On February 10, 2022, the United Kingdom published new legislation (the “Amendment”) significantly expanding the scope of targets on which the UK government may impose sanctions relating to Russia.[1]  The Amendment, which was issued in response to the current situation in Ukraine and takes immediate effect, broadens the designation criteria of the existing Russia (Sanctions) (EU Exit) Regulations 2019.[2]  Whereas the existing provisions were limited to persons directly engaged in activities relating to the “destabilisation” of Ukraine,[3] the Amendment further authorizes sanctions against:

  • any “Government of Russia-affiliated entity,” defined as entities:
    • directly or indirectly owned or controlled by the Russian government;
    • in which the Russian government directly or indirectly holds a minority interest;
    • that receive or have received financing directly or indirectly from the Russian Direct Investment Fund or the National Wealth Fund; or
    • which “otherwise obtain a financial benefit or other material benefit” from the Russian government;
  • individuals or entities carrying on business of “economic significance” (which is not further defined) to the Russian government;
  • individuals or entities carrying on business in a sector of “strategic significance” to the Russian government, defined as the Russian chemicals, construction, defence, electronics, energy, extractives, financial services, information, communications and digital technology, and transport sectors; and
  • individuals or entities that directly or indirectly own or control or work as a director (whether executive or non-executive), trustee, or equivalent of any entity in the above categories.

As before, sanctions imposed under the United Kingdom’s Russia sanctions program include an asset freeze, travel ban (for individuals), prohibition on making funds or economic resources available to or for the benefit of the designated party, and prohibition on dealing with funds or economic resources of the designated party (as well as entities owned or controlled by the designated party).

Continue Reading United Kingdom Broadens Scope of Potential Russian Sanctions Targets

U.S. sanctions policy in the first year of the Biden administration saw both change and continuity. As expected, the administration sought to cooperate with allies to impose multilateral (rather than unilateral) sanctions, focused on human rights abuses and opened the door for a new nuclear deal with Iran. At the same time, the administration continued to focus on virtual currencies and on combating illicit cyber activities relating to ransomware, and clarified (and in some respects expanded) sanctions issued under the Trump administration targeting Chinese companies deemed to be part of the Chinese military-industrial complex.
Continue Reading Economic Sanctions: Developments and Considerations

On December 2, 2021, the U.S. Department of the Treasury, Office of Foreign Assets Control (“OFAC”) issued a new directive (Directive 1) prohibiting with immediate effect U.S. persons from transacting or participating in the primary and secondary markets of new Belarusian sovereign debt, in any denomination, with a maturity of greater than 90 days.[1]  In coordination with the European Union, United Kingdom, and Canada, OFAC also designated over 30 individuals and entities determined to have contributed to “ongoing attacks on democracy, human rights, and international norms” on the list of Specially Designated Nationals and Blocked Persons (“SDN List”) and issued General License No. 5, authorizing transactions and activities ordinarily incident and necessary to the wind down of transactions involving newly sanctioned Open Joint Stock Company Belarusian Potash Company or Agrorozkvit LLC, or any of their subsidiaries, until April 1, 2022.[2]
Continue Reading OFAC Imposes Sanctions on Belarusian Sovereign Debt, Announces New Designations

On November 8, 2021, the U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC) designated a virtual currency exchange, Chatex, and its infrastructure support providers on the list of Specially Designated Nationals and Blocked Persons (SDN List) for their role in facilitating financial transactions for ransomware actors.[i]  The Financial Crimes Enforcement Network (FinCEN) also released an updated advisory on ransomware and the use of the financial system to facilitate ransomware payments.[ii]  These actions were taken in furtherance of a coordinated “whole-of-government” effort to disrupt criminal ransomware actors and the virtual currency exchanges used to launder ransom payments around the world.
Continue Reading OFAC Ramps up Targeting of Ransomware-linked Actors and FinCEN Updates Ransomware Advisory

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

On September 21, 2021, the U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC): (i) issued an updated advisory on potential sanctions risks for facilitating ransomware payments; and (ii) designated SUEX OTC, S.R.O. (SUEX), a virtual currency exchange, on the list of Specially Designated Nationals and Blocked Persons (SDN List) for its role in facilitating financial transactions for ransomware actors.[1]  These actions demonstrate the U.S. government’s increasing focus on virtual currencies as a key means of facilitating ransomware payments and related money laundering, as well as OFAC’s commitment to combating ransomware attacks and other malicious cyber activities.
Continue Reading OFAC Updates Ransomware Advisory and Sanctions Virtual Currency Exchange

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

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

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