Junzejun Perspective | Cross border Compliance Information - Newsletter | March 18, 2022

2023-04-19
358
Author: Lawyer Jun Zejun
Source: WeChat Official Accounts

In order to actively assist relevant government departments, industry associations, and key enterprises in foreign economic and trade activities in China, and fully leverage the public service role of foreign lawyers in the comprehensive opening up of the country to the outside world, the lawyer team of Jun Zejun and Ye Shufu regularly collects and integrates the latest information on relevant laws and regulations in the fields of investment, mergers and acquisitions, cross-border trade, and commercial compliance operations in major countries around the world, as well as recent developments and relevant cases of regulatory agencies, In order for relevant departments and various professional institutions to timely understand relevant trends.

Key points of this issue

China:

Brief Analysis: Pilot and Non compliant Cases of Compliance Reform for the Supreme Inspection Enterprises

The Interpretation of the Supreme People's Court on Several Issues Concerning the Application of the Law of the People's Republic of China on Anti unfair competition was released

Shanghai Financial Court Releases Typical Cases in 2021

Five Chinese concept stock companies identified as at risk of delisting

Overseas:

Adjustment of laws and regulations in [the United States]: the United States Department of Commerce revised the Export Control Regulations, and the President of the United States issued two new administrative orders related to Russia

Update of General License in the United States

[United States] list update: the United States Department of Commerce updates the entity list, and the Treasury updates the SDN list

EU Announces New Sanctions Against Russia and Belarus

Switzerland announces effective sanctions against Belarus, Singapore announces new sanctions against Russia, and the UK announces new sanctions against Russia

Russia Announces Several Anti Sanctions Measures

China

(1) Brief Analysis: Pilot and Non compliant Cases of Compliance Reform for the Supreme Inspection Enterprises

Since 2020, the Supreme People's Procuratorate (hereinafter referred to as the "Supreme Procuratorate") has been continuously promoting the pilot work of enterprise compliance reform, with the aim of "not arresting, not suing, or proposing lenient sentencing suggestions in accordance with the law, while urging the involved enterprises to make compliance commitments, implement compliance rectification, and achieve both 'kindness' and' strict management 'in criminal cases involving enterprises. According to the "Guiding Opinions on Establishing a Third Party Supervision and Evaluation Mechanism for Compliance of Enterprises Involved in Cases (Trial)" jointly issued by the nine departments including the Supreme Inspection and Quarantine on June 3, 2021, enterprises involved in cases that meet the applicable conditions for enterprise compliance reform pilot projects, The third-party supervision and evaluation organization (hereinafter referred to as the third-party organization) is entrusted by the procuratorate to investigate, evaluate, supervise, and inspect the compliance commitments of the enterprises involved. The inspection results serve as an important reference for the People's Procuratorate to handle cases in accordance with the law.

On March 6, 2022, the Supreme People's Procuratorate issued the "Suggestions and Countermeasures for Prominent Management Issues in Enterprises in the Pilot of Deepening the Compliance Reform of Enterprises Involved in Cases" (hereinafter referred to as the "Suggestions and Measures"), which made a phased summary for the pilot work of the "non prosecution of enterprise compliance" system in China: "More than 600 compliance cases involving enterprises were handled in 10 pilot provinces, of which more than 300 cases were subject to third-party supervision and evaluation mechanisms, As of December 2021, there are 164 non prosecution enterprises and 302 natural persons. The "Countermeasures and Suggestions" summarized four prominent issues in the management of the enterprises involved: "weak awareness of legal compliance", "lack of internal supervision and constraint mechanism", "lack of internal supervision and constraint mechanism", and "inadequate implementation of safety management responsibilities". The "Countermeasures and Suggestions" proposed three suggestions for preventing legal risks in enterprises: building a full process compliance risk monitoring system, strengthening legal publicity and education for enterprise personnel, and actively integrating into industry governance.

Scope of application and typical cases

From the deployment of the second phase of enterprise compliance reform pilot in March 2021 to the end of December, with the deepening of reform work, the applicable charges in cases have also shown a diversified trend, mainly involving tax related crimes, environmental pollution crimes, major liability accident crimes, duty embezzlement crimes, non state staff bribery crimes, illegal business crimes, and other charges. Among them, false invoicing cases account for about one-third of the total. In addition, the number of other types of cases such as production and sales of counterfeit and inferior products, illegal mining, illegal occupation of agricultural land, assistance in information network criminal activities, infringement of citizens' personal information, and infringement of trade secrets has also gradually increased. The applicable targets of enterprise compliance reform are not only private enterprises, but also various market entities such as state-owned enterprises, listed companies, domestic and foreign-funded enterprises, large, medium, small, and micro enterprises. As long as the involved enterprise pleads guilty and accepts punishment, promises to strictly implement the compliance rectification plan, the enterprise compliance reform system can be applied. Enterprise compliance reform cases are not only applicable to unit crime cases constituted by enterprise units, but also to criminal cases closely related to production and business activities implemented by actual controllers, management personnel, key technical personnel, etc.

Based on typical cases released by the Supreme Court of Justice, we have found that companies that have successfully applied the compliance non prosecution system generally have the following characteristics: 1. Whether the company's leaders voluntarily surrender or passively appear in the case, they all confess their guilt and punishment, with a correct attitude; 2. The enterprises involved in the case are mostly local leading enterprises, backbone enterprises, and leading enterprises, which have made significant contributions to the development of the private economy; 3. The enterprises involved in the case actively cooperated with the procuratorial suggestions, compliance supervision agreements, etc., actively improved the construction of the enterprise's compliance system, and withstood the test of patrol inspections.

Successful cases that have emerged in the pilot, such as, A private enterprise in Huangshi, Hubei Province, is suspected of falsely issuing value-added tax special invoices. After the incident, it voluntarily paid taxes. The procuratorial organs initiated compliance supervision on the enterprise, promoted compliance rectification, and improved financial and tax management systems. After being fully recognized by third-party organizations, the decision not to sue was made in accordance with the law. The enterprise not only did not collapse, but also expanded investment in the local area by over 100 million yuan, promoting more than 130 local employment. For example, a household appliance enterprise in Yinan, Shandong was suspected of conducting covert operations and colluding in bidding, with a target amount of over 10 million yuan. After the incident, the legal representative voluntarily pleaded guilty and punished. Considering that the enterprise is a leading local enterprise with a large market share, it has been decided to conduct a compliance inspection. The procuratorate and the third-party mechanism management committee signed the "Enterprise Compliance Remote Collaboration Agreement" to assist enterprises in improving their internal bidding management system, strictly approving the process, rectifying account book registration, and conducting employee compliance training. After evaluation by a third-party organization, it was found that the rectification was in place, and then it passed the flight inspection, ultimately deciding not to sue.

However, corporate compliance does not equate to blind "love". Among more than 600 corporate compliance cases, some companies have inadequate compliance awareness and rectification efforts, which have failed to pass third-party supervision and evaluation, and are ultimately still being sued. For example, in the case of a mining company and its responsible person illegally occupying agricultural land handled in Suizhou, Hubei, a third-party organization gave a comprehensive compliance assessment result of "unqualified" in response to the impure motivation of the involved enterprise to apply for compliance supervision, false confession, and lack of proactive rectification. The procuratorial organ filed a public prosecution in accordance with the law.

Enterprise Compliance Plan

The success of enterprise compliance construction is a key indicator of the "Enterprise Compliance Plan". The "Plan" is submitted to the procuratorate in the name of the enterprise, and after review and approval, the enterprise should conduct comprehensive rectification based on the text content. When formulating a compliance plan, it is generally necessary to include the following points: (1) the awareness of the offending enterprise about its illegal behavior and legal responsibility, and accompanied by specific loss compensation plans, such as returning stolen goods, compensating for losses, paying taxes, and repairing the environment; (2) The analysis of the reasons for the crime by the enterprises involved, as well as their reflection on their business behavior and economic activities, reflects the self-examination of their own legal risks; (3) Corporate compliance culture cultivation plan, such as formulating articles of association, organizing training, etc; (4) The compliance construction guarantee plan includes compliance personnel and their division of labor, fund allocation, organizational structure, and institutional mechanism construction. It also includes how to cooperate with supervision and inspection work, how to regularly report on the implementation of compliance plans, etc., to ensure the smooth progress of inspection and evaluation work. The above content is a key point that the procuratorial organs pay special attention to when reviewing the "Enterprise Compliance Plan", and it also has great reference value for the daily compliance construction of enterprises.

epilogue

According to the unified deployment of the Supreme Procuratorate, after the completion of the second phase of the pilot project in March this year, the compliance reform of the involved enterprises will be comprehensively promoted in the national procuratorial organs. The "Countermeasures and Suggestions" also clearly pointed out that one of the focus of the next stage of pilot work is to accelerate the research and development of special compliance plans for enterprises with common and frequent crimes such as commercial bribery, as well as key examples of effectiveness evaluation and review. Therefore, we suggest that all enterprises attach great importance to the establishment of internal compliance risk control and supervision and restraint systems, take the initiative, advance "post compliance" to "pre compliance", strengthen employee compliance awareness, and refer to relevant laws, industry norms, and typical cases for self-examination.

(2) The Interpretation of the Supreme People's Court on Several Issues Concerning the Application of the Law of the People's Republic of China on Anti unfair competition was released

On March 16, 2022, the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of the Law of the People's Republic of China on Anti unfair competition (hereinafter referred to as the "New Interpretation") was released, and the New Interpretation will officially take effect on March 20, 2022. On April 23, 2019, the Anti unfair competition Law was revised. The promulgation of the New Interpretation will adapt to the provisions of the newly revised Anti unfair competition Law in judicial practice and meet the needs of practice. In combination with the relevant content of the person in charge of the Third Supreme Court of Justice and the People's Republic of China on the New Interpretation, we suggest that enterprises pay attention to the following key points in the New Interpretation, so as to operate in compliance.

1. The second article of the Anti unfair competition Law has been refined and the judgment standards have been unified. Article 1 of the New Interpretation stipulates that "if an operator disturbs the order of market competition, damages the legitimate rights and interests of other operators or consumers, and is in violation of Chapter II of the Anti unfair competition Law, the Patent Law, the Trademark Law, the Copyright Law and other provisions, the people's court may apply Article 2 of the Anti unfair competition Law to determine", which creates a general clause with a bottom-up nature for judicial practice, In addition to the specific illegal acts specified in the Trademark Law, the Copyright Law and other special intellectual property laws, as well as Chapter II of the Anti unfair competition Law, the acts that "disrupt the market competition order and damage the legitimate rights and interests of other operators or consumers" were identified by reference to the anti unfair acts, further clarifying the discretion standards.

2. Proposed a reference basis for determining whether it violates business ethics. The Supreme Law said that "the core of the people's court's determination of the legitimacy of market competition behavior by using general provisions is to determine whether the operator has violated business ethics". The Supreme Law believed that "the 'business ethics' in the Anti unfair competition Law should not be simply equivalent to the daily moral standards, but should be the code of conduct generally followed and recognized in specific business fields", Therefore, Article 3 of the New Interpretation lists the considerations for determining whether it violates business ethics.

3. The "confusion behavior" stipulated in Article 6 of the Anti unfair competition Law was further refined with the focus of the large space from Article 4 to Article 14. Referring to the introduction of the Supreme Law, it mainly includes three aspects of further refinement: (1) it is clear that "having a certain influence" in Article 6 of the Anti unfair competition Law can be understood as "having a certain market popularity and distinctive characteristics that distinguish the source of goods", and it lists the reference elements on which to evaluate the market popularity and distinctive characteristics of the source of goods; (2) It excludes the use and registration of marks prohibited in the Trademark Law from being protected by the Anti unfair competition Law; (3) Referring to Article 2 of the Regulations on the Registration and Administration of Market Entities (which stipulates the scope of market entity recognition), "the scope of market entities whose names can be protected has been refined", including enterprises registered by the domestic market entity registration management department in accordance with the law, overseas enterprises, individual businesses with certain influence, farmers' professional cooperatives (cooperatives), and other market entities specified by laws and administrative regulations.

(3) Shanghai Financial Court Releases Typical Cases in 2021

On March 3, 2022, the Shanghai Financial Court officially released the typical cases of the Shanghai Financial Court in 2021. There were 10 typical cases released this time, involving jurisdiction determination and law application in cross-border guarantees, whether there is conflict between international commercial arbitration and mainland litigation and its considerations, group securities disputes, etc.

Selected Typical Cases: The Conflict between Hong Kong Arbitration Awards and Mainland Judgments

Basic facts of the case

In November 2011, Nomura Holding Co., Ltd. (hereinafter referred to as Nomura Co., Ltd.) signed the limited partnership Agreement with Japan China Capital Co., Ltd. (hereinafter referred to as Japan China Company) and Shanghai Jiuyou Equity Investment Fund Management Partnership (limited partnership) (hereinafter referred to as Jiuyou Fund) to jointly establish Shanghai Jiuyou Quanxing Equity Investment Partnership, of which Nomura Co., Ltd. and Japan China Company are limited partners, Jiuyou Fund is the General partner and executive partner. In December 2017, Nomura Co., Ltd. filed an arbitration with the Hong Kong International Arbitration Center in accordance with the arbitration clauses agreed in the limited partnership Agreement on the grounds that the Japanese Chinese company had not paid in its capital contribution and the Jiuyou Fund had not distributed its earnings. The Hong Kong International Arbitration Center has made an arbitration decision, including the right of Nomura Corporation to receive investment returns or equivalent damages, the breach of contract by Japan China Company and the delisting from the partnership, and the provision of financial data by Jiuyou Fund to Nomura Corporation. Nomura Corporation hereby filed an application for recognition and enforcement of the aforementioned arbitration award. The respondent, Jiuyou Fund, argued that the Hong Kong arbitration award involved three mainland judgments, including the liquidation of the partnership enterprise, the right to know of Nomura Corporation, and the scope of interest distribution. One of the civil rulings and one of the civil rulings has come into effect, while the other case is still in the second instance stage. Due to the conflict between the arbitration award and the effective judgment in mainland China, the recognition and enforcement of the arbitration award violates the public interests of mainland society, and falls under the circumstances stipulated in Article 7 (3) of the "Arrangement of the Supreme People's Court on Mutual Enforcement of Arbitration Awards between Mainland China and Hong Kong Special Administrative Region", and should not be enforced.

Judgment results

Finally, the Shanghai Financial Court ruled to recognize and implement the final award made by the Hong Kong International Arbitration Center on November 26, 2019 (excluding fees).

Key points of the referee

In the case of duplicate requests and intertwined judgment results between Hong Kong arbitration awards and mainland litigation judgments, the similarities and differences of related cases should be defined based on the differences between formal review and substantive review, the nature of the legal relationship on which the request is based, and the basis of the right to request, in order to determine whether there is a conflict between the arbitration case and the litigation case. The legal relationship of the partnership involved in the case is a civil legal relationship between equal subjects. The content of the award made by the Hong Kong International Arbitration Center on the disputes related to the partnership agreement in the case is limited to the parties to the contract and does not involve the interests of an unspecified majority. The enforcement of the award does not violate the policy of domestic and foreign exchange management, and the recognition and enforcement of the Hong Kong arbitration award does not harm the public interests of mainland society.

The ruling in this case provides useful reference for judicial review of the difficult issue of whether the subject matter of arbitration and litigation is the same. It not only defends the judicial authority of mainland litigation procedures and judgments, but also demonstrates the support of Chinese courts for international commercial arbitration.

(4) Five Chinese concept stock companies identified as at risk of delisting

On March 8, 2022, the United States Securities and Exchange Commission (SEC) announced on its official website that five Chinese companies would be included in the provisional list of the Holding Foreign Companies Accountable Act (15 days after being included in the provisional list, they will enter the "confirmed delisting list"), causing a collective drop in Chinese concept stocks. The five companies included in this tentative list can provide evidence to the SEC before March 29th to prove that they do not meet the conditions for delisting. The direct cause of this incident is the conflict between China and the United States regarding the financial information of listed companies and the regulatory regulations of relevant accounting firms.

According to the Foreign Company Accountability Act [9] introduced by the United States, listed companies will be placed on the "confirmed delisting list" if the audit manuscript has not been audited by the Public Company Accounting Oversight Board (PCAOB); If the company is on the "confirmed delisting list" for three consecutive years, it will officially enter the prohibited trading (delisting) process after the third year. Therefore, if foreign listed companies fail to submit the reports required by PCAOB for three consecutive years, the SEC has the right to forcibly delist them from the exchange. The five Chinese listed companies listed on this list were included in the provisional list one by one after submitting their annual reports to the SEC.

However, in the "Measures for the Management of Audit Archives of Accounting Firms" issued in 2016, China has included the "audit work manuscript" within the scope of "archives" under Article 25 of the "Archives Law of the People's Republic of China", which is subject to relevant regulations on the export of archives, that is, "unauthorized transportation, mailing, carrying out of the country, or transmission through the internet is prohibited; if it is indeed necessary to leave the country, approval procedures shall be handled in accordance with relevant national regulations". In addition, with the introduction of the Data Security Law of the People's Republic of China and the Cybersecurity Law of the People's Republic of China, China has continued to tighten its data supervision over companies listed overseas.

Regarding this incident, the China Securities Regulatory Commission also stated that it will communicate and negotiate with relevant departments in the United States. In the future, there is a possibility that more Chinese concept stocks may be added to the provisional list. Therefore, we suggest that companies and enterprises that have already gone public in the United States immediately carry out internal audit and regulatory compliance work, and continue to pay attention to the implementation of the Foreign Company Accountability Act, analyze their own relevant risks, and develop response measures in advance; For companies and enterprises that are about to go public in the United States, it is recommended to make a cautious decision on whether to continue implementing the plan to go public in the United States.

overseas

Legal and regulatory adjustments in the United States

(1) The United States Department of Commerce revised the Export Control Regulations to strengthen export control over Belarus

☆ On March 8, 2022 local time, the Bureau of Industry and Security (BIS) of the United States Department of Commerce issued a final rule through the Federal Register, announcing the addition of new license requirements and review policies for Belarus under the Export Control Regulations (EAR), which came into effect on March 2, 2022. The key revisions include:

1. [Section 734.9] Add two foreign direct product (FDP) rules for Belarus. The Belarus FDP rule stipulates that if a foreign manufactured item is not an EAR 99 item and: (1) it is a "direct product" of US origin "technology" or "software" classified as ECCN code in CCL category 3-9 and product group D or E; Or (2) if the foreign direct product is manufactured by a factory located outside the United States or the main equipment of the factory (whether or not manufactured in the United States), and the factory or the main equipment of the factory belongs to the "direct product" of "technology" or "software" originating in the United States, which is classified as ECCN code in CCL Category 3-9 and product group D or E, such as; (1) Knowing that the aforementioned foreign manufactured items will be transported to Belarus; Or (2) will be embedded or used in the production or development of any non EAR 99 parts, components, or equipment that are produced in Belarus or exported to Belarus, then the relevant foreign direct products that meet the aforementioned conditions are subject to EAR jurisdiction. The Belarus Military End User FDP rule stipulates that foreign manufactured items: (1) are "direct products" of "technology" or "software" with ECCN codes classified under any CCL category and product groups D or E; Or (2) if the foreign direct product is manufactured by a factory located outside the United States or the main equipment of the factory (whether or not manufactured in the United States), and the factory or the main equipment of the factory belongs to the "direct product" of ECCN code classified under any category of CCL and product group D or E, or "software", then, For example, (1) knowingly knowing that the aforementioned foreign manufactured item will be embedded or used in the production or development of any parts, components, or equipment produced, purchased, or ordered by any entity specified in footnote 3; Or (2) in transactions involving the aforementioned foreign manufactured items, if the counterparty involves an entity marked with "footnote 3", the relevant foreign direct products that meet the aforementioned conditions are subject to EAR jurisdiction.

2. Except as otherwise provided in the Commercial Control List (CCL) or other provisions of the EAR, exports, re exports, or (domestic) transfers (excluding deemed exports or re exports) of items in categories 3-9 of the CCL (mainly related to electronic development and production, computers, telecommunications, information security, sensors and lasers, navigation and avionics equipment, marine, aerospace, and propulsion related items) to Belarus, All must obtain a license; For foreign manufactured items that comply with the Belarusian FDP rules and the Belarusian Military End User FDP rules and are controlled by EAR, a license is required for re export, export from abroad to any destination, or transfer (domestically) to any destination. Unless the destination is a country listed in Appendix 3 of Chapter 746.8 and has committed to implementing broadly similar export control measures against Belarus in accordance with its domestic laws.

3. In general, a constructive rejection review policy is adopted for permit applications for exporting, re exporting, or transferring any items controlled by EAR to Belarus, except for those involving flight safety, maritime safety, meeting humanitarian needs, supporting government space cooperation, etc Exceptions such as intergovernmental activities and the transportation of items to certain specific companies (including companies headquartered in countries A: 5 and A: 6, and applying to support telecommunications infrastructure) are subject to a case-by-case review policy.

4. [Section 746.8] The scope of applicable licenses for restricted exports, re exports, or (domestic) transfers to Belarus is currently limited to TMP (temporary imports, exports, re exports, and transfers of countries), GOV (government related activities), TSU (unrestricted technology and software), BAG (luggage), AVS (aircraft, ships, and spacecraft), ENC (encrypted goods, software, and technology) CCD (Consumer Communication Device).

5. [CCC] Belarus will be added as a country in the NP-1 and NP-2 columns of the "List of Commercial Countries" (CCC). Exporting or re exporting items controlled by EAR due to nuclear non-proliferation reasons to Belarus requires applying for a license in accordance with EAR requirements.

6. [Sections 744.21 and 744.22] List Belarus as a country under the control of Sections 744.21 and 744.22, and list the Main Intelligence Director of the General Staff of the Armed Forces of Belarus as the "end user of military intelligence".

(2) The United States Department of Commerce revised the Export Control Regulations to strengthen export control over the Russian oil refining industry

☆ On March 8, 2022 local time, the Bureau of Industry and Security (BIS) of the United States Department of Commerce issued a final rule through the Federal Register, announcing the revision of section 746.5 of the Export Control Regulations (EAR). The main amendments include: adding a new paragraph (a) (1) (ii) to regulate the export, re export or (domestic) transfer of any item controlled by the EAR and listed in Appendix 4 of this chapter to Russia, All must obtain a license; Add Appendix 4 to Chapter 746, listing the codes and corresponding descriptions in the Harmonized Tariff Schedule for related controlled items to assist exporters in identifying the items; Add a new paragraph (b) (1) to apply for a license under section 746.5 (a) (1) (i), which mainly applies to the export, re export, or (domestic) transfer of items with specific ECCN codes that are knowingly used, directly or indirectly, in deep water or other specific projects in Russia. If the relevant items are to be directly or indirectly used in deep water (greater than 500 feet) from Russia that may produce oil or gas Projects for exploration or production near the Arctic or in shale areas will adopt a policy of presumed refusal of permit review. Unless the item is necessary for health or safety reasons, a policy of permit review will be adopted on a case by case basis; Add a new paragraph (b) (2), which states that for permission applications made under section 746.5 (a) (1) (ii) (as previously mentioned), a policy of constructive refusal of permission review will be adopted, unless the item is necessary for health or safety reasons, and a policy of case-by-case review of permission review will be adopted.

(3) The United States Department of Commerce amended the Export Control Regulations to list South Korea as a country exempt from certain licensing requirements under section 746.8

☆ On March 10, 2022 local time, the Bureau of Industry and Security (BIS) of the United States Department of Commerce issued a final rule through the Federal Register, announcing that based on South Korea's commitment to take export control measures generally similar to those of the United States against Russia and Belarus in accordance with its domestic laws, South Korea was included in Appendix 3 of Chapter 746 of the Export Control Regulations (EAR), For items that comply with the FDP rules of Russia and Belarus and the military end user FDP rules, the export or re export of the aforementioned items from South Korea (as listed in Appendix 3 of Chapter 746), or the transfer within South Korea (or other Appendix 3 countries) does not require a license application.

(4) Two New Executive Orders Related to Russia Issued by the President of the United States

On March 8, 2022 local time, the President of the United States issued a new administrative order No. 14066 related to Russia, titled "Prohibiting Certain Imports and New Investments With Respect to Continued Russian Federation Efforts to Understand the Sovereignty and Territorial Integrity of Ukraine". This administrative order prohibits:

1. Importing crude oil, petroleum, petroleum fuels, oils and their distilled products, liquefied natural gas, coal, and coal products originating from the Russian Federation into the United States;

2. New investments by American individuals (regardless of location) in the energy sector of the Russian Federation;

3. Prohibit US persons (regardless of location) from approving, financing, facilitating, or guaranteeing transactions with foreign persons that are prohibited by Section 1 of this Executive Order, as long as such transactions are carried out by or within the United States.

On March 11, 2022 local time, the President of the United States issued a new executive order No. 14068 related to Russia titled "Prohibiting Certain Imports, Exports, and New Investment With Respect to Continued Russian Federation Aggression". This administrative order prohibits:

1. Fish, seafood and their products, alcoholic beverages, non industrial diamonds, and any other products originating from the Russian Federation, as determined by the Minister of Finance in consultation with the Secretary of State and the Minister of Commerce, are imported into the United States;

2. Directly or indirectly exporting, re exporting, selling, or supplying luxury goods and any other products determined by the Secretary of the Treasury in consultation with the Secretary of State and the Secretary of Commerce to any person located in the Russian Federation, whether from the United States or by a person in the United States (regardless of location);

3. New investments by American individuals (regardless of location) in any industry of the Russian Federation determined after consultation between the Secretary of the Treasury and the Secretary of State;

4. Directly or indirectly exporting, re exporting, selling, or supplying US dollar denominated banknotes to the government of the Russian Federation or any person located in the Russian Federation, whether from the United States or by a US person (regardless of location);

5. Prohibit US persons (regardless of location) from approving, financing, facilitating, or guaranteeing transactions with foreign persons that are prohibited by Section 1 of this Executive Order, as long as such transactions are carried out by or within the United States.

(5) The United States Department of Commerce revised the Export Control Regulations to strengthen the control over the export of luxury goods to Belarus and Russia

☆ On March 16, 2022 local time, the Bureau of Industry and Security (BIS) of the United States Department of Commerce issued a final rule through the Federal Register, announcing the addition of section 746.10 in the Export Control Regulations (EAR) to strengthen the control of luxury exports to Belarus and Russia. This section stipulates: (1) Unless otherwise specified in the EAR, the export, re export, or (domestic) transfer of "luxury goods" listed in Appendix 5 of Chapter 746 to Russia or Belarus requires a license; (2) Unless otherwise specified in the EAR, exporting, re exporting, or (domestically) transferring "luxury goods" listed in Appendix 5 of Section 746 globally to Russian or Belarusian oligarchs and malicious actors regardless of their location, Or if the aforementioned Russian or Belarusian oligarchs and malicious actors are buyers, intermediate recipients, ultimate recipients, or end users in the aforementioned luxury goods transactions, they all need to obtain licenses. According to this section, for the aforementioned license applications, BIS will adopt a license review policy of constructive rejection; For the aforementioned (1) scenario, the applicable license exceptions only include BAG (luggage) and AVS (aircraft, ships, and spacecraft); For the aforementioned (2) scenario, there are no applicable license exceptions.

Update of General License in the United States

(1) The US Treasury Department Releases 9 General Licenses Related to Russia

On March 2, 2022 local time, the Office of Foreign Assets Control (OFAC) of the US Treasury Department issued General Licenses No. 9A, 10A, 13, and 14 related to Russia, authorizing:

1. Prior to 12:01 a.m. Eastern Time on May 25, 2022, the relevant entity engaged in transactions prohibited by the Russian Harmful Foreign Activities Sanctions Regulations, including divestment, transfer, or occasional transactions involving bonds or equity issued by one or more of the following entities, to non US persons:

——State Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank;

——Public Joint Stock Company Bank Financial Corporation Otkritie;

——Sovcombank Open Joint Stock Company;

——Public Joint Stock Company Sberbank of Russia;

——VTB Bank Public Joint Stock Company;

——Any entity in which one or more of the aforementioned entities directly or indirectly, individually or collectively, own 50% or more of the equity.

2. [No. 10A] Related entities engaged in derivative contracts prohibited by the Russian Harmful Foreign Activities Sanctions Regulations before 12:01 a.m. on May 25, 2022, and terminated before 4:00 p.m. Eastern Time on February 24, 2022, for: (1) derivative contracts signed with one or more of the following entities as trading counterparties; Or (2) necessary and occasional transactions related to derivative contracts related to bonds or equity of one or more of the following entities, provided that any payment made to sanctioned persons is transferred to a frozen account:

——State Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank;

——Public Joint Stock Company Bank Financial Corporation Otkritie;

——Sovcombank Open Joint Stock Company;

——Public Joint Stock Company Sberbank of Russia;

——VTB Bank Public Joint Stock Company;

——Any entity in which one or more of the aforementioned entities directly or indirectly, individually or collectively, own 50% or more of the equity.

3. [No. 13] Transactions prohibited by Directive 4 under Executive Order 14024 involving the payment of taxes, fees, or import duties, as well as the purchase or acquisition of licenses, licenses, registrations, or certificates by American individuals before June 24, 2022 Eastern Time, which are necessary and incidental to the daily operations of American individuals in the Russian Federation.

——Central Bank of the Russian Federation;

——National Wealth Fund of the Russian Federation;

——Ministry of Finance of the Russian Federation.

4. [No. 14] The relevant entities shall carry out transactions prohibited by Directive 4 under Executive Order 14024, involving the following entities whose sole role in the relevant transactions is to act as operators of clearing and settlement systems, provided that, unless separately authorized: (1) assets shall not be transferred to or obtained from the following entities; And (2) no entity shall be the counterparty or beneficiary of a transaction:

——Central Bank of the Russian Federation;

——National Wealth Fund of the Russian Federation;

——Ministry of Finance of the Russian Federation.

On March 3, 2022 local time, the Office of Foreign Assets Control (OFAC) of the US Department of the Treasury issued General License No. 15 related to Russia, authorizing relevant entities to carry out transactions prohibited by the Russian Harmful Foreign Activities Sanctions Regulations, involving any entity directly or indirectly owned by Alisher Burhanovich Usmanov with a 50% or more interest and not included in the SDN list.

On March 8, 2022 local time, the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury issued General License No. 16 related to Russia, authorizing relevant entities to carry out activities prohibited by Executive Order 14066 before 12:01 a.m. Eastern time on April 22, 2022, in accordance with written contracts or agreements signed before March 8, 2022, involving the import of crude oil, petroleum, and petroleum fuels originating from the Russian Federation to the United States Necessary and occasional transactions in oil and its distilled products, liquefied natural gas, coal, and coal products.

On March 11, 2022 local time, the Office of Foreign Assets Control (OFAC) of the US Department of the Treasury issued General Licenses No. 17, No. 18, and No. 19 related to Russia (mainly authorizing US individuals located in the Russian Federation to carry out import, export, and new investment activities necessary for their personal lives), authorizing:

1. [No. 17] Relevant entities engaged in transactions prohibited by Executive Order 14068 prior to March 25, 2022, which were necessary and incidental to the importation of fish, seafood and their products, alcoholic beverages, and non industrial diamonds originating from the Russian Federation into the United States, in accordance with written contracts or agreements signed before March 11, 2022.

2. The relevant entities engaged in activities prohibited by Section (1) (a) (iv) of Executive Order 14068 (Prohibition on US dollar denominated banknotes) involve: (1) from the United States or US persons (regardless of location) to individuals located in the Russian Federation; Or (2) necessary and occasional transactions related to the transfer of non commercial personal remittances of US dollar denominated banknotes from US individuals located in the Russian Federation.

(2) The US Treasury Department issues General License No. 23 related to Ukraine

On March 11, 2022 local time, the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury issued General License No. 23 related to Ukraine, authorizing relevant entities to carry out transactions prohibited by Executive Order No. 14065 that are necessary and occasional for non-governmental organizations to carry out the following activities, including processing fund transfers, paying taxes, fees, and import duties, and purchasing or acquiring licenses License or Public Service:

——Activities in the Donetsk People's Republic or Luhansk People's Republic region of Ukraine or other regions of Ukraine determined by the US Treasury Secretary in consultation with the Ukrainian government (hereinafter collectively referred to as the "Coverage Area") to support humanitarian projects to meet basic human needs, including activities related to drought and flood relief; Distribution of food, nutritional items, and drugs; Provide healthcare services; Activities to provide assistance and environmental plans for vulnerable or displaced populations, including people with disabilities and the elderly;

——Activities to support regional democratic construction, including those related to supporting the rule of law, citizen participation, government accountability and transparency mechanisms, human rights and fundamental freedoms, information access, and civil society development projects;

——To support activities covering regional education, including activities related to literacy, increasing educational opportunities, international exchanges, and assisting in educational reform projects;

——Activities to support non commercial development projects that directly benefit people in the covered areas, including those related to health, food security, water and sanitation facilities;

——To support activities related to the protection of the environment and natural resources in the coverage area, including those related to the protection of threatened or endangered species, responsible and transparent management of natural resources, and the restoration of pollution or other environmental damage.

List update in the United States

(1) United States Department of Commerce Update Entity List

☆ On March 9, 2022 local time, the Bureau of Industry and Security (BIS) of the United States Department of Commerce published a final rule in the Federal Register, announcing that, in response to Russia's destabilization of Ukraine, one entity in Belize, three entities in Estonia, one entity in Kazakhstan, one entity in Latvia, two entities in Malta, 81 entities in Russia, one entity in Singapore One entity from Slovakia, two entities from Spain, and three entities from the UK are included in the entity list.

(2) US Treasury Update SDN List

On March 3, 2022 local time, the Office of Foreign Assets Control (OFAC) of the US Treasury Department included 45 Russians, 1 Ukrainian, 1 Finnish, 41 Russian entities, 1 vessel with the Cayman Islands flag state, and 2 aircraft on the SDN list under the US sanctions plan.

☆ On March 4, 2022 local time, the Office of Foreign Assets Control (OFAC) of the US Department of Finance listed two Lebanese (SAADE, Ali and TAHER, Ibrahim) on the SDN list in accordance with the Global Terrorism Sanctions Regulations, and identified them as subject to secondary sanctions.

On March 4, 2022 local time, the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury added KATIBAT AL TOWHID WAL JIHAD to the SDN list and marked it as subject to secondary sanctions under the Global Terrorism Sanctions Regulations.

On March 11, 2022 local time, the Office of Foreign Assets Control (OFAC) of the US Treasury Department included 35 Russian individuals, 3 Russian entities, 1 vessel with the Cook Islands flag state, and 1 aircraft on the SDN list under the US sanctions plan. Among the aforementioned sanctioned entities, two individuals (CHASOVNIKOV, Aleksandr Aleksandrovich and GAYEVOY, Aleksandr Andreyevich) were identified as being subject to secondary sanctions, and three Russians were all identified as being subject to secondary sanctions:

——APOLLON OOO;

——RK BRIZ, OOO;

——ZEEL - M CO., LTD.

On March 15, 2022 local time, the Office of Foreign Assets Control (OFAC) of the US Treasury Department included 14 Russian individuals, 1 Belarusian person, and 1 Russian entity on the SDN list in accordance with the US sanctions plan.

On March 17, 2022 local time, the Office of Foreign Assets Control (OFAC) of the US Treasury Department included one Belgian person, one Ugandan entity, three UAE entities, one Seychelles entity, and four Belgian entities on the SDN list in accordance with the sanctions plan related to Congo.

It is recommended that relevant Chinese enterprises screen in advance whether there are transactions or plans to carry out transactions with individuals or entities listed on the SDN list (especially entities marked as secondary sanctions), adjust transaction arrangements in a timely manner, and closely monitor relevant risks.

european union

(1) EU Announces New Sanctions Against Russia and Belarus

On March 9th local time, the European Union announced the implementation of new sanctions against Belarus and Russia, including:

Restrict its member states from providing specialized financial information services (SWIFT) to Belagorombank, Bank Dabrabyte, the Development Bank of the Republic of Belarus, and their subsidiaries in Belarus.

Prohibit transactions related to reserves or asset management with the Central Bank of Belarus, as well as providing public financing for trade and investment with Belarus.

Starting from April 12, 2022, the stocks of Belarusian state-owned entities are prohibited from being listed on EU trading venues and providing related services to them.

Significantly restrict the inflow of funds from Belarus into the European Union, prohibit the acceptance of deposits exceeding 100000 euros from Belarusian nationals or residents, prohibit the European Central Securities Depository from holding accounts with Belarusian clients, and prohibit the sale of euro denominated securities to Belarusian clients.

Prohibit the provision of euro denominated banknotes to Belarus.

In addition, the European Council also stated that it will introduce "further restrictive measures on the export of maritime goods and radio communication technology to Russia" and expand the list of prohibited legal persons, entities, and institutions related to investment services, transferable securities, money market instruments, and loans.

On March 9th local time, the European Council announced the inclusion of 160 individuals on the sanctions list. The individuals and entities included in the list include 14 oligarchs and well-known businessmen and their families in the metallurgical, agricultural, pharmaceutical, telecommunications, and digital industries of Russia, and 146 members of the Russian Federation Council who have ratified the Treaty of Friendship, Cooperation, and Mutual Assistance between the Russian Federation and the "Donetsk People's Republic" and "Luhansk People's Republic".

Currently, the EU's sanctions measures apply to a total of 862 individuals and 53 entities. Individuals and entities listed on the list will have their assets frozen, and EU citizens and companies are prohibited from providing funds to them. Individuals will also be subject to travel bans, prohibiting them from entering or transiting EU territory.

The regulatory authorities of the European Central Bank recently requested European banks to strengthen their supervision of accounts opened by Russians and Belarusians, even though these individuals have obtained EU permanent residence permits and are not included in the EU sanctions list. Regulatory measures include: not allowing the transfer in or out of large amounts exceeding 100000 euros; Opening new accounts is not allowed; Not approving new loan applications, etc. The European Central Bank says this is to prevent Russia from using these accounts to evade EU financial sanctions. According to Eurostat data, the total number of Russian and Belarusian people living in EU countries is currently about 300000, with the majority residing in countries such as Germany and Spain. (excerpted from CCTV News)

Other countries

(1) Switzerland Announces Effectiveness of Sanctions Against Belarus

Switzerland's sanctions against Belarus came into effect on March 16th local time, mainly involving trade and financial sanctions, and including a ban on the export of dual-use items that can be used for military or civilian purposes. Specifically, it includes:

Prohibit the import of Belarusian wood products and items made of rubber, iron, steel, and cement into Switzerland;

Prohibit the provision of public financing or financial assistance for trade or investment with Belarus, while imposing restrictions on securities, loans, and deposit taking;

Prohibit transactions with the Central Bank of Belarus.

Previously, neutral Switzerland had fully adopted the economic sanctions imposed by the European Union on Belarus on March 2nd and 9th. (From Reuters [12])

(2) Singapore Announces New Sanctions Against Russia

On March 5th local time, the Ministry of Foreign Affairs of Singapore stated that it would take several sanctions and control measures against Russia, including:

Prohibit the export of all items from Singapore's Military Goods List to Russia;

Prohibit the export of all items in the categories of "electronic", "computer", and "telecommunications and information security" in the dual use items list of Singapore's Strategic Goods (Control) Order 2021 to Russia. If there is an existing business relationship, its assets and funds must be frozen;

Prohibit Singaporean financial institutions from conducting business with four Russian financial institutions: VTB Bank Public Joint Stock Company, The Corporation Bank for Development and Foreign Economic Affairs VNeshecombank, Promsvyazbank Public Joint Stock Company, and Bank Rossiya. If there are existing business relationships, their assets must be frozen;

Prohibit Singaporean financial institutions (including banks, financial companies, insurance companies, capital market intermediaries, stock exchanges, and payment service providers) from engaging in transactions with the Government of the Russian Federation, the Central Bank of the Russian Federation, and any entities owned, controlled, or acting on their behalf, as well as providing financial services that facilitate their fundraising, The Government of Singapore and the Monetary Authority of Singapore will also stop investing in the newly issued securities of these entities;

Prohibit Singaporean financial institutions from providing financial services or conducting transportation, telecommunications, energy, as well as exploration and production of oil, natural gas, and mineral resources to the Donetsk and Luhansk regions in eastern Ukraine.

(3) Britain announces new sanctions against Russia

On March 10th local time, the Office of Financial Sanctions Enforcement ("OFSI") in the UK, in accordance with the 2019 Russia (Sanctions) (EU Exit) Regulations, Add 7 individuals (Roman Arkadyevich ABRAMOVICH, Igor Ivanovich SECHIN, Oleg Vladimirovich DERIPASKA, Dmitri Alekseevich LEBEDEV, Alexei Borisovich MILLER, Andrei Leonidovich KOSTIN, and Nikolai Petrovich TOKAREV) to the sanctions list [14].

Russia Announces Several Anti Sanctions Measures

On March 1st local time, the official website of the Russian Kremlin announced that Russian President Vladimir Putin has signed a decree imposing sanctions on Russia against the United States, other countries, and international organizations (considered unfriendly by the Russian authorities). Counter measures include:

1. The following transactions with foreigners associated with unfriendly countries can only be carried out with government permission:

Provide loans (in rubles) to foreigners, unless otherwise prohibited from trading;

Transactions (businesses) involving securities and real estate ownership (which can also be conducted in organized auctions with the permission of the central bank);

Transfer foreign currency to foreign bank agency accounts related to the aforementioned transactions;

2. Non affiliated foreigners who engage in securities and real estate transactions with foreign nationals associated with unfriendly countries and credit institutions after February 22, 2022 are also obligated to conduct transactions in accordance with the rules stipulated in the aforementioned laws and regulations;

3. Prohibit the export of foreign currency cash exceeding $10000.

The countermeasures will take effect immediately. However, the above restrictive measures do not apply to transactions with central banks and Russian state institutions.

On March 10th local time, the Russian government announced that it had approved a list of imported goods and equipment temporarily prohibited from exporting from Russia.

On March 15th local time, the Russian Ministry of Foreign Affairs announced that Russia would impose sanctions on US politicians and individuals such as US President Biden. Russia's personal sanctions list against the United States includes a total of 13 individuals. In addition to Biden, U.S. Secretary of State Antony Blinken, Defense Secretary Austin and others were also included in the sanctions list. (excerpted from Xinhua News Agency)

Swipe down to view annotations

[1] Suggestions and Countermeasures for Prominent Management Issues of Enterprises in the Pilot Project of Deepening the Compliance Reform of Enterprises Involved in Cases by Prosecutors

[2] Article 1 of the Guiding Opinions on Establishing a Third Party Supervision and Evaluation Mechanism for Compliance of Enterprises Involved in Cases (Trial)

[3] Interview with Wan Chun, Deputy Ministerial Full time Member of the Supreme Inspection and Inspection Commission: Deepening the Compliance Reform of the Enterprises Involved in the Case

[4] Same as footnote 1

[5] Same as footnote 1

[6] Interview with Wan Chun, Deputy Ministerial Full time Member of the Supreme Inspection and Inspection Commission: Deepening the Compliance Reform of the Enterprises Involved in the Case

[7] Same as footnote 1

[8] Please refer to the "Five Elements" of Enterprise Compliance Plan Review https://www.spp.gov.cn/spp/llyj/202107/t20210730_525370.shtml

[9] https://www.congress.gov/bill/116th-congress/senate-bill/945/text

[10] https://www.consilium.europa.eu/en/press/press-releases/2022/03/09/russia-s-military-aggression-against-ukraine-eu-agrees-new-sectoral-measures-targeting-belarus-and-russia/?utm_source=dsms -auto&utm_ medium=email&utm_ campaign=Russia%u2019s+military+aggression+against+Ukraine%3a+EU+agrees+new+sectoral+measures+targeting+Belarus+and+Russia

[11] https://www.consilium.europa.eu/en/press/press-releases/2022/03/09/eu-imposes-restrictive-measures-on-160-individuals-as-a-consequence-of-russia-s-military-aggression-against-ukraine/

[12] https://www.reuters.com/article/ukraine-crisis-swiss-belarus/update-1-swiss-step-up-economic-sanctions-against-belarus-idINL5N2VJ20I

[13]www.mfa.gov.sg/Newsroom/Press-Statements-Transcripts-and-Photos/2022/03/20220305-sanctions

[14] https://www.gov.uk/government/publications/financial-sanctions-ukraine-sovereignty-and-territorial-integrity?utm_medium=email&utm_campaign=govuk -notifications-topic&utm_ source=554dfe3f-ad8c-4850-a7ae-9d3e2f36b08e&utm_ content=immediately

[15] http://kremlin.ru/events/president/news/67886

[16] https://www.worldecr.com/news/russias-countergambit-banning-export-of-imported-goods/

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Junzejun Perspective | Cross border Compliance Information - Newsletter | March 18, 2022

The lawyer team of Ye Shufu has been committed to assisting relevant government departments, industry associations, and key enterprises in China in regularly obtaining information related to cross-border trade, domestic and foreign investment and mergers and acquisitions, as well as commercial compliance operations, so that relevant departments and industry practitioners can timely understand the latest developments and understand relevant extraterritorial risks. As of this issue, the Ye Shubin lawyer team has released a total of 47 issues of information in a biweekly report format (* Thank you to Ms. Ge Yiling for her contribution to this issue of the newsletter). If you need to know the specific content of this and previous issues of information, you can contact the Jun Zejun Ye Shubin lawyer team at any time.

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