• Economic sanctions and export restrictions extended
  • Russian investment in United States likely subject to heightened scrutiny
  • Diligence on Russia transactions and business partners is essential to ensure compliance

Since the beginning of August 2018, the United States has taken multiple actions that will affect U.S. trade with Russia.  The actions cover exports to Russia, doing business with Russian partners, and potential Russian investment in the United States.  These actions have added to the already challenging landscape of conducting business in and with Russia.

Economic Sanctions in Place Since 2014 Are Expanded Again

The United States has maintained targeted economic sanctions on Russia since 2014.  Most of these sanctions are administered by the U.S. Treasury Department, Office of Foreign Assets Control (OFAC).

These sanctions ensnare many prominent Russian individuals and entities.  They have also ensnared prominent U.S. companies: see our July 2017 blog post on penalties imposed against Exxon for Russia sanctions violations.  For an example of how sanctions have been periodically and consistently extended, see our September 2016 blog post.


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I provided insight on Tesla Inc.’s recent announcement of potential Saudi Arabian funding to take the company private and how this move could draw scrutiny from the Committee on Foreign Investment in the United States (CFIUS).  “The big question is whether this technology is really sensitive enough and whether if acquired by a non-U.S. company it could have some kind of negative impact on U.S. national security,” I explained. I noted that this could be possible since the Trump administration has announced possible tariffs on auto imports for national security reasons.

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Bass, Berry & Sims attorney Thad McBride provided insight on the sanctions evasion techniques being used by foreign owners of seemingly legitimate money services businesses (MSBs) to move funds illicitly. The article provides examples of foreign entities – such as those in countries faced with strict U.S. sanctions, such as Iran or North Korea – taking control of MSBs in foreign jurisdictions and then using the ownership status to pass money and convert funds to U.S. dollars. Because entities in sanctioned countries are severely restricted related to the amount of money that can be brought into or moved within the United States, ownership of these MSBs can be a profitable way of avoiding detection.

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In a Law360 article published on August 7, Bass, Berry & Sims attorney Thad McBride provided insight on how the Foreign Risk Review Modernization Act (FIRRMA) legislation included in this year’s National Defense Authorization Act (NDAA) would alter the Committee on Foreign Investment in the United States (CFIUS) by broadening its authority when reviewing foreign investments in the U.S.

As part of FIRRMA’s effort to broaden CFIUS’s power, the interagency committee will officially have the ability to review foreign investments in U.S. companies that hold personal information of U.S. citizens. While this has been an issue for potential foreign investors in the past (i.e. MoneyGram International Inc.), its formal inclusion in the legislation text takes it to another level.


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  • Ericsson Caused Violation by Having U.S. Party Ship Equipment to Sudan
  • U.S. Employee Facilitated Sudan Business
  • OFAC Expects Parties Conducting International Business to Have Robust Compliance Processes

In June 2018, the U.S. Treasury Department, Office of Foreign Assets Control (OFAC) announced that Ericsson, a Swedish telecommunications company, agreed to pay approximately $145,000 for violating U.S. sanctions on Sudan.  Among other things, this is one of the few OFAC enforcement actions explicitly premised on a non-U.S. actor causing a U.S. company to violate U.S. sanctions.


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  • FIRRMA would significantly expand CFIUS jurisdiction.
  • Mandatory filing would be required in some cases.
  • Parties that protect and maintain personal information are likely to face more scrutiny.

As we have described in recent blog posts in March 2018, January 2018 and October 2017, a rash of proposed transactions have not survived the Committee on Foreign Investment in the United States (CFIUS) process.  Most notably, as we described here, in March 2018, President Trump announced that he would not allow Singapore-based Broadcom to acquire U.S.-based Qualcomm, a rival chipmaker.

The president made his decision based on the recommendation of CFIUS, the U.S. government’s inter-agency committee that reviews transactions that could result in control of a U.S. business by a foreign person in order to determine if the transaction would have an effect on the national security of the United States.


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  •  Previously permissible activities must be wound down in 90 or 180 days
  • Non-U.S. companies at particular risk of enforcement action
  • Only limited guidance issued so far, unclear what authority U.S. companies have

On May 8, 2018, President Trump announced that the United States is leaving the Joint Comprehensive Plan of Action (JCPOA).  The U.S. Treasury, Office of Foreign Assets Control (OFAC), which administers most U.S. economic sanctions programs, has taken an initial stab at providing guidance in a set of Frequently Asked Questions (FAQs) released the same day as the President’s announcement.


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  • 7-year denial order imposed against Chinese telecommunications equipment maker
  • Denial order strictly limits business with company
  • Action comes as U.S. imposes other trade restrictions on China

On April 16, U.S. Commerce Secretary Wilbur Ross announced a seven-year denial order (the Order) against Chinese telecommunications company Zhongxing Telecommunications Equipment Corporation (ZTE).  The Order prohibits ZTE from engaging in virtually any trade or other activities involving U.S.-origin goods or technologies.


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Bass, Berry & Sims attorney Thad McBride co-authored an article for Compliance & Ethics Professional magazine outlining best practices for conducting effective internal compliance investigations. Thad co-authored the article with Kate Garfinkel, Vice President and Chief Ethics & Compliance Officer at Alcoa Corporation.

As the article states, “A strong internal investigation process can make the difference between identifying and addressing a problem early on or letting it fester into an issue that becomes a legal liability and reputational crisis … Internal compliance investigations and reviews, when conducted in a confidential and professional manner, ensure that a company can adequately address compliance issues.”


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