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1. Treasury Mandates Reporting of Foreign Securities Holdings
of $200M or More

All U.S. persons (custodians and end investors) who manage $200
million or more in foreign securities for themselves or others must
file a report by March 4,
2022. Information collected through the survey is confidential, and
failure to report can result in civil and criminal penalties. The
Treasury Department conducts this survey every five years.

2. Prepare Now for Potential Increased Sanctions on Russia

As the tension about Russia’s potential invasion of Ukraine
increases, companies can take steps now to prepare for possible
increased sanctions on Russia. Specifically, companies should:

  • Identify outstanding debts from Russian entities or individuals
    and promptly pursue collection activities.

  • Check sanctions screening policies and procedures and screen
    customers and business partners in real time against global
    sanctions lists.

  • Identify contracts with Russian entities or individuals and
    review them for compliance with law clauses, notice clauses, and
    termination provisions.

  • Identify beneficial owners of Russian trading partners. If an
    entity is owned 50 percent or more by one or more SDNs, that entity
    is also treated as if it is on the SDN List and subject to blocking
    and asset freezes.

  • Identify items or technology being exported to Russia and any
    transactions with Russian entities that have ongoing or continuing
    obligations. You may need a license for the export.

  • Consider alternative sources for any supplies or services being
    sourced from Russia.

3. Tighter Export Controls on Cybersecurity Items Delayed Until

In a January 11 notice, the Bureau
of Industry and Security (BIS) delayed the effective date of its
new export controls over certain cybersecurity items after
receiving comments from industry. The controls, which were
scheduled to take effect January 19, were delayed for 45 days and
will now take effect March 7. The controls impact hardware and
software on command and delivery platforms for “intrusion
software”; the technology for the “development,”
“production,” or “use” of the command and
delivery platforms; and the technology for the
“development” of “intrusion software.”

4. Burma Warning; Sanctions Enforcement Continues

a. U.S. Government Warns About Conducting Business in

On January 26, multiple U.S. government agencies issued a joint business
to inform businesses of the heightened reputational,
financial, and legal risks of doing business in Burma, including
violations of U.S. anti-money laundering laws and sanctions as well
as abetting human rights abuses. The specific entities and sectors
of greatest concern include state-owned enterprises; gems and
precious metals; real estate and construction projects; and arms,
military equipment, and related activity. Companies and investors
considering or already engaged in business in Burma need to review
their compliance processes to ensure that they adequately address
the risks involved.

b. Hong Kong Company Hit With $5.2M OFAC Fine Over Iran

On January 11, the Office of Foreign Assets Control (OFAC)
announced a $5.2 million
with Hong Kong-based chemical company Sojitz (Hong
Kong) Ltd. for its apparent violations of the Iranian Transactions
and Sanctions Regulations. From 2016 to 2018, Sojitz HK made 60
U.S. dollar payments totaling $75,603,411 for 64,000 tons of
Iranian-origin high density polyethylene resin (HDPE) from its bank
in Hong Kong to the HDPE supplier’s banks in Thailand. These
U.S. dollar payments were processed through U.S. financial
institutions, which facilitated prohibited transactions related to
goods of Iranian origin. Certain noncompliant Sojitz HK employees
concealed the Iranian country of origin on all relevant
documentation. OFAC said the case shows the importance of
risk-based internal controls to identify and prevent prohibited
sanctions activities.

c. TD Bank Fined for Sanctions Violations

On December 23, 2021, OFAC announced a $115,000 settlement
with TD Bank, N.A. (TD Bank) related to TD Bank’s apparent
violations of the North Korea Sanctions Regulations and the Foreign
Narcotics Kingpin Sanctions Regulations. The apparent violations in
both cases resulted from multiple sanctions compliance breakdowns,
including screening deficiencies and human error such as dismissing
a name and birth date screening result match of an individual on
the List of Specially Designated Nationals and Blocked Persons
(SDN). This enforcement action highlights the importance of
maintaining and following proper escalation procedures and ensuring
adequate employee training.

5. CFIUS Updates List of Excepted Foreign States; New Zealand
in the Mix

On January 5, the Treasury Department announced final regulations
modifying the definitions of excepted foreign state and excepted
real estate foreign state for the Committee on Foreign Investment
in the United States (CFIUS). CFIUS also determined that Australia
and Canada have met the criteria for permanent status as excepted
foreign states. New Zealand has been added as an eligible foreign
state, and it, along with the United Kingdom, has until Feb. 23,
2023, to meet the criteria of effectively analyzing foreign
investments for national security risks and facilitating
coordination with the United States on matters related to
investment security.

6. Commerce Acts to Deter Misuse of Biotechnology, Adds 37 to
Entity List

On December 16, 2021, the Bureau of Industry and Security (BIS
implemented a rule to address
threats to U.S. national security as a result of China’s and
Iran’s misuse of biotechnology. BIS has added 37 entities in
China, Georgia, Malaysia, and Turkey to the Entity List.

7. CFIUS Asks Ukrainian Tech Firm to Divest Its Stake in U.S.
Space Company

CFIUS has requested that Ukrainian tech entrepreneur Max
Polyakov sell his 50 percent stake in Texas-based rocket company
Firefly Aerospace Inc. Government and aerospace industry officials
have expressed objections to Polyakov’s control of the company
amid fears that valuable technology could make its way to Ukraine,
Russia, or other nations trying to develop rocket programs. This
sale request comes amid rising tensions with Ukraine and

Means Companies Need to Trace and Document All Their Supply

On January 24, the Forced Labor Enforcement Task Force
requested public comment on how the U.S. can best enforce the
Uyghur Forced Labor Prevention Act. The act’s importation ban
on all goods with Xinjiang-origin inputs is set to take effect on
June 21, and the government has until that date to release guidance on
the compliance requirements importers will need to satisfy in order
to enter goods into the United States. Importers should already be
reviewing their supply chains to identify and replace Xinjiang
inputs/suppliers and to compile documentation demonstrating that
none of their products are linked to Xinjiang or forced labor. The
trend toward requiring increased supply chain transparency and
accountability continues to garner bipartisan support and growing
consumer attention, so comprehensive supply chain tracing is
becoming a compliance expectation.

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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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