The Committee on Foreign Investment in the U.S. already has issued two civil monetary penalties this year and plans to impose more before 2024, said Paul Rosen, the head of the Treasury Department’s Office of Investment and Security. Rosen also said CFIUS is increasing its on-site visits to monitor compliance with mitigation agreements and is preparing to formally “refine” regulations surrounding the committee's enforcement powers, case review functions and efforts to track own non-notified transactions.
Ian Cohen
Ian Cohen, Deputy Managing Editor, is a reporter with Export Compliance Daily and its sister publications International Trade Today and Trade Law Daily, where he covers export controls, sanctions and international trade issues. He previously worked as a local government reporter in South Florida. Ian graduated with a journalism degree from the University of Florida in 2017 and lives in Washington, D.C. He joined the staff of Warren Communications News in 2019.
Republicans are asking the Biden administration to strengthen export controls against Huawei and Semiconductor Manufacturing International Company after Huawei this month unveiled a new smartphone that may have been made through means that violated U.S. export restrictions (see 2309120005). They said both technology companies should be subject to “full blocking sanctions” and their executives should face criminal investigations, adding that the Commerce Department should revoke all of their existing license applications, add all their subsidiaries to the Entity List and take other measures to cut off a broad range of shipments to both firms.
Treasury Secretary Janet Yellen said the Committee on Foreign Investment in the U.S. is doubling down on enforcement, warning industry lawyers about potential subpoenas or penalties for violating the committee's rules or mitigation agreements. Yellen’s comments came one day after Paul Rosen, who heads CFIUS, said the committee recently hired additional enforcement officials and may add more.
The U.S. this week announced new Russia-related sanctions, designating more than 150 Russian business people, government officials, financial institutions, technology suppliers and foreign companies for supplying Russia with controlled goods or aiding the government. The sanctions include nearly 100 new designations imposed by the Treasury Department and more than 70 designations by the State Department and are designed to undermine Russia’s military supply chains, Treasury Secretary Janet Yellen said.
The U.S. doesn't have to sacrifice innovation when imposing new regulations on artificial intelligence, including through potential export controls, said Jack Corrigan, a senior research analyst at Georgetown University’s Center for Security and Emerging Technology (CSET). Corrigan said there is always “tension” between the government’s desire to issue restrictions and industry’s drive to develop new technologies, but “as it relates to AI, regulation doesn't necessarily need to get in the way of innovation.”
The Bureau of Industry and Security should explore several changes to the Export Administration Regulations to better prevent exported technologies from being used for human rights violations, including by maintaining a regularly updated list of EAR99 items that are likely to be misused by authoritarian regimes, said Annie Boyajian, vice president for policy and advocacy for Freedom House. Boyajian also suggested BIS engage more with civil society groups, including by creating a formal mechanism that would allow those groups to inform the agency about new ways technologies are being misused.
The Census Bureau is mulling whether to nix a proposed country of origin reporting requirement in the Automated Export System or to scale back the requirements under a “phased-in” approach that would cause less of a burden for export filers, said Gerry Horner, chief of the agency’s trade regulations branch.
The upcoming U.S. outbound investment restrictions (see 2308090066 and 2308100045) should be overseen by the Office of Foreign Assets Control, not the agency that heads the Committee on Foreign Investment in the U.S., Republicans said this week. Several lawmakers, including Patrick McHenry, the top Republican on the House Financial Services Committee, said the new outbound investment restrictions are similar to a sanctions program as opposed to the case-by-case review process overseen by CFIUS for inbound investments, and said OFAC is better suited to prevent China from benefiting from sensitive American investments.
The Bureau of Industry and Security’s top export enforcement official this week urged customs brokers, forwarders and non-vessel operating common carriers to be more proactive in export compliance even though they may not always have the “primary” responsibility for ensuring goods comply with U.S. export licensing restrictions. Matthew Axelrod, the BIS assistant secretary for export enforcement, said those service providers should take steps to ensure they have maximum visibility into their clients and the goods they are shipping.
Suspicious activity reports recently filed with the U.S. government show nearly $1 billion worth of transactions over the last year may have had ties to Russia-related export control evasion, the Financial Crimes Enforcement Network said in a new report analyzing SAR trend data. The report -- issued as part of a joint effort between FinCen and the Bureau of Industry and Security to collect more leads for export enforcement agents -- highlights several evasion trends being reported by banks and other financial institutions, including what types of goods are most commonly being sought by sanctions evaders and which foreign countries those transactions most frequently involve.