Sanctions remain essential; Comprehensive anti-money laundering legislation begins to be implemented | Skadden, Arps, Slate, Meagher & Flom LLP




The Biden administration has made it clear that economic sanctions will continue to be an important tool of U.S. foreign policy and has launched a comprehensive review of current sanctions policies and practices. While the assessment is ongoing, the United States continues to impose new measures in response to national security threats, and as expected, the new administration appears to be placing more emphasis on multilateralism and diplomacy.

Burma. In February 2021, the Biden administration imposed targeted sanctions in response to the military coup in Burma (Myanmar), which now include blockade sanctions against Myanma Economic Holdings Public Company Limited (MEHL) and Myanmar Economic Corporation Limited ( MEC), two large conglomerates controlled by the Burmese military. (See our customer alert of February 16, 2021 “US places restrictions on Burma following military coup. ”) The European Union has also imposed new sanctions against Burma, notably against the MEHL and the MEC.

Russia. The president announced additional sanctions against Russia in April 2021 over its interference in the U.S. election and other malicious cyber activity. The order targeted, among other things, technology companies that support Russian intelligence services; and the Treasury Department’s Office of Foreign Assets Control issued a new directive prohibiting U.S. financial institutions from participating in the primary market for newly issued ruble or unissued bonds by the Russian Central Bank, the National Wealth Fund and the Ministry of Finances, or lend funds in rubles or not to these bodies. In partnership with the EU, UK, Canada and Australia, the US has also imposed sanctions on certain individuals and entities associated with Russia’s efforts to annex the Crimean region to Ukraine. (See our customer alert of April 22, 2021 “US imposes series of additional sanctions on Russia amid mounting tensions. ”)

China. President Biden has so far upheld various sanctions imposed on China by the Trump administration, including those against designated Communist Chinese military companies, but White House Biden has advocated for a coordinated approach with allies in Europe and across Europe. the Pacific region to meet the challenges that China present, including human rights concerns in the Xinjiang region.

Iran. The administration began indirect talks with Iran in April 2021 to discuss the possibility of the United States joining the Iran nuclear deal known as the Joint Comprehensive Plan of Action. If a deal is made, it should at least lift some sanctions against Iran.

International Penal Court. In a second notable change from the previous administration, the Biden administration revoked the sanctions against International Criminal Court staff, saying the concerns that led to the sanctions would be better addressed through dialogue.

Fight against money laundering

With the newly enacted legislation, the Biden administration will have an important opportunity to shape the development of new rules to strengthen the US regulatory framework for combating money laundering and counterterrorism financing.

The Biden administration is responsible for implementing the 2020 Anti-Money Laundering Act and the Business Transparency Act (CTA), both of which are included in the 2021 National Defense Authorization Act. (See our customer alert of January 7, 2021 “United States Passes Landmark Legislation to Strengthen Legal Framework for Combating Money Laundering and Counterterrorism Financing. Among other key changes, this legislation imposes new beneficial ownership reporting requirements, extends the power of the Treasury and Justice departments to subpoenas of foreign banks with US correspondent accounts, and establishes a more robust denunciation to fight against money laundering.

On April 1, 2021, the Treasury’s Financial Crimes Enforcement Network (FinCEN) published an advance notice of the draft regulation regarding CTA’s beneficial owner reporting requirements, kicking off the CTA implementation process. The administration requested $ 191 million for FinCEN in its 2022 federal budget, $ 64 million above the level promulgated in 2021, to fund the creation of the beneficial owner database required by CTA. (See our April 23, 2021, customer alert “FinCEN begins rulemaking process to implement new beneficial ownership requirements. ”)

The Biden administration will also determine the fate of anti-money laundering rules proposed in the final months of the Trump administration. Among these is a rule jointly proposed by FinCEN and the Federal Reserve Bank on October 27, 2020, which would lower the threshold at which international remittances must be reported, from $ 3,000 to $ 250. (See our customer alert of November 10, 2020 “FinCEN and Federal Reserve Propose Dramatically Lower Threshold for International Money Transfers Under Record Keeping and Travel Rules. A second rule proposed on December 23, 2020 would impose new reporting, record keeping and auditing requirements on banks and money services businesses for certain virtual currency transactions. (See our customer alert of January 19, 2021 “FinCEN proposes new reporting, record keeping and verification requirements for transactions involving non-hosted wallets. ”)

The Biden administration recently appointed a new acting director of FinCEN, although it is too early to say whether this appointment will be permanent and how it may influence the enactment of the proposed rules.

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