Kharon

Explore this month's top articles and investigations from the Kharon Brief: • Two Cartel-Tied Logistics Networks, Operating on Both Sides of the Border: https://lnkd.in/e46TxRzF • How China’s ‘Car Valley’ Injects UFLPA Risks into Global Supply Chains: https://lnkd.in/ekJa3Get • ‘The Robot Dog’s Time to Kill’: At China’s Star Robotics Firm, the Military Ties Keep Mounting: https://lnkd.in/e8dixueX • EU’s 18th Russia Sanctions Package Reworks Oil Price Cap, Moves to Choke Energy Revenues: https://lnkd.in/ebrwmj88 • OFAC’s Nearly $12 Million Settlement Raises the Stakes for Sanctioned Securities Screening: https://lnkd.in/ehctiX75 • Weeks After BIS Listed These Chinese Tech Companies, They Spun Up Unrestricted Subsidiaries: https://lnkd.in/ezV7tbcX Read these stories and more at kharon.com/brief

Learn about mitigating sanctioned securities risk from our latest webinar, now available on demand. Kharon's Olivia Valone discusses the evolving regulatory landscape with Charles Schwab's Senior Manager of the Global Sanctions Team, Colin Romer. Real-life case studies provided by Kharon's Aisha H. illustrate how institutions can be exposed to hidden ownership risks through foreign subsidiaries of sanctioned entities. Watch the webinar here: https://lnkd.in/eYbqG6Jt

The White House’s AI Action Plan, released last week, made a few direct mentions of China. But during a Wednesday event in D.C., tech policy chief Michael Kratsios explained the central role that China — and its telecoms giant Huawei — are playing in U.S. policymakers' strategic thinking. “If most countries around the world are running on an AI stack that isn’t American, and potentially one’s an adversary, that’s a really, really big problem,” Kratsios said, in remarks at The Center for Strategic and International Studies. Kratsios’s comments offered more specifics on and insights into how the second Trump White House sees export controls fitting into its AI policy vision. Here were three points he made that stood out: https://lnkd.in/eisnbmmf

US Treasury Targets High-Profile Iranian Network, American Semiconductor Firm to Pay $140M in China Export Control Case, and More... This week in the Kharon Readbook:

An American cornerstone of the semiconductor supply chain has agreed to plead guilty and pay more than $140 million in total for unlawfully exporting design tools to a restricted Chinese military university. The penalties underscore the U.S. government’s focus on exports of advanced and dual-use technologies to China. They also reflect how steep the repercussions can get if businesses identify a major potential export risk and fail to act. Read more about the settlement: https://hubs.ly/Q03zDSGp0

Under a potential rule at the Commerce Department’s Bureau of Industry and Security (BIS), subsidiaries owned 50% or more by export-restricted companies would automatically face the same controls. Diversion risks are fueling that push. When BIS adds companies to the Entity List, some follow by launching fresh subsidiaries with no U.S. trade restrictions of their own. A 50% rule would close that loophole, but it would hand private industry a new challenge in ownership screening. Two Chinese tech companies, from Kharon’s research, offer case studies in quick-turn subsidiary launches and the tech-diversion risks they present: https://hubs.ly/Q03zj28W0

If you missed it, our 20-minute Quick Take webinar on the EU's 18th sanctions package against Russia is now available on demand. Watch Kharon's Freya Page and Alberto B. discuss the key measures of the new designations and provide an insightful case study that highlights supply chain vulnerability concerning sanctions circumvention. Watch the full webinar here: https://lnkd.in/e4WD_JXz

Join us tomorrow for a 30-minute overview of sanctioned securities risk with Kharon's Olivia Valone and Aisha H., joined by Charles Schwab's Colin Romer. Learn how your team can operationalize data to mitigate risk and ensure compliance across business operations. Register today: https://hubs.ly/Q03z4-z60

The House Select Committee on the China Communist Party announced this week that it had subpoenaed the CEOS of two major U.S. banks over their sponsoring of the IPO for the Chinese battery giant CATL. As the Brief wrote last month, banks appear to have weighed CATL’s exposure risks against its commercial upside. It’s not a straightforward equation: https://hubs.ly/Q03y-wBj0

The U.S. Treasury Department announced an $11.8 million settlement last week with one of the country's largest online trading platforms. One category of violations arose from the firm's processing of trades of securities issued by the blocked Chinese company Xinjiang Tianye Water Saving Irrigation System Company Ltd. Xinjiang Water was ultimately owned 50 percent or more by Xinjiang Production and Construction Corps (XPCC), a sanctioned Chinese paramilitary organization. The apparent violations relating to sanctioned securities make the settlement a first of its kind. Here's what brokers should know about the OFAC action and assessing their own sanctions exposure in securities trading: https://lnkd.in/ehctiX75