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CFIUS & Export Controls: Putting Buyers, Sellers, and M&A Practitioners at Risk

The U.S. Treasury Department building next to the White House in Washington DC
The Foreign Investment Regulations Putting Buyers, Sellers, and M&A Practitioners at Risk: In recent memory, enforcement of the Committee on Foreign Investment in the United States (“CFIUS” or the “Committee”) regulations has been mostly limited and sporadic. But recently, the U.S. government is reviving and enhancing these regulations as a direct response to the national security and foreign policy concerns ensuing from an increasingly tumultuous geopolitical environment. A CFIUS due diligence review is fundamentally related to export control laws and regulations — even for businesses that have never engaged in any exports.

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February 2024 Export Practitioner

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Sanctions
Oil tanker, port of Murmansk, Russia.

Treasury: Oil Price Cap Phase Two Effective

The Oil Price Cap permits service providers in Coalition countries to support the Russian oil trade only if the oil was sold at or below a specific cap. A Treasury policy note looks at the difference that the price cap is continuing to make three months into the second phase, as the coalition continues to take action to enforce the prohibition against the use of G7 services outside the cap.
Sanctioned entities include Mir Payment Systems

Treasury Sanctions Hundreds in Anniversary package

Joining British and European allies, the US imposed a further raft of sanctions on Russia and her enablers. Treasury’s Office of Foreign Assets Control (OFAC) is sanctioning almost 300 individuals and entities. This is the largest number of sanctions imposed since Russia’s 2022 invasion of Ukraine. State is designating three Government of Russia officials in connection with Aleksey Navalny’s death; together, Treasury and State are sanctioning over 500 targets. The Department of Commerce is also adding more than 90 companies to the Entity List.
EU and Ukrainian flags fly in Brussels, Belgium.

EU: 13th Sanctions package tags China and India

The European Union announced another round of sanctions on Russia and her allies, extending the reach to include Chinese and Indian firms complicit in avoiding existing restrictions.  The new measures focus on the procurement network supporting Russia's military, especially the supply chain to make drones. Twenty-seven companies were added to the Annex IV list, which means European firms cannot sell dual-use goods to them.
Enforcement

Russian Bankers Charged with Yacht & Property Violations

The Justice Department unsealed of an Indictment charging sanctioned Russian oligarch and the President and Chairman of a Russian state-owned VTB bank, Andrey Kostin, with participating in two separate schemes that violated U.S. sanctions. The first scheme was to operate, maintain, and improve  two superyachts, collectively worth over $135 million, while the second scheme was related to the operation and transfer of Mr. Kostin's home in Aspen, Colorado.

Seized Machine Tool Funds to Ukraine Reconstruction

Nearly $500,000 of forfeited proceeds of an illicit machine tool sale to Russian buyers will be used to support a drone-based program to assess the damage Russian aggression has done to Ukraine’s electrical distribution and transmission infrastructure. Deputy Attorney General Lisa Monaco and Estonian Secretary General Tõnis Saar announced  the transfer at the Munich Security Conference Saturday Feb 17.

Disruptive Tech Task Force Marks One Year

Marking the one-year anniversary of the Disruptive Technology Strike Force, the Departments of Justice and Commerce released a joint fact sheet touting their accomplishments. The Task force initiated 14 cases involving alleged sanctions and export control violations, smuggling conspiracies, and other offenses related to the unlawful transfer of sensitive information, goods, and military-grade technology to Russia, China, or Iran. These cases were brought through the work of U.S. Attorneys’ Offices throughout the country and the Counterintelligence and Export Control Section in Justice Department’s National Security Division.
Policy Briefs

FinCEN Small Entity BOI Disclosure Guidance

The Financial Crimes Enforcement Network (FinCEN) published a small entity compliance guide today that provides an overview of the requirements regarding access to beneficial ownership information (BOI) by small entities. The guide includes sections summarizing the Access Rule’s requirements that pertain to small financial institutions’ access to BOI. 

Treasury Meeting with European Allies

Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson will travel to European capitals this week to coordinate the allied response to the Russian invasion of Ukraine. Nelson's schedule includes the Munich Security Conference, meetings in Brussels with EU counterparts, and in Paris the Plenary of the Financial Action Task Force.

DHS Chief Keynote at Munich Cyber Conference

Mayorkas delivered the keynote address to the Munich Cyber Security Conference. "The world is on the cusp of a new era in the digital revolution," he said. "We must answer the question of how security and governance should be exercised on this modern digital landscape, in service of the world’s economic and social well-being."
Licensing

Monaco at Cambridge: AI at the "Very Top" of Export Control Enforcement

Deputy Attorney General Lisa O. Monaco delivered remarks on "the Promise and Peril of AI," at Oxford University February 14, calling  an "inflection point with AI," Claiming that "AI is the ultimate disruptive technology," she vowed that the Distruptive Technology Strike Force established last year to coordinate export control activities, will place AI at the "very top" of its enforcement priority list.

Montreal Woman Guilty Laundering Brooklyn Dual Use Cash

A Montreal woman pleaded guilty to money laundering conspiracy for her role in a multimillion-dollar scheme to send components used in unnamed aerial vehicles (UAVs) and guided missile systems and other weapons to sanctioned entities in Russia.  Last October, a criminal complaint was unsealed, and a Brooklyn, New York, resident and two Canadian nationals were arrested in connection with a global procurement scheme in which the defendants used two corporate entities registered in Brooklyn to unlawfully source and purchase dual-use electronics on behalf of end-users in Russia, including companies affiliated with the Russian military.

Rogue Jumbo Jet Flown to Miami

A 747 Boeing Freighter was flown to Miami from Buenos Aires by U.S. Marshalls in the latest chapter of the Mahan Air Saga.  Mahan, a sanctioned Iranian airline is affiliated with the Islamic Revolutionary Guard Corp-Qods Force (IRGC-QF), a designated Foreign Terrorist Organization (FTO). On Oct. 20, 2022, in support of its ongoing criminal investigation, the United States filed a civil forfeiture complaint alleging that the aircraft’s transfer from Mahan Air to Empresa de Transporte Aéreocargo del Sur, S.A. (EMTRASUR), a Venezuelan cargo airline and subsidiary of a Venezuelan state-owned company, violated U.S. export control laws.