Morrison & Foerster’s National Security Practice, led by John Smith, Nick Spiliotes, and Brandon Van Grack, provides strategic advice and counseling to clients on a broad range of challenging regulatory and compliance matters in the national security space. The government’s enforcement and regulatory efforts pertaining to national security continue to expand and overlap, and thus navigating this space increasingly requires expertise across multiple disciplines.
John Smith is the former Director of the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), where he was centrally involved in all aspects of developing, implementing, and enforcing U.S. government sanctions requirements, and oversaw every OFAC enforcement case against financial institutions and global operating companies.
Nick Spiliotes has decades of experience advising U.S. and foreign clients on CFIUS matters; before joining the firm he served as a U.S. Foreign Service Officer and staff member on the National Security Council at the White House.
Brandon Van Grack is the former Chief of DOJ’s Foreign Agents Registration Act (“FARA”) Unit, after serving as a lead prosecutor for Special Counsel Robert S. Mueller III’s investigation of the Russian government’s efforts to interfere in the 2016 presidential election. He has held other senior national security roles at the DOJ, including as Counsel to the Assistant Attorney General for National Security, where he worked on the resolution of almost every significant corporate matter pertaining to export control and sanctions violations in the last decade.
The National Security Practice includes members from the over 100-attorney investigations/enforcement practice, including former federal and state prosecutors.
Each of these regulatory regimes presents unique challenges to business planning and operations of U.S. and non-U.S. entities that must be addressed in connection with diligence, obtaining required approvals, implementing appropriate compliance programs, and engaging with the U.S. government on potential enforcement matters. Our experience enables us to identify practical solutions tailored to the business needs of our clients.
Morrison & Foerster has the distinction of being perhaps the only law firm in the world with three full-time OFAC veterans, including John Smith, who served as OFAC Director until last summer. We are certainly the only firm with three such recent additions from OFAC who can speak from eyewitness experience regarding the inner workings of OFAC and the Trump Administration in their imposition, analysis, and enforcement of U.S. economic sanctions, and their expectations regarding corporate compliance programs. We are also the only law firm with an attorney who managed the DOJ’s Voluntary Self Disclosure Program for export control and sanctions violations.
Our National Security Practice Group help clients make sense of the regulatory and policy landscapes pertaining to economic sanctions, and forecast what might be coming so that clients can get ahead of it. Our lawyers help clients understand the various sanctions regimes implemented by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”); assist them on discrete issues, such as obtaining an OFAC license for the release of blocked funds or to permit an otherwise prohibited transaction; and handle broad sanctions investigation and enforcement matters. When new sanctions are imposed (whether by legislation, executive order, or implementing regulations), we assist clients in updating their policies and procedures to ensure best compliance practices. We also assist our clients with assessments of their OFAC policies and procedures, conduct internal investigations to identify issues that contributed to deficiencies in their OFAC compliance programs, provide training on sanctions issues, and help them develop strategic plans to improve their systems and procedures to address the identified compliance gaps. If a lapse results in government interest or action, our award-winning Investigations + White Collar Defense practice is there to provide support.
We have a very active and long-established practice advising clients on the potential national security implications of proposed transactions under the Defense Production Act of 1950, as amended by the recently enacted FIRRMA. FIRRMA authorizes the President of the United States to block or unwind acquisitions of, or investments in, U.S. companies by foreign investors when, in the President’s view, such transactions threaten the national security of the United States. The President administers this authority through CFIUS, an interagency committee of the U.S. Government. Under the new statute, CFIUS has the authority not only to review transactions through which a foreign person could gain “control” of a U.S. business, but also certain non-controlling investments in U.S. businesses involving critical technologies, critical infrastructure, or sensitive personal data of U.S. citizens. For the first time, FIRRMA also provides for a mandatory notification process for certain transactions, under which parties will be required to seek CFIUS review and approval prior to closing.
Our CFIUS counseling begins by working with the client and the deal team to undertake a full evaluation of the national security implications of a proposed transaction to ensure that the CFIUS review risks are properly identified and allocated in the transaction documents. As counsel, we prepare the relevant notifications and work with the CFIUS member agencies to address the national security concerns presented by the deal. We also work with the client to address and preempt potential political and public relations issues that may arise.
We have represented both foreign acquiring entities and acquired U.S. entities before CFIUS since 1990. Our CFIUS experience includes dozens of extended CFIUS investigations and two transactions (out of five in the past 20 years) that were presented to the President for decision. Our practice includes multiple partners, including Brandon Van Grack, who handled the review of transactions before CFIUS and Team Telecom, including mitigation proposals, for the DOJ.
The Foreign Agents Registration Act (FARA) represents a heightened area of risk for companies and individuals that work closely with non-U.S. entities, especially when those entities have non-U.S. government ownership or other significant ties to non-U.S. governments. Drawing on its deep experience in national security law and government regulation, our lawyers advise clients on the latest FARA enforcement trends and interpretive guidance and conduct sensitive internal investigations and risk-based compliance reviews.
FARA is a U.S. law that requires “agents of foreign principals” who undertake certain types of political and quasi-political activities to register with the U.S. Department of Justice (DOJ). The registration statement must disclose certain details about the relationship between the registrant and the foreign principal, and is made publicly available on the DOJ website. Originally enacted in 1938 in response to concerns regarding foreign propaganda, FARA stayed below the radar of many in the public and the business community for much of its existence – but garnered significantly greater public attention in investigations relating to the 2016 election. Today, those who overlook it do so at their peril. In 2020, the DOJ opened a record number of FARA investigations and conducted a record number of FARA enforcement actions.
At a time of fast-moving FARA developments and enforcement actions, Morrison & Foerster’s national security team has recent and extensive government and private sector counseling experience relating to FARA enforcement and compliance. We are the only law firm that has a former Chief of the FARA Unit of the DOJ, and our practice group includes two former senior DOJ national security lawyers, the former General Counsel of the Office of the Director of National Intelligence, and a former Assistant United States Attorney in the Southern District of New York with recent experience defending against FARA enforcement.
We have advised both organizations and individuals in sensitive and high stakes matters relating to FARA – and have extensive experience giving practical, risk-based guidance on the law’s applicability as well as in conducting domestic and cross-border investigations relating to FARA and engaging with the DOJ on matters relating to FARA. In addition to advising on potential filings and compliance measures, we have the right experience and background to advocate on our clients’ behalf to the DOJ and to respond to inquiries and enforcement actions.
Our team also possesses deep experience advising clients with respect to export control considerations under the Export Administration Regulations administered by the U.S. Commerce Department’s Bureau of Industry and Security (“BIS”) and the International Traffic in Arms Regulations administered by the Department of State’s Directorate of Defense Trade Controls (“DDTC”) and comparable European Union export controls. We tailor our representation and advice to the specific requirements of the client based on their products, technology, operations, and export activities. We assist clients in developing appropriate export compliance programs to prevent inadvertent export control violations. We also assist clients in dealing with inadvertent export control violations. This frequently requires undertaking a thorough review to evaluate whether, in fact, a violation has occurred and developing safeguards to prevent any further violations. Once the facts are established, we develop, with the client, an appropriate disclosure of the violation to the relevant enforcement agency, if warranted. We also advise clients in defending against enforcement actions related to potential export control violations.
For items requiring an export license, we assist clients in obtaining the required export approvals and establishing appropriate safeguards to ensure compliance with the terms of the export license. We routinely obtain BIS export licenses on behalf of our clients and, for clients with in-house export control expertise, advice on developing appropriate arguments in support of the export license. We also obtain DDTC export licenses covering items on the U.S. Munitions List and have assisted clients in registering with the DDTC as manufacturers or exporters of defense articles or services.
In connection with our CFIUS representation, our team often deal with matters involving the National Industrial Security Program Operating Manual administered by DSS. U.S. companies engaged in “classified activities” face special regulatory requirements in M&A transactions involving non-U.S. parties to protect the classified activities of the U.S. companies from foreign ownership, control, or influence (“FOCI”). We have been involved in negotiating and implementing numerous arrangements to address FOCI concerns, such as Special Security Agreements, Proxy Boards, and other FOCI mitigation measures.Show More