Corporations can take a number of steps to make sure their compliance procedures will allow them to qualify for potential declinations under DOJ’s new corporate enforcement policies, lawyers said this week. But they also said certain parts of the new DOJ policies could be clearer, including the agency’s definition for “extraordinary” cooperation during an investigation.
Senators unveiled legislation this week that would give the administration new authority to block transactions with TikTok and other foreign technology products that threaten U.S. national security. The bill, which has bipartisan support and was endorsed by the White House, would require the Commerce Department to establish new procedures to prohibit or mitigate transactions involving information and communications technology products “in which any foreign adversary has any interest and poses undue or unacceptable risk to national security.”
Although many of the U.S. sanctions against Russia have been in place for months, companies are still dealing with a range of compliance challenges, Crowell & Moring trade lawyers said this week, especially involving Russia-related service restrictions. They also said they don’t expect the pace of sanctions to slow anytime soon, especially as the U.S. ramps up enforcement efforts this year.
The Bureau of Industry and Security approved $23 billion worth of prospective exports involving Chinese companies on the Entity List from January through March 2022, representing about 79% of all license applications it received for those companies during that time period. The data, recently released by House Foreign Relations Committee Chair Michael McCaul, R-Texas, shows an “unacceptable” amount of approvals, the lawmaker said.
DOJ last week announced “significant changes” to how it assesses corporate compliance programs’ approach to communications platforms, which could impact whether the agency offers to resolve an investigation without criminal charges. Under the revised policies, companies that claim to not have access to emails and other electronic information related to a DOJ probe may have to prove to the agency that they can’t access those messages, Assistant Attorney General Kenneth Polite said.
Russia is using the United Arab Emirates as a major transhipment hub to import controlled goods, a Treasury Department official said last week. UAE companies exported more than $18 million worth of goods to sanctioned Russian entities between July and November, said Elizabeth Rosenberg, assistant secretary for terrorist financing and financial crimes. They also exported more than $5 million worth of U.S.-origin and export controlled goods to Russia June to November. Those items included “semiconductor devices” used by Russia to fight its war in Ukraine.
The Bureau of Industry and Security will increase the number of penalties it issues against corporations for export violations this year, an effort it hopes will lead to improved industry compliance, the top export BIS enforcement official said last week. DOJ also will concentrate more resources on targeting export violators, a top agency official said, and plans to significantly expand its Export Control Section.
Western democracies should pursue new restrictions on technology researchers or risk further falling behind China in global technological competition, the Australian Strategic Policy Institute said in a report that it released this week. The institute warned that China’s dominant research position could allow that country to “gain a stranglehold on the global supply of certain critical technologies.”
U.S. enforcement agencies this week issued their first joint “compliance note” to warn industry about common Russian sanctions evasion efforts. The note -- from the Commerce, Treasury and Justice departments -- outlines methods Russia uses to circumvent trade restrictions, including through intermediaries or transshipment points, and describes a range of red flags businesses should monitor.
The Bureau of Industry and Security this week added 37 entities to the Entity List for a range of activities the agency said threaten U.S. national security, including for supporting Russia’s war effort, sending controlled items to China’s military and aiding companies already listed on the Entity List. The entities -- located in Belarus, Myanmar, China, Pakistan, Russia and Taiwan -- will be subject to a license requirement for all items subject to the Export Administration Regulations with varying license application review policies. BIS also modified 10 existing Chinese entries on the Entity List. The additions and changes took effect March 2.