More countries are using cryptocurrencies to evade U.S. sanctions, a troubling trend that could damage U.S. sanctions regimes if not managed correctly, sanctions experts told Congress this week. The experts said lawmakers should provide more funding to the Treasury Department's Office of Foreign Assets Control to address the issue and should push for more public-private partnerships to help OFAC target cryptocurrency users.
Promega Corp., a U.S. biotechnology company, said it doesn't sell to China’s Xinjiang region. following a report last week that said the company’s products are being used by Xinjiang police (see 2106150055). “Promega does not conduct business in Xinjiang, and we have no customers or distributors there,” a company spokesperson said in a June 16 email. Promega said it “takes seriously its obligation to comply with all applicable U.S. government export controls and sanctions requirements,” including the Entity List, and has “robust procedures and controls that ensure compliance with such requirements.”
The U.S. and the European Union agreed this week to establish a U.S.-EU Trade and Technology Council, which will feature working groups on emerging technologies, export controls, investment screening and securing semiconductor supply chains, the White House said June 15. The European Commission said the council will meet “periodically” at the political level and will be chaired by EU trade officials along with U.S. Secretary of State Antony Blinken, Commerce Secretary Gina Raimondo and U.S. Trade Representative Katherine Tai. The working groups will “operationalise the political decisions into deliverables” and report to the political level, the commission said.
The U.S. District Court for the District of Columbia in a June 13 opinion rejected Russian businessman Oleg Deripaska's challenge to his sanctions listing, granting the Office of Foreign Assets Control's motion for summary judgment. Deripaska, who argued his listing as part of the wave of sanctions in the wake of Russia's annexation of the Crimean Peninsula in 2014 violated multiple procedural and constitutional rights. Deripaska claimed that OFAC violated his Fifth Amendment due process rights by “relying on undisclosed classified information and failing to provide him with adequately detailed unclassified summaries of that information.” Deripaska is a “non-resident alien who lacks sufficient contact with the United States” to bring a due process challenge, Judge Amit Mehta said. Mehta said that “even if the court were to consider Deripaska’s due process claim on the merits, it would reject it” because the International Emergency Economic Powers Act explicitly says that OFAC can rely on classified information in its determinations.
The two top Republicans on the Senate and House foreign affairs committees urged President Joe Biden to immediately impose a second round of sanctions against Russia under the U.S. Chemical and Biological Weapons Control and Warfare Elimination Act. In a June 16 letter, Sen. Jim Risch, R-Idaho, and Rep. Michael McCaul, R-Texas, said the administration was required to impose a second round of sanctions under the CBW Act unless it certified to Congress by June 2 that the Vladimir Putin regime was “no longer using chemical weapons in violation of international law” and agreed to on-site inspections. The Biden administration had imposed the first round of sanctions against Russia in March (see 2103020067).
The Office of Foreign Assets Control on June 16 revised two entries on its Non-Specially Designated National Chinese Military-Industrial Complex Companies List. OFAC changed the entries for the Aviation Industry Corp. of China, which was identified as a Chinese military company in June 2020 (see 2006250024), and China National Offshore Oil Corp., which was identified in December 2020 (see 2011300038).
Republican lawmakers again threatened to remove export control responsibilities from the Commerce Department if it doesn’t move faster to issue restrictions over emerging and foundational technologies, doubling down on criticism levied at agency officials for months. The latest threat, sent in a June 15 letter to Commerce Secretary Gina Raimondo and signed by 10 Republican senators, highlights the tension between an agency that wants to avoid rushing into overbroad controls that could harm U.S. companies and lawmakers who say Commerce is neglecting a congressional mandate to restrict sensitive exports to China.
Paul Marquardt joined Davis Polk as a partner in its Washington, D.C.-based Financial Institutions Group, the firm announced in a June 14 news release. Marquardt previously led the foreign investment and national security practice at Cleary Gottlieb, where he worked with the Treasury Department's Office of Foreign Assets Control and the Commerce Department's Bureau of Industry and Security.
John Demers, the President Donald Trump-appointed official at the head of the Department of Justice's national security division, is leaving by his post at the end of June, a DOJ spokesperson said. The Biden administration has nominated former Uber executive Matt Olsen to replace him. Olsen is awaiting Senate confirmation. A DOJ spokesperson confirmed that Demers' departure had been pre-planned for months with June being the ultimate cutoff time for him to leave the division. Demers was originally slated to leave his role on inauguration day but was asked to stay on to aid with the transition. The national security division handles many security-related issues, from counterterrorism to export controls.
The European Parliament published its new tools to address trade risks in dual-use items in the June 11 Official Journal of the European Union. The regulation addresses trade risks for emerging technologies and goods that could be involved in cybersurveillance. The 460-plus-page regulation, approved May 20, includes stricter controls for cybersurveillance technology that may be used for human rights abuses, new general export licenses to authorize shipments of cryptographic items and certain “intra-group technology transfers,” and mechanisms for greater coordination between members and with trading partners (see 2105100013).