Key Notes:
President Biden signed H.R. 815 (now Public Law No. 118-50) on April 24, 2024, which provides additional foreign aid while also bolstering U.S. national security and enhancing sanctions and export control laws with the enactment of provisions that:
- Increase the statute of limitations for U.S. sanctions violations to ten years, affecting compliance and reporting for businesses.
- Requires the president to report to Congress on the overlap of U.S. sanctions on Russian entities and persons with EU and UK sanctions, potentially increasing the number of sanctioned individuals.
- Authorizes the seizure of Russian assets in the U.S. to rebuild Ukraine.
- Introduces sanctions targeting Iran's petroleum exports and missile activities and expands U.S. export controls.
- Implements a ban on TikTok and other apps linked to foreign adversaries and addresses security risks from foreign-controlled digital platforms.
- Prohibits data brokers from transferring sensitive U.S. data to foreign adversaries or their controlled entities.
- Sets sanctions and reporting mandates to reduce the capabilities of Palestinian terrorist groups.
- Imposes sanctions on those involved in significant trafficking of fentanyl and related substances.
Introduction
On April 24, 2024, President Biden signed into law a broad national security package, H.R. 815 (Public Law No. 118-50), which included the Israel Security Supplemental Appropriations Act, 2024, the Ukraine Security Supplemental Appropriations Act, 2024, the Indo-Pacific Security Supplemental Appropriations Act, 2024, the 21st Century Peace through Strength Act, the FEND off Fentanyl Act, and the Rebuilding Economic Prosperity and Opportunity for Ukrainians Act. This new law is organized into 20 separate Divisions A-T, and not only provides substantial aid to Ukraine, Israel, and Indo-Pacific security for Taiwan but also encompasses extensive amendments to U.S. sanctions and export control laws.
Some of the most important legislative provisions are discussed below.
U.S. Sanctions Enforcement Period Is Extended to Ten Years
The Act (Division E, Title I, Subtitle B, Sec. 311) extends the statute of limitations for U.S. sanctions violations, doubling the enforcement period from five to ten years. Under the International Emergency Economic Powers Act (IEEPA) and the Trading With the Enemy Act (TWEA), enforcement actions must now be initiated within a decade of the violation. This amendment underscores the need for businesses to adopt and amend compliance strategies, requiring enhanced recordkeeping and preparation for potential audits covering transactions dating as far back as ten years. See Thompson Hine’s May 1, 2024 Update for further details.
Additional Sanctions on Russia to Align with UK and EU Measures
The Act (Division G, Sec. 1) requires the president to submit a report to Congress within 90 days, identifying foreign persons subject to European Union (EU) and United Kingdom (UK) sanctions, as well as those meeting criteria for U.S. sanctions related to Russian aggression. The president is then authorized to impose sanctions on persons not already under U.S. sanctions as outlined in the report. This provision is crucial as it ensures that U.S. sanctions align with international efforts, particularly with EU and UK measures, enhancing the effectiveness and consistency of the global response to Russian aggression.
Seizure of Russian Sovereign Assets to Rebuild Ukraine
The “Rebuilding Economic Prosperity and Opportunity for Ukrainians Act” or “REPO for Ukrainians Act” (Division F) provides authority to the president to seize Russian sovereign assets frozen in U.S. financial institutions and allocate them to Ukraine for reconstruction efforts. Below are key highlights of the Act:
- Russian sovereign assets include funds and property of the Central Bank of the Russian Federation, the Russian National Wealth Fund, the Ministry of Finance of the Russian Federation, and any other assets owned by the Government of the Russian Federation. Belarusian sovereign assets may also be included if Belarus engages in acts of war against Ukraine related to Russia's invasion.
- Frozen Russian assets cannot be released until the end of the Russia-Ukraine war and full compensation to Ukraine has been made.
- U.S. financial institutions holding Russian sovereign assets must notify the Treasury Department within 10 days of detection, following instructions from the president.
- The president may seize, confiscate, transfer, or vest identified Russian assets after submitting the certification to the appropriate congressional committee, with all rights, titles and interests transferring to the United States.
- The U.S. State Department is authorized to distribute seized assets to Ukraine via a "Ukraine Support Fund" for reconstruction, economic, and humanitarian assistance. Congress must be notified at least 15 days before fund distribution from the Ukraine Support Fund.
- The president is mandated to establish an international mechanism, including creating a "Ukraine Compensation Fund" to receive seized assets from foreign partners to compensate Ukraine for harm caused by Russia.
Additional Sanctions and Export Controls on Iran
- SHIP Act. The “Stop Harboring Iranian Petroleum Act” or “SHIP Act” (Division J) emphasizes a policy framework aimed at restricting Iran's capacity to engage in destabilizing activities and terrorism by curtailing its petroleum exports. Through a series of stringent sanctions, including vessel landing prohibitions, property blocking, and ineligibility for visas, the Act targets foreign entities involved in facilitating Iran's petroleum trade. Additionally, it mandates annual reporting on Iran's petroleum exports until compliance conditions are met. Furthermore, the Act outlines strategies to counter China's role in evading sanctions related to Iranian petroleum.
- Fight CRIME Act. The “Fight and Combat Rampant Iranian Missile Exports Act” or the “Fight CRIME Act” (Division K) enacts stringent sanctions targeting individuals and entities involved in Iran's missile and drone proliferation activities. Specifically, the Act authorizes the president to block transactions and freeze assets of foreign persons involved in acquiring, developing, or transferring missile technology to or from Iran. It also denies U.S. visas and entry to such individuals. Additionally, the sanctions extend to those providing significant support, including financial and technological, to sanctioned activities or entities, and even to adult family members of the primary offenders.
- MAHSA Act. The "Mahsa Amini Human Rights and Security Accountability Act" or the “MAHSA Act” (Division L) imposes a comprehensive set of sanctions targeting the office of Iran's Supreme Leader (an institution of the Islamic Republic of Iran). These sanctions specifically include blocking property and interests in property within U.S. jurisdiction, prohibiting transactions with the U.S., and implementing visa bans. The sanctions target the Supreme Leader's office, Iran's president, and their respective networks, which are deemed responsible for severe human rights abuses and for supporting terrorism globally.
- Export Controls. The "No Technology for Terror Act" (Division N) extends and specifies U.S. export controls under the "foreign direct product rule" (FDPR) in the Export Administration Regulations (15 C.F.R. Section 734.9(j)). It broadens the range of products covered and applies these rules to materials supplied to the Government of Iran, even when these transactions take place outside of Iran. The Act includes provisions for waivers in situations where exports or transfers align with U.S. national interests. Additionally, it provides exemptions from licensing requirements for certain items sent to Iran, including food, medicine, and some medical devices.
- Restrictions on Financial Institutions. The "Holding Iranian Leaders Accountable Act of 2024" (Division R) requires the president to report to Congress on the financial activities of top Iranian officials and their connections with global financial institutions, focusing on asset control and corrupt practices. It requires U.S. financial institutions to close certain accounts and stop providing financial services to specified individuals, or actively pursue similar actions with foreign financial institutions. The Act emphasizes transparency by mandating public disclosure of the reports in multiple languages. It is set to expire in five years, with provisions for extension based on Iranian cooperation or changes in its money laundering status.
- Energy-Related Sanctions. The "Iran-China Energy Sanctions Act of 2023" (Division S) amends the National Defense Authorization Act for Fiscal Year 2012 to specifically target Chinese financial institutions involved in purchasing petroleum products from Iran and any foreign financial institutions dealing in Iranian unmanned aerial vehicles (UAVs) and related systems. The amendment categorizes these transactions as "significant financial transactions," regardless of their size, number, frequency, or nature. The Act requires the president to annually assess and report to Congress whether these institutions have engaged in such transactions. This process is mandated to continue annually for five years following the enactment of the amendment.
Sanctions Aimed at Hamas and Other Terrorist Groups
The "Hamas and Other Palestinian Terrorist Groups International Financing Prevention Act" (Division M) establishes comprehensive measures aimed at curtailing the financial and operational capabilities of designated Palestinian terrorist organizations through a series of targeted sanctions and reporting requirements.
- The Act mandates that the president impose sanctions on foreign persons that knowingly engage, directly or indirectly, in a significant transaction with Hamas, Palestinian Islamic Jihad, Al-Aqsa Martyrs Brigade, the Lion’s Den, or any affiliate. The sanctions also apply to those who engage in terrorism-related activities.
- Sanctions would not apply to transactions related to agricultural commodities, food, medicine, medical devices, or humanitarian assistance.
- The provisions of the Act will terminate seven years after enactment unless extended or sooner if certain conditions regarding the declassification of organizations as terrorist entities are met.
TikTok Ban
The “Protecting Americans from Foreign Adversary Controlled Applications Act” (Division H) includes the widely discussed ban on the Chinese-owned TikTok. This Act targets foreign adversary controlled applications, particularly from China, Iran, North Korea, and Russia, making it illegal within the U.S. to distribute, maintain, or update such applications through online stores or internet hosting services. Specifically, the Act applies to entities like ByteDance and its subsidiary, TikTok, and extends to any company with over 1,000,000 monthly active users that allows user-generated content and is deemed a national security threat after a review process by the president. Set to take effect in January 2025 for ByteDance and TikTok, the law imposes penalties for violations, including potential civil penalties enforced by the Department of Justice based on user numbers within the U.S. See Thompson Hine’s April 30, 2024 Update for more details.
Data Protection
The "Protecting Americans' Data from Foreign Adversaries Act of 2024" (Division I) enacts stringent prohibitions on “data brokers” to sell, license, rent, trade, transfer, release, disclose, provide access to, or otherwise make available “personally identifiable sensitive data” of a United States individual to (1) any foreign adversary country (China, Iran, North Korea, or Russia); or (2) any entity that is controlled by a foreign adversary (entities 20% or more owned by entities organized under the laws of or headquartered in the listed countries). The Act defines crucial terms including "data broker," "foreign adversary country," "personally identifiable sensitive data," and "sensitive data," detailing various types of sensitive personal information. The legislation is set to take effect 60 days after enactment of the Act.
Fentanyl Trafficking and Related Opioids
The "FEND Off Fentanyl Act" (Division E) strengthens the U.S. approach to the fentanyl crisis, recognized as a major national security threat causing extensive overdose deaths. The Act authorizes the president to impose sanctions on individuals and entities determined to be knowingly involved in the significant trafficking of fentanyl, precursor chemicals, or related opioids, or otherwise knowingly involved with the activities of a transnational criminal organization (TCO) involved in illicit narcotics trafficking. It also grants the Financial Crimes Enforcement Network (FinCEN) authority to enforce stringent anti-money laundering measures on U.S. financial institutions.
Conclusion
The new law significantly expands the U.S. legal framework on sanctions and export controls and increases their complexity. The law’s broad scope emphasizes the need for comprehensive due diligence and robust supply chain oversight.
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