’s limited resources and dedication of such resources to reviewing transactions notified to CFIUS.  In 2018, Congress passed the Foreign Investment Risk Review Modernization Act (“FIRRMA”), which, among other things, provided CFIUS with additional resources to identify transactions that: (1) could be within the jurisdiction of CFIUS, (2) potentially raise national security concerns, and (3) were not notified to CFIUS (often referred to as “non-notified transactions”).
Continue Reading A Look Behind the CFIUS Non-Notified Process Curtain; How it Works and How to Handle Outreach From CFIUS

Earlier this week, the U.S. Department of Commerce, Bureau of Industry and Security (“BIS”) published a final rule (the “Final Rule”) imposing export controls on additional emerging technologies pursuant to the Export Control Reform Act of 2018 (“ECRA”).[1]  We previously wrote about the process to identify and impose export controls on emerging and foundational technologies under the ECRA, as well as the steps taken in furtherance of that process, here and here.
Continue Reading New Biotech Export Controls Expand CFIUS Mandatory Notification Requirements

Maybe.

Let’s use a typical U.S. sponsored private equity fund as an example.  In this example, the limited partnership (“Fund”) is registered in the Cayman Islands and managed by a U.S.-based investment firm through a U.S.-based general partner (“GP”) entity and U.S. citizens in New York making investment decisions.
Continue Reading Is Your U.S. Sponsored Private Equity Fund a Foreign Person for CFIUS Purposes?

Updated on December 15, 2021

Magnachip Semiconductor Corporation (“Magnachip”), a South Korea-based semiconductor company, recently disclosed that the Committee on Foreign Investment in the United States (“CFIUS” or the “Committee”) threatened to recommend that President Biden exercise his authority to block a Chinese private equity firm’s acquisition of Magnachip due to unresolvable national security concerns.  Given Magnachip’s very limited nexus to the United States, this case demonstrates the willingness of CFIUS to stretch its jurisdictional arms, especially when it comes to transactions implicating sensitive sectors.
Continue Reading CFIUS Threatens to Block Magnachip Deal; Shows Willingness to Interpret its Jurisdiction Broadly

The “Supplemental Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region” was signed on November 27, 2020 and entered into force partially on the same day and partially on May 19, 2021.

Significantly, the Supplemental Arrangement modifies and expands the existing “Arrangement Concerning Mutual Enforcement of Arbitral…

The Committee on Foreign Investment in the United States (CFIUS) recently released its 2020 annual report, which provides information and statistics regarding transactions reviewed by CFIUS in 2020.[1]  For the first time, the 2020 annual report also includes information regarding so-called non-notified transactions identified and reviewed by CFIUS.
Continue Reading CFIUS Releases 2020 Annual Report

While large financial institutions have traditionally been hesitant to enter new areas of financial products, particularly virtual assets, many more banks and companies have expressed interest in virtual currencies as cryptocurrency has become increasingly mainstream.  Given the use of such services by terrorist groups, it is important for banks and other financial institutions to consider evolving dynamics in this area.  On the one hand, one of the widely described benefits of virtual currency is the transparency and public nature of transactions since they are typically recorded in a publicly accessible blockchain, which could facilitate policing and enforcement against illicit activity.  At the same time, the relevant legal framework for combating terrorist funding creates potential areas of liability, including, in particular under the Anti-Terrorism Act (“ATA”) and the Justice Against Sponsors of Terrorism Act (“JASTA”).  These considerations are important for companies and banks that provide services related to virtual currency, but also are relevant to any company that could be the target of ransomware attacks since attackers may be sanctioned entities or have ties to terrorism and as a matter of practice demand that the ransom payment be made in virtual currency.
Continue Reading Cryptocurrency and Other New Forms of Financial Technology: Potential Terrorist Financing Concerns and Liability

The U.S. government recently announced that it issued multiple subpoenas to Chinese companies pursuant to an executive order that provides the U.S. government with the authority to review and prohibit or restrict transactions conducted by any person, or involving any property, subject to U.S. jurisdiction, if they involve certain categories of information and communications technology…