On April 24, 2024, President Biden signed into law H.R. 815, an emergency appropriations package billed as authorizing $95 billion in foreign aid to Ukraine and Israel (the Act). While the Ukraine and Israel aid provisions and the potential ban on TikTok have received the most attention, the Act contains over 20 sections, some of which make significant changes to US sanctions and export control laws. Salient provisions include, among others:
- extending the statute of limitations under the International Emergency Economic Powers Act (IEEPA) and the Trading With the Enemies Act (TWEA) from five years to 10 years, which will double enforcement time horizons while placing additional recordkeeping and compliance responsibilities on private-sector actors;
- authorizing the President to confiscate all Russian sovereign assets subject to US jurisdiction and transfer the money to funds established for the benefit of Ukraine;
- increasing congressional pressure to harmonize the US list of persons designated under Russia sanctions with the EU and UK sanctions lists, intended to increase the effectiveness and alignment of Russia sanctions;
- revising the Comprehensive Iran Sanctions Accountability and Divestment Act of 2010 (CISADA) so that any transaction by a Chinese financial institution involving the purchase of Iranian-origin petroleum may be deemed “significant,” placing Chinese financial institutions at higher risk for secondary sanctions;
- revising CISADA so that any transaction by a foreign financial institution involving the purchase of Iranian unmanned aerial vehicles may be deemed “significant,” which places foreign financial institutions at increased risk for secondary sanctions;
- providing new authority to impose sanctions on foreign persons who own docks, vessels or refineries that knowingly support significant transactions involving Iranian-origin petroleum, also increasing secondary sanctions risks;
- requiring the Secretary of State to provide an assessment of options for expanding designations related to China’s role in evading sanctions on Iranian-origin petroleum;
- expanding the foreign direct product rule governing export controls to Iran to further expand the reach of US export controls to limit Iran’s access to a broader list of technologies;
- providing new authority to impose sanctions on persons who support the Iranian missile program, on Iranian government officials involved in human rights abuses and on foreign persons and foreign states that provide material support to Hamas;
- imposing a new prohibition on US and foreign financial institutions from providing a more comprehensive list of financial services to certain designated Iranian officials;
- providing new authority for imposing sanctions on any foreign person who has ordered, directed or taken material steps to carry out any use of violence against any current or former US official;
- providing new authority to impose sanctions on parties involved in fentanyl or captagon trafficking;
- providing new authority for the Financial Crimes Enforcement Network (FinCEN) to require US financial institutions to take Section 311 special measures with respect to foreign financial institutions of “primary money laundering concern” in connection with “illicit opioid trafficking”; and
- requiring FinCEN to issue guidance on filing suspicious activity reports regarding activity related to suspected fentanyl trafficking by transactional criminal organizations.
Given these provisions, there are a few important takeaways from this legislation for entities grappling with the already dynamic, ever-changing international economic landscape. Congress has identified key areas where it wants the executive branch to focus its priorities and where there may be heightened congressional scrutiny of executive branch actions. This could translate into heightened compliance requirements for private-sector actors related to dealings with agencies like the Office of Foreign Assets Control of the US Department of the Treasury. The law also reinforces the trend of placing higher burdens on companies involved in cross-border activities to know not only their customers but also their end-to-end supply chains. And the law seeks to encourage further harmonization of US, EU and UK blocking sanctions, which may have a significant impact on diligence and compliance responsibilities for companies with extensive cross-border operations. The doubling of statutes of limitations on all IEEPA- and TWEA-based sanctions measures, once implemented (likely through regulations), will also have the practical effect of adding heightened compliance burdens and recordkeeping requirements. The law notably adds further scrutiny to activities by the Chinese government and Chinese actors that may be perceived to be undermining US national security and foreign policy interests, which will also heighten business and compliance risks for business partners of those parties.
This client alert provides a preliminary review of a lengthy, complex piece of legislation signed into law the middle of last week. WilmerHale continues to monitor these developments closely and is prepared to advise clients on how to respond to these latest developments.
