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THE LATEST ON GOVERNMENT INQUIRIES AND ENFORCEMENT ACTIONS

Government Investigations and White Collar Litigation Group
Energy Enforcement, Sanctions, Trade Embargo, and Export Controls

G7+ Coalition Issues Alert on Russian Oil Price Cap Evasion Methods and How to Report Violations

On February 1, 2024, the G7+ Coalition (consisting of the G7, the European Union, and Australia) published an Oil Price Cap (OPC) Compliance and Enforcement Alert (the “Alert”), identifying notable OPC evasion methods and recommending various methods to reduce the risk of evasion and its negative impacts.  The OPC was enacted in December 2022 in response to the Russian incursion into Ukraine and related disruptions to global oil flows and energy security.  The Alert seeks to bolster legitimate commercial efforts to comply with the OPC and provides guidance to regulators on how to combat the innovative methods by which bad actors are attempting to circumvent it.  The G7+ Coalition is further encouraging regulators to supplement its findings and recommendations with their own detailed advisories, sector-specific guidance, and case studies.

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Compliance

FinCEN Issues Access Rule Compliance Guide for Beneficial Ownership Information

Rule Regarding Access to Beneficial Ownership Information Takes Effect

On February 21, 2024, FinCEN published a Small Entity Compliance Guide to aid in compliance with the Corporate Transparency Act’s (“CTA”) Beneficial Ownership Information (“BOI”) Access and Safeguards Rule (“Access Rule”).  The Compliance Guide is called the Small Entity Compliance Guide only because federal law requires that the federal government issue guidance specifically directed at facilitating smaller business’s compliance efforts.  Notwithstanding the title, the Compliance Guide will assist financial institutions (“FIs”) of all sizes with understanding FinCEN’s expectations for access to the BOI database once such access is approved.

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Anti-Money Laundering

Bank Secrecy Act’s Anti-Money Laundering and Counter Terrorism Financing Requirements to Apply to Investment Advisers

The Bank Secrecy Act (“BSA”) establishes program, recordkeeping, and reporting requirements for certain financial institutions to combat and detect money laundering, terrorist financing, and other illicit activities.  On February 13, 2024, FinCEN proposed new rules which expand the scope of the BSA to include certain investment advisers, which currently are not subject to any federal or state regulations regarding anti-money laundering (“AML”) or counter-financing of terrorism (“CFT”) compliance.  FinCEN also published a fact sheet on the proposed rules that provides a helpful summary of the key provisions.

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Enforcement and Prosecution Policy and Trends, Government Contracts, Sanctions, Trade Embargo, and Export Controls

Disruptive Technology Strike Force Continues Focus on Trade Secret Theft, Export Control Enforcement

During a summit celebrating its one-year anniversary, the Disruptive Technology Strike Force provided updates on its efforts to prevent authoritarian regimes and hostile nation-states from acquiring critical technologies.

Read on for details about a new expansion of the effort, recent prosecutions and the group’s continued focus on cases involving theft of trade secrets and export control enforcement.

Enforcement and Prosecution Policy and Trends

BIS Continues Enforcement Policy Ramp-Up

On January 16, 2024, the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) issued new guidance to incentivize voluntary self-disclosure (“VSD”) of possible violations of the Export Administration Regulations (“EAR”). This new guidance—which was announced in conjunction with a speech by BIS’s top enforcement official indicating the EAR enforcement is an increasingly important priority for BIS and the Department of Justice (“DOJ”)—continues a trend of BIS signaling increasingly aggressive enforcement of export control violations.

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Enforcement and Prosecution Policy and Trends, Sanctions, Trade Embargo, and Export Controls

Recent Sanctions Enforcement Actions Demonstrate Importance of  Incorporating All Available Data into Screening

For U.S. businesses, sanctions compliance has never been more challenging or more important.  The U.S. has responded to Russia’s invasion of Ukraine with a broad range of sanctions targeting the Russian government, its officials, oligarchs and Russia’s financial and energy industries, among others.  Indeed, since the invasion of Ukraine, the agency that administers sanctions, the Office of Foreign Assets Control (OFAC), has added over 2500 Russia-related targets to the Specially Designated Nationals and Blocked Persons (SDN) List.  These new sanctions mean that there are now more sophisticated and motivated sanctions evaders than ever before.  In turn, the U.S. has made clear its determination to pursue those who violate sanctions.  As a means of capturing its new level of intensity and commitment to sanctions enforcement, the leadership of the Department of Justice (DOJ) has described sanctions enforcement as “the new FCPA.”[1]  Moreover, all of the above was true before Hamas’ attack on Israel and the escalation of violence in the Middle East, which increases the importance of sanctions targeting Hamas, Hezbollah, Iran and other adversaries of the U.S. based in the Middle East.

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Anti-Bribery and Corruption

The Foreign Extortion Prevention Act: Another Tool to Fight Foreign Corruption

In recent years, the Biden Administration has been vocal that combatting foreign public corruption is a key pillar of its national security efforts.[1]  Consistent with those policy goals, on December 22, 2023, Congress passed the Foreign Extortion Prevention Act (FEPA), a long-awaited complement to the Foreign Corrupt Practices Act (FCPA).  Where the FCPA targets those who offer or pay bribes to foreign officials, the new FEPA targets those who solicit and receive the bribes—the foreign officials themselves.

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Compliance

New York LLC Transparency Act Beneficial Ownership Reporting Requirements to Take Effect

On December 23, 2023, New York Governor Kathy Hochul signed the New York LLC Transparency Act (“NYLTA”), which requires LLCs to disclose beneficial ownership information (“BOI”) to the New York Department of State.  Effective December 21, 2024, the NYLTA will impose separate BOI reporting requirements on New York LLCs, which are also subject to the reporting requirements under the federal Corporate Transparency Act (“CTA”).  McGuireWoods has published prior alerts on the CTA generally, the use of FinCEN identifiers to report BOI, FinCEN’s extension of the time to file from 30 to 90 days for entities created beginning January 1, 2024, and January 2024 updates regarding the CTA.

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Fraud, Deception and False Claims

1st Circuit Rejects Convicted Former Medical Device Executives’ Off-Label “Free Speech” Theory

A federal appeals court recently upheld misdemeanor convictions of two former Acclarent Inc. executives for commercially distributing an adulterated and misbranded medical device by misleading the U.S. Food and Drug Administration regarding the device’s intended use.

Read on for details about the decision, which rejected claims that their off-label promotion amounted to constitutionally protected commercial speech.

Anti-Money Laundering, Compliance

Corporate Transparency Act: Three Updates for January 2024

As of January 1, 2024, the Corporate Transparency Act (“CTA”) has gone into effect. Companies that may be Reporting Companies of Beneficial Ownership Information (“BOI”) should be aware of three key aspects of the CTA.

  • One, entities formed on or after January 1, 2024 must file, within 90 days after formation or registration, their required BOI with the Financial Crimes Enforcement Network (“FinCEN”). McGuireWoods has published prior alerts on the CTA generally, the use of FinCEN identifiers to report BOI, and FinCEN’s extension of the time to file from 30 to 90 days. As a reminder, Reporting Companies in existence prior to January 1, 2024 have until January 1, 2025 to make their required reports. FinCEN has published guidance materials to facilitate understanding the BOI reporting requirements, which include a Small Business Compliance Guide, FAQs, and other resource materials. These are available on FinCEN’s website. FinCEN plans to continue developing guidance and other materials to ensure timely, accurate, and complete reporting. FinCEN also established a dedicated BOI contact center to respond to questions regarding reporting requirements, as well as to provide technical assistance to users encountering issues with its Beneficial Ownership Secure System (“BOSS”).
  • Two, FinCEN met its January 1, 2024 deadline to have the BOSS up and running to receive, store, and maintain BOI.
  • Three, FinCEN adopted a new regulation that addresses how FinCEN will regulate access to the BOI reported to FinCEN. While the new access rule takes effect on February 20, 2024, access will be phased in over time to ensure that the proper controls are in place to, among other things, ensure the security of the reported information.

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