On April 29, 2021, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced a settlement with MoneyGram Payment Systems, Inc. (MoneyGram), a global payments and money transfer company.  Under the settlement, MoneyGram agreed to pay a $34,000 civil penalty for 359 apparent violations of multiple OFAC sanctions programs.  MoneyGram provided services to blocked individuals incarcerated in U.S. federal prisons without a license from OFAC, processed transactions on behalf of an additional blocked person, and processed transactions for individuals who initiated commercial transactions involving Syria.

According to the enforcement release sheet, between March 2013 and April 2016, MoneyGram provided money transfer services to the Department of Justice’s Federal Bureau of Prisons (BOP), which allowed inmates to send and receive funds into and out of their personal commissary accounts.  In providing these services, however, MoneyGram did not screen the inmates against OFAC’s Specially Designated Nationals (SDN) List, even while knowing that some inmates could be on the list.  It erroneously thought such measures were not necessary under the BOP program.  Despite making corrections and beginning to screen the money transfers, MoneyGram “continued to process transactions on behalf of blocked persons in federal prisons due to other screening, technology, and fuzzy logic failures, as well as limited instances of human error.”  This included processing commercial transactions related to Syria, a U.S.-sanctioned country.  Overall, the apparent violations totaled over $105,000 for approximately 40 persons on the SDN List and two persons involving Syria transactions.

The conduct resulted in apparent violations of numerous OFAC sanctions programs:  (i) Foreign Narcotics Kingpin Sanctions Regulations; (ii) Narcotics Trafficking Sanctions Regulations; (iii) Syrian Sanctions Regulations; (iv) Democratic Republic of the Congo Sanctions Regulations; (v) Central African Republic Sanctions Regulations; and (vi) Weapons of Mass Destruction Proliferators Sanctions Regulations.  While the maximum civil penalty was over $300,000, OFAC determined that MoneyGram voluntarily self-disclosed the matter and it constituted a non-egregious case.  Specifically, OFAC noted MoneyGram’s efforts to improve its compliance program and the implementation of a new and more robust screening system.

OFAC made the following statement:  “This action highlights that money services businesses that are processing transactions for individuals worldwide, including individuals potentially ordinarily resident in, or doing business in, countries subject to U.S. sanctions — like all financial service providers — should understand the sanctions risks associated with those services and should take steps necessary to mitigate those risks.”

 

On April 30, 2021, the Department of Commerce’s Bureau of Industry and Security (BIS) issued a notice announcing a settlement and fine of over $300,000 to FLIR Systems, Inc. for an egregious violation of the Export Administration Regulations (EAR).  This settlement highlights that violations of the EAR are not limited to physical exports of goods or services.  The settlement resolves allegations that FLIR made “inaccurate or incomplete representations, statements, or certifications in violation of the EAR” while seeking a commodity jurisdiction (CJ) determination on a newly developed product.

The notice indicates that during the review of the item, the government expressed concern over possible diversion of FLIR’s product to end-uses of concern.  However, at the time of the CJ submission, FLIR claimed the item was “designed specifically for insertion into commercial smartphones and recognized the need to prevent its diversion to uses other than insertion into smartphones” while internally the company was contemplating other markets for the product – including military and drone applications.  Adding to the egregious nature of the violation was FLIR’s representation that the item had incorporated a novel anti-tampering encryption protection device to protect against diversion, but never actually developed or included such protections on the item.

The order issued by BIS provides details on the two charges where FLIR made misrepresentations and concealed certain facts.  In addition to the civil fine, FLIR must complete internal audits of its export controls compliance program.  Further, the payment of the fine and audit reports submitted to BIS by the company are conditions to the granting, restoration or continuing validity of any export license, license exception, permission or privilege granted to FLIR Systems.

 

 

On April 28, 2021, Chief Judge Mark Barnett of the U.S. Court of International Trade (CIT) issued an order staying any new complaints filed in the ongoing Section 301 tariff refund litigation involving the legality of tariffs imposed under Section 301 of the Trade Act of 1974 on imports from China appearing on the Office of the U.S. Trade Representative’s Lists 3 and 4A. Any “new 301 Cases(s)” will be automatically stayed without further action pending resolution of the lead “sample” case identified by the CIT in the Master Section 301 case. The order states that any party seeking to lift the stay on a new Section 301 case must  consult with the plaintiffs’ Steering Committee at least three days before filing a motion and must provide “good cause” for the CIT to allow any exemption from the stay.

On April 23, 2021, the plaintiff group in the ongoing Section 301 tariff refund litigation at the U.S. Court of International Trade (CIT) filed a Motion for Preliminary Injunction Limited to Suspension of Liquidation of all unliquidated entries of imported products from China appearing on the Office of the U.S. Trade Representative’s Lists 3 and 4A subject to tariffs pursuant to Section 301 of the Trade Act of 1974. The preliminary injunction motion in this litigation, which now involves more than 3,700 complaints challenging the legality of certain Section 301 duties, makes clear that the plaintiff group does not seek to enjoin or limit the collection of these Section 301 duties and that the U.S. government defendants will continue to collect the duties during the litigation. Instead, the plaintiffs seek injunctive relief to preserve the status quo as to liquidation until the CIT issues a final judgment.

The preliminary injunction motion states that “[t]his motion should not have been necessary” but must be filed because of the U.S. government defendants’ position that the CIT cannot order refunds on liquidated entries. If the CIT were to agree, then, the motion notes, “the immediate need for a preliminary injunction to suspend liquidation is self-evident.” If liquidated entries are ruled to be non-refundable, yet plaintiffs ultimately prevail in this matter, the harm would be the substantial loss of those paid duties found to be illegal. The motion argues that injunctive relief “merely maintains the status quo to protect those sums from becoming irretrievably lost if the Section 301 tariffs are deemed unlawful but the refund remedy is deemed available only with respect to unliquidated entries.” The motion also suggests that the CIT “can and should reaffirm its broad remedial powers to issue refunds irrespective of liquidation status,” referencing numerous U.S. Court of Appeals of the Federal Circuit and CIT precedents on this issue.

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued a final rule amending the Somalia Sanctions Regulations, 31 C.F.R. Part 551 (“Regulations”) and reissuing them to further implement the April 12, 2010 and July 20, 2012 Somalia-related executive orders. This final rule replaces the regulations that were published in abbreviated form on May 5, 2010 and includes additional interpretive and definitional guidance, general licenses, statements of licensing policy and other regulatory provisions. The rule became effective on April 28, 2021.

The Regulations implement targeted sanctions directed at certain persons who meet the criteria set forth in the Regulations as well as sanctions that may be set forth in the Somalia-related executive orders. These sanctions do not generally prohibit trade with or the provision of banking or other financial services to Somalia but instead apply where the transaction in question involves property or interests in property that are blocked, and prohibit the importation into the United States, directly or indirectly, of charcoal from Somalia. OFAC has also incorporated several new general licenses and made technical edits to others. For example, the Regulations now authorize certain transactions relating to the investment of certain funds, payments for legal services from funds originating outside the United States, official business of the United States government and official activities of international organizations.

On April 19, 2021, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued General License No. 2H under the Belarus Sanctions Regulations, representing a shift in the licensing policy for transactions with certain entities. Since October 2015, now revoked OFAC General License No. 2G had authorized transactions with these nine companies. The new General License 2H essentially requires the winding down of any transactions with the entities and authorizes until June 3, 2021 all transactions and activities “ordinarily incident and necessary” to winding down activities. U.S. persons and companies now have 45 days to wind down transactions and activities with the following entities:

  • Belarusian Oil Trade House
  • Belneftekhim
  • Belneftekhim USA, Inc.
  • Belshina OAO
  • Grodno Azot OAO
  • Grodno Khimvolokno OAO
  • Lakokraska OAO
  • Naftan OAO
  • Polotsk Steklovolokno OAO

This authorization includes any entities that are 50% or greater owned or controlled by these listed entities. This general license does not authorize the unblocking of any specifically sanctioned and blocked property or any other activities prohibited under the Belarus Sanctions Regulations. OFAC notes that for any wind down transactions in excess of $50,000, U.S. persons must report such transactions to the Department of State no later than 30 days after execution of the transaction.

The Belarus sanctions were implemented during the presidency of George W. Bush and are intended to sanction persons and entities determined by the United States to have undermined or continue to undermine Belarus’s democratic processes or institutions.

On April 15, 2021, President Biden issued an Executive Order (“E.O.”) on “Blocking Property with Respect to Specified Harmful Foreign Activities of the Government of the Russian Federation.”  The E.O.  establishes a new national emergency under which sanctions may be imposed against individuals and entities furthering specified harmful foreign activities of Russia against the United States and others, including: undermining free and fair elections; malicious cyber-enabled activities; transnational corruption; extraterritorial activities targeting dissidents or journalists; undermining security, international law and the territorial integrity of states.  Pursuant to the E.O., the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued Directive 1 and has published the following new FAQs: 886887888889890891, and updated FAQs 673674675676.  These actions are part of an ongoing U.S. government effort to increase sanctions and export controls pressure on Russia, see Updates for March 8, 2021, March 19, 2021 and April 14, 2021.

The E.O. provides for blocking sanctions on persons operating in the technology, defense and related material sectors of the Russian economy, and any other sectors determined by Secretaries of State and Treasury.  Persons designated pursuant to the E.O. for operating in these sectors and fostering or engaging in the specified harmful activities are subject to blocking sanctions and will appear on the Blocked Entities and Specially Designated Nationals List (“SDN List”). The following tech companies were designated pursuant to the E.O.:

  • ERA Technopolis;
  • Pasit, AO (Pasit);
  • Federal State Autonomous Scientific Establishment Scientific Research Institute Specialized Security Computing Devices and Automation (SVA);
  • Neobit, OOO (Neobit);
  • Advanced System Technology, AO (AST); and
  • Pozitiv Teknolodzhiz, AO (Positive Technologies).

Further, Directive 1 was issued by OFAC to expand certain sovereign debt prohibitions previously issued pursuant to the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 related Executive Order 13883 and Russia–Related Directive issued in August 2019 (“CBW Act E.O. and Directive”) to cover certain activities related to non-ruble denominated bonds and funds.  Specifically, as of June 14, 2021, U.S. financial institutions and their foreign branches are prohibited from engaging in the primary market for ruble or non-ruble denominated bonds issued by, or lending ruble or non-ruble denominated funds from, the following:

  • Central Bank of the Russian Federation;
  • National Wealth Fun of the Russian Federation; and
  • The Ministry of Finance of the Russian Federation (collectively, the “Russian Financial Institutions”).

Directive 1 defines U.S. financial institutions broadly to include, among others, securities brokers and dealers, clearing corporations, investment companies employee benefits plans, and U.S. affiliates, subsidiaries and holding companies of any of the foregoing.  The Directive also prohibits transactions that evade or cause a violation of the Directive and any conspiracy to violate the Directive.  All other activities with these Russian Financial Institutions are permitted.

OFAC FAQs 887-891 explain these prohibitions and makes two notable clarifications: (1) E.O. Directive 1 does not prohibit U.S. financial institutions from participating in the secondary market for bonds issued by the Russian Financial Institutions (see FAQ 889); and (2) the 50 percent rule does not apply, such that the prohibitions set forth in Directive 1 apply only to certain bonds issued by, or loans made to, the Russian Financial Institutions but not to any entity that is owned, directly or indirectly, 50 percent or more by one or more of these three entities, whether individually or in the aggregate (see FAQ 891). Updates to FAQs 673-676 relate to the CBW Act E.O. and Directive and note differences or similarities with respect to the new E.O. and Directive 1.

On April 13, 2021, the U.S. Court of International Trade (CIT) issued a Scheduling Order in response to the joint status report filed the previous day by the plaintiffs and U.S. government defendants in the ongoing litigation involving more than 3,700 complaints challenging the legality of duties implemented on certain imports from China pursuant to Section 301 of the Trade Act of 1974. The report addressed the briefing schedule for the sample case selected by the CIT, HMTX Industries LLC, et al. v. United States, et al., and issues requiring early case management intervention.

The status report makes clear that the parties continue to strongly disagree on the issue of interim relief for liquidated entries of duties already paid under Section 301. The government defendants argue that any liquidated entries have “become final and conclusive” and that relief is not available even if the plaintiffs ultimately prevail in this litigation. The plaintiffs continue to argue that recent court decisions support the availability of such refunds. Because the parties cannot agree on the interim relief issue, the plaintiffs stated in the joint status report that they will seek expedited resolution from the CIT as to the availability of refunds for liquidated entries and plan to file by April 22 a motion in the sample case seeking (1) a declaratory judgment of the CIT’s authority to order such refunds if the plaintiffs prevail on the merits and, in the alternative, (2) a preliminary injunction limited to suspending the liquidation of unliquidated entries pending a final judgment in the litigation.

The chart below identifies key dates in the litigation:

FILING DUE DATE WORD LIMIT
Defendants file administrative record index April 30, 2021 N/A
Defendants file their dispositive motion, including any defenses, objections, or other arguments that would otherwise be presented pursuant to USCIT Rule 12 June 1, 2021 20,000
Plaintiffs file combined response and dispositive cross motion August 2, 2021 20,000
Amicus curiae file supporting briefs (if any) August 9, 2021 5,000
Defendants file combined reply supporting their dispositive motion and response to cross motion (including any response to amicus briefs) October 1,2021 10,000 (+ up to half of total amicus words)
Plaintiffs file reply supporting their cross motion November 15, 2021 10,000

Since April 2020, we have partnered with foreign law firms to monitor and report on the most relevant government measures worldwide addressing the COVID-19 pandemic. This most recent (and final) version of the guide includes a concise, corporate-focused and user-friendly list of government measures and covers areas like tax, restructuring, business immigration, government contracts and international trade.

View/Download (PDF): Country-by-Country Guide:
Government Measures Taken in Response to COVID-19.

This last update includes new information as of March 2021 for Australia, Belgium, Canada, Chile, Czech Republic, European Union, Germany, Honduras, Hungary, India, Indonesia, Japan, Mexico, Panama, Philippines, Poland, Republic of Korea, Spain, Turkey, United Kingdom and United States.

Many countries around the world continue to maintain health and safety measures to restrict public gatherings or movement of persons to address rising numbers of COVID-19 cases and have rolled out plans for vaccination and safe reopening. Regional curfews or lockdown requirements are maintained primarily based on the numbers of infections within local populations. In the United States, cities, counties and states continue to differ in their approaches to both business closures/reopenings and mask requirements. In Asia and the Americas, the general trend shows countries adopting risk-based systems to identify high-risk populations and restricting their activities accordingly. In Asia, international travel restrictions have been eased in some countries, with a focus on workers. That said, following the discovery of new COVID-19 variants, some countries have introduced travel bans from countries with the presence of the new variants.

Governments continue to support workers and employers affected by the economic instability caused by the pandemic. Most have taken various measures, including tax deferrals, incentives or exemptions and loan facilities, to address the difficulties endured by businesses. Other measures include business subsidies, short-term compensation procedures, social security benefits and other regulations to ensure that workers receive personal protective equipment and do not face discrimination.

As to government contracts, some governments have enacted measures to address COVID-19-related economic difficulties, including easing the termination of contracts for force majeure or introducing emergency procurement regimes to speed up the procurement process. Further, some governments have introduced measures to facilitate the rollout of COVID-19 vaccines. Additionally, there is increased attention on investment and regulations involving critical infrastructure in the Americas and Europe to support COVID-19 efforts.

In the area of international trade, some countries continue to restrict exports of certain personal protective equipment (PPE) and have introduced measures subjecting foreign investments to increased scrutiny, especially investments linked to public health emergencies. Foreign investment in health care and related infrastructure continues to be regulated in light of the pandemic around the world.

On April 12, 2021, the State Department’s Directorate of Defense Trade Controls (DDTC) issued additional guidance regarding changes that have been made to the International Traffic in Arms Regulations (ITAR) pertaining to export of defense articles or services to Russia. The guidance summarizes changes that were implemented on March 18, 2021, when the Departments of Commerce, State and the Treasury imposed sanctions and export restrictions on numerous Russian officials and government entities in response to the Russian Federation’s imprisonment and alleged previous poisoning of opposition figure Aleksey Navalny. See International Trade Update of March 8, 2021.

Most notably for DDTC, effective March 18, 2021, the ITAR was amended at § 126.1 to include Russia in the list of countries “subject to a policy of denial for exports of defense articles and defense services,” with limited exceptions. The guidance issued by DDTC reiterates this new licensing review policy towards Russia and offers answers to several questions that the new policy of denial has raised. DDTC has clarified that while no new export licenses or other approvals that identify Russia and do not satisfy one of the carve-outs will be issued (including amendments to existing agreements and licenses in furtherance of existing agreements), existing licenses remain valid. DDTC will contact holders of exiting and currently valid licenses in the event that the “existing license or other approval is terminated, suspended, or otherwise revoked.” Further, DDTC has clarified that license applications related to temporary imports “will continue to be adjudicated on a case-by-case basis consistent with U.S. foreign policy and national security considerations.” As for ITAR-related brokering activities involving Russia, DDTC states that it will deny requests for approval of any brokering activities.

DDTC has also issued a series of FAQs. Regarding all pending Russia license applications filed prior to March 18, 2021, DDTC is assessing those applications “to determine [Russia’s ] role in the transaction. If the transaction does not meet one of the carve-outs, the license application will be denied. If it does meet one of the carve-outs, the license application will be reviewed on a case-by-case basis.” Another FAQ confirms that, generally and with limited exceptions, license exemptions may no longer be used for exports to Russia. With regard to Technical Assistance Agreements (TAA), another FAQ states that the policy of denial for Russia does apply to “in furtherance of licenses” that do not involve Russia but where a related overarching TAA does involve Russia. Finally, DDTC confirms in one FAQ that these ITAR amendments do not have an expiration date.