Just before the holidays, President Biden signed two bills passed on the last day of the last Congress. These bills contain numerous provisions regarding sanctions, export controls, and restrictions on supply chain.
- On December 23, 2022, President Biden announced, National Defense Authorization Act (“NDAA“) Fiscal Year 2023 (PL 117-263). This action includes additional sanctions against Burma, a ban on US government agencies from using , and contains a number of clauses on related matters.
- On December 29, 2022, President Biden announced, Consolidated Appropriations Act, 2023 (PL 117-328). The measure includes provisions on sanctions and related subjects, including authorizing the transfer of confiscated assets to aid Ukraine and funding initiatives to combat forced labor and sanctions enforcement. I’m here.
Below we discuss the main highlights of the newly enacted legislation.
- Interagency Strategy to Stop Drug Production and Trafficking in Syria
Section 1238 of the NDAA, within 180 days of enactment, requires the Secretary of State to develop an interagency strategy to disrupt and dismantle drug production and trafficking and related networks linked to the Bashar al-Assad regime in Syria. request that A detailed plan to dismantle the drug network and use sanctions approved under the Caesar Syrian Civil Protection Act of 2019.
- Amendments to the Annual Report on Military and Security Developments Involving Russia
Section 1243 of the NDAA, as part of the Secretary of Defense’s “Annual Report on Military and Security Developments Involving the Russian Federation,” describes the impact of U.S. It includes a description of how it affected the actions of Russian private military companies and an assessment of the impact of maintaining or withdrawing such sanctions.
Sections 5567-5579 of the NDAA incorporate amendments to the Burmese Unity Act with Strict Military Accountability, 2022 (“Burma Laws”). The BURMA Act imposes her two types of sanctions on Burmese government officials and state-owned enterprises, subject to certain waivers and exceptions.
First, within 180 days of enactment, Section 5571(a) will require the President to impose mandatory blocking, foreign exchange, and visa sanctions on government-identified non-U.S. persons, subject to certain exceptions and waivers. instruct to impose A high-ranking official in the Burmese military or a political government, defense sector, or state-owned enterprise in the industrial or administrative sector that financially benefits the Burmese military. Section 5571(b) also authorizes sanctions against corresponding or payable accounts for non-U.S. financial institutions that conduct material transactions on behalf of sanctioned parties.
Second, Section 5571(c) has the power to impose discretionary sanctions on Myanmar oil and gas companies, Burmese state-owned companies that benefit the Burmese military, and persons involved in activities related to the February 2021 coup in Myanmar. also given to the president. An entity that provides material support to Burma or the Burmese Army.
Section 5572 also co-ordinates sanctions across the U.S. government (including with respect to demands for new reports to Congress), facilitates multilateral sanctions against the Burmese Army and its allies, and enforces additional sanctions, including: We are calling for a comprehensive strategy on sanctions against Burma. Pressure China and Russia to seek support for greater multilateral efforts in Burma.
- Sanctions on Russian gold trade
Section 5590(a) of the NDAA authorizes the President to sell, supply, or transfer (including from Russia or from reserves of the Central Bank of the Russian Federation held outside the Russian Federation) within 90 days of enactment. transport of gold in which the Russian government is interested, including Section 5590(b) requires the President to impose blocking and visa sanctions against persons identified in the report, subject to certain waivers and exceptions.
- Accountability for human rights violations in Iran
Section 5592 of the NDAA states that civil servants of the government of the Islamic Republic of Iran are responsible for human rights violations in the form of politically motivated imprisonment. Global Magnitsky Human Rights Accountability Act and other available authorities.
- Bank Transparency Act for Sanctioned Persons 2022
Section 5706 of the NDAA incorporates the Bank Transparency Act for Sanctioned Persons. The law requires the Secretary of the Treasury to issue an annual report within one year of enactment detailing the specific licenses issued by the Treasury Department in the previous year. Entities that provide financial services to governments of state sponsors of terrorism, or persons sanctioned by the Office of Foreign Assets Control under the Global Magnitsky Sanctions. These licenses typically allow the facilitation of certain types of trade in humanitarian goods (such as medicines and medical devices) and agricultural goods (such as food and agricultural goods).
- Assessing the impact of sanctions imposed in connection with Russia’s invasion of Ukraine
Section 6807 of the NDAA requires, within 180 days of enactment, a semi-annual evaluation of the effectiveness of sanctions imposed on Russia’s aggression against Ukraine. The Director of National Intelligence (“DNI”) has the right to use Russia’s efforts to evade sanctions through direct or indirect engagement from the administrations of Cuba, Nicaragua, Venezuela, China, Iran, and such other countries as the Director deems appropriate. You must submit a report outlining your efforts. The report describes the substantive impact of U.S. and allied sanctions on individual sectors of the Russian economy, senior leaders, senior military officers, and state-supported and state-related actors subject to such sanctions. must also include a description of Sanctions that had a significant impact, not just those where no impact was observed. Reports must also include evasive techniques used by Russia, sanctioned organizations and individuals, and other governments, organizations, and individuals who assisted in the use of such techniques. This includes, for example, the use of digital assets for sanctions evasion.
- Strengthening coordination on sanctions strategies
Section 9107 of the NDAA requires the Secretary of the Treasury, within 90 days of enactment, to report to Congress on steps taken by the State Department’s Office of Sanctions Coordination to coordinate its activities with the Treasury Department. Department of the Treasury and Humanitarian Assistance Programs to ensure the proper flow of humanitarian aid and supplies to countries subject to U.S. sanctions.
- Establishment of Financial Integrity Fund
The Consolidated Appropriations Act establishes a funding mechanism within the Treasury Department, called the Financial Integrity Fund, through which whistleblowers who report cases of sanctions evasion or money laundering are rewarded for successful U.S. enforcement actions. It will be. It also sets a minimum percentage of 10% of the total amount of financial penalties imposed on an entity for misconduct that should be given to whistleblowers. Similar to the Securities and Exchange Commission’s Whistleblower Program, the Anti-Money Laundering and Sanctions Evasion Whistleblower Program has a revolving fund that is paid out of fines imposed on violators and replenished periodically.
- Approval of Transfer of Confiscated Property to Help Ukraine
The Consolidated Appropriations Act allows the Attorney General to remit proceeds from the sale of assets confiscated from sanctioned persons for Russian aggression in Ukraine and related crimes to the Department of State to provide foreign assistance to Ukraine. meeting.
- Implementation of the Global Magnitsky Human Rights Accountability Act
The Interpretation of the Consolidated Appropriations Act states that the Act provides funding to continue to strengthen the implementation of the Global Magnitsky Human Rights Accountability Act (22 USC 10101 et seq.), including the Department of State’s Office of Economics and Business, the International Narcotics Service, and the Office of Law Enforcement. indicates that it contains General affairs, democracy, human rights, labor. In addition, the Secretary of State must consult with the Appropriations Committees of the House and Senate on the implementation of these directives within 90 days of their enactment.
Export control regulations
- Extension of certain export controls
Section 5589 of the NDAA extends the end date of the commercial embargo on covered munitions to the Hong Kong Police Department under Public Law 116-77 to 2024.
- Enhanced Intelligence Support for Export Control and Foreign Investment Screening
Section 6311 of the NDAA provides DNI with a pilot program designating elements of the intelligence community to provide enhanced intelligence support, including intelligence derived from open sources, publicly and commercially available information require an evaluation of the feasibility and justification of doing so. Export control and screening of foreign investments. The pilot program will share information with the Departments of Commerce and Homeland Security to support their respective export control and investment review functions.
Regulations on supply chain restrictions
- Prohibition of Certain Semiconductor Products and Services
Section 5949 of the NDAA permits the U.S. Government to acquire electronic components, products, or services, including covered semiconductor products or services, from certain Chinese companies (such as Semiconductor Manufacturing International Corporation, ChangXin Memory Technologies, and Yangtze Memory). Prohibits Procurement or Contracting with Entities. Technologies Corp, or any subsidiary or affiliate of such entity. Government contractors are responsible for demonstrating that covered semiconductor products or services are not used in such parts or products. The Secretary of Defense, Commerce, Homeland Security, Energy, and DNI may waive prohibitions for “vital national security interests.”
The semiconductor ban will come into force five years after the date of enactment. Within three years of the date of enactment, the Federal Acquisition Regulatory Council must issue regulations implementing the prohibitions. Within two years of enactment, the Federal Procurement Security Council will issue recommendations for mitigating supply chain risks associated with federal acquisitions of semiconductor products and services, and recommendations for regulations that implement the prohibitions. is needed.
For more information on these semiconductor prohibitions, please visit our Supply Chain Compliance Blog, which will soon publish a more detailed blog post on this legislation.
- Enforcement of the Uyghur Forced Labor Prevention Law
The Consolidated Appropriations Act narrative indicates that the Act fully funds the implementation of the Uyghur Forced Labor Prevention Act (“UFLPA”), and for the funds provided in excess of the requirements for fiscal year 2022, Adjusted. A 60-day enactment to provide a briefing to the House and Senate Appropriations Committees on the implementation of the UFLPA.