Ian Cohen

Republicans asked the Biden administration to strengthen export controls against Huawei and Semiconductor Manufacturing International Corp., after Huawei unveiled a new smartphone this month that may have been made through means that violated U.S. export restrictions. In a letter sent to the Bureau of Industry and Security last week, 10 House Republicans, including Foreign Affairs Committee Chair Michael McCaul of Texas, said they're “extremely troubled and perplexed” about BIS’ “inability to effectively write and enforce export control rules against violators, especially China.” They said BIS has continued to grant licenses to SMIC and other Chinese companies despite “continued Congressional pressure to adopt stricter policies.” They said both technology companies should be subject to “full blocking sanctions” and their executives should face criminal investigations, and the Commerce Department should revoke all of their existing license applications, add all their subsidiaries to the Entity List and take other measures to cut off a broad range of shipments to both firms. The lawmakers asked for a briefing with BIS and other agencies that oversee export controls by Sept. 28 and listed several recommendations for the administration to further limit sensitive technology exports to China, including by creating a new sanctions authority under the International Emergency Economic Powers Act specifically focused on China. The new sanctions authority should be used to target companies that “flout” export controls and should be leveraged to “designate SMIC and Huawei with full blocking sanctions.”

A recent increase in U.S. sanctions against ransomware actors helped to slow the effectiveness of cyberattackers and limit their profits, witnesses told the Senate Homeland Security Committee Tuesday. But the U.S. can do more to counter ransomware activity, they said, including working closer with allies to track ransomware payments and collecting better information from industry.

A bipartisan House bill would require the administration to study how digital currencies could help Russia evade U.S. sanctions. The legislation, introduced Thursday by Reps. Gregory Meeks, D-N.Y., and Michael McCaul, R-Texas, the top members of the House’s Foreign Affairs Committee, would also create a new State Department officer to oversee sanctions evasion efforts involving digital currency. Although administration officials have cast doubt on Russia’s ability to use cryptocurrencies to prop up its economy, digital assets are still “ripe for abuse” as Russia looks to evade the U.S.’s “unprecedented” sanctions, Meeks said. McCaul said the bill will ensure the U.S. is “taking the necessary steps to prevent these emerging technologies,” such as blockchain, “from undermining sanctions, including those currently aimed at bankrupting [Russian President Vladimir] Putin’s war machine.” The bill would require the State and Treasury departments to submit a report to Congress that assesses how digital currencies could “impact the effectiveness and enforcement of” U.S. sanctions against Russia. It would also authorize the State Department to appoint a director of digital currency to help develop “sanctions enforcement mechanisms resilient to malevolent actors’ use of digital currencies.”

The Commerce Department should add ZTE to its Entity List now that its five-year probation period and U.S. criminal case has ended, said Sen. Marco Rubio, R-Fla., in a Monday letter to Commerce and the Justice Department. Rubio also expressed “disappointment and concern” that a U.S. court ruled this month against further penalties against the Chinese telecommunications company despite “credible evidence” that ZTE violated its probation. Rubio said the judge in the case “appeared unconvinced of any serious commitment to reform” by ZTE officials. “Given that the decision effectively marks the end of ZTE’s five-year probationary period, the net result is that a firm explicitly identified by the Federal Communications Commission as a national-security threat is today rewarded with relaxed oversight, despite its acknowledged noncompliance,” Rubio said in the letter. He said Commerce and DOJ should “take all appropriate measures against ZTE to ensure it cannot pose a threat to Americans,” including adding the company to Commerce’s export control blacklist. Spokespeople for Commerce and DOJ didn’t respond to requests for comment.

The Treasury Department's Office of Foreign Assets Control added several more Chinese tech firms to its investment blacklist, including drone maker DJI, for allegedly helping Beijing track and detain Muslim minorities in Xinjiang. The move, announced Thursday, also banned investments in Cloudwalk Technology, Dawning Information Industry, Leon Technology, Megvii Technology, Netposa Technologies, Xiamen Meiya Pico Information and Yitu. All were already on the Commerce Department’s Bureau of Industry and Security entity list for export restrictions. The companies, which are now formally designated as having ties to the Chinese military, operate in China’s surveillance technology sector, OFAC said. The agency said DJI, the world’s largest commercial drone producer, supplies drones to the Xinjiang Public Security Bureau, which was added to the entity list in 2019. Technology supplied by the companies helped Xinjiang authorities confine more than a million Uyghurs and other Muslim minorities in detention centers, OFAC said. The companies “actively support the biometric surveillance and tracking of ethnic and religious minorities in China” through the “installation of thousands of neighborhood police kiosks and ubiquitous placement of surveillance cameras, collection of biometric data for identification purposes, and more intrusive monitoring of internet use,” OFAC said. A DJI spokesperson declined to comment. Megvii, CloudWalk, Xiamen Meiya Pico, Yitu, and NetPosa didn’t respond to requests for comment. Dawning and Leon couldn’t be reached. "The attempt of the U.S. to use Xinjiang to contain China will never succeed," said a Chinese Foreign Affairs Ministry spokesperson Friday. "China will take all necessary measures to resolutely safeguard the legitimate rights and interests of Chinese institutions and companies."

Democrats want the Biden administration to designate more spyware technology companies for human rights abuses, saying this complements existing export restrictions meant to curb their sales of surveillance technology to authoritarian governments. Wednesday's letter to the Treasury and State Departments sought Magnitsky Act sanctions against United Arab Emirates-based DarkMatter, Israel-based NSO Group and European companies Nexa Technologies and Trovicor. Target the companies and their senior executives, asked House Foreign Affairs Committee Chair Gregory Meeks of New York, Senate Finance Committee Chair Ron Wyden of Oregon, and 16 others including Sens. Ed Markey of Massachusetts and Hawaii's Brian Schatz and Reps. Anna Eshoo and Ro Khanna, both from California. State and Treasury declined to comment.

The Bureau of Industry and Security will add four companies in Israel, Russia and Singapore to the entity list for "malicious cyber activities" contrary to U.S. foreign policy and national security, BIS said; see also a State Department announcement. The two Israeli companies that include NSO Group supply malicious spyware to foreign governments, and the companies in Russia and Singapore “traffic in cyber exploits” that threaten the “privacy and security of individuals and organizations worldwide.” BIS' parent agency the Commerce Department said these additions -- which take effect Thursday, when they're to be published in the Federal Register -- reflect a government-wide effort to "stem the proliferation of digital tools used for repression." Adding NSO and others is "long overdue," Access Now said. It said the EU and other governments "should implement similar restrictions on surveillance tech companies who facilitate human rights violations. The privacy advocacy group wants the U.S. government to sanction owners and affiliates of NSO Group and Candiru, another company that's being added to the BIS list. NSO "is dismayed by" BIS' decision because "our technologies support US national security interests and policies by preventing terrorism and crime," emailed a company spokesperson. "We will advocate for this decision to be reversed.”

The House Foreign Affairs Committee's release of export licensing information for Huawei and China chipmaker SMIC (see 2110220019) doesn't present an accurate picture, the Commerce Department said. The agency's Bureau of Industry and Security approved more than a combined $100 billion worth of export licenses for shipments to Huawei and SMIC from November 2020 through April. Some pending applications were in BIS' “intent to deny” process and weren't part of the figures. That those denials weren’t included “risks politicizing the licensing process, discouraging good faith industry actors from participating in the licensing process, misrepresenting the thoughtful, evidence-based national security determinations made by BIS and other national security agencies,” a Commerce spokesperson said Friday, “and even undercutting U.S. technology leadership.” Huawei and SMIC didn't comment Monday.

The Bureau of Industry and Security approved $100 billion-plus worth of export licenses for shipments to Huawei and top Chinese chipmaker SMIC Nov. 9 through April 20, per documents released Thursday by the House Foreign Affairs Committee. BIS said it approved 113 licenses for Huawei -- about 70% of applications received -- for more than $61 billion worth of goods. The agency greenlit 188 licenses for SMIC -- about 90% -- for more than $41 billion. BIS denied two applications for Huawei and returned 48 without action during that period. It denied one for SMIC and returned 17. The companies are on the BIS parent agency's Commerce Department entity list.

The Commerce Department's Bureau of Industry and Security fined a U.S.-based telecom company $1.87 million for illegally exporting goods to Vietnam, BIS said in a Tuesday order. California-based VTA Telecom, a subsidiary of a Vietnamese state-owned telecom company, allegedly included false statements in its export applications to conceal defense end uses for the exports, BIS said. It said it will suspend about $200,000 of the penalty if VTA completes a two-year probationary period outlined in a settlement agreement with BIS, or if it dissolves its business. VTA agreed to spend $25,000 to improve its “ongoing” export compliance efforts and hire a trade compliance director for two years. If VTA doesn’t pay the fine or violates the agreement, BIS may deny the company export privileges. VTA Telecom couldn’t be reached for comment.