Foreign Corrupt Practices Act (“FCPA”) enforcement has been fairly predictable for many years as the Fraud Section of the Department of Justice (“DOJ”) has maintained exclusive authority over investigating claims and bringing enforcement actions in federal courts across the country. President Trump’s recent pause on FCPA enforcement, the first of its kind since the statute was passed in 1977, has created significant uncertainty for individuals and businesses operating internationally regarding the future of FCPA enforcement. While DOJ is in the process of assessing what the future of FCPA enforcement, state attorneys general are stepping in. On April 2, California Attorney General Rob Bonta issued a Legal Advisory (the “Advisory) to California businesses explaining that violations of the FCPA are actionable under California’s Unfair Competition Law (UCL). The announcement signals a shift in FCPA enforcement where states may take the lead and pursue FCPA enforcement through their state unfair competition laws.

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On April 9, 2025, President Trump signed and released an Executive Order (EO) to “improve speed and accountability” in the U.S. defense trade system and published an accompanying fact sheet.  The EO identifies specific actions for executive branch agencies to take including: (i) reverting back to the Conventional Arms Transfer Policy that President Trump implemented in 2018 (which was amended under the Biden Administration); (ii) reevaluating restrictions imposed by the Missile Technology Control Regime on Category I items; (iii) requesting Congress to update statutory congressional notification thresholds; and (iv) updating the Foreign Military Sales (FMS)-Only List.

The EO also sets a 60-day deadline for the Secretaries of State and Defense to: (i) develop a list of priority partners for conventional arms transfers; (ii) develop a list of priority end-items for potential transfer to priority partners; and (iii) ensure the transfer of priority end-items advance the administration’s goal of strengthening allied burden-sharing.  It further mandates that the Secretaries of State and Defense review, update, and reissue the lists of priority partners and military end-items on an annual basis.

The EO sets a 90-day deadline for the Secretaries of State, Defense, and Commerce to submit a plan to the President to improve the transparency of defense sales to foreign partners by: (i) developing metrics for accountability; (ii) including exportability as a requirement in the early parts of the acquisition process; and (iii) consolidating technology security and foreign disclosure approvals.

Finally, the EO sets a 120-day deadline for the Secretaries of State, Defense, and Commerce to submit a plan to the Assistant to the President for National Security Affairs to develop a single electronic system to track all direct commercial sale license requests and ongoing FMS efforts throughout the FMS case life cycle.

Crowell & Moring, LLP continues to monitor export control developments and their potential impact on customers and businesses going forward.

A Florida-based small business is first out of the gate to challenge President Trump’s sweeping new tariffs under the International Emergency Economic Powers Act of 1977. The complaint was filed by conservative legal advocacy group New Civil Liberties Alliance (“NCLA”) on behalf of Emily Ley Paper, Inc.(doing business as “Simplified”), a small business based in Florida.

The plaintiff has requested that the Court (1) declare the China EOs unlawful and unconstitutional, (2) enjoin the suit’s defendants from implementing or enforcing the EOs, and (3) set aside the modifications made to the HTS resulting from the EOs.

The suit challenges what it calls “President Trump’s unlawful use of emergency power to impose a tariff on all imports from China,” alleging that IEEPA only authorizes the president to issue sanctions in international emergencies, and not “to impose tariffs on the American people.” The suit cites both the fact that the statute does not mention the word “tariff” and the lack of congruence between the justifications given by the president in imposing the tariffs (namely, an “emergency” of illegal opioids entering the U.S.) and the legal authority granted to the president by IEEPA in contending that the Executive Orders should be vacated as ultra vires. Additionally, the suit alleges that even if IEEPA permits the EOs, then the statute violates the nondelegation doctrine because it lacks “an intelligible principle that constrains a president’s authority.”

Finally, the suit states that any resulting modifications to the Harmonized Tariff Schedule are actionable under the Administrative Procedure Act because they are contrary to law due to the allegedly unlawful nature of the Orders.

In the last week, President Trump has threatened “secondary” tariffs in three distinct scenarios. While this is the first time that the Administration has used the term “secondary” tariffs, the terminology is likely intended to mirror that used in the sanctions context and, as with “secondary” sanctions, appears designed to be another mechanism by which the U.S. Administration could impose economic costs against third countries based on their alleged dealings with targets of U.S. sanctions.

Concrete Action Against Venezuela: On March 24, 2025, President Trump issued an Executive Order, authorizing the imposition of a 25% tariff on all goods imported into the United States from any country determined to be importing Venezuela crude oil or petroleum products extracted, refined, or exported from Venezuela on or after April 2, 2025.

The U.S. Department of Commerce, in coordination with the U.S. Departments of State and Justice will determine which country has imported Venezuelan oil (which includes indirect imports through third parties, as can be reasonably traced back to Venezuela). Commerce will be responsible for issuing regulations, guidance, and determinations to implement the order.

However, it will be the U.S. Department of State, in consultation with the U.S. Departments of the Treasury, Commerce, and Homeland Security, and the Office of the U.S. Trade Representative (“USTR”) that will decide whether or not to impose the 25% tariff on a particular country. Once the tariff is imposed, it will expire one year after the country last imported Venezuelan oil, or at an earlier date, if determined by Commerce in consultation with the U.S. Departments of State, Treasury, Homeland Security, and the USTR. This tariff would be in addition to any other tariffs already imposed on the specific country or product, such as existing duties imposed under IEEPA and Sections 232 and 301.

Based on publicly available information in a 2024 brief published by the U.S. Energy Information Administration (“EIA”), two of the largest importers of Venezuelan oil are China and India, making them potential targets of further tariffs.

As of the date of this blog post, none of the U.S. Department’s of Commerce, State, and Justice have publicly identified any countries that import Venezuelan oil.

Russia: On March 30, President Trump threatened to impose secondary tariffs on Russian oil, specifically noting that it would be a 25-50% tariff on goods from countries that buy oil from Russia. President Trump explained that he would impose such a tariff within a month, if (a) Russia is unable to agree to a ceasefire in Ukraine and (b) the White House believes that failure is attributable to Russian action (or inaction). No further details were shared.

A 2024 brief published by EIA explains that the largest importers of Russian oil are China, India, Turkey, and a handful of Eastern EU members (i.e., Hungary, Slovakia, and Czech Republic). Importers of petroleum products from Russia are much more diversified to include locations such as Singapore, Brazil, and the United Arab Emirates.

Iran: Also on March 30, President Trump threatened to impose secondary tariffs on Iranian oil, by imposing tariffs on goods from countries that buy oil from Iran. He provided even fewer details on these potential tariffs, other than the decision to impose them would depend on whether the Iranian government would negotiate a nuclear agreement with the United States.

The 2024 EIA brief on Iran explains that China is the largest importer of Iranian oil by significant margins (89% of all sales), with the remaining purchases from Syria, the UAE, and Venezuela.

The UK’s Office of Financial Sanctions Implementation (“OFSI”) has imposed a monetary penalty of £465,000 against a multinational law firm’s Russian office (the “Russian Office”) for breaching UK financial sanctions against Russia following its invasion of Ukraine in February 2022.  This is the first time OFSI has enforced against a law firm.

The Russian Office was a limited liability partnership incorporated in the UK, and it operated in Russia until the office’s closure on 31 May 2022 (with the firm’s Russian employees shifting to work for a local, standalone firm in Russia (“Local Firm”)). By being a UK-incorporated entity, the Local Firm was subject to UK sanctions jurisdiction even when operating in Russia.

The penalty concerns six payments totalling £3,932,392.10 made by the Russian Office to designated persons subject to a UK asset freeze between 25 and 31 May 2022. Over the course of these seven days, as the Russian Office was winding down its presence in Russia, it made payments to Alfa-Bank, Sovcombank Life, and Sberbank. The largest payment (£3,915,232.31) involved the Russian Office mistakenly transferring funds to the Local Firm’s account at Alfa-Bank rather than a non-sanctioned Raiffeisenbank account. Once the Russian Office identified the mistake later in the day, the Local Firm arranged for the funds to be transferred to Local Firm’s non-sanctioned account at Raiffeisenbank.

At the time of the breaches, the Russian Office’s finance team had authority to approve payments locally, without having to obtain specific authorisation from its parent firm in London (the “Parent Firm”). The Parent Firm voluntarily disclosed the breaches on behalf of the Russian Office after they occurred. OFSI imposed a monetary penalty finding that the breaches occurred as a result of (i) inadequate due diligence and sanctions screenings and (ii) errors caused by the hasty closure of the Russian Office.

Aggravating and mitigating factors 

OFSI cited the following aggravating factors in its decision to impose a penalty:

  1. The funds were made available directly to designed persons. The repeated nature of the payments was serious, and the total value significant.
  2. The harm or risk of harm to the regime’s objective at a time when attempts to elicit behavioural change from Russian designated persons were a critical government priority.
  3. The Russian Office had significant awareness of sanctions risk and failed to take reasonable care.
  4. The Russian Office’s systems and policies proved ineffective as they were not properly followed.
  5. A failure by the Russian Office’s most senior finance staff to conduct proper due diligence or understand the application of ownership and control in UK sanctions regulations in relation to these payments.

OFSI also considered the following mitigating factors:

  1. The Parent Firm’s initial disclosure to OFSI came almost immediately after it first discovered there had been a breach by the Russian Office, and was followed by subsequent further voluntary reporting five days later. All reporting was voluntary, prompt, and contained significant detail.
  2. The Russian Office committed the breaches whilst in the process of closing down its operations within Russia in support of UK policy objectives.

OFSI did not consider the fact that the main payment was quickly transferred by the Local Firm out of the sanctioned Alfa-Bank account to the non-sanctioned account as a mitigating factor. This was on the basis that the funds were transferred out of that account and into the non-sanctioned account by the Local Firm, not by the Russian Office, notwithstanding the fact that the Local Firm made the change at the request of the Russian Office, the overlapping nature of the two firms, and that presumably only the Local Firm could correct the error.  

Outcome

OFSI assessed a base penalty amount of £930,000, but provided a 50% discount based on the Parent Firm’s voluntary disclosure. The Parent Firm, on behalf of the Russian Office, exercised its right under the Policing and Crime Act 2017 to a ministerial review. The Minister delegated the review to a senior Treasury official with no prior involvement in the case; however, OFSI’s decision was upheld in full. The Parent Firm agreed to pay the penalty on behalf of the Russian Office, although OFSI reiterated that no findings were made against the Parent Firm.

Key takeaway

While OFSI stressed that it was issuing the monetary penalty against the Russian Office, and that it had found no fault with the actions of the Parent Firm, the penalty serves as a reminder that all businesses, particularly those with exposure to high-risk sanctions environments such as Russia, should ensure they have the appropriate procedures in place and that these are adhered to by local teams. 

The case further indicates that OFSI is willing to impose penalties notwithstanding prompt disclosure and in a context where a firm was trying to wind down its Russian exposure in line with UK government priorities. OFSI noted in its press release that this penalty, and its August 2024 penalty against Integral Concierge Services Limited, mark the first of several in OFSI’s pipeline for Russian sanctions enforcement. We therefore expect to see further enforcement resulting from the actions that firms took following Russia’s invasion as they scrambled to comply with rapidly changing sanctions.

On March 25, 2025, the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”)  released two final rules that announced the addition of 80 new entities to the Entity List (see BIS press release here). In its press release, BIS officials stated that the Entity List is only one of the powerful tools at their disposal, signaling the likelihood of more actions under BIS’ regulatory authorities.

The two BIS’ final rules are among BIS’ first regulatory actions, and take effect immediately, adding 12 entities to the Entity List: 11 under the destination of China and one under the destination of Taiwan. The newly added entities include six subsidiaries of a leading Chinese cloud computing and big data service provider whose parent entity was added to the Entity List in 2023, four entities supporting a major Chinese server manufacturer designated on the Entity List in 2019 for building supercomputers, and two Chinese AI and advanced computing chips companies that supported Chinese military modernization. All the entities added under this rule include a footnote 4 designation, which means that these entities are now subject to the Entity List Foreign Direct Product (FDP) Rule (see § 734.9(e)(2) of the Export Administration Regulations (EAR)), and the scope of items restricted for export, reexport, or transfer to them is even broader. This rule is effective as of March 25, 2025.

The second final rule added 68 new entities to the Entity List: 42 under the destination of China, 19 under Pakistan, four under the UAE, three under South Africa, and two under Iran (two entities have China and Iran addresses). The final rule also modified four existing entities. All exports to these entities of items “subject to the EAR” now require a license, and BIS will review these license applications under a either a presumption or policy of denial.

Among the reasons that BIS cited for the addition of the new entities include:

  • Their contributions to Pakistan’s unsafeguarded nuclear activities and ballistic missile program;
  • China’s quantum technology capabilities and military modernization efforts, including training Chinese military forces in South Africa;
  • Iran’s defense industry and unmanned aerial vehicle programs.

This final rule is effective March 28, 2025.

BIS’ addition of these entities to the Entity List signals early national security priorities for the Trump Administration, including: (1) restricting China’s technological advancement; (2) limiting support for China’s military modernization; (3) increasing pressure on Iran; and (4) supporting the nonproliferation of nuclear activities, specifically tied to Pakistan in this case. 

On March 20, 2025, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) designated the “teapot” Chinese oil refinery Shandong Shouguang Luqing Petrochemical Co., Ltd. (“Luqing Petrochemical”), its chief executive officer, eight vessels, and eleven vessel owners, managers, and operators, on OFAC’s List of Specially Designated Nationals and Blocked Persons (“SDN List”). OFAC explains that Luqing Petrochemical purchased hundreds of millions of dollars’ worth of crude oil from Iran, at times using vessels linked to designated terrorist organization Ansarallah—also known as the Houthis—and the Iranian Ministry of Defense of Armed Forces Logistics.

On the same day, the Department of State designated Huaying Huizhou Daya Bay Petrochemical Terminal Storage Co., Ltd.  (“Huaying Petrochemical”). The Department’s press released explains that Huaying Petrochemical is a crude oil and petroleum products storage terminal in the port of Huizhou in China that received and stored Iranian-origin crude oil onboard a blocked tanker.  Both departments cited President Trump’s reinstatement of “maximum pressure” on Iran as the impetus for these actions.

This represents an escalation of OFAC’s Iran-related designations since President Trump took office.  Over the last two months, OFAC has issued several rounds of designations, often targeting vessels and related parties for trading in Iranian crude.  Today’s actions specifically target downstream entities in China, which buys the majority of Iran’s oil exports, and OFAC highlights that it is the first time, that the U.S. government has designated a Chinese oil refinery for refining Iranian oil.

We will continue to closely monitor the Trump Administration’s expansion of its maximum pressure campaign, particularly to the extent that it expands beyond those directly transacting with Iranian parties to capture further downstream users or refiners of Iranian products.  Companies should continue to engage in their know-your-customer (“KYC”) processes to confirm that they are not having indirect dealings with Iran, as well as to confirm whether any counterparties in China, the United Arab Emirates, or other known diversion points have historic dealings with Iran, which could subject the counterparties to sanctions designations.

On February 26, 2025, Senators Jim Banks (R-Ind.) and Mark Warner (D-Va.) introduced the Maintaining American Superiority by Improving Export Control Transparency Act (the Act) in the United States Senate. A companion bill titled the same was reintroduced in the United States House of Representatives on March 5, 2025, by Congressman Ronny Jackson (R-TX-13).

The Act would amend the Export Control Reform Act of 2018 to require the Secretary of Commerce to submit an annual report to Congress on license applications, enforcement actions, and other requests for authorization for the export, reexport, release, and in-country transfer of items subject to the U.S. Export Administration Regulations (EAR) to entities: (i) located in or operating in a D:5 country; (ii) included on the U.S. Department of Commerce Bureau of Industry and Security (BIS) Entity List; or (iii) included on the BIS Military End-User List.

Specifically, the Act would require the report to include the following details for all applicable license applications or other requests for authorization: (i) the name of the entity submitting the application; (ii) a brief description of the item and its Export Control Classification Number (ECCN); (iii) the name of the end-user; (iv) the end-user’s location; (v) the value of the items; (vi) the agency’s decision with respect the license application or authorization; and (vii) the date of submission of the application.  Further, the report would require Commerce to provide the date, location, and result of any related enforcement activities, such as end-use checks and aggregate statistics on all license applications and other requests for authorizations.

Representative Jackson introduced a similar bill in the House of Representatives in December 2023, which passed the House and stalled in the Senate.

We are proud to share that our partner Caroline Brown is named on the Foreign Investment Watch Top Advisor list for the second consecutive year. To learn more about this 2025 recognition as a top advisor on foreign investment and national security in the United States and abroad and Caroline’s practice, read HERE.

On March 6, 2025, following discussions with the heads of major U.S. automakers, the White House announced a one-month suspension of the IEEPA tariffs on Mexico and Canada for certain USMCA-originating automotive sector products. The White House subsequently expanded that temporary suspension to all products from Canada and Mexico that satisfy USMCA’s “origination” requirements. Products that qualify for exemption from “ordinary” customs duties under USMCA’s terms and requirements will now be exempt from the IEEPA tariffs for one month, to facilitate supply chain adjustments and onshoring of manufacturing operations.  See below for language that is a direct quotation from the White House Fact Sheet:

  • Duties imposed to address the flow of illicit drugs across our borders are now:
    • 25% tariffs on goods that do not satisfy U.S.-Mexico-Canada Agreement (USMCA) rules of origin.
    • A lower 10% tariff on those energy products imported from Canada that fall outside the USMCA preference.
    • A lower 10% tariff on any potash imported from Canada and Mexico that falls outside the USMCA preference.
    • No tariffs on those goods from Canada and Mexico that claim and qualify for USMCA preference.