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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

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.
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Continue Reading Cryptocurrency and Other New Forms of Financial Technology: Potential Terrorist Financing Concerns and Liability

On June 10, 2021, the Standing Committee of the National People’s Congress of China adopted the “Anti-Foreign Sanctions Law,” which represents the Chinese government’s most recent and direct response to U.S. and EU sanctions that have been imposed on China during the last year.  The law, which took immediate effect, authorizes the Chinese government to take certain actions when foreign countries are deemed to breach international laws or basic norms of international relations, seek to contain or suppress China’s interest under pretext or using their domestic laws, adopt restrictive measures against Chinese citizens or organizations on a discriminatory basis, or interfere with China’s domestic affairs.  Given how broadly a number of the provisions are worded, it remains to be seen how the Chinese government will implement and enforce the law.…
Continue Reading China Passes “Anti-Foreign Sanctions Law”

President Biden recently issued a highly anticipated executive order that effectively replaces an existing ban on U.S. persons trading in securities of companies determined to be linked to the Chinese military.  Effective August 2, 2021, U.S. persons are prohibited from purchasing (and, as of June 3, 2022, selling) certain publicly traded securities of companies listed…

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…

On April 19, 2021, in response to reported human rights violations by the regime of President Alexander Lukashenko, the U.S. Department of the Treasury, Office of Foreign Assets Control (“OFAC”) issued General License 2H (“GL 2H”)[1] under the U.S. sanctions program targeting Belarus.  GL 2H revokes and replaces General License 2G (“GL 2G”),[2] which authorized U.S. persons to engage in transactions with nine sanctioned Belarusian state-owned entities.…
Continue Reading OFAC Revokes Key General License Under Belarus Sanctions Program

On April 15, 2021, the Biden administration issued a new executive order (the New EO) creating broad authority to impose blocking sanctions against a wide range of individuals and entities determined to be engaged in “harmful foreign activities” of the Russian Federation.[1]  In parallel with and under the authority of the New EO, the U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC) issued a new directive (Directive 1) prohibiting U.S. financial institutions from participating in the primary market for ruble-denominated sovereign debt or from otherwise lending funds to the Russian Federation, effective June 14, 2021.[2]  (Non-ruble Russian sovereign debt and funding have been prohibited under an existing 2019 ban, described in our previous post and below.)  As part of “a new U.S. campaign against Russian malign behavior” under the New EO and existing authorities, OFAC also designated over 40 individuals and entities alleged to have attempted to influence the 2020 U.S. presidential election or to be operating in the Crimea region.[3]…
Continue Reading Biden Administration Imposes New Restrictions on Russian Sovereign Debt, Authorizes Additional Sanctions

On Thursday, March 25, the Biden administration imposed blocking sanctions against Myanma Economic Holdings Public Company Limited (MEHL) and Myanmar Economic Corporation Limited (MEC), pursuant to Executive Order 14014 (the Burma EO), in response to the military’s refusal to disavow the February 1, 2021 military coup.[1]  As a result of the sanctions, all transactions and dealings within U.S. jurisdiction, including U.S. dollar interbank transfers, in which MEHL and MEC have a direct or indirect interest are prohibited, and all property within the United States or in the possession or control of U.S. persons in which either has a direct or indirect is blocked.  These sanctions also extend to any entity directly or indirectly 50% or more owned by one or more sanctioned persons or entities, directly or indirectly.[2]  The move was made in coordination with the United Kingdom, which also imposed blocking sanctions against MEHL.[3]  You can read our previous blog post on the Burma EO here.[4]…
Continue Reading United States Designates Myanmar Military Conglomerates

On February 18, 2021, the U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC) announced a $507,375 settlement with BitPay, Inc. (BitPay), a payment processor for merchants accepting digital currency as payment for goods and services, for 2,102 apparent violations of multiple sanctions programs between 2013 and 2018.[1] The settlement highlights that financial service providers facilitating digital currency transactions must not only establish sanctions compliance programs to screen their own customers but also must monitor third-party non-customer transaction information.…
Continue Reading OFAC Settles with Digital Currency Payment Processor for Sanctions Violations

On February 10, 2021, in response to the February 1, 2021, military coup in Myanmar (Burma),[1] President Biden issued an executive order (the Burma EO)[2] authorizing the imposition of blocking sanctions against a range of individuals and entities.  Concurrently, the U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC) designated 10 individuals (two of the individuals were already designated under a different sanctions authority) and three entities on the list of Specially Designated Nationals and Blocked Persons.  All property and interests in property of persons sanctioned under the Burma EO are blocked and all transactions within U.S. jurisdiction in which a sanctioned person has an interest are prohibited.  Sanctions also extend to any entity directly or indirectly 50% or more owned by one or more sanctioned persons or entities.…
Continue Reading United States Imposes Sanctions in Response to Military Coup in Myanmar