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Biden issues executive order on EU-U.S. privacy shield replacement
On October 7, President Biden signed an Executive Order on Enhancing Safeguards for United States Signals Intelligence Activities (E.O.) to address the facilitation of transatlantic data flows between the EU and the U.S. The E.O. outlines commitments the U.S. will take under the EU-U.S. Data Privacy Framework, which was announced in March as a replacement for the invalidated EU-U.S. Privacy Shield. As previously covered by InfoBytes, the Court of Justice of the EU (CJEU) issued an opinion in the Schrems II case (Case C-311/18) in July 2020, holding that the EU-U.S. Privacy Shield did not satisfy EU legal requirements. In annulling the EU-U.S. Privacy Shield, the CJEU determined that because the requirements of U.S. national security, public interest, and law enforcement have “primacy” over the data protection principles of the EU-U.S. Privacy Shield, the data transferred under the EU-U.S. Privacy Shield would not be subject to the same level of protections prescribed by the GDPR.
Among other things, the E.O. bolsters privacy and civil liberty safeguards for U.S. signals intelligence-gathering activities, and establishes an “independent and binding mechanism” to enable “qualifying states and regional economic integration organizations, as designated under the E.O., to seek redress if they believe their personal data was collected through U.S. signals intelligence in a manner that violated applicable U.S. law.” Specifically, the E.O. (i) creates further safeguards for how the U.S. signals intelligence community conducts data transfers; (ii) establishes requirements for handling personal information collected through signals intelligence activities and “extends the responsibilities of legal, oversight, and compliance officials to ensure that appropriate actions are taken to remediate incidents of non-compliance”; (iii) requires the U.S. signals intelligence community to make sure policies and procedures reflect the E.O.’s new privacy and civil liberty safeguards; (iv) establishes a multi-layer review and redress mechanism, under which the Civil Liberties Protection Officer in the Office of the Director of National Intelligence (CLPO) is granted the authority to investigate complaints of improper collection and handling of personal data and may issue binding decisions on whether improper conduct occurred and what the appropriate remediation should be; (v) directs the U.S. attorney general to establish a Data Protection Review Court (DPRC) to independently review CLPO decisions, thereby serving as the second level of the E.O.’s redress mechanism (see DOJ announcement here); and (vi) calls on the Privacy and Civil Liberties Oversight Board to review U.S. signals intelligence community policies and procedures to ensure they are consistent with the E.O.
FSB reports on stablecoins and crypto-asset activities
Recently, Financial Stability Board (FSB) Chair Klaas Knot sent a letter to the G20 Finance Ministers and Central Bank Governors concerning global financial stability, followed by the release of two FSB reports. The letter stated that “turmoil in crypto-asset markets has validated many of the FSB’s concerns about crypto assets,” and noted that the “‘crypto winter’ has reinforced [its] assessment of existing structural vulnerabilities.” The letter expressed concerns that the risks crypto assets pose to financial stability are "likely to come back to the fore sooner rather than later.” Knot stated that the FSB’s report on stablecoins expanded recommendations for the regulation of stablecoins, which are digital tokens that aim to maintain a one-on-one value with less volatile assets such as the euro or dollar. In the stablecoin report, the FSB stated that most existing stablecoins would not meet its recommendations at present, and would require “significant improvements” to their governance, risk management, stabilization mechanisms and disclosures. Knot also discussed the FSB's report on crypto-asset activities and markets, which focuses on regulatory, supervisory, and oversight issues relating to crypto-assets to help ensure safe innovation. The report noted that “[c]orrelations between crypto-asset prices and mainstream equity indices have been steadily increasing since year-end 2021 and peaked in May 2022, when the market stress began.” The letter further described that in 2020, G20 Leaders endorsed the Roadmap for Enhancing Cross-border Payments to address the frictions that payments currently face, and thereby achieve faster, cheaper, more transparent and more inclusive cross-border payment services. As previously covered by InfoBytes, Knot stated that the recent FSB report on the roadmap presents “priorities for this new phase of the work, and proposes an intensified public-private sector collaboration to take this forward.” In regard to cyber risks, he stated that cyber-risk safeguards are important due to rapidly growing cyber incidents. He further stated that the FSB “is working to promote a resilient global financial system in the near term and over the longer run, supporting policymakers in the G20 to foster stronger, equitable and inclusive growth.”
FSB releases G20 roadmap for enhancing cross-border payments
On October 10, the Financial Stability Board (FSB) published its priorities for the next phase of work under the G20 Roadmap for Enhancing Cross-Border Payments. According to the FSB, the plan includes steps to strengthen external engagement during the next phase of the group’s work. The FSB noted three priorities for the payment program’s next phase, which include: (i) payment system interoperability and extension; (ii) legal, regulatory and supervisory frameworks; and (iii) cross-border data exchange and message standards. The FSB further noted that it will coordinate work to develop further details of the actions that will take place to follow through with the plan, including discussions with industry participants. The updated roadmap will be provided during the first G20 Finance Ministers and Central Bank Governors meeting in 2023.
FinCEN extends FBAR filing deadline for natural disaster victims
On October 6, the Financial Crimes Enforcement Network (FinCEN) issued a notice extending the deadline to February 23, 2023 for victims of certain recent natural disasters to file their reports of Foreign Bank and Financial Accounts (FBAR) for the 2021 calendar year (ordinarily due on or before October 15, 2022). The expanded relief is offered to victims impacted by Hurricane Fiona in Puerto Rico, Hurricane Ian in Florida, North Carolina, and South Carolina, and storms and floods in parts of Alaska. If FEMA later designates additional areas as eligible for individual assistance, FBAR filers in those locations will automatically receive the same filing relief. FinCEN also stated that it will work with FBAR filers who live outside the designated disaster areas but may have trouble meeting their filing obligations because their records are located in the affected areas.
OFAC sanctions Iranian leaders
On October 6, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions, pursuant to Executive Order 13553, against seven senior leaders within Iran’s government and security apparatus for the shutdown of Iran’s Internet access and the ongoing violence against peaceful protesters following the death of a 22-year old who died in the custody of Iran’s Morality Police. OFAC noted that the designations follow the September 22 sanctions against Iran’s Morality Police along with seven senior leaders who oversee Iran’s security organizations (covered by InfoBytes here). Collectively, and with the release of Iran General License D-2 (covered by InfoBytes here), which authorizes exports of additional tools to assist Iranians in accessing the Internet, these sanctions “show the United States’ commitment to free, peaceful assembly and open communication.” As a result of the sanctions, all property and interests in property belonging to the sanctioned persons subject to U.S. jurisdiction are blocked and must be reported to OFAC. Additionally, “any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.” U.S. persons are also generally prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons. Persons that engage in certain transactions with the individuals or entities designated today may themselves be exposed to designation. Additionally, OFAC warned that “any foreign financial institution that knowingly facilitates a significant transaction or provides significant financial services for any of the individuals designated today could be subject to U.S. sanctions.”
OFAC sanctions wildlife trafficking organized crime group
On October 7, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13581 against a Malaysian national, a wildlife trafficking transnational criminal organization, and a Malaysian company for trafficking endangered wildlife and engaging in poaching. According to OFAC, the Malaysian individual specializes in transporting rhino horn, ivory, and pangolins from Africa, generally utilizing routes through Malaysia and Laos and onward to consumers in Vietnam and China. OFAC noted that the designations were made in collaboration with the U.S. Fish and Wildlife Service, the State Department, and the DOJ. As a result of the sanctions, all property and interests in property belonging to the sanctioned targets that are in the U.S. or in the possession or control of U.S. persons are blocked and must be reported to OFAC. Further, “any entities that are owned 50 percent or more by one or more designated persons” are blocked. U.S. persons are prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons.
OFAC sanctions arms dealers for supporting Burma’s military regime
On October 6, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 14014 against three individuals and one entity connected to Burma’s military regime. According to OFAC, the sanctions target persons who profit from the regime’s oppressive actions, including support networks and war profiteers that enable weapons procurement for the military regime. The same day, the State Department also designated the former Burma police chief and deputy Home Affairs minister under Section 7031(c) of the Department of State, Foreign Operations, and Related Programs Appropriations Act, 2022, for his involvement in “gross violations of human rights.” As a result of the sanctions, all property and interests in property belonging to the sanctioned persons subject to U.S. jurisdiction are blocked and must be reported to OFAC. Additionally, “any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.” U.S. persons are generally prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons unless authorized by a general or specific OFAC license, or are otherwise exempt.
OFAC sanctions North Korean fuel procurement network
On October 7, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13810 against two individuals and three entities for engaging in activities related to the exportation of petroleum to the Democratic People’s Republic of Korea (DPRK), which directly support the development of DPRK weapons programs and its military. OFAC’s actions build upon other U.S. government actions taken against one of the sanctioned individuals and entities, including criminal charges for conspiring to evade economic sanctions of the DPRK and conspiring to launder money. As a result of the sanctions, all property and interests in property of the sanctioned persons subject to U.S. jurisdiction are blocked and must be reported to OFAC. OFAC noted that its regulations generally prohibit U.S. persons from participating in transactions with the designated persons, including transactions transiting the U.S. OFAC’s announcement further warned that any foreign financial institution that knowingly facilitates significant transactions or provides significant financial services for any of the designated persons may be subject to U.S. correspondent account or payable-through account sanctions. Additionally, persons that engage in certain transactions with the designated persons may themselves be exposed to designations.
OFAC sanctions persons in Bosnia and Herzegovina
On October 3, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 14033 against two individuals and one business entity in Bosnia and Herzegovina (BiH). According OFAC, these designations follow OFAC’s September 26 designation of a corrupt state prosecutor in BiH and build on other recent sanctions imposed on individuals and entities in the region (covered by InfoBytes here). Collectively, OFAC noted that “these actions underscore the United States’ willingness to hold accountable those enabling divisive and destabilizing activities in the Western Balkans.” OFAC further noted that one of the designated individuals is one of the wealthiest individuals in BiH and is the longtime owner of a large engineering firm. According to OFAC, the individual and the firm “have been linked to corruption in the construction sector.” The sanctions also target the Prime Minister of the Federation of Bosnia and Herzegovina for “misus[ing] pensioner data for the benefit of his own political party and contrary to BiH law.” As a result of the sanctions, all property and interests in property belonging to the sanctioned individuals and entities subject to U.S. jurisdiction are blocked and must be reported to OFAC. Additionally, “any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.” OFAC further noted that “transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or blocked persons are prohibited unless authorized by a general or specific license issued by OFAC, or exempt,” which “include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person and the receipt of any contribution or provision of funds, goods, or services from any such person.”
Treasury reissues Libyan Sanctions Regulations
On September 30, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a final rule reissuing the Libyan Sanctions Regulations, which were previously published in abbreviated form in 2011. The reissuance of the Libyan Sanctions Regulations includes additional interpretive guidance and definitions, general licenses, and other regulatory provisions that will provide further guidance to the public. includes additional interpretive guidance and definitions, general licenses, and other regulatory provisions that will provide further guidance to the public. The rule is effective immediately.