The Office of Foreign Assets Control reached a $3.3 million settlement this week with a California-based skincare company and a $175,000 settlement with its former unnamed senior executive for illegal exports to Iran in violation of U.S. sanctions. Murad, owned by multinational company Unilever, worked with distributors in Iran and the United Arab Emirates to ship goods to Iran, leading to at least 62 exports worth more than $11 million, OFAC said.
Both outbound and a new approach for the Committee for Foreign Investment in the U.S. drew attention at a recent hearing of the House Select Committee on the Chinese Communist Party, and the chairman of the committee suggested that limiting investment screening to active investors, such as venture capital firms, is not enough.
The U.S. is preparing to roll out a “substantial package” of new sanctions and export controls against Russia for its war in Ukraine, including by adding about 70 new entities to the Commerce Department’s Entity List and introducing more than 300 new financial sanctions against people, entities, vessels and aircraft, a senior administration official said. The measures, which will be coordinated alongside allies as part of the Group of 7 summit in Japan May 19-21, are aimed at closing “loopholes” used by Russia to evade sanctions and “extensively restricting categories of goods key to the battlefield,” the official said during a May 18 call with reporters.
The Committee on Foreign Investment in the U.S. is mitigating more investment deals and is hiring more staff to manage its increasing workload, said Paul Rosen, head of CFIUS. Rosen also said the committee is assessing more violations for breaches of mitigation agreements and is “for the first time” beginning to receive voluntary self-disclosures.
The Bureau of Industry and Security announced a host of new Russia-related export controls, including measures that expand its Russian and Belarusian Industry Sector Sanctions, broaden its foreign direct product rule restrictions and add 71 new entities to the Entity List. Some of the changes, outlined in a 106-page final rule effective May 19, “better align” U.S. export controls with allies, place new export license requirements on additional “industrial items” and chemicals destined to Russia, and impose controls on certain electrical parts destined to Iran for use in unmanned drones. The Entity List changes, also effective May 19, add entities in Armenia, Kyrgyzstan and Russia for either supporting Russia’s military sector, diverting U.S.-controlled items to Russia or preventing a U.S. end-use check.
China denounced recent U.S. enforcement actions by the Disruptive Technology Strike Force against various Chinese and Russian individuals for allegedly violating sanctions by conspiring to export technology, trade secrets and aircraft parts 2305160047). A spokesperson for the Ministry of Foreign Affairs said May 17 the U.S. "has kept stretching the national security concept to abuse export control regimes and its leading technological advantage," according to a transcript in English of the regular press conference the spokesperson holds with media in Beijing. The spokesperson urged the U.S. to stop suppressing China in the field of technology and using judicial power to target Chinese researchers, adding "China will do what is necessary to firmly safeguard the lawful rights and interests of Chinese citizens."
The House Foreign Affairs Committee this week advanced a bill that could lead to new U.S. sanctions against people and entities involved in illegal fentanyl trade. The Project Precursor Act, introduced by Rep. Michael McCaul, R-Texas, would require the State Department to seek to classify illicit fentanyl under the Chemical Weapons Convention and authorize the U.S. to sanction banks, people and transnational criminal organizations “complicit in the trafficking of this chemical weapon,” McCaul said during a May 16 markup. “This is a generational crisis that requires bold action and thinking outside the box. That’s what we’re doing.”
The Office of Foreign Assets Control amended and replaced its South Sudan Sanctions Regulations to “further implement” a 2014 executive order. The new, “more comprehensive” set of regulations includes “additional interpretive and definitional guidance, general licenses, and other regulatory provisions that will provide further guidance to the public,” OFAC said. The changes take effect May 18.
President Joe Biden this week renewed a national emergency authorizing certain sanctions related to Iraq. The White House said "obstacles to the orderly reconstruction" of peace, security and economic institutions in Iraq continue to threaten U.S. national security. The sanctions were renewed for another year from May 22.
The U.S. should avoid placing export controls on cloud computing services to try to prevent Chinese companies from using a loophole that allows them to access controlled semiconductors, researchers said. Georgetown’s Center for Security and Emerging Technology and the Center for a New American Security explored this strategy in a new report released this week but said export controls don't “appear feasible and may have adverse consequences.”