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Today, President Biden issued an Executive Order (E.O.) authorizing the imposition of additional sanctions on the Government of Belarus and a number of key sectors of the Belarusian economy in coordination with the United Kingdom and Canada, which also expanded sanctions on Belarus.  The E.O. authorizes the Office of Foreign Assets Control (OFAC) to

Today, President Biden issued an Executive Order expanding U.S. restrictions on dealings in the publicly traded securities of Chinese companies.  Today’s move amends Executive Order 13959 to prohibit U.S. persons from buying or selling the publicly traded securities of listed companies operating in (1) the surveillance technology sector or (2) the defense and related material sector of the Chinese economy.  E.O. 13959 was previously limited to companies affiliated with the Chinese military.

The amended order reflects a growing emphasis on human rights and “democratic values” in U.S. sanctions policy related to China.  The White House fact sheet announcing today’s amendment indicated that the Order is intended to prevent the flow of U.S. capital to companies that develop or use surveillance technology to facilitate repression or serious human rights abuse in and outside of China, including technology used to surveil religious or ethnic minorities.  Other recent moves, including those in response to Chinese government policies in the Xinjiang region and Hong Kong, have similar human rights policy motivations.  The administration may cite to security and adherence to democratic values in imposing future sanctions.

Below, we summarize the key features of the new restrictions and guidance issued by the Office of Foreign Assets Control (“OFAC”).

Companies targeted

The amended E.O. initially applies to the 59 Chinese companies listed in the annex to the E.O.  The companies are also included on OFAC’s new “Non-SDN Chinese Military-Industrial Complex Companies List” (“NS-CMIC List”), which replaces the previous “Communist Chinese Military Company” (“CCMC”) list.  The NS-CMIC List includes a number of new Chinese companies that did not appear in the prior CCMC list and excludes a handful of companies that were on the prior list. (A table summarizing the list changes is below the break.)  Notably, the NS-CMIC List captures companies operating in the defense sector, subsidiaries and affiliates of companies on the CCMC list, and two companies operating in the surveillance technology sector.

The Biden administration indicated that it expects to add additional parties to the NS-CIMC List in the future.

Relevant securities

As in the original E.O. 13959, the prohibition on purchasing and selling publicly traded securities also applies to derivatives and securities designed to provide investment exposure to such securities, including ADRs, GDRs, ETFs, index funds, and mutual funds.  Restrictions apply regardless of the CMIC securities’ share of the underlying index fund, ETF, or derivative.  The amended E.O. defines “securities” as those specified in Section 3(a)(10) of the Securities Exchange Act of 1934.

Wind-down period

The amended E.O.’s prohibitions come into effect on August 2, 2021 for the 59 companies currently on the NS-CMIC List, and U.S. persons are permitted to divest holdings in those securities until June 3, 2022.  The amended E.O. also provides for a 365-day divestment period for CMICs that are designated in the future.

Guidance for U.S. financial service companies and investors

OFAC guidance issued today explains how the agency will apply the new E.O. to broker-dealers, market intermediates, and other market participants.  In particular:

  • U.S. financial service companies that provide clearing, execution, settlement, and related services can continue to deal in CMIC securities so long as they do not facilitate prohibited transactions by U.S. persons.
  • Securities exchanges operated by U.S. persons, along with market makers, market intermediaries and other participants, are not prohibited from effecting U.S. persons’ divesture of publicly traded securities in the listed CMICs during the wind-down period.
  • U.S. persons employed by non-U.S. entities are not prohibited from facilitating purchases or sales related to a CMIC security on behalf of their non-U.S. employer or providing investment management or similar services to a non-U.S. person.
  • U.S. financial service companies can rely on “information available to them in the ordinary course of business” in conducting due diligence on whether an underlying purchase or sale is prohibited under the amended E.O

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Our team is actively monitoring developments in this area, please contact us with questions on how the new rules may apply to your business.


Continue Reading New Executive Order Targets Investments in Chinese Surveillance and Military Companies

The Department of Treasury’s office that administers reviews of foreign investments in U.S. companies is changing how it identifies critical technology businesses and related technologies that require mandatory review during a foreign investment process.  The Committee on Foreign Investment in the United States (CFIUS or the Committee) issued a final rule effective October 15, 2020

On September 14, 2020, the U.S. Department of Treasury, as Chair of the Committee on Foreign Investment in the United States (CFIUS), published final regulations changing the mandatory CFIUS declaration requirements for transactions involving U.S. businesses that produce, design, test, manufacture, or develop  critical technologies. Previously, the regulations provided that a CFIUS declaration was mandatory

Last Thursday, the President issued two executive orders (“E.O.s”) targeting social media applications TikTok (and its parent company, ByteDance) and WeChat (and its parent company, Tencent Holdings).  The E.O.s direct the Department of Commerce (“DOC”) to prohibit transactions involving the applications.  Companies that deal directly with TikTok or WeChat in the United States and abroad or use their services need to evaluate the scope of those activities and determine if they will be affected by the E.O.s.

The E.O.s were issued pursuant to the national emergency declared in E.O. 13873 regarding information and communication services in the United States that are controlled by persons within the jurisdiction of a “foreign adversary.”  In issuing the E.O.s, the President cited concerns that the Chinese government could gain access to Americans’ personal information collected by the applications, among other policy considerations.  The President has the power to issue the directives under the International Emergency Economic Powers Act (“IEEPA,” 50 U.S.C. 1701 et seq.), which provides the President with the authority to declare national emergencies and implement sweeping trade controls based on national security concerns.

The intended scope of the E.O.s is not clear due to ambiguous language used in Section 1, which contain the E.O.s’ primary prohibitions.  Here is an excerpt of that section from the TikTok order:
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Earlier this week, the COVID-19 Accountability Act was introduced in the Senate and the House by Rep. Senator Lindsey Graham and Rep. Doug Collins respectively.  While the text of the draft legislation is not yet available, a summary indicates that it would require within sixty days that the President certify to Congress that China has:

“Provided a full and complete accounting to any COVID-19 investigation led by the United States, its allies, or United Nations affiliates, such as the World Health Organization (WHO);

  • Closed all wet markets that have the potential to expose humans to health risks; and
  • Released all pro-democracy advocates in Hong Kong that were arrested in the post COVID-19 crackdowns.”

If there is no such certification, the Act would then authorize the President to impose at least two of a variety of sanctions to hold China accountable, including travel bans, visa revocations, asset freezes, restricting U.S. financial institutions from loaning money to Chinese businesses, and barring Chinese firms from being listed on American stock exchanges.  Such sanction would be effective until the certification could be made.
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The Department of State’s Office of Defense Trade Controls Policy announced that they are temporarily suspending, modifying, and excepting certain International Traffic in Arms Regulations (ITAR) requirements in an effort to mitigate the impact of the COVID-19 pandemic.  The temporary changes are as follows:

  • As of February 29, 2020, ITAR registrations and fees with an

Our previous blog post listed the specific types of PPE respirators, masks, and gloves restricted for export from the U.S. on April 10, 2020 by the Federal Emergency Management Agency (FEMA) in response to the COVID-19 pandemic.

On April 21, 2020, FEMA published a list of exemptions to those export restrictions which includes:

  • shipments to

On April 22, 2020, President Trump ordered Chevron to “wind down” its business in Venezuela by December 1, 2020. This will have a significant impact on companies that supply Chevron with equipment used for oil and gas projects in Venezuela that were previously licensed.

Effective April 21, 2020, the Department of Treasury’s Office of Foreign