Compliance Trends During the Second Trump Administration
Question: What changes to compliance could be expected during the second Trump Administration?
Answer: The enforcement priorities of the new administration, coupled with a different approach to regulation in various sectors may not be entirely predictable, but certain trends could be expected:
FCPA Compliance
The approach to FCPA compliance will likely not change dramatically, but will consistently emphasize the importance of corporate compliance. The principles outlined in the consolidated guidance on the evaluation of compliance programs issued and updated by the Department of Justice (“DoJ”) will still be in effect. The DoJ will continue incentivizing and rewarding companies that implement effective compliance programs and will hold bad actors accountable for corporate and ethical misconduct. The companies should review their corporate compliance functions to ensure that they enable early detection, remediation and reporting of misconduct.
Sanctions
The areas where a change in focus could be anticipated are sanctions and export controls. National security interests will remain a high priority and sanctions will be continuously used to achieve foreign policy objectives, but geographical focus is likely to shift from Russia to China. Sanctions programs targeting Russia will not disappear overnight, but shall there be a negotiated end to the conflict in Ukraine, there might be a willingness on behalf of the incoming administration to offer certain sanctions relief. The Office of Foreign Assets Control(“OFAC”) has developed and implemented the most aggressive set of secondary sanctions against Russia. The same tools may continue to be used, but now against China. Sanctions against companies linked to Chinese military-industrial complex will be strengthened and the overall sanctions enforcement will be increasingly robust. Thus, companies operating internationally should revisit their trade and sanctions compliance policies and risk assessment functions. Business engaged in international trade, investing overseas or receiving inbound investment should continue being diligent in their sanctions compliance efforts. In addition, companies dependent on goods and services originating in China, should revisit their supply chains and be prepared to find alternatives in case of disruptions. In general, companies need to increase their attention to third-party risks, due to new patterns of sanctions circumvention and diversion that may occur in the future.
Export Controls
In terms of export controls, we are already seeing major restrictions placed on China's semiconductor industry, curbing exports to major Chinese chip equipment makers. This large-scale effort to limit China's ability to access and produce chips that have potential of threatening U.S. national security, will likely be continued by the incoming administration and may spread to other areas, affecting not only semiconductor companies, but also chipmaking tools makers, telecommunications and investment companies.
CFIUS Review
In line with protection of national security interests and focus on China, the new administration will increase its scrutiny of inbound investments from China and may expand the scope of the Committee on Foreign Investment in the US (“CFIUS”) review. If previously the center of attention was critical and emerging technology companies in fields such as biotech and AI, the new administration may expand its scrutiny of in-bound Chinese investments into more traditional sectors of economy, such as manufacturing. On other fronts, ESG disclosures, workplace and environmental issues will be less of a priority in terms of enforcement efforts.
*The contents of this message, current at the date of publication, are for reference and general informational purposes only and do not constitute legal advice. You should contact your attorney to obtain advice with respect to any particular legal matter. You should not act or refrain from acting on the basis of information in this publication without first seeking legal advice from counsel in the relevant jurisdiction. Only your individual attorney can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation.
Question: What changes to compliance could be expected during the second Trump Administration?
Answer: The enforcement priorities of the new administration, coupled with a different approach to regulation in various sectors may not be entirely predictable, but certain trends could be expected:
FCPA Compliance
The approach to FCPA compliance will likely not change dramatically, but will consistently emphasize the importance of corporate compliance. The principles outlined in the consolidated guidance on the evaluation of compliance programs issued and updated by the Department of Justice (“DoJ”) will still be in effect. The DoJ will continue incentivizing and rewarding companies that implement effective compliance programs and will hold bad actors accountable for corporate and ethical misconduct. The companies should review their corporate compliance functions to ensure that they enable early detection, remediation and reporting of misconduct.
Sanctions
The areas where a change in focus could be anticipated are sanctions and export controls. National security interests will remain a high priority and sanctions will be continuously used to achieve foreign policy objectives, but geographical focus is likely to shift from Russia to China. Sanctions programs targeting Russia will not disappear overnight, but shall there be a negotiated end to the conflict in Ukraine, there might be a willingness on behalf of the incoming administration to offer certain sanctions relief. The Office of Foreign Assets Control(“OFAC”) has developed and implemented the most aggressive set of secondary sanctions against Russia. The same tools may continue to be used, but now against China. Sanctions against companies linked to Chinese military-industrial complex will be strengthened and the overall sanctions enforcement will be increasingly robust. Thus, companies operating internationally should revisit their trade and sanctions compliance policies and risk assessment functions. Business engaged in international trade, investing overseas or receiving inbound investment should continue being diligent in their sanctions compliance efforts. In addition, companies dependent on goods and services originating in China, should revisit their supply chains and be prepared to find alternatives in case of disruptions. In general, companies need to increase their attention to third-party risks, due to new patterns of sanctions circumvention and diversion that may occur in the future.
Export Controls
In terms of export controls, we are already seeing major restrictions placed on China's semiconductor industry, curbing exports to major Chinese chip equipment makers. This large-scale effort to limit China's ability to access and produce chips that have potential of threatening U.S. national security, will likely be continued by the incoming administration and may spread to other areas, affecting not only semiconductor companies, but also chipmaking tools makers, telecommunications and investment companies.
CFIUS Review
In line with protection of national security interests and focus on China, the new administration will increase its scrutiny of inbound investments from China and may expand the scope of the Committee on Foreign Investment in the US (“CFIUS”) review. If previously the center of attention was critical and emerging technology companies in fields such as biotech and AI, the new administration may expand its scrutiny of in-bound Chinese investments into more traditional sectors of economy, such as manufacturing. On other fronts, ESG disclosures, workplace and environmental issues will be less of a priority in terms of enforcement efforts.
*The contents of this message, current at the date of publication, are for reference and general informational purposes only and do not constitute legal advice. You should contact your attorney to obtain advice with respect to any particular legal matter. You should not act or refrain from acting on the basis of information in this publication without first seeking legal advice from counsel in the relevant jurisdiction. Only your individual attorney can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation.
