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The reporting period saw the most significant expansion of sanctions against Russia in the last six months, with Congress calling for further action against Iran and China.
Biden Administration
During the reporting period, the Biden Administration issued Executive Order 14114 to address sanctions evasion by foreign financial institutions involved in significant transactions supporting Russia’s key sectors (technology, defense and related materiel, construction, aerospace, or manufacturing) or involving Russia’s military-industrial base, including the supply to Russia (directly or indirectly) of certain listed items. It is important to note that these financial sanctions are secondary sanctions; meaning that they apply to transactions outside of U.S. primary sanctions jurisdictions, such as non-dollar denominated transactions. The expanded measures also expanded sanctions against certain sectors and added import prohibitions on Russian-origin seafood and diamonds. This move can be seen as part of an effort to address multiple potential jurisdictions of sanctions evasion by the Administration. Additionally, the U.S. sanctions were issued December 22 following the European Union’s 12th package of sanctions against Russia, imposed on December 18—particularly with respect to the diamond industry, which should anticipate further guidance on the importation of Russian diamonds processed in third countries, countries that are not EU members and do not enjoy the EU right to free movement.
The Biden Administration also ramped up the enforcement of the Russia oil price cap in coordination with the G-7 Price Cap Coalition. The Treasury Department published updated guidance on the implementation of the price cap policy for crude oil and petroleum products of Russian Federation origin, bringing it in line with the G-7 agreement to require oil shippers using Western maritime insurers and other firms that finance Russian oil exports to provide more frequent and rigorous documentation to those service providers about the contents and prices of oil shipments. It also requires additional information from shippers about ancillary costs, such as shipping fees, which traders have been inflating to disguise higher prices that are being paid for Russian oil. The guidance was accompanied by enforcement actions for violations of the oil cap, which have increased in frequency over the fall.
Congress
House Financial Services Committee Chairman Patrick McHenry (R-NC), Rep. Blaine Luetkemeyer (R-MO), Rep. Andy Barr (R-KY), and Rep. French Hill (R-AR) sent a letter during the reporting period to National Security Advisor Jake Sullivan calling for the Administration to cease the Russian oil price cap scheme and instead to adopt a comprehensive energy sanctions regime that more effectively targets Russia’s energy revenue, particularly from oil sales. Additionally, multiple congressional offices from Alaska, Washington State, and elsewhere supported imposing sanctions on the Russian seafood sector.
What to Watch: Expect additional enforcement actions from the Administration on the oil cap to further shape the environment. Additionally, look for the Administration and its allies in the medium-term to target frozen Russian government assets for potential confiscation.
Biden Administration
The reporting period was characterized by Chinese sanctions designations on multiple U.S. companies and actors. The Chinese government imposed sanctions on BAE Systems Land and Armaments, Alliant Techsystems Operations, AeroVironment, Viasat, and Data Link Solutions for their relationship with Taiwan. These sanctions will freeze any property the companies have in China and prohibit organizations and individuals in China from doing business with them. The Chinese government also imposed sanctions against the research and data analytics company Kharon and two employees due to their work on human rights violations in Xinjiang. The Chinese government also continued to expand their ban on iPhones within multiple state firms and government offices, targeting both Apple and Samsung.
Congress
During the reporting period, Congress was particularly active with respect to China-related items. The House Select Committee on the Chinese Communist Party (CCP) issued a report outlining “a strategy to fundamentally reset the United States’ economic and technological competition with the People’s Republic of China” to include the expansion of existing sanctions and export controls. The Committee and the Senate Foreign Relations Committee Chairman also called for the imposition of sanctions against Hong Kong officials that have been offering bounties for dissidents. As part of the debate over the supplemental, Senator Lindsay Graham (R-SC) threatened to draft sanctions if China invades Taiwan. Multiple senators also called for the Department of Defense to lock export licenses for U.S. components for Chinese-drone manufacturer DJI.
What to Watch: As Congress reconvenes in January, expect multiple pieces of China-related legislation to be introduced in advance of the FY25 National Defense Authorization Act and FY25 appropriations process.
Biden Administration
The Administration continued to target Iran’s defense industrial base by designating 10 entities and four individuals in Iran, Malaysia, Hong Kong, and Indonesia for supporting Iran’s unmanned aerial vehicle (UAV) production. The Administration also targeted a network of one individual and three entities for facilitating the flow of Iran’s financial assistance to Houthi forces—including exchange houses in Yemen and Turkey. There were no sanctions targeting Iran’s oil trade, although reports indicate a disruption in that trade due to a pricing dispute between Beijing and Tehran.
Congress
Congress focused on calling for increased sanctions enforcement with respect to energy and steel industries during the reporting period, but Congress’ activities relevant to Iran were at a reduced level going into the holiday recess.
What to Watch: Congress will likely continue to focus on the implementation of broad trade sanctions, while the Administration will likely continue to take a network-centered approach to Iran sanctions targeting.
Biden Administration
Venezuela sanctions considerations were dominated by two significant events: the Venezuelan territorial claims on Guyana and a hostage exchange. With respect to the former, a commitment by both states to refrain from the use of force to resolve these disputes has reduced the likelihood that the U.S. and other partner states would use sanctions as part of any response. With respect to the latter, there have been no new sanctions levied against the Maduro government after the release of senior Venezuelan regime figure Alex Saab in return for 10 Americans. The reduction in sanctions last year against the Venezuelan government has resulted in some transactions that would have been otherwise unavailable.
Congress
The congressional response to the exchange of Venezuelan and U.S. nationals dominated the conversation on Venezuela, with Senate Foreign Relations Committee Chairman Ben Cardin (D-MD) supporting the exchange and House Foreign Affairs Committee Chairman Michael McCaul (R-TX) opposing it. During the reporting period, Congress did not extend statutory sanctions against Venezuela, and allowed them to expire.
What to Watch: Congress will likely try to reconstitute statutory sanctions against Venezuela after allowing them to expire.
Biden Administration
During the reporting period, The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) submitted a new rule for internal review by the Administration that would amend existing regulations to require real estate professionals to report the identities of the beneficial owners of companies buying real estate in cash. The new rule will likely be formally proposed next year. FinCEN also issued a final rule under the Corporate Transparency Act, which delineates circumstances for disclosing beneficial ownership information to federal agencies, governments, and financial institutions beginning in February.
Congress
During the reporting period, multiple congressional offices continued to raise concerns regarding the use of cryptocurrencies by foreign terrorist organizations, and called on the Administration to curb those activities.