International Regulation and Compliance

On November 26, 2024, the US Court of Appeals for the Fifth Circuit ruled that the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) exceeded its statutory authority when it designated the digital asset mixer Tornado Cash as a Specially Designated National (SDN) under Executive Order (EO) 13694 and EO 13722. The court’s opinion in the case is a rare loss for OFAC and significant victory for the digital asset industry. Steptoe's Quentin Johnson and Evan Abrams examine the Fifth Circuit's decision and its possible implications in a new blog post: https://lnkd.in/epRdVTfE

On November 14, 2024, the UK government laid a new piece of legislation before parliament, the Sanctions (EU Exit) (Miscellaneous Amendments) (No.2) Regulations 2024 (the “Regulations”). The Regulations introduce a number of changes to the UK’s various sanctions regimes and are intended in significant part to improve the implementation and enforcement of UK financial sanctions, including by strengthening the intelligence-gathering capabilities of HM Treasury’s Office of Financial Sanctions implementation (“OFSI”), the agency responsible for the implementation and civil enforcement of UK financial sanctions. Among the package of amendments contained in the Regulations is the imposition of a new mandatory reporting obligation on art market participants (“AMPs”) and high value dealers (“HVDs”) that will come into effect on May 14, 2025. Steptoe's Alex Melia and Elliot Letts discuss the Regulations and their impact on AMPs and HVDs in a new blog post: https://lnkd.in/eHAAFnqs

On November 14, the U.S. Department of Defense (DoD) issued a proposed rule that would effectively require DoD contractors to disclose whether they have permitted or agreed to permit a foreign government or person to review software code for certain categories of products and services. For non-commercial code that is custom-developed for DoD, contractors would also be required to confirm whether they hold or have sought a license under U.S. export controls for products and services containing such code. After more than six years, the proposed rule would finally implement requirements imposed under the National Defense Authorization Act (NDAA) for Fiscal Year 2019. However, the rule would significantly expand the NDAA’s requirements. Steptoe's Tyler Evans, Caitlin Conroy, Paul Hurst, and Amba Datta explore the proposed rule and key considerations for industry in a new blog post: https://lnkd.in/g8AR6w8T

On November 7, 2024, the U.S. Department of the Treasury (Treasury) published a final rule expanding the jurisdiction of the Committee on Foreign Investment in the United States (CFIUS) to review certain real estate transactions involving foreign persons near military installations and other sensitive U.S. government facilities. This rule significantly broadens CFIUS’s authority to monitor foreign access to real estate close to sites critical to national security, aiming to mitigate risks posed by surveillance and potential intelligence-gathering activities by foreign persons. Steptoe's Chris Forsgren, Evan Abrams, and Brian Fleming analyze the changes to CFIUS's jurisdictional reach in a new blog post: https://lnkd.in/eQSYaVqX

On October 28, 2024, the US Department of the Treasury issued a Final Rule that will prohibit or require notification of certain US investments concerning China (including Hong Kong and Macau) that involve sensitive technologies and products in the semiconductors and microelectronics, quantum information technologies, and artificial intelligence sectors. Steptoe's Ryan Pereira, Evan Abrams, and Brian Fleming discuss the Final Rule and its takeaways for industry in a new blog post: https://lnkd.in/e_9m5BPf

On October 9, 2024, the U.S. Department of the Commerce’s Bureau of Industry and Security ("BIS") published guidance to financial institutions (“FIs”) on best practices for compliance with the Export Administration Regulations (“EAR”). The guidance reflects BIS’s increasing focus on EAR compliance by FIs and follows several joint alerts published by BIS and the U.S. Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”) in May, June, and November 2023 that provided FIs with “red flag” indicators for export control evasion and key terms to use in export control evasion-related Suspicious Activity Reports (“SARs”). Steptoe's Ryan Pereira, Meredith Rathbone, Ali Burney, Wendy Wysong, and Peter Jeydel cover BIS's recent guidance and its implications for both U.S. and non-U.S. FIs in a new blog post: https://lnkd.in/ep4RBN7y

On September 27, 2024, HM Treasury’s Office of Financial Sanctions Implementation (“OFSI”), announced that a civil monetary penalty of £15,000 was imposed on August 29, 2024, against Integral Concierge Services Limited (“ICSL”) for breaches of The Russia (Sanctions) (EU Exit) Regulations 2019 (the “Russia Regulations”). The ICSL case represents the tenth use of OFSI’s civil monetary penalty powers since they were introduced under Part 8 of the Policing and Crime Act 2017 (“PACA”), and the second penalty to be imposed by OFSI in relation to Russia’s February 2022 invasion of Ukraine. Steptoe's Alex Melia and Elliot Letts discuss the ICSL case and the insights it provides into OFSI's enforcement approach in a new blog post: https://lnkd.in/eqaydFTS

On September 26, 2024, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) issued a Notice of Proposed Rulemaking (NPRM) aimed at securing the automotive supply chain from foreign adversaries. The rule seeks to address national security concerns by prohibiting the import and sale of connected vehicles and key components, including Vehicle Connectivity Systems (VCS) and Automated Driving Systems (ADS), that have ties to entities subject to the jurisdiction or direction of, or otherwise linked to, certain foreign adversary jurisdictions, currently identified as China and Russia. Steptoe's Chris Forsgren, Jack Hayes, Evan Abrams, Meredith Rathbone, and Brian Fleming discuss the NPRM and its implications for the automotive industry in a new blog post: https://lnkd.in/eYH2ccup

On September 24, 2024, for the first time, the United States, Canada, France, Germany, Italy, Japan, the United Kingdom, and the European Union (collectively, the G7) published joint guidance for industry on preventing the evasion of export controls and sanctions imposed on Russia. The guidance reflects the G7’s continued emphasis on preventing diversion of Common High Priority List (CHPL) items to Russia. Accordingly, parties involved in the export, reexport, or transfer (in-country) of CHPL items should be aware that these items are an enforcement priority in these jurisdictions. Steptoe attorneys Ryan Pereira and Alexandra Baj summarize the G7's joint guidance in a new blog post: https://lnkd.in/gccWYAz4

On September 11, 2024, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued an Interim Final Rule (the IFR), effective March 12, 2025, that extends OFAC’s general recordkeeping requirement from five years to 10 years. The IFR aligns OFAC’s recordkeeping requirement with the recent extension of the statute of limitations (SOL) period for civil and criminal violations of the International Emergency Economic Powers Act (IEEPA) and the Trading with the Enemy Act (TWEA), which took effect on April 24, 2024, when President Biden signed into law HR 815 (the National Security Supplemental). Steptoe attorneys Peter Jeydel, Dave Stetson, Edward Krauland, Jack Hayes, Brian Fleming, and Wendy Wysong, along with Pre-Law Fellow Jonathan Eaton, assess the IFR and its implications for the enforcement landscape in a new blog post: https://lnkd.in/eeb7fzBa