Sidley Austin LLP
Founded in 1963, our Washington, D.C. office, with more than 250 lawyers, handles civil and administrative litigation concerning a wide range of issues involving federal law. Our lawyers also help our clients navigate U.S. and international regulatory law and public policies that affect the way business is conducted both here and around the globe.
The New York State Department of Financial Services (DFS) recently released its final BitLicence rules to regulate virtual currency businesses. Nearly all the changes in the final rules are of a technical or clarifying nature. However, the final rules eliminate the obligation to file transaction reports and suspicious activity reports with the DFS where such reports already must be filed with the federal government.
Virtual currency exchanger Ripple Labs Inc and its wholly owned subsidiary XRP II LLC recently entered into a consent agreement with the Financial Crimes Enforcement Network in which Ripple consented to a $700,000 civil penalty and admitted that it had failed to register as a money services business (MSB). This was the first civil enforcement action against a virtual currency exchanger for failing to register as an MSB.
The government has released new guidance under the Volcker Rule in the form of an addition to its frequently asked questions (FAQs). The new FAQ clarifies the circumstances under which a foreign banking entity may continue to hold, or may make, investments in a "third-party covered fund" and provides useful guidance to foreign banking entities and the managers of third-party covered funds in which foreign banking entities invest.
The New York State Department of Financial Services (DFS) has issued a revised version of its proposed 'BitLicence' regulatory framework for public comment, amending the original rules proposed in July 2014. While the DFS has responded to comments on a number of key elements of the regulations and has taken steps to make the revised regulations more workable for the industry, other issues remain.
The US Financial Crimes Enforcement Network recently filed a civil complaint against Thomas Haider, former chief compliance officer for MoneyGram International Inc. The complaint seeks monetary and injunctive relief from Haider in his personal capacity, alleging a wilful failure to implement an effective anti-money laundering compliance programme and properly file suspicious activity reports.
The Board of Governors of the Federal Reserve System issued an order that extends, until July 21 2016, the conformance period under the Volcker Rule for the purposes of giving banking entities additional time to conform investments in, and relationships with, 'covered funds' and certain foreign funds (legacy covered funds).
The Consumer Financial Protection Bureau recently issued a far-reaching proposal to extend consumer protections to most pre-paid cards and accounts. The proposed rule would also extend protections for credit cards to pre-paid cards and accounts that are associated with lines of credit or overdraft credit plans.
A federal court has ruled that disparate impact claims are not cognisable under the Fair Housing Act. This is the latest decision in a long-developing debate over the use of disparate impact claims in discrimination cases brought under the Fair Housing Act and the Equal Credit Opportunity Act.
The Financial Crimes Enforcement Network (FinCEN) has issued two administrative rulings on companies engaged in virtual currency activities. Companies engaged in activities involving virtual currencies should note that FinCEN does not recognise the exchange of virtual currency as a non-money transmission related service.
The Financial Crimes Enforcement Network has published a notice of proposed rulemaking in the Federal Register pertaining to the development of customer due diligence requirements that would be applicable to banks, broker dealers, mutual funds and futures commission merchants and introducing brokers in commodities. The proposed rule focuses on the four core elements of customer due diligence.
The New York State Department of Financial Services (DFS) recently issued for public comment its proposed 'BitLicense' regulatory framework and an accompanying press release. The release of the proposed regulations follows the announcement that the DFS would consider proposals and applications in connection with the establishment of virtual currency exchanges in New York.
Companies often ask how they should approach a Consumer Financial Protection Bureau (CFPB) enforcement matter if it lands on their desk. Because the industry is still trying to figure out how the CFPB operates, they are concerned about making a misstep during the course of an investigation. This update sets out essential tips from a former enforcement attorney for successfully navigating an investigation while positioning your company for the best outcome.
The federal banking agencies have published an addendum to their 1998 income tax allocation policy statement. The addendum instructs insured depository institutions and their holding companies and other affiliates to review and revise their tax allocation agreements to ensure that the agreements expressly acknowledge that the holding company receives any tax refunds as an agent for the insured depository institution.
The Financial Crimes Enforcement Network (FinCEN) recently published five administrative rulings, providing additional information on how exemptions from money transmitter status may or may not apply to certain business models under the regulations promulgated by FinCEN under the Bank Secrecy Act.
The Federal Reserve Board has approved a final rule to implement certain enhanced prudential standards required under Section 165 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The rule includes risk-based and leverage capital requirements, liquidity standards, risk management and risk committee requirements and stress testing.
The Financial Crimes Enforcement Network (FinCEN) has published rulings regarding whether companies engaged in 'mining' software development and investment with respect to virtual currencies must register as money services businesses. The rulings provide insight on how FinCEN will interpret the recent regulations and guidance.
The Consumer Financial Protection Bureau (CFPB) has issued a proposed rule that would permit it to supervise non-bank international money transfer providers that satisfy the proposed rule's definition of 'larger participant'. The rule's impetus is to provide the CFPB with supervisory authority to ensure that non-bank international money transfer providers adhere to consumer protection rules for international remittances.
The Federal Reserve System's new Guidance on Managing Outsourcing Risk is the most recent publication in a series of supervisory and enforcement actions by federal regulators of financial institutions clarifying regulatory expectations with respect to outsourcing and selection and management of third-party service providers. It describes the heightened regulatory scrutiny that now applies to the outsourcing activities of covered financial institutions.
The Office of the Comptroller of the Currency (OCC) recently released a bulletin highlighting the enhanced scrutiny to which national bank engagements of third-party service providers are now subject. National banks should revisit their policies, procedures and processes for evaluating, engaging and monitoring third-party service providers in light of this new articulation of the OCC's supervisory expectations.
Federal banking agencies recently released an inter-agency statement responding to inquiries about whether a creditor would be liable under the disparate impact doctrine of the Equal Credit Opportunity Act and its implementing regulation, Regulation B, by originating only qualified mortgages.
The US District Court for the District of Columbia has granted summary judgment in NACS v Board of Governors of the Federal Reserve System, ruling in favour of a group of retailers and retailer trade associations in a lawsuit in which those parties sought to overturn the final rule of the board of governors of the Federal Reserve System that set standards for debit card interchange transaction fees and network exclusivity prohibitions.
The Federal Reserve System recently approved a final rule that substantially revises the capital rules for US banking organisations. Key reforms include increased requirements for both the quantity and quality of capital held by banks so that they are more capable of absorbing losses and withstanding periods of financial distress, and the establishment of alternative standards of creditworthiness in place of credit ratings.
The Federal Reserve Board has released an interim final rule clarifying that uninsured US branches and agencies of foreign banks will be treated as insured depository institutions for purposes of Section 716 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the 'swaps push-out rule'). In practical terms, uninsured US branches and agencies of foreign banks may continue certain limited swap activities.
The Consumer Financial Protection Bureau has brought its first enforcement action for alleged abusive acts or practices under the Consumer Financial Protection Act of 2010. The allegations relate to misrepresentations commonly associated with deceptive acts claims, but also emphasise elements in the statutory definition of 'abusive', including the reasonable reliance of vulnerable consumers on the debt-settlement company.
The Consumer Financial Protection Bureau (CPFB) has released a final rule implementing the remittance transfer provisions in Section 1073 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The final rule provides important new flexibility for remittance transfer providers, especially in open-loop environments such as international wire transfers. The CFPB also extended the effective date of the final rule to October 28 2013.
The Consumer Financial Protection Bureau (CFPB) recently issued guidance stating that it intends to use its regulatory tools, including enforcement lawsuits, to address discriminatory practices in auto lending. The CFPB bulletin represents an important development for the exercise of its fair-lending authority, as well as its authority over auto loans.
The Financial Crimes Enforcement Network recently issued guidance on how the Bank Secrecy Act applies to users, administrators and exchangers of 'convertible virtual currency'. Companies engaged in activities involving such currencies should assess the impact of the guidance on their obligations. Administrators and exchangers of such currencies should re-evaluate their status under money transmitter licensing laws.
The Federal Financial Institutions Examination Council has issued a request for comment on proposed guidance entitled "Social Media: Consumer Compliance Risk Management Guidance". Once finalised, institutions will be expected to use the guidance in developing and implementing risk management policies and practices to manage and control risks associated with social media.
The Federal Reserve Board has issued a notice of proposed rule making which would implement the enhanced prudential standards and early remediation requirements in Sections 165 and 166 of the Dodd-Frank Wall Street Reform and Consumer Protection Act for certain foreign banking organisations (FBOs). The new rules are designed to respond to vulnerabilities in FBO activities observed during and after the financial crisis.
The Consumer Financial Protection Bureau has released a proposed rule and request for comments outlining a limited set of revisions to its previously published final rule on international money transfers, and an extension of the date on which the rule would become effective. The proposal would amend the rule implementing Section 1073 of the Dodd-Frank Wall Street Reform and Consumer Protection Act on remittance transfers.
A recent Eleventh Circuit opinion has provided an important precedent for the banking industry. The Chavez decision should prompt financial institutions to review the language of their funds transfer agreements to ensure that the agreements unambiguously reference the bank's discretionary security procedures as part of the Article 4A security procedures agreed to by customers.
The Federal Trade Commission and the Consumer Financial Protection Bureau have announced a joint investigation into allegedly misleading mortgage-related advertisements. This is the first time that the two agencies have announced a joint enforcement action. Potentially affected companies should review their practices in light of this regulatory activity.
The Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation have proposed amending their general capital rules to increase their risk sensitivity by revising the methodology for computing a banking organisation's total risk-weighted assets (the denominator of the banking organisation's risk-based capital ratios).
The Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation recently released three proposed rules and one final rule (the market risk rule) which would substantially revise the federal banking agencies' current capital rules. Comments on the proposals are due by September 7 2012.
In a case with potentially significant implications for state regulation of national banks, the California Supreme Court has ruled unanimously that a state law mandating the form and content of disclosures printed on the front of convenience checks issued to credit card customers was pre-empted by the National Bank Act.
The Board of Governors of the Federal Reserve System has announced that banking entities subject to Section 13 of the Bank Holding Company Act of 1956 (known as the 'Volcker Rule') will have the full two-year period provided by statute to conform with the Volcker Rule's restrictions on proprietary trading and investment in and sponsorship of covered funds.
The Federal Reserve System Board of Governors recently issued a supplemental notice of proposed rulemaking and a request for comment that would amend the board's Regulation Y to establish the criteria for determining whether a company is 'predominantly engaged in financial activities' for purposes of Title I of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act.
The Financial Crimes Enforcement Network recently published in the Federal Register an advance notice of proposed rulemaking pertaining to the development of a customer due diligence regulation applicable to banks, brokers and dealers in securities, mutual funds and futures commission merchants which focuses on the collection of beneficial ownership information about account holders
The Consumer Financial Protection Bureau recently announced a new Know Before You Owe project. The stated goal of the project is to simplify credit card agreements to enhance consumer understanding of the prices, risks and terms of credit cards. The centrepiece of the project is a prototype two-page credit card agreement, which is intended to convey the key terms of a credit card to a consumer.
The Financial Crimes Enforcement Network (FinCEN) recently released a set of frequently asked questions (FAQs) to assist providers and sellers of pre-paid access in understanding certain aspects of the final pre-paid access rule that FinCEN issued earlier in 2011. FinCEN makes clear that the FAQs provide interpretive guidance only, and do not supersede any aspect of the pre-paid access rule.
The Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation have issued a proposed rule implementing the requirements of new Section 13 of the Bank Holding Company Act of 1956, known as the 'Volcker Rule'. The rule imposes various prohibitions on banking entities.
The Board of the Federal Deposit Insurance Corporation recently approved the Dodd-Frank Act Resolution Plan Rule and the Insured Depository Institutions Resolution Plan Rule. The first relates to the submission by certain entities of a 'living will', while the second relates to the submission by certain depository institutions of a plan for their resolution in the event of failure.
The Financial Crimes Enforcement Network recently published a final rule that revises the Bank Secrecy Act requirements currently applicable to money services businesses with regard to stored value products and services. The final rule renames 'stored value' as 'pre-paid access' and creates two new categories of money services business – providers of prepaid access and sellers of pre-paid access.
The Board of Directors of the Federal Deposit Insurance Corporation (FDIC) approved a final rule addressing certain provisions of the Orderly Liquidation Authority (OLA) contained in the Dodd-Frank Act. Under the OLA, failing financial companies can be taken out of the bankruptcy regime that would normally apply to them and be resolved instead under the OLA, with the FDIC acting as receiver.
The Consumer Financial Protection Bureau (CFPB) recently issued a notice and request for comment on defining the non-bank entities that will be subject to its supervision under the Dodd-Frank Act. Financial service providers that are not banks should consider whether, under the notice, they might be subject to supervision by the CFPB as a larger participant in designated markets for other consumer financial services or products.
Section 1073 of the Dodd-Frank Wall Street Reform and Consumer Protection Act amended the Electronic Fund Transfer Act to establish a disclosure and error resolution regime for consumers who use 'remittance transfer providers' to send remittances to recipients located in a foreign country. The Board of Governors of the Federal Reserve System has now issued proposed rules to implement these provisions.
The Federal Deposit Insurance Corporation (FDIC) recently issued frequently asked questions (FAQs) and answers in response to questions from FDIC-supervised institutions and third-party vendors about the FDIC's Overdraft Payment Supervisory Guidance. The FAQs provide further explanation of the FDIC's supervisory expectations regarding overdraft payment programmes.
The Federal Reserve has issued a proposal to provide guidance on implementing the new requirements for advance action notices, and the Federal Reserve and the Federal Trade Commission jointly issued proposed regulations addressing risk-based pricing notices.
The Federal Deposit Insurance Corporation has approved an interim final rule, with request for comments, to implement certain provisions of Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Title II provides for the orderly liquidation under a special resolution regime of a financial company whose failure would have serious adverse effects on the financial stability of the United States.
The Board of Governors of the Federal Reserve System has released for comment a proposed regulation to implement the debit interchange fee and network exclusivity and routing provisions of the Durbin Amendment. The amendment added a new Section 920 to the Electronic Fund Transfer Act regarding debit interchange transaction fees and rules for debit card transactions.
The Federal Deposit Insurance Corporation has proposed regulations to implement certain provisions of Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Title II provides for the orderly liquidation under a special resolution regime of a financial company whose failure would have serious adverse effects on the financial stability of the United States.
The Financial Crimes Enforcement Network (FinCEN) recently proposed new regulations which would require some US financial institutions to submit reports on certain cross-border electronic transmittal of funds. They would also require all banks to file annually with FinCEN a list of account numbers and US taxpayer identification numbers of account holders which transmitted or received a cross-border electronic fund transmittal.
President Obama has signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act. Many provisions of the act require rulemaking by the applicable regulator before they become effective, but others become effective after the date of enactment of the act.
The Financial Crimes Enforcement Network has released a proposed rule that would revise the Bank Secrecy Act requirements for money services businesses with regard to stored value products and services. The rule is intended to address "regulatory gaps that have resulted from the proliferation of prepaid innovations over the last ten years and their increasing use as an accepted payment method".
By separate votes along strict party lines of 20 to 11 and seven to five, House of Representatives and Senate conferees have approved the Conference Committee Report on the Dodd-Frank Wall Street Reform and Consumer Protection Act. This update summarizes the key provisions that will have an impact on the banking sector.
The Federal Reserve System has issued proposed regulations regarding limitations on credit card penalty fees and credit card issuers' duty to review periodically all rate increases. The proposal would limit penalty fees, such as late fees, overlimit fees and returned cheque fees that credit card issuers charge. It would also require issuers to review accounts for which rates have been increased and reduce rates as required.
The Board of Governors of the Federal Reserve System and the Federal Trade Commission have jointly issued a final rule to implement the requirements of Section 615(h) of the federal Fair Credit Reporting Act. Section 615(h) was added by the Fair and Accurate Credit Transactions Act and provides for so-called 'risk-based pricing' notices.
The Board of Governors of the Federal Reserve System has released its final rule regarding overdraft services. The rule creates an opt-in rule under which financial institutions may not charge overdraft fees to consumers in connection with automated teller machine transactions and one-off debit card transactions, unless the consumer has affirmatively consented to such fees.
The Board of Governors of the Federal Reserve System has issued a proposed amendment to Regulation Z to implement the Credit Card Accountability Responsibility and Disclosure Act of 2009. The act enacted substantial new limitations and requirements for credit card issuers. The proposal provides much-needed detail on how those new limitations and requirements will apply to the industry.
The Federal Deposit Insurance Corporation (FDIC) has adopted its final Statement of Policy on the Acquisition of Failed Bank Depository Institutions. While the FDIC has relaxed some of the originally proposed restrictions, the statement still stands as a significant impediment to private equity financing of the resolution of failed institutions.
The Federal Reserve has released implementing regulations for two key provisions of the Credit Card Accountability Responsibility and Disclosure Act of 2009. The provisions require creditors to deliver periodic statements at least 21 days before a due date and to provide notice of changes relating to credit card accounts at least 45 days in advance of the effective date.
The Fair and Accurate Credit Transactions Act amended the Fair Credit Reporting Act to require the federal banking agencies and the Federal Trade Commission to issue guidelines for use by furnishers of information to consumer reporting agencies. The accuracy and integrity rule requires furnishers to evaluate their current policies and procedures and revise them as necessary based on specific guidelines.
The president has released a presidential memorandum setting out the administration's general policy with regard to federal pre-emption of state law by executive departments and agencies of the federal government. In the last 10 years the federal banking agencies have taken several regulatory actions, including the adoption of final rules, that construe the extent to which federal law pre-empts state law.
The House of Representatives and the Senate have both passed the Credit Card Accountability Responsibility and Disclosure Act of 2009. One of the most significant provisions of the act is a provision that may be used to limit certain credit card charges substantively. Another key provision relates to issuers' apparent obligations to reduce annual percentage rates in some circumstances.
The Department of the Treasury's Financial Crimes Enforcement Network has released a proposed rule to revise its regulations regarding money services businesses under the Bank Secrecy Act. It intends to revise the existing definitions to clarify the scope of entities subject to regulation as money services businesses, but in so doing raises significant issues for the delineation of entities subject to the rule.
A statement has been issued announcing the imminent release of the Supervisory Capital Assessment Programme capital assessment of the 19 largest US bank-holding companies and describing how those results should be understood. The joint statement also outlines the requirements applicable to bank holding companies that wish to redeem outstanding Capital Purchase Programme preferred stock.
The Department of the Treasury has outlined its framework for financial regulatory reform. In addition, three bills are under consideration: two companion bills that would create a new federal systemic risk regulator to oversee regulation of the US financial markets, and a third which that grant the Federal Deposit Insurance Corporation the power to take over and resolve systemically important financial companies.
President Barack Obama recently signed the Omnibus Appropriations Act 2009 into law. Although the primary purpose of the legislation was to appropriate funds to various federal agencies, members of Congress also used the legislation as a vehicle to enact substantive changes to various laws with little or no notice or debate. Of particular note to consumer lenders is Section 626 of the act.
The Federal Deposit Insurance Corporation (FDIC) has issued an interim rule to extend the Temporary Liquidity Guarantee Programme to include issuances of certain mandatory convertible debt. Under the programme, the FDIC guarantees certain senior unsecured debt of participating insured depository institutions and insured depository institution holding companies that matures on or before June 30 2012.
Secretary of the Treasury Timothy Geithner has outlined the six-point plan with which the Department of the Treasury, in cooperation with Federal Reserve, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision and the Office of the Comptroller of the Currency, hopes to bring stability to the US credit markets.
Federal agencies have issued a final rule relating to unfair or deceptive acts or practices relating to credit cards. The board also issued final rules revising the open-end credit portions of Regulation Z and imposing certain disclosure obligations under Regulation DD in connection with overdraft services offered by banks.
In a significant departure from its previous stance, the Federal Deposit Insurance Corporation (FDIC) has published notice of a new General Counsel's Opinion No 8 which addresses whether funds underlying stored-value cards and other non-traditional access mechanisms are to be considered deposits insured by the FDIC. The new opinion should be reviewed by all participants in stored-value programmes.
The Board of Governors of the Federal Reserve System and the Department of Treasury have issued a final regulation implementing key portions of the Unlawful Internet Gambling Enforcement Act of 2006. The regulations, which prohibit any "business of betting or wagering" from knowingly accepting payments in connection with participation in unlawful internet gambling, will affect many financial institutions.
The US Treasury Department, the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation have announced the implementation of “extraordinary steps”, including the promulgation of a Capital Purchase Programme, the creation of the Temporary Liquidity Guarantee Programme and further details of its Commercial Paper Funding Facility.
The Federal Reserve has issued guidance that further refines, clarifies and, to a limited extent, relaxes its prior positions on the circumstances under which it will find a minority equity investment in a bank or bank holding company to constitute a “controlling influence over the management or policies” of the bank or bank holding company.
The US Court of Appeals for the Ninth Circuit has issued a decision in American Bankers Association v Lockyer. This litigation focuses on the restrictions on sharing information among affiliates in the California Financial Information Privacy Act and the extent of federal pre-emption regarding the exchange of information among affiliated parties under the federal Fair Credit Reporting Act.
The US and UK anti-money laundering laws and regulations compare favourably in that both regimes stipulate extensive regulatory requirements for banking institutions to implement and maintain anti-money laundering procedures. However, certain differences mean that developing an anti-money laundering framework that is consistent with UK and US requirements may not be as straightforward as it seems.
On May 2 2008 the Board of Governors of the Federal Reserve System, the Office of Thrift Supervision and the National Credit Union Administration released an expansive proposal to prohibit or regulate a number of practices in credit card lending. The proposal is a dramatic and expansive exercise of the agencies’ powers to issue regulations on unfair and deceptive acts and practices.
On May 8 2008 the Board of Governors of the Federal Reserve System and the Federal Trade Commission issued a proposed rule to implement Section 615(h) of the federal Fair Credit Reporting Act relating to risk-based pricing notices. This update addresses the specific risk-based notice requirements proposed by the agencies, as well as the proposed exceptions to those requirements.
The Board of Governors of the Federal Reserve recently issued for comment an extensive proposed amendment to Regulation Z that would impose many significant new requirements in connection with residential mortgage loans. Many of the new proposed requirements apply to all owner-occupied residential mortgage loans, while others apply to a newly created class of higher-priced mortgage loans.
The federal financial institution regulatory agencies and the Federal Trade Commission have published final rules on identity theft 'red flags' and address discrepancies. Among other things, financial institutions and creditors that hold a covered account must develop and implement a written programme for combating identity theft in connection with new and existing accounts.
The Second Circuit has handed down an eagerly awaited decision in Clearing House Association v Cuomo. The court held that the National Bank Act blocked the New York attorney general from probing the loan practices of national banks and their operating subsidiaries, stating that federal regulations shield such institutions from investigation and enforcement action by state officials.
The federal banking agencies and the Federal Trade Commission have recently released final rules implementing Section 624 of the federal Fair Credit Reporting Act in relation to the ability of one affiliate to use certain information obtained from another affiliate to make solicitations to consumers.
The Securities and Exchange Commission (SEC) and the board of governors of the Federal Reserve System have issued a release adopting new Regulation R to implement the Gramm-Leach-Bliley Act statutory exceptions for bank brokerage activities. The SEC has also issued a companion release adopting certain additional bank dealer exemptions and related rule amendments.
The Board of Governors of the Federal Reserve System recently issued a proposed amendment to Regulation Z that would make substantial changes to many of the disclosures with which creditors are required to provide consumers in connection with credit card accounts and other open-end credit plans.
In Watters v Wachovia Bank the court held by a five-to-three majority that the National Bank Act pre-empts Michigan statutes requiring operating subsidiaries of national banks to register with, and be subject to examination by, state regulators.
The Securities and Exchange Commission and the board of governors of the Federal Reserve System have proposed new Regulation R in order to implement the Gramm-Leach-Bliley Act statutory exceptions for bank brokerage activities. The proposed regulation addresses four of the 11 statutory bank exceptions to the general broker definition contained in the Securities Exchange Act 1934.
Section 670 of the John Warner National Defence Authorization Act, as recently adopted by Congress, includes restrictions on credit extended to certain members of the armed forces and their dependants. Although the original intent of the act was to regulate payday or other 'high-cost' loans made to active duty service members, the scope of the legislation could be broader and affect consumer credit programmes.
Congress has recently passed the Financial Services Regulatory Relief Act 2006. The act represents a long-anticipated bank regulatory relief package that streamlines certain regulations pertaining to financial institutions, although the act is more limited than many in the banking industry had wanted. In addition, the act expands the enforcement power of the federal banking agencies.
The Office of Foreign Assets Control (OFAC) has issued an interim final rule to describe economic penalty enforcement procedures for banking institutions. The interim rule, which applies to 'banking institutions' (ie, depositary institutions supervised or regulated by a federal banking regulator), explains the procedures that OFAC will follow with respect to economic penalty violations.
The US bank regulatory environment is one of heightened scrutiny and expectations in all areas of a bank's operations. A prudent response calls for serious attention to implementing principles of 'enterprise-wide risk management' and continuous adoption of refinements and upgrades in compliance processes.
Banks with US operations will need to take a number of steps to implement the requirements and best practices made explicit by the new Bank Secrecy Act/Anti-money Laundering Examination Manual. The high level of detail in monitoring and record-keeping that is now expected is evident in the surveillance expected even of routine customer activities such as trade finance.
The Federal Financial Institutions Council recently released its long-awaited revision of the Bank Secrecy Act/Anti-money Laundering Examination Manual. It emphasizes a banking organization's responsibility to implement risk-based policies and procedures to comply with the Bank Secrecy Act, and to safeguard its operations from money laundering and the financing of terrorism.
Recent enforcement actions against UBS and Riggs National Bank highlight the continuing challenge of money laundering and USA PATRIOT Act compliance issues for international banks with US operations. Complex structured finance transactions and the continuing US-EU regulatory dialogue have also captured recent headlines.
In the post Gramm-Leach-Bliley era, anti-tying compliance has taken on a new urgency because of the intricacies of the anti-tying prohibitions and the liberalization of the variety of permitted banking activities. A Federal Reserve Board interpretation indicates the serious treatment that anti-tying safeguards will receive from US banking regulators and bank examiners in the near term.
Anti-money laundering initiatives such as the USA Patriot Act currently being implemented will be successful in the long run only if accompanied by global efforts to eradicate the financial underpinnings of terrorism. Two years after the events of September 11 2001, the challenge remains and the outcome is uncertain.
The US Department of Treasury and other federal banking agencies have issued a final rule requiring financial institutions to implement certain minimum procedures as part of their know-your-customer programmes. In order to ensure compliance with the final rule, banks should review their policies and procedures relating to current customer identification, and amend them where necessary.
The US Treasury Department recently issued final rules to implement sections of the USA Patriot Act, which provide guidance on the maintenance of correspondent accounts for foreign banks, and on the sharing of information between financial institutions and government agencies.
For financial institutions, compliance obligations related to the fight against terrorism and money laundering have increased dramatically over the past 10 months. This update traces the development of these new regulatory requirements and makes some suggestions for ongoing compliance.
New rules issued under the USA Patriot Act define the term 'account' broadly enough to require broker-dealers to obtain certificates from foreign individuals and entities having 'accounts' with them. In addition, suspicious activity reports will now be required from broker-dealers as well as commercial banking entities.
Employment & Benefits
The National Labour Relations Board (NLRB) recently issued a long-awaited decision on the issue of joint employer status under the National Labour Relations Act. The NLRB rejected the previous test for establishing joint employer status and instead instituted a broader, more malleable standard that makes it both easier to make a finding of joint employer and harder to predict how the NLRB will rule.
Environment & Climate Change
The Environmental Protection Agency recently proposed three significant regulatory actions extending its controls over the energy sector by expanding regulations over the oil and gas industry. This is key to achieving the Obama administration's goal of reducing methane emissions from the oil and gas sector and its overall efforts to reduce greenhouse gas emissions by regulating the development and use of fossil fuels.
The DC Circuit has held that emissions limits imposed by the Environmental Protection Agency (EPA) on 13 states under its Cross-State Air Pollution Rule were unlawful. The EPA "overstepped its authority", the three-judge panel unanimously held, by requiring states to cut emissions more than necessary to ensure that other states meet air-quality standards.
Several activists have petitioned the Environmental Protection Agency (EPA) Administrator to rescind its delegation of authority to Oklahoma to manage its wastewater disposal programme. According to the petition, the Oklahoma Corporation Commission is failing adequately to restrict the underground injection of oil and gas wastewater and to fine companies that inject wastewater, leading to continued low-level seismic activity.
New York's Department of Environmental Conservation has officially banned high-volume hydraulic fracturing after concluding that it poses risks to public health and the environment. The ban came after a more than six-year evaluation process during which time high-volume hydraulic fracturing was subject to a temporary moratorium.
The Supreme Court recently reversed a decision upholding the Environmental Protection Agency (EPA) Mercury and Air Toxics Standards Rule, which set emission standards for hazardous air pollutants from power plants. The court held that the EPA had excluded the consideration of costs when evaluating whether the regulation of hazardous air pollutants from power plants is appropriate and necessary.
Environmental group Public Employees for Environmental Responsibility has filed a petition with the Environmental Protection Agency (EPA) Environmental Appeals Board, challenging five federal national pollutant discharge elimination system permits allowing three oil and gas companies to dispose of wastewater in surface streams. The permits were issued by the EPA for hydraulically fractured drilling operations in Wyoming.
During 2014 the Environmental Protection Agency issued a number of important policy decisions and new regulations, and the courts issued opinions in key environmental cases. This update summarises some of these actions, focusing on those that likely will have precedential impacts and may represent long-term trends affecting the environment and regulated entities during 2015 and beyond.
The White House has announced broad plans to reduce methane emissions over the next decade by 40% to 45% from 2012 levels. The plan will involve new regulations by a number of federal agencies – for example, the Environmental Protection Agency will issue new source performance standards under Section 111 of the Clean Air Act for new and modified wells.
A Madison County judge denied an injunction in the first lawsuit to challenge Illinois fracking rules, finding that the plaintiffs failed to demonstrate that they were in immediate danger. Two environmental groups filed suit in Franklin County Court, challenging approvals by the Ohio Department of Natural Resources for approximately 20 waste-disposal facilities handling wastewater from hydraulic fracturing operations.
Over 100 environmental groups have signed a petition to the Environmental Protection Agency and the Department of the Interior seeking rulemaking that would address emissions of air pollutants from hydraulic fracturing operations. The petition alleges that hydraulic fracturing emits hazardous air pollutants which are threatening the health of those living near drilling operations.
Since the recent transmission of the 2014 Renewable Volume Obligations (RVOs) to the Office of Management and Budget, obligated parties and affected stakeholders continue to visit federal officials regarding the Environmental Protection Agency's proposed 2014 RVO standard, which outlines the standards for the upcoming year.
The House of Representatives recently considered and approved the Waters of the United States Regulatory Overreach Protection Act which, if enacted, would repeal the current proposal and establish a consultation process that would involve federal agencies and state and local officials, with a proposed rulemaking developed and later issued based on the consultation process.
After receiving numerous requests to extend the comment period on the New Source Performance Standards proposal for existing sources, Acting Office of Air and Radiation Assistant Administrator Janet McCabe recently announced a 45-day extension. The comment period on the proposed rule, which would regulate carbon dioxide emissions for existing fossil fuel-fired power plants, will now close on December 1.
The Environmental Protection Agency has provided details on its ongoing study of the potential impacts of hydraulic fracturing on drinking water resources. The study will be consistent with the administration's support for unconventional oil and gas extraction within the context of its climate programme and will focus on best management practices.
A recent Supreme Court decision substantially restricts the authority of the US Environmental Protection Agency to regulate greenhouse gas emissions from stationary sources under the Clean Air Act's Prevention of Significant Deterioration (PSD) and Title V permitting programmes. Emissions may be regulated under these programmes only if a facility is otherwise subject to permitting based on emissions of other air pollutants.
The California Office of Environmental Health Hazard Assessment (OEHHA) has proposed significant changes to the regulations that govern Proposition 65 warnings. The draft regulations have raised numerous concerns, including regarding their effectiveness in accomplishing the purported goal of consumer education. The comment period on the draft regulations is now open.
On March 11, Environmental Protection Agency sent a draft advanced notice of proposed rulemaking to the Office of Management and Budget for regulatory review. The notice relates to reporting on the health and safety of chemicals used in hydraulic fracturing fluid under Sections 8(a) and 8(d) of the Toxic Substances Control Act.
The Environmental Protection Agency has amended the 'all appropriate inquiries' rule to give parties the temporary option of using either the revised ASTM International standard for Phase I known as E1527-13 or the prior ASTM Phase I standard known as E1527-05 to satisfy the 'all appropriate inquiries' requirement under the Comprehensive Environmental Response, Compensation and Liability Act.
Diisononyl phthalate was recently added to California's list of chemicals known to cause cancer. California's Office of Environmental Health Hazard Assessment maintains the list pursuant to the state's Safe Drinking Water and Toxic Enforcement Act. Companies that use a listed chemical should take steps to review, investigate and reformulate their products in the 12 months before the warning obligation takes effect.
The California governor recently signed an amendment to Proposition 65 allowing certain businesses a 14-day cure period to remedy alleged violations of the Safe Drinking Water and Toxic Enforcement Act without being subject to civil penalties. Other businesses remain subject to the civil penalties of up to $2,500 per day for each violation and injunctions ordering them to provide the requisite warnings or to cure the violation.
The Environmental Protection Agency recently released a revised proposed rule regulating carbon dioxide emissions from electric generating units under the Clean Air Act's New Source Performance Standard. While the revised proposal includes a number of significant changes from the earlier proposal, it maintains strict emissions limits for coal-fired electric generating units that will require carbon capture and storage for any new facility.
In response to a petition for rulemaking, the Environmental Protection Agency (EPA) has announced that it will gather data on chemicals used in hydraulic fracturing fluid. The EPA will take comments on a process to gather data while avoiding duplication, protecting confidential information and consulting with other agencies.
There has been more controversy surrounding the Energy Savings and Industrial Competitiveness Act of 2013, which would impose a variety of new energy efficiency standards. Further, the Energy and Commerce Committee recently released its third Renewable Fuel Standard Assessment White Paper, focused on greenhouse gas emissions and other environmental impacts.
Continuing a message from his January 2013 inaugural speech, President Obama devoted a portion of his State of the Union address to climate change. He surprised many with his request that Congress enact "market-based" climate change legislation. In addition, Environment and Public Works Committee Chair Barbara Boxer recently held a public briefing focused on the science surrounding climate change.
The Environmental Protection Agency has issued two new guidance documents on the use of institutional controls at contaminated sites regulated under the Comprehensive Environmental Response, Compensation and Liability Act, the Resource Conservation and Recovery Act, brownfields programmes and other federal programmes. Institutional controls are often an important part of the clean-up at such sites.
The Environmental Protection Agency (EPA) recently focused on finalising various priorities. As well as releasing a progress report on its study regarding the environmental safety of hydraulic fracturing, the EPA issued its long-awaited boiler maximum achievable control technology rule and final amendments to the 2010 cement manufacturing clean air standards.
Two Republican bicameral lawmakers have indicated that they will introduce and advance a concurrent resolution that would express the sense of Congress that a carbon tax is not in the best interest of the United States. While non-binding, such a vote could publicly gauge the support for a carbon tax.
The Environmental Protection Agency has issued the PCB Bulk Product Waste Reinterpretation, which addresses the regulatory status of building debris that has been in contact with non-liquid polychlorinated biphenyls (PCBs), such as PCB-containing caulk and paint. This reinterpretation should be taken into account in planning building maintenance or demolition projects.
The Federal Trade Commission (FTC) has issued its revised Guides for the Use of Environmental Marketing Claims – known as its 'Green Guides' – which contain guidance on how product marketers should use environmental claims in their advertising and packaging. The FTC intends these revisions to encourage marketers to support clearly claims of their products' environmental benefits.
In a victory for pro-coal supporters, the US Army Corps of Engineers has indicated that it will not conduct a comprehensive environmental impact statement review of a proposed Oregon coal export terminal. The National Environmental Policy Act requires the corps to review proposed federal actions that could have a significant environmental impact.
Healthcare & Life Sciences
In a widely anticipated recent ruling in the ongoing Amarin litigation against the US Food and Drug Administration (FDA), the judge granted Amarin's general and specific requests for relief. This ruling is of major significance for FDA-regulated manufacturers as it addresses and rejects the FDA's frequently articulated rationale that it must be allowed to regulate truthful, non-misleading off-label speech.
The Office of Inspector General has issued an advisory opinion offering several new points of guidance for medical device manufacturers in the process of designing patient subsidies for clinical research studies. Clinical studies involving subsidies paid to patient participants are less likely to violate the federal Anti-kickback Statute or the federal prohibition on beneficiary inducements if certain criteria are fulfilled.
The Office of the National Coordinator for Health Information Technology and the Office for Civil Rights recently published new guidance on the privacy and security of electronic health information. Although the guide was drafted primarily for the benefit of smaller healthcare providers, it provides information on privacy and security issues that is potentially valuable to providers of all sizes.
The new Precision Medicine Initiative is intended to "revolutionize how we improve health and treat disease" through better prevention, diagnostics and treatment. Interested entities such as academic medical centres, researchers and foundations should take advantage of this opportunity to help to shape law and policy as it develops to ensure that their interests in the future of healthcare are protected in the short and long term.
Enforcement agencies and courts have long dealt with high-profile antitrust cases in the pharmaceutical sector. However, until recently, major antitrust or merger cases in the medical device sector were relatively rare. This has changed significantly in the past few years; indeed, the sector looks set to be a focus of enforcement and litigation activity throughout 2015 and beyond.
In recent weeks the Centres for Medicare and Medicaid Services released several significant updates affecting reimbursement for clinical laboratory tests in 2015 and beyond. In addition, the Department of Health and Human Services Office of Inspector General announced that it will increase its scrutiny of laboratory billing in 2015 and pursue enforcement actions against laboratories showing unusual claims.
The National Institutes of Health (NIH) has published a proposed rule that would expand the clinicaltrials.gov registration and results-reporting provisions first created by the Food and Drug Administration Amendments Act in 2007. The NIH would require posting of results for clinical trials of unapproved and uncleared products.
The Department of Justice recently (DOJ) filed a False Claims Act suit against Reliance Medical Systems, LLC. The medical device industry should follow Reliance closely as it might either signal the start of an enforcement trend against physician-owned distributors (PODs) or simply reflect an action targeting a network of PODs that allegedly paid particularly lucrative profits to physicians.
The US Department of Health and Human Services' Office of Inspector General (OIG) recently issued a controversial report entitled "Manufacturer Safeguards May Not Prevent Copayment Coupon Use for Part D Drugs", along with a companion special advisory bulletin. The report and the advisory bulletin reflect the OIG's efforts to use transparency as a way to reduce what it considers to be a source of fraud and abuse.
The Department of Health and Human Services' Office of Inspector General has released a special fraud alert addressing two increasingly common relationships between clinical laboratories and physicians that may raise fraud and abuse concerns – payments to referring physicians for specimen collection and data submission/review for laboratory registries.
The Food and Drug Administration has issued draft guidance announcing that it does not intend to enforce compliance with the regulatory controls that apply to software medical device data systems, medical image storage devices or medical image communications devices, due to the low risk they pose to patients and the importance they play in advancing digital health.
The Department of Health and Human Services Office for Civil Rights recently announced that Concentra Health Services Inc and QCA Health Plan Inc have agreed to pay a total of $1,975,220, collectively, to resolve potential violations of the Health Insurance Portability and Accountability Act Privacy and Security Rules stemming from the theft of unencrypted laptops.
The Centres for Medicare and Medicaid Services announced that Physician Payments Sunshine Act registration and data submission for applicable manufacturers and group purchasing organisations will be executed in two phases. Detailed payment information covering August to December 2013 will be due no earlier than May 2014.
The US Department of Health and Human Services has released a final rule that amends the Clinical Laboratory Improvement Amendments of 1988 regulations and the Health Insurance Portability and Accountability Act of 1996 privacy regulations to permit patients and their personal representatives to access laboratory test reports.
The president recently signed the Drug Quality and Security Act into law. It is designed to clarify the Food and Drug Administration's oversight authority over drug compounding and to modernise the federal drug tracking and tracing system. The new act comes just over a year after a deadly meningitis outbreak was traced to the New England Compounding Centre and, on the same day, another compounding recall was announced.
The Centres for Medicare and Medicaid Services recently released the long-awaited final regional gap-fill reimbursement rates and the 2014 National Limitation Amounts for several of the Tier 1 Molecular Pathology Current Procedural Terminology codes on the Medicare Clinical Laboratory Fee Schedule. Once effective, the payment rates are essentially permanent because Clinical Laboratory Fee Schedule prices are not adjusted annually.
The US Food and Drug Administration recently issued an updated version of its Guidance for Industry: Frequently Asked Questions About Medical Foods. This second edition of the guidance provides further information on the definition, labelling and availability of medical foods, as well as answers to new questions that have arisen since its first publication in May 2007.
The Food and Drug Administration recently announced the availability of draft guidance, Medical Device Reporting for Manufacturers, which, when final, will supersede the 1997 version. The draft addresses specific questions about the reporting and record-keeping requirements for device-related adverse events.
The Department of Health and Human Services recently announced that Shasta Regional Medical Centre (SRMC) had agreed to pay $275,000 and enter into a one-year corrective action plan to settle potential violations of the Health Insurance Portability and Accountability Act Privacy Rule. The settlement relates to allegations that SRMC disclosed a patient's protected health information to media sources and its entire workforce.
Three departments recently published final regulations setting out the criteria that group health plans with wellness programmes must satisfy in order to be considered non-discriminatory within the meaning of the Health Insurance Portability and Accountability Act 1996. Such plans must not discriminate against individuals regarding plan eligibility, benefits or premiums based on a health factor.
The Department of Health and Human Services' Office of Inspector General recently released the Updated Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programmes, which replaces and supersedes a 1999 bulletin on the same topic. The bulletin describes the scope and effect of the legal prohibition on federal healthcare programme payment to excluded persons.
The Department of Health and Human Services has published final regulations for health insurance issuers offering non-grandfathered coverage in the individual or small-group markets to ensure that it includes an essential health benefit package. As there are no annual limits on these for plan years beginning on and after January 1 2014, it is important for all employers to know what benefits are considered essential.
The Office for Civil Rights of the Department of Health and Human Services has released a highly anticipated final rule which makes sweeping changes to the privacy, security and enforcement regulations promulgated under the Health Insurance Portability and Accountability Act, with the aim of building patient confidence in the security of electronic health records.
The Treasury Department recently published proposed excise tax regulations under Section 4980H of the Internal Revenue Code of 1986, which was added to the code by the Affordable Care Act. These excise taxes are among the more controversial aspects of the Affordable Care Act, perhaps surpassed only by the mandate that practically every individual lawfully in the United States obtain adequate health coverage or pay a penalty.
The Centres for Medicare and Medicaid Services (CMS) recently released both the Medicare physician fee schedule and hospital outpatient prospective payment system final rules with comment period. The final rules generally took effect on January 1 2013. In the final rules, CMS commented on and/or finalised a number of significant proposals relating to pharmaceutical and biological products.
The Office for Civil Rights (OCR) has issued important new guidance regarding the two existing methods by which covered entities may de-identify protected health information in accordance with the privacy rule promulgated under the Health Insurance Portability and Accountability Act. The guidance may signal that the OCR will make proper de-identification of protected health information an enforcement priority.
In a widely anticipated ruling the US Court of Appeals for the Second Circuit recently reversed the conviction of pharmaceutical sales representative Alfred Caronia for misbranding under the Federal Food, Drug and Cosmetic Act, based on alleged off-label promotion. The court agreed with Caronia that the government's prosecution had been based solely on speech promoting off-label uses.
The Financial Conduct Authority (FCA) recently published Policy Statement 15/13, which confirms the new regulatory rules for certain add-on guaranteed asset protection (GAP) sales. Policy Statement 15/13 implements one of four competition remedies arising from the FCA's general insurance add-ons market study.
The Financial Conduct Authority (FCA) recently published its second consultation paper on competition remedies, which is intended to address some of the issues identified in the FCA's general insurance add-on market study. After concluding that competition in general insurance add-on markets is ineffective and that the add-on mechanism has an adverse impact on consumer behaviour, the FCA has proposed four competition remedies.
Cyber-risk is now firmly established as one of the most serious global risks, affecting all organisations, regardless of sector or size. This update discusses what sound cyber-governance involves from an insurance perspective, cyber-liability cover considerations, reasons why cyber-insurance uptake seems not to have been as rapid as expected and the continuing issue for insurers of pricing cyber-risk.
The Insurance Bill 2015 recently received royal assent, becoming law as the Insurance Act 2015. The act overhauls certain fundamental areas of UK insurance law and applies to both insurance and reinsurance contracts. The reforms will come into force in August 2016, giving the industry 18 months to prepare.
This update provides an overview of the legal and regulatory framework for conflicts of interest and remuneration in respect of general insurance intermediaries in the United Kingdom, with a particular focus on the findings of the latest review conducted by the Financial Conduct Authority and the impact of anticipated changes to the EU Insurance Mediation Directive.
The government recently introduced the new Insurance Bill to Parliament. The bill mostly applies to commercial insurance contracts, although certain provisions also apply to consumer policies. It will overhaul longstanding tenets of English insurance law, in particular the insurer's right to avoid a policy for breach of the insured's duty of disclosure and the law applicable to warranties.
The US Department of the Treasury's Office of Foreign Assets Control (OFAC) has announced a $271,815 settlement with a US-based company for 48 alleged violations of various OFAC sanctions programmes. This enforcement action highlights the need for insurers and reinsurers to integrate economic sanctions into their compliance procedures.
The new Trade Preferences Extension Act reauthorises the Generalised System of Preferences (GSP), effective from July 29 2015 to December 31 2017. The reauthorisation applies to otherwise eligible articles that were imported or withdrawn from a warehouse since the GSP lapsed on August 1 2013. Excluded, however, are goods that entered from Russia and Bangladesh, neither of which is currently eligible for GSP benefits.
Recent amendments give new directions and discretion to the two agencies responsible for administering US anti-dumping and countervailing duty laws. They aim to increase the likelihood of affirmative injury determinations by the International Trade Commission and to grant the Department of Commerce greater discretion to augment the dumping margins and subsidy rates applied to foreign manufacturers and their US importers.
The World Trade Organisation (WTO) Appellate Body recently upheld the underlying WTO panel report in an appeal by Vietnam in a dispute concerning Section 129(c)(1) of the Uruguay Round Agreements Act. The decision suggests that alternative mechanisms are available for respondents seeking US implementation of WTO determinations arising from trade remedy proceedings with respect to certain prior unliquidated entries of subject merchandise.
In order to ease US sanctions against Cuba intended to further engage and empower the Cuban people, the US Department of Treasury Office of Foreign Assets Control and the US Department of Commerce Bureau of Industry and Security have amended the Cuban Assets Control Regulations and the Export Administration Regulations. The amendments have authorised a number of previously prohibited activities.
President Obama recently announced that the United States and Cuba would renew diplomatic relations. As part of this deal, certain US sanctions against Cuba and Cuban nationals will be lifted or eased. In the coming weeks, the Treasury and Commerce Departments will amend their regulations to implement the president's announcement.
President Obama has signed into law the Ukraine Freedom Support Act of 2014, which authorises further sanctions against parties in Russia, as well as military assistance for Ukraine. The act requires the imposition of sanctions with respect to certain Russian weapons exporters and authorises – but does not require – the imposition of sanctions and export controls against Russia's energy sector.
The government has expanded sanctions and export controls against Russia's energy, defence and financial services sectors. The Treasury Department's Office of Foreign Assets Control has broadened sectoral sanctions targeting Russia's defence sector and additional entities and activities in the energy sector. New restrictions on exports to Russia destined to military end uses or end users have also been announced.
The Treasury Department's Office of Foreign Assets Control has revised its guidance on entities owned by blocked persons. The revised guidance makes clear that an entity is blocked if one or more blocked persons directly or indirectly owns a 50% or greater interest in the entity, whether individually or in aggregate.
The Treasury Department Office of Foreign Assets Control has revised its guidance on entities owned by blocked persons. The revised guidance makes clear that an entity is blocked if one or more blocked persons directly or indirectly owns a 50% or greater interest in the entity, whether individually or in the aggregate.
In response to the crisis in Ukraine, the US government has imposed new sanctions against Russian firms in the energy, financial and defence sectors. They include two new directives barring transactions or dealings in new debt or equity of companies identified on the new Sectoral Sanctions Identifications List. The Office of Foreign Assets Control has also added to its Specially Designated Nationals List.
The Office of Foreign Assets Control has sanctioned additional parties in connection with the continuing crisis in Ukraine. The most recent designations target seven officials in Russia's leadership and 17 entities linked to the president's inner circle in the banking, construction and energy sectors. The targeted individuals will be subject to an asset freeze and a US visa ban, and the targeted companies will be subject to an asset freeze.
In response to the latest developments in Crimea, the US government has blocked the property of certain Russian government officials, their supporters and a Russian bank. These parties have been added to the Office of Foreign Assets Control's specially designated nationals list and US persons are now barred from having any dealings with them.
Clearstream Banking, SA recently agreed to pay the Department of the Treasury's Office of Foreign Assets Control (OFAC) $152 million to settle claims that it violated US economic sanctions. OFAC's settlement with Clearstream extends to the securities industry a string of multimillion-dollar enforcement actions involving use of the US financial system.
The Department of Commerce is applying a new methodology for selecting respondents in anti-dumping administrative reviews. When the Department of Commerce cannot examine all respondents in an administrative review, it can review either the largest-volume exporters or a "statistically valid" sample of exporters, producers or products. The new methodology expands and standardises use of the second statutory option.
The US Food and Drug Administration (FDA) recently published two significant, long-awaited proposed rules which aim to ensure that imported foods meet the same high safety standards as those processed or harvested in the United States, and to ensure the competence and independence of third-party auditors or certification bodies which will conduct foreign food safety audits.
The Court of Appeals for the Federal Circuit recently issued an important decision regarding the Department of Commerce's method of interpreting the scope of anti-dumping orders. The decision, which criticised the agency's practice of relying on case-by-case analysis, could lead the department to propose amended regulations establishing criteria for drafting and interpreting the scope of anti-dumping orders.
Although the US Department of Energy has conditionally approved Freeport LNG Expansion's application to export liquefied natural gas to countries without a free trade agreement, it remains uncertain when further approvals will be forthcoming. Freeport is the second project that the department has approved after it imposed a two-year moratorium on reviewing applications.
The United States and the European Union recently implemented a mutual recognition arrangement for their respective supply chain security programmes. The US Customs-Trade Partnership Against Terrorism is now recognised as equivalent to the European Union's Authorised Economic Operator programme. Programme members receive certain benefits, including expedited EU customs clearance.
Adding a chapter to the long-running controversy over the Department of Commerce's application of the anti-subsidy (countervailing duty) statute to goods imported from non-market economy countries, the US Court of International Trade has rejected constitutional challenges to legislation to provide a retrofitted legal foundation for the department's practice.
The US Departments of State and Treasury have announced the issuance of a new general licence that waives a nearly decade-old US import ban on most Burmese-origin goods. The move represents the latest step in a process of targeted easing first proposed by Secretary of State Hillary Clinton. US persons now may import any article that is a product of Burma, subject to certain limitations.
The Iran Threat Reduction and Syria Human Rights Act of 2012 has been signed into law. Capping months of congressional debate over Iran's nuclear weapons programme and Syria's crackdown on opposition groups, the new law expands the Iran Sanctions Act of 1996 and the Comprehensive Iran Sanctions, Accountability and Divestment Act of 2010. It also codifies various prohibitions recently imposed by executive order.
The Office of Foreign Assets Control recently authorised new investment in and exportation of financial services to Myanmar, easing sanctions that have been in place for over 15 years. The statutory framework for the US sanctions remains in place, thereby permitting the US government to re-impose sanctions should reforms in Myanmar not proceed as hoped.
President Obama recently determined that there is a sufficient supply of petroleum products in world markets to allow countries to reduce their petroleum imports from Iran significantly. The finding clears the way for new sanctions under Section 1245 of the National Defence Authorisation Act on foreign financial institutions that conduct or facilitate financial transactions related to purchases of petroleum products from Iran.
President Obama has issued an executive order blocking all property of the government of Iran and Iranian financial institutions, including the Central Bank of Iran. The executive order, which implements the National Defence Authorisation Act 2012, comes in the midst of growing international concern regarding Iran's nuclear programme and its recent threats to block the Strait of Hormuz.
The US State Department's Directorate of Defence Trade Controls has proposed changes to the rules governing the brokering of defence articles and defence services under the International Traffic in Arms Regulations (ITAR). The proposed rule entails far-reaching changes to the ITAR brokering provisions and related provisions applicable to manufacturers and exporters of defence articles and defence services.
The United States has imposed new sanctions against Iran in response to the recent alleged assassination plot against the Saudi ambassador in the United States and new findings by the International Atomic Energy Agency concerning Iran's nuclear activities. The new sanctions primarily target non-US persons with dealings in Iran's petroleum, petrochemical, banking and nuclear sectors.
The Office of Foreign Assets Control (OFAC) recently issued a final rule authorising the export and re-export of food to Iran and Sudan. These changes come in the form of two new general licences. Exports of non-food agricultural commodities, medicines, medical devices continue to be subject to the specific licensing process that OFAC has administered for many years under the Trade Sanctions Reform and Export Enhancement Act.
President Obama recently imposed further sanctions on Syria. The new sanctions block all property interests of the government of Syria and prohibit many trade transactions by US persons with Syria. These sanctions represent the strongest US financial action taken against the regime of Syrian President Bashar al-Assad since the start of popular protests in Damascus earlier this year.
The United States recently took a series of steps signalling that it has finally begun to enforce the most controversial extraterritorial aspects of US economic sanctions against Iran. Non-US companies in the petroleum and natural gas industries should carefully consider their response to this significant change in US economic sanction enforcement priorities.
The US Treasury Department's Office of Foreign Assets Control recently issued guidance concerning US economic sanctions against Sudan and Libya. This guidance is intended to help companies and non-profit organisations with ties to these countries to maximise available opportunities while still complying with US law.
In response to the growing violence in Libya, the United States has imposed economic sanctions against Libya. All property interests of the Libyan government, certain senior officials and others implicated in human rights abuses have been blocked, and US persons have been barred from transferring or donating funds to, or having other business dealings with, those persons.
President Obama has signed into law the much-anticipated Food and Drug Administration Food Safety Modernisation Act, bringing about the biggest reform of US food safety regulation in decades. The new law has significant consequences for importers of food items, which should prepare for increased federal government oversight of food imports.
US employers will soon be required to provide certification of compliance with deemed export rules when petitioning for certain non-immigrant work visa classifications on behalf of their employees. Inaccurate certifications may expose employers to liability for false statements to the US government, as well as export control violations.
The US State Department has issued a proposed rule that, if adopted, would relax the controls associated with the export of defence-related items to non-US entities that employ individuals of various nationalities. Such entities would be required to conduct due diligence on their employees to prevent diversions to countries subject to US defence trade embargoes.
President Obama has signed into law the Comprehensive Iran Sanctions, Accountability and Divestment Act. As the United States already maintains a nearly comprehensive embargo of Iran, this act largely targets the activities of non-US companies doing business in Iran, particularly in the petroleum sector. However, even US companies may be affected by the act's wide-ranging provisions.
The Commerce Department's Bureau of Industry and Security has published an interim final rule implementing major changes to the US export controls applicable to encryption items. The changes, effective immediately, simplify the regulation of encryption software, technology and hardware, and should substantially reduce the administrative burden associated with the export and re-export of such items.
A partisan congressional battle over the use of earmarks means that many US companies are currently paying duties on products that had been duty free before this year. A recent decision by Republicans in the House of Representatives to adopt "a unilateral moratorium on all earmarks, including tax and tariff related earmarks" has now ensnared bills that direct that import duties not be collected.
The United States is the only major economy that employs a retrospective system for assessing and collecting anti-dumping and countervailing duties on imports. At the direction of Congress, the Department of Commerce's International Trade Administration has sought public comment on the relative merits of the existing retrospective system versus a prospective system.
Over 9,000 pharmaceutical and chemical intermediates enjoy duty-free treatment under the customs regime of the United States and other countries that participate in the World Trade Organization Pharmaceutical Agreement. The Office of the US Trade Representative recently sought public comment on the possible expansion of the list of products subject to this reciprocal duty-free treatment.
The Treasury Department's Office of Foreign Assets Control has promulgated two final rules that ease sanctions against Cuba, Iran and Sudan with respect to key areas of authorized trade. The new rules will make it easier for exporters to supply agricultural commodities to Cuba, as well as to support internet-based personal communications in Cuba, Iran and Sudan.
With the advent of the Internet, US companies have found it increasingly difficult to protect their intellectual property from infringing imports. Online sales of counterfeit, grey-market or other allegedly infringing products manufactured abroad are quick, inexpensive and difficult to trace. However, in the fight to protect IP rights against online sales of infringing imports, a forum of choice has emerged in the International Trade Commission.
The Department of Commerce Bureau of Industry and Security has proposed a rule to change certain recordkeeping requirements applicable to exporters and reduce paper documentation in the agency's licensing programme. The proposed rule is intended to reduce mailing costs and free up staff time, and will also affect exporter compliance practices if implemented.
The recently signed Omnibus Appropriations Act may increase sales to Cuba of agricultural commodities, medicine and medical products by reversing a 2005 interpretation of 'cash in advance', as set out in the Trade Sanctions Reform Act 2000. During the fiscal year 2010, the term 'payment of cash in advance' shall mean "payment before the transfer of title to, and control of, the exported items to the Cuban purchaser".
US companies should expect enhanced export enforcement activities focusing on domestic sales as the result of a recent undercover investigation by the Government Accountability Office. With congressional and administrative interest focused on the control of sensitive items and technologies, US companies should review their screening and 'know your customer' procedures, even for domestic sales.
The Bureau of Industry and Security and the Office of Foreign Assets Control have reached a joint settlement agreement with DHL regarding allegations that it unlawfully aided and abetted the unauthorized exportation of goods to Syria, Iran and Sudan in 2004 and failed to comply with applicable record-keeping requirements in respect of hundreds of exports.
Following the Federal Circuit's decision in Kyocera, the US International Trade Commission no longer issues limited exclusion orders extending to downstream products of third parties. However, at the same time, and perhaps rather unexpectedly, the commission appears to have tightened the requirements for issuance of general exclusion orders against infringing goods from all sources.
The Departments of the Treasury and Commerce have taken action regarding President Obama's announcement in April 2009 that the US government would ease restrictions on Cuba. The regulatory amendments detail how the agencies will ease restrictions on travel to Cuba and open up business opportunities on the island for US telecommunications providers.
In what could be a significant development with respect to anti-dumping and countervailing duty investigations against imports from non-market economy countries, the US Court of International Trade recently issued a decision instructing the Department of Commerce to reconsider several aspects of its application of countervailing duties to non-market economies.