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

Cleary Gottlieb partner Chase Kaniecki and associates William Dawley and Pete Young co-authored the United States chapter in Lexology Getting the Deal Through: Foreign Investment Review 2022.

To read the chapter, click here or visit the Lexology website (subscription may be required.)

On December 30, 2021, the Italian Government extended until the end of 2022 Italy’s emergency foreign direct investments (“FDI”) regime, which enables it to review also acquisitions of controlling stakes by European Economic Area (“EEA”) investors, as well as certain minority investments by non-EEA investors, in any strategic sector.

By contrast, under ordinary rules,  these transactions would be reviewable only in the defense and national security sector.

This  regime was initially introduced in April 2020 as part of certain CoViD-19 emergency measures, and was due to expire at the end of 2021 (after two extensions).

In parallel, the scope of the Italian FDI review was expanded as of January 2021 with the addition of a number of new strategic sectors.

The combination of the emergency regime and new strategic sectors has caused a dramatic increase in the number of transactions reviewed by the Government in 2020 and 2021; the same trend is expected to continue throughout 2022.

This memorandum provides an overview on the expanded scope of Italian FDI review, as well as the enforcement trends since the CoViD-19 outbreak.

The following post was originally included as part of our recently published memorandum “Selected Issues for Boards of Directors in 2022”.

In 2022, boards of directors will continue to face a complex and expanding global foreign direct investment landscape that increasingly requires transactions to undergo intensive multijurisdictional FDI reviews and filing and approval processes, alongside merger control reviews and clearances.  This includes longstanding FDI review regimes with which boards of directors may be familiar, such as the Committee on Foreign Investment in the United States, as well as new and recently modified and expanded regimes, particularly in Europe.  Governments appear increasingly willing to scrutinize, and in some cases ultimately prevent, transactions they deem objectionable – in late 2020, the French government blocked the acquisition of a French photo-sensor imaging technologies company by a U.S. company, and in April 2021, the Italian government blocked a Chinese takeover of a semiconductor company.

To read the full post, please click here.

For a PDF of the full memorandum, please click here.

The following post was originally included as part of our recently published memorandum “Selected Issues for Boards of Directors in 2022”.

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.

In 2022, boards of directors should be aware of continued regulatory focus on virtual currencies and ransomware, potential divergences and conflicts across new global sanctions regimes and potential sanctions developments relating to Russia, Iran and China.

To read the full post, please click here.

For a PDF of the full memorandum, please click here.

On January 5, 2022, the U.S. Department of the Treasury, as Chair of the Committee on Foreign Investment in the United States (“CFIUS”), determined that Australia and Canada have established and are effectively utilizing robust processes to analyze foreign investments for national security risks and facilitate coordination with the United States on matters relating to investment security.  As a result, Australia and Canada are and will remain “excepted foreign states” for CFIUS purposes unless and until the U.S. Government deems otherwise.[1]  The United Kingdom and New Zealand, both of which also currently are treated as excepted foreign states,[2] have until February 2023 to fulfill the criteria necessary to remain excepted foreign states.  It is possible that additional countries may be designated in the future as the global foreign direct investment (“FDI”) trend, particularly in U.S. ally countries, continues.

Continue Reading Australia and Canada Remain CFIUS Excepted Foreign States; United Kingdom and New Zealand Have Until February 2023 to Fulfill Criteria Necessary to Keep Designations

The National Security and Investment Act 2021, which was passed on 29 April 2021, comes into force today. The new regime, which subjects investments in many companies active in the UK to mandatory review on national security grounds, will be among the most wide-ranging in the world. It represents the most significant change in the UK regulatory environment since the Government ceded the power to approve or prohibit mergers on competition grounds to an independent agency in 2002.

For more information, please see our Alert Memorandum here.

Last week, the Financial Crimes Enforcement Network (“FinCEN”) of the Department of the Treasury announced a Notice of Proposed Rulemaking (“NPRM”) to implement the beneficial ownership reporting requirements of the Corporate Transparency Act (“CTA”), part of the Anti-Money Laundering Act of 2020.  This legislation requires a range of U.S. legal entities, and non-U.S. legal entities registered to do business in the United States, to report information on their underlying beneficial owners to FinCEN.

The NPRM addresses and interprets four key aspects of the CTA: who must report, when they must report, what information they must report, and what penalties apply for violations of reporting requirements. Companies should review the CTA and the NPRM, including the definition of “reporting company” and the related exemptions, to determine whether it will impose reporting requirements on them. Parties may submit written comments to FinCEN about the NPRM until February 7, 2022.

Please click here to read the full alert memorandum.

On December 6, the Financial Crimes Enforcement Network (FinCENrequested public input, through an advanced notice of proposed rulemaking (the ANPR), on the potential imposition of nationwide recordkeeping and reporting requirements on persons involved in certain residential and commercial real estate transactions pursuant to its authority under the Bank Secrecy Act (BSA).

FinCEN has previously imposed anti-money laundering (AML) requirements on certain non-bank participants in financed residential real estate transactions[2] and has used geographic targeting orders to impose specific recordkeeping and reporting requirements on title insurance companies in certain transactions involving cash purchases of residential real estate by legal entities. However, other real estate transactions, including most commercial real estate transactions that do not involve bank financing, generally do not trigger specific AML recordkeeping or reporting requirements.

The ANPR signals that FinCEN views this as a “gap” to be filled; it asserts that “money laundering risks stem from transactions in both the commercial and residential real estate sectors, and both merit appropriate regulatory treatment.” FinCEN seeks comment on, among other things, what parties should be subject to, and which transactions should trigger, such recordkeeping and reporting requirements.

Please click here to read the full alert memorandum.

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