Trade Law

On June 16, 2017, the Trump administration issued a national security presidential memorandum entitled “Strengthening the Policy of the United States Towards Cuba” (the “Presidential Memorandum”). Related to this announcement, the White House issued a Cuba Fact Sheet, OFAC issued a new set of Frequently Asked Questions (FAQs) and the Department of Transportation also issued a new set of FAQs relating to the President’s announcement.

Background

On February 27, 2017, FinCEN announced a $7 million civil monetary penalty against Merchants for willful violations of the BSA. Additionally, the Office of the Comptroller of the Currency (OCC), Merchants’ federal functional regulator, identified deficiencies in Merchants’ processes that resulted in violations of the 2010 and 2014 consent orders that Merchants entered into with the OCC, as well as continued violations of 12 C.F.R. § 21.21 (i.e., the requirement that a bank’s AML compliance program must be reasonably designed to assure and monitor compliance with the BSA’s recordkeeping and reporting requirements). The OCC is assessing an additional, separate $1 million penalty for the violations.¹

CFIUS: Account for CFIUS risks in transactions involving non-U.S. investments in businesses with a U.S. presence

Over the past year, the Committee on Foreign Investment in the United States (CFIUS), an interagency committee chaired by the Department of the Treasury, has been particularly active in reviewing and, at times, intervening, in non-U.S. investments in U.S. businesses to address national security concerns. CFIUS has the authority to impose mitigation measures on a transaction before it can proceed. It may also recommend that the President block a pending transaction or order divestiture of a U.S. business in a completed transaction. Consequently, companies that have not sufficiently accounted for CFIUS risks may face significant hurdles in successfully closing a deal. With the incoming Trump administration, there is also the potential for an expanded role for CFIUS, particularly in light of campaign statements opposing certain foreign investments.

On October 7, 2016, the U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC) published new guidance clarifying (a) circumstances under which non-U.S. financial institutions (FFIs) may engage in U.S. dollar transactions involving Iran; (b) when residual “secondary” U.S. sanctions on Iran can affect transactions involving affiliates of Iranian Specially Designated National (SDNs); and (c) U.S. government expectations for conduct of compliance screening and due diligence in Iran-related transactions otherwise permissible under U.S. sanctions relief implemented pursuant to the Joint Comprehensive Plan of Action (JCPOA or “the Agreement”) in January 2016.

On April 15, 2016, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued the Hizballah Financial Sanctions Regulations (HFSR, 31 CFR Part 566) implementing the Hizballah International Financing Prevention Act of 2015 (HIFPA or “Act,” Pub. L. No. 114-102 (2015)). The HFSR are intended to disrupt Hizballah’s global logistics and financial network by providing a new basis of secondary sanctions jurisdiction over foreign (i.e., non-U.S.) financial institutions (FFIs) that, when invoked, would prohibit or significantly limit the ability of U.S. financial institutions to open or maintain correspondent or payable-through accounts on their behalf in the United States.

On Wednesday, March 16, 2016, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) and the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) implemented amendments to the Cuban Assets Control Regulations (CACR) and Export Administration Regulations (EAR) that further ease the U.S. sanctions and export controls targeting Cuba, particularly related to financial transactions, travel and certain trade-related activities. These changes immediately precede President Obama’s visit to Cuba next week, building upon the previous lifting of sanctions that occurred in January 2015, September 2015 and January 2016, and supplementing the upcoming resumption of commercial air services between the United States and Cuba.

On Wednesday, January 27, 2016, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) and the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) implemented amendments to the Cuban Assets Control Regulations (CACR) and Export Administration Regulations (EAR). These amendments further ease U.S. sanctions on Cuba, continuing the implementation of the Obama administration’s new policy direction toward Cuba, as announced in December 2014. The latest amendments build upon previous changes easing U.S. sanctions on Cuba in January 2015 and September 2015 (see prior alerts here and here).

On January 16, 2016, the International Atomic Energy Agency (IAEA) verified, and U.S. Secretary of State Kerry confirmed, that Iran had implemented its key nuclear-related measures described in the Joint Comprehensive Plan of Action (JCPOA or the “Agreement”). This event triggered “Implementation Day” under the Agreement, which commences the suspension and/or easing of UN, U.S. and EU nuclear-related sanctions.