International Regulatory Enforcement

New Export Regulations on AI Software Could Signal Narrow Approach to Pending “Emerging Technology” Controls
The U.S. Government has imposed new export controls over artificial intelligence software that is specially designed to analyze geospatial imagery. The classification took immediate effect and, as such, this software is now restricted from export to any country, or national thereof, other than Canada. Commerce intends to submit this software to the multilateral regime governing export controls, indicating a potential intent to restrict exports of this software permanently. This is the first major action by Commerce to control exports of AI technology since Congress empowered the agency to clamp down on transfers of so-called “emerging and foundational technologies.” While not technically an action under this new authority, Commerce’s initial step to rein in exports of AI could portend a more targeted, careful approach than has been anticipated.
Enhancing Workforce Confidence in Internal Investigations
While each company will have different approaches to reviewing potential policy and regulatory breaches, we offer five steps that companies can take right now to enhance workforce confidence in internal investigations.
New EU Anti-Money Laundering Laws Applicable to Cryptocurrency
Anti-money laundering and counter terrorist financing requirements to apply to cryptoasset businesses from 10 January 2020. Crypto-businesses will need to overcome obstacles to customer journeys and satisfy fit and proper threshold.
Financial Regulators Issue Joint Guidance to Snuff Out Reporting Requirement on Legal Hemp-Related Businesses
The Guidance was issued as a result of the Agriculture Improvement Act of 2018 (2018 Farm Bill), which directed the removing of hemp as a Schedule I controlled substance under the Controlled Substances Act.
CFTC Paying for a Company's Dirty Laundry: New Whistleblower Initiatives and Rewards Suggest Increased Enforcement in the Virtual Currency, Foreign Corrupt Practices, Insider Trading, and BSA Spaces
The Commodity Futures Trading Commission (“CFTC”) recently issued a series of four whistleblower alerts aimed at seeking information from would-be whistleblowers in the areas of virtual currency fraud, foreign corrupt practices, insider trading, and violations of the Bank Secrecy Act (“BSA”). These alerts suggest that the CFTC seeks to further incentivize whistleblower cooperation—particularly in areas typically policed by the Financial Crimes Enforcement Network (“FinCEN”) and the U.S. Department of Justice (“DOJ”)—consistent with the CFTC’s previously stated intent to focus its investigative resources on foreign corruption and increasingly active enforcement activity in the virtual currency space.
New German Act to Combat Corporate Crime
On 22 August 2019, the German Federal Ministry of Justice presented the draft bill for the introduction of the Corporate Sanctions Act (Verbandssanktionengesetz, the “Act"). Once the German Parliament enacts the Act, it will enhance enforcement against corporations against business-related crimes, facilitate punishment, promote internal investigations, and incentivize investment in compliance.
EU Adopted Regulation on Screening of Foreign Investments
In August 2019, the EU adopted the Regulation on the Screening of Foreign Direct Investments (“Regulation”), which will apply as of 11 October 2020 in all Member States.
U.K. Serious Fraud Office Issues New Cooperation Guidance
The U.K. Serious Fraud Office issued new "Corporate Cooperation Guidance" on 6 August 2019, setting out a range of different considerations the agency will use to assess a company's cooperation when making charging decisions or supporting a company's application for a Deferred Prosecution Agreement. The Guidance represents a shift in approach and an attempt to provide more clarity and specificity as to the factors that the SFO will take into account when assessing whether a company's management has adopted a "genuinely proactive approach" after learning about the offending. This more pragmatic position under new SFO Director Lisa Osofsky moves closer to the policies and practices of the U.S. Department of Justice. However, differences remain and companies ought to carefully consider their position before seeking to make a voluntary disclosure to the SFO or embarking on an internal investigation if an SFO investigation is already underway.
FATF Adopts New Anti-Money Laundering Guidelines for Virtual Assets and Related Providers
On June 21, 2019, the Financial Action Task Force—an independent intergovernmental body that develops and promotes policies to protect the global financial system from money laundering and terrorist financing—released new Guidance governing virtual assets and virtual asset service providers. The Guidance clarifies the obligations of member jurisdictions with respect to licensing, supervision, and enforcement of covered virtual asset activities and virtual asset service providers. The Guidance also clarifies the compliance obligations of private sector entities engaged in virtual asset activities, particularly with respect to the obligation to obtain, hold, and transmit required originator and beneficiary information.
"Respectful Consideration": Supreme Court Clarifies Deference Due to Foreign Governments Interpretation of Its Law
Animal Science Products, Inc. v. Hebei Welcome Pharmaceutical Co., the Supreme Court held that federal courts should not accept as binding a foreign government's representation regarding the meaning of its laws. In the aftermath of this ruling, parties engaged in international litigation before U.S. courts that raise questions of foreign law should not rely exclusively on a foreign government’s characterization of its laws. Instead, those parties should be ready to retain foreign-law experts and to present other evidence supporting their construction and application of those foreign laws.
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