On February 15, 2022, the Office of Foreign Assets Control (“OFAC”) of the U.S. Department of the Treasury published regulations to implement the Chinese military-industrial complex sanctions program established pursuant to Executive Order 13959, as amended by Executive Order 14032 (the “CMIC Sanctions Program”). With the aim of restricting access of certain Chinese companies, including those with an ostensibly civil character, to U.S. sources of capital, the CMIC Sanctions Program targets transactions in publicly traded securities that may be used to provide, directly or indirectly, financial support for modernization or operations of the military, intelligence or security apparatuses of People’s Republic of China’s (“PRC”).
Under the CMIC Sanctions Program, the U.S. Secretary of the Treasury (the “Treasury Secretary”), in consultation with the U.S. Secretary of State and the U.S. Secretary of Defense, may designate any entity that is determined by the Treasury Secretary: (i) to operate or have operated in the defense and related materiel sector or the surveillance technology sector of the economy of the PRC; or (ii) to own or control, or to be owned or controlled by, any entity that is operating or has operated in such economic sectors (any such designated entity, a “CMIC Company”).
