On Thursday, December 31, 2015, the US Treasury Department’s Office of Foreign Assets Control (“OFAC”) issued the Cyber-Related Sanctions Regulations, 31 C.F.R. Part 578 (“Regulations”), which implement Executive Order 13694 of April 1, 2015 (“Blocking the Property of Certain Persons Engaging in Significant Malicious Cyber-Enabled Activities” or the “Cyber EO”). Our prior blog post on the Cyber EO is available here. The Regulations implement the restrictions on transactions involving parties designated as Specially Designated Nationals (“SDNs”) under the Cyber EO. Parties may be designated as SDNs under the Cyber EO for, among other things, engaging in “significant malicious cyber-enabled activities.” Although no parties have been designated under the Cyber EO to date, publication of the Regulations signals that the U.S. Government continues to pursue measures for combating “significant cyber threats,” as announced by the President in a statement accompanying release of the Cyber EO in April. The Regulations were published in an abbreviated form and, for now, include only the standard provisions that are incorporated in most OFAC blocking program regulations. These include a small number of general licenses that are commonly found in OFAC sanctions regulations, such as general licenses for legal services and certain payments and transfer of credit related to blocked accounts. The Regulations also re-state OFAC’s interpretation that any entities in which any SDNs hold a 50% or greater interest are treated as SDNs for purposes of the Regulations. OFAC has noted that it intends to provide a more comprehensive set of Regulations at a later date, which may include guidance regarding “cyber-enabled” activities and potential general licenses/statements of licensing policy. OFAC provided some initial guidance on the activities targeted by the Cyber EO in FAQ’s issued in April 2015 on the same day as the Cyber EO.
Maria van Wagenberg is an associate in Baker & McKenzie’s International Trade Compliance and Customs Practice Group. She served as a 2010 summer associate at the Firm. Ms. van Wagenberg has experience drafting memoranda relating to foreign aid restrictions, appropriations law, and government contracts for the USAID bureaus for Asia, the Middle East, and Democracy, Conflict & Humanitarian Assistance.
Sylwia Lis is a partner and member of the International Trade, Compliance and Customs Steering Committee in Baker McKenzie. She has extensive experience advising companies on US laws relating to exports and reexports of commercial goods and technology, defense trade controls and trade sanctions — including licensing, regulatory interpretations, compliance programs and enforcement matters. She also has advised clients on national security reviews of foreign investment administered by the Committee on Foreign Investment in the United States (CFIUS), including CFIUS-related due diligence, risk assessment, and representation before the CFIUS agencies.
Meghan Hamilton is a member of the International Commercial Practice Group and the International Trade Compliance Sub-Practice Group in Baker McKenzie Chicago, where she has been an associate since 2015. Meg regularly assists multinational companies on sanctions, customs and export control compliance as well as other international trade matters, including commercial agreements and anti-boycott regulations. She is active in civic activities throughout Chicago, serving on the Young Professional Board of the Center for Disability and Elder Law as well as the Auxiliary Board of the Chicago Legal Clinic.