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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.

 

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As the Trump Administration continues to examine its trade relationship with China, legislators in Congress are looking to modernize the Committee on Foreign Investment in the United States (CFIUS) review process in order to effectively respond to increased foreign direct investment in the U.S. and perceived threats to U.S. national security. On June 22, 2017, Senator John Cornyn (R-TX) spoke at the Council on Foreign Relations where he highlighted key features of his proposed Foreign Investment Risk Review Modernization Act (FIRRMA).  The bill would make certain changes to the CFIUS review process in order to close perceived gaps.  As described, however, it appears that CFIUS already has the legislative and regulatory authority to address many of these issues.

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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 begins a process to alter some aspects of U.S. policy towards Cuba, but retains much of the Obama Administration’s reforms to travel, business and trade with Cuba.

The signaled changes focus on limiting business with companies related to Cuba’s military, intelligence and security apparatus and tightening aspects of the administration of existing travel allowances. Existing business and travel arrangements affected by the changes may be grandfathered.

There are no immediate changes to U.S. sanctions or export control policy. The memorandum sets the framework for the Office of Foreign Assets Control (OFAC), Bureau of Industry and Security (BIS) and other agencies to consider regulatory changes in the coming months.

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On June 15, 2017, the Senate passed the Countering Iran’s Destabilizing Activities Act of 2017 (S.722) by a vote of 98-2.  Included with the bill is a significant Russia sanctions amendment, the Countering Russian Influence in Europe and Eurasia Act of 2017, which would expand U.S. primary and secondary sanctions for Russia and limit the President’s ability to ease existing sanctions.

The bill represents a bi-partisan compromise among key legislators to advance Iran and Russia sanctions measures together. The House of Representatives is now beginning to consider its own Iran and Russia sanctions measure, with the potential for final legislation this fall. Continue reading →