U.S. regulations implementing executive order, Chinese military-industrial complex sanctions regulations

OFAC intends to supplement the regulations with a more comprehensive set of regulations.

Chinese military-industrial complex sanctions regulations

The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) today released for publication in the Federal Register a final rule adding regulations to implement an executive order related to securities investments that finance Chinese military companies (as amended by a June 2021 executive order related to the Chinese military-industrial complex and Chinese surveillance technology).

According to the final rule [PDF 315 KB], OFAC intends to supplement the regulations with a more comprehensive set of regulations, which may include additional interpretive guidance and definitions, general licenses, and other regulatory provisions.

Summary

  • The president in November 2020 issued an executive order (E.O. 13959) finding that China is increasingly exploiting United States capital to resource and to enable the development and modernization of its military, intelligence, and other security apparatuses.
  • The president therefore found that China’s military-industrial complex, by directly supporting the efforts of China’s military, intelligence, and other security apparatuses, constitutes an unusual and extraordinary threat, which has its source in substantial part outside the United States, to the national security, foreign policy, and economy of the United States and declared a national emergency with respect to that threat.
  • In E.O. 14032, issued in June 2021, the president found that additional steps are necessary to address the national emergency declared in E.O. 13959, including the threat posed by the military-industrial complex of China and its involvement in military, intelligence, and security research and development programs, and weapons and related equipment production under the China’s military-civil fusion strategy.
  • In addition, the president found that the use of Chinese surveillance technology outside China and the development or use of Chinese surveillance technology to facilitate repression or serious human rights abuse constitute unusual and extraordinary threats, which have their source in whole or substantial part outside the United States, to the national security, foreign policy, and economy of the United States and expanded the scope of the national emergency declared in E.O. 13959 to address those threats.
  • OFAC is issuing today’s regulations to implement E.O. 13959, as amended by E.O. 14032.

For more information on this topic or to learn more about KPMG’s Trade & Customs Services, contact:

Doug Zuvich
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John L. McLoughlin
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Andy Siciliano
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Steve Brotherton
Principal and Global Export and Sanctions Leader
T: 415-963-7861
E: sbrotherton@kpmg.com

Luis (Lou) Abad
Principal, Washington National Tax
T: 212-954-3094
E: labad@kpmg.com

Irina Vaysfeld
Principal
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E: ivaysfeld@kpmg.com

Amie Ahanchian
Principal
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Christopher Young
Principal
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Gisele Belotto
Principal
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George Zaharatos
Principal
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Andy Doornaert
Managing Director
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E: adoornaert@kpmg.com

Jessica Libby
Principal
T: 612-305-5533
E: jlibby@kpmg.com

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