Mergers & Acquisitions 2022 Annual Review

12 MORRISON FOERSTER 2022 continued the trend of increasing national security-related regulatory procedures and concerns for dealmakers. Comprehensive Russia Sanctions. Russia’s February 2022 invasion of Ukraine ushered in unprecedented sanctions from the United States, European Union, United Kingdom, and other allied countries, causing dealmakers to expand their diligence and mitigation plans. Examples of the new sanctions include: ■ Comprehensive sanctions on the People’s Republic of Donetsk and the People’s Republic of Luhansk regions of Ukraine; ■ Blocking sanctions against major Russian companies and banks, major state-owned television stations, and entities critical to Russia’s defense sector, as well as President Putin, political figures, and Russian oligarchs and elites and their family members; ■ Correspondent account sanctions prohibiting U.S. financial institutions from opening or maintaining correspondent or payable-through accounts for or on behalf of identified Russian financial institutions; ■ Certain restrictions on transactions with Russia’s Central Bank, limiting its ability to draw on U.S. dollar foreign reserves, as well as on transactions with Russia’s Ministry of Finance and National Wealth Fund; ■ Ban on U.S. imports of Russian goods, including energy products, seafood, spirits, non-industrial diamonds, and gold; ■ Ban on new U.S. person investment in Russia and U.S. provision of accounting, trust and corporate formation, and management consulting services to Russia; and ■ Removal of select Russian and Belarusian banks from the SWIFT network, essentially disconnecting such banks from the international financial system. U.S. Foreign Investment Review . In November 2022, the U.S. Department of the Treasury published its first ever CFIUS Enforcement and Penalty Guidelines (“Guidelines”). The Guidelines lay out the following factors in determining whether to impose penalties for CFIUS non-compliance: ■ Harm: The extent to which the conduct impaired or threatened to impair U.S. national security. ■ Intent: The extent to which the conduct was the result of simple negligence, gross negligence, intentional action, or willfulness, or any effort to conceal or delay the sharing of relevant information with CFIUS. ■ Persistence: The frequency and duration of the conduct. ■ Remediation: Whether the violation was self-disclosed, the promptness of remediation of the conduct, and whether there was an internal review of the conduct to prevent its reoccurrence. The Guidelines are the latest example of increased attention to, and resources for, CFIUS monitoring and enforcement since the enactment of the Foreign Investment Risk Review Modernization Act of 2018, including, among other things, CFIUS’s enhanced efforts to identify and pursue non-notified transactions. 10 4. INCREASED NATIONAL SECURITY CONSIDERATIONS