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On October 25, 2017, the U.S. House of Representatives passed three bills and a resolution in response to Iran’s ballistic missile program and threats posed by Hizballah. Notably, neither the bills nor the resolution would directly affect U.S. obligations in relation to the Iran Nuclear Agreement (Joint Comprehensive Plan of Action, or JCPOA). Further, because Hizballah is already sanctioned on the U.S. List of Specially Designated Nationals and the President already has authority to impose sanctions based on Iran’s ballistic missile program, it does not appear that the bills would result in substantive changes to existing law if enacted.

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Effective October 12, 2017, the Sudanese Sanctions Regulations (SSR) have been revoked in recognition of the Government of Sudan’s (GOS) sustained positive actions in stopping conflict and improving humanitarian access in Sudan.  This latest action makes permanent the general license issued in January 2017.  However, Sudan remains designated as a “State Sponsor of Terrorism” and accordingly, key restrictions remain.

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President Trump issued an Executive Order prohibiting the proposed acquisition of Lattice Semiconductor (Lattice) by a Chinese consortium known as Canyon Bridge. Lattice is a semiconductor company primarily manufacturing programmable logic devices.  The Executive Order prohibits the proposed acquisition and any substantially equivalent transaction, and requires the parties to permanently abandon the proposed transaction in 30 days. The Executive Order follows a lengthy review process with the Committee on Foreign Investment in the United States (CFIUS). This is only the fourth time since the enactment of the Exon-Florio Amendment in 1988 that a transaction has been formally blocked.

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On Aug. 22, 2017, the Financial Crimes Enforcement Network (FinCEN) announced an expansion of its Geographic Targeting Orders (GTO) that require the identification by U.S. title insurance companies of the natural persons behind shell companies used to buy high-end residential real estate. On Gravel2Gavel, colleague Christine Scheuneman provides a number of insights and resources examining the ramifications of this broader scope.

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Today, President Trump issued an Executive Order (E.O.) providing for sanctions against the Government of Venezuela. The sanctions are structured similar to existing sectoral sanctions on the Russian petroleum sector and target financial transactions with the Government of Venezuela.

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On August 2, 2017, President Trump signed into law the Countering America’s Adversaries Through Sanctions Act (CAATSA), which strengthened U.S. sanctions on Russia, North Korea and Iran. CAATSA had been passed by overwhelming “veto-proof” majorities of Congress and President Trump signed the bill while expressing reservations concerning the limitations it placed on the President’s authority.

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On June 16, 2017, President Trump issued a National Security Presidential Memorandum on Strengthening the Policy of the United States Toward Cuba, which began the process to alter some aspects of U.S. policy toward Cuba. [See prior blog post here].  On July 25, 2017, OFAC updated its Cuba FAQs to address upcoming changes to its Cuba sanctions rules as they relate to pre-existing contracts, licenses, and travel arrangements.

Some of the more important points in the new OFAC guidance include the following:

  • Treatment of existing contracts and companies engaged in the Cuban market

OFAC states that companies already engaged in the Cuban market with entities related to the Cuban military, intelligence, or security services that may be affected by the new Cuba sanctions regime will be allowed to continue after issuance of the new regulations.  In the updated FAQs, OFAC further clarifies that “businesses will be permitted to continue with transactions outlined in contingent or other types of contractual arrangements agreed to prior to the issuance of the new regulations, consistent with other [Cuban Assets Control Regulations] authorization.”

  • Addition of “subentities”

OFAC indicated that the State Department will be publishing a list not only of “entities with which direct transactions generally will not be permitted,” but also a list of “subentities.”  This suggests that the Administration plans to assemble its own list of entities that are considered to be owned or controlled by the Cuban military, intelligence, and security services, which may be useful to U.S. companies by lessening their burdens to investigate the ownership of some Cuban entities.

  • Travel

OFAC explains that for travel after issuance of the forthcoming regulations, as long as a traveler has already completed at least one travel-related transaction prior to June 16, 2017, such as purchasing a flight, the trip and any meetings with listed entities/subentities will be permitted.

  • People-to-People Travel. The latest FAQs reiterate that the general license allowing individual people-to-people travel will end once Treasury issues the upcoming regulations. Nevertheless, group people-to-people travel will remain available subject to the rules in 31 CFR § 515.565(b).
  • Persons Organizing or Sponsoring people-to-people or educational travel. OFAC clarifies in new FAQs that such parties are covered by the general licenses and do not need to apply for a specific license.
  • Remittances

The latest Cuba FAQs explain that remittances to Cuba will still be permitted under the new regulations. However, “changes will be made to the definition of prohibited members of Government of Cuba that may exclude certain persons from receipt of such remittances.”

The June 16, 2017 Cuba FAQs may be found here.

The July 25, 2017 Cuba FAQs may be found here.

 

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Recent public reports indicate Sen. Chuck Schumer (D-NY), the Senate Democratic Leader, has authored a letter to President Trump requesting the President order the Committee on Foreign Investment in the United States (CFIUS) to suspend the approval of all covered transactions by Chinese entities.  Sen. Schumer explains that such action would place severe economic pressure on China and force the country to take more stringent action against North Korea.  While President Trump has publicly expressed “disappointment” with China over its perceived lack of response to recent North Korean missile tests, it is unclear what actions, if any, the President might take to spur action from China.

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On July 11, 2017, the President issued an Executive Order (E.O.) extending the review period for the possible permanent revocation of sanctions on Sudan for an additional three months.  The Executive Order is available here.

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On June 29, 2017, the U.S. Treasury Department announced new steps applying pressure on North Korea in relation to its proliferation activities.  Specifically, this involved (1) sanctions designations against Chinese shipping company Dalian Global Unity Shipping Co., Ltd. and two Chinese individuals; and (2) anti-money laundering special measures against China’s Bank of Dandong.  All were involved in business with North Korea according to the Treasury Department’s announcement.

The Special Measures for Bank of Dandong under Section 311 of the USA PATRIOT Act prohibit U.S. financial institutions from maintaining correspondent accounts for, or on behalf of, that bank.  This would prevent access to the U.S. banking system for dollar transactions or wiring services.

None of the sanctioned parties appear to be systemically important companies for China, but the sanctions may be intended, or viewed, as an effort by the Trump Administration to pressure China into doing more to restrain North Korea’s nuclear activities.