DEPARTMENT OF STATE

DEPARTMENT OF THE TREASURY

DEPARTMENT OF COMMERCE

DEPARTMENT OF HOMELAND SECURITY

OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE

DEPARTMENT OF LABOR

Xinjiang Supply Chain Business Advisory Updated: July 13, 2021

Title: Risks and Considerations for Businesses and Individuals with Exposure to Entities Engaged in Forced Labor and other Human Rights Abuses linked to Xinjiang, China [1]

[1] This advisory is explanatory only and does not have the force of law. It does not supplement or modify statutory authorities, executive orders, or regulations. It is not intended to be, nor should it be interpreted as, comprehensive or as imposing requirements under U.S. law, drawing any legal conclusions about specific fact scenarios regarding particular businesses or entities, or otherwise addressing any particular requirements under applicable law. Its sole intent is to provide information to businesses and individuals that they may consider in assessing their potential exposure to involvement with entities engaged in human rights abuses, as part of a risk-based approach to due diligence. Please see the legally binding provisions cited and other relevant legal authorities.

SUMMARY:

The People’s Republic of China (PRC) government continues to carry out genocide and crimes against humanity against Uyghurs and members of other ethnic and religious minority groups in the Xinjiang Uyghur Autonomous Region (Xinjiang), China.2 The PRC’s crimes against humanity include imprisonment, torture, rape, forced sterilization, and persecution, including through forced labor and the imposition of draconian restrictions on freedom of religion or belief, freedom of expression, and freedom of movement.

[2] The U.S. government is also aware of reports documenting the expansion of internment camps to Tibet and Inner Mongolia to arbitrarily detain other ethnic and religious minorities and documenting the use of forced labor beyond Xinjiang such as in the fishing industry. Businesses should similarly be aware of the potential reputational, economic, and legal risks of involvement with entities and individuals engaged in any human rights abuses in China or elsewhere.

Businesses, individuals, and other persons, including but not limited to investors, consultants, labor brokers, academic institutions, and research service providers (hereafter “businesses and individuals”) with potential exposure to or connection with operations, supply chains, or laborers from the Xinjiang-region, should be aware of the significant reputational, economic, and legal risks of involvement with entities or individuals in or linked to Xinjiang that engage in human rights abuses, including but not limited to forced labor and intrusive surveillance.

Given the severity and extent of these abuses, including widespread, state-sponsored forced labor and intrusive surveillance taking place amid ongoing genocide and crimes against humanity in Xinjiang, businesses and individuals that do not exit supply chains, ventures, and/or investments connected to Xinjiang could run a high risk of violating U.S. law. Potential legal risks include: violation of statutes criminalizing forced labor including knowingly benefitting from participation in a venture, while knowing or in reckless disregard of the fact that the venture has engaged in forced labor; sanctions violations if dealing with designated persons; export control violations; and violation of the prohibition of importations of goods produced in whole or in part with forced labor or convict labor.

I. Introduction

The U.S. Department of State, the U.S. Department of the Treasury, the U.S. Department of Commerce, the U.S. Department of Homeland Security (DHS), the Office of the U.S. Trade Representative, and the U.S. Department of Labor are updating this advisory, originally published in July 2020, in light of growing evidence of the use of forced labor in Xinjiang and the Secretary of State’s determinations that the PRC government has committed genocide and crimes against humanity in Xinjiang.

The U.S. government has taken action in response to human rights abuses in and in connection to Xinjiang. Actions include the issuance of Withhold Release Orders by U.S. Customs and Border Protection (CBP), the addition of entities to the U.S. Department of Commerce Entity List, the imposition of economic sanctions by the U.S. Department of the Treasury, the imposition of visa restrictions by the U.S. Department of State, as well as the addition of multiple goods to the U.S. Department of Labor’s List of Goods Produced by Child Labor or Forced Labor. Raw and

refined materials, commodities, intermediate goods, byproducts, and recycled materials may all have connections to forced labor and human rights violations in Xinjiang, regardless of the final product and region of origin or export. See Annex 1 for U.S. government actions. This advisory outlines risks that businesses and individuals should consider when assessing business partnerships with, investing in, sourcing from, or providing other support to companies operating in Xinjiang, linked to Xinjiang, or with laborers from Xinjiang.

a. Human Rights Violations in Xinjiang

The PRC government in Xinjiang has, since at least March 2017, unjustly imprisoned more than one million Uyghurs, ethnic Kazakhs, ethnic Kyrgyz, and members of other ethnic and Muslim minority groups for indefinite periods in internment camps. Detainees have described extreme overcrowding, sleep and food deprivation, medical neglect, physical and psychological abuse, torture, forced labor, forced ingestion of unidentified drugs, forced sterilizations and abortions, sexual abuse, forced renunciation of religion, denial of prayer and other religious practices (including pressure to consume pork or alcohol), denial of the use of their native languages, and being forced to study and recite Chinese Communist Party (CCP) propaganda. There are reports that some detainees have died in the internment camps, or very shortly after release, as a result of abuse and neglect. These abuses are believed to have spread outside the internment camps and beyond Xinjiang, with credible reports claiming that victims have been forcibly transferred to other provinces of China and subjected to forced labor and other abusive labor conditions.

Businesses and individuals should be aware of the atrocities against Uyghurs, ethnic Kazakhs, ethnic Kyrgyz, and members of other ethnic and Muslim minority groups, including state- sponsored forced labor practices employed by the PRC government in Xinjiang, as well as situations of forced labor involving members of these groups outside Xinjiang. There are credible reports indicating that labor transfers of ethnic minorities in Xinjiang to other regions and provinces of China are part of a state-sponsored coercive relocation and forced labor program aiming to force assimilation and reduce their population density.

b. Overview of Issues Addressed in Advisory

This advisory urges businesses and individuals to undertake heightened human rights due diligence to identify potential supply chain links to entities operating in Xinjiang, linked to Xinjiang (e.g., through the pairing program described in III. a or Xinjiang supply chain inputs) or utilizing Uyghur or other ethnic and Muslim minority laborers from Xinjiang. Such heightened due diligence is in line with the UN Guiding Principles on Business and Human Rights (UN Guiding Principles), the International Labor Organization’s Combating Forced Labor: A Handbook for Employers and Business (ILO Forced Labor Guidelines), and the Organisation for Economic Co-Operation and Development (OECD) Guidelines for Multinational Enterprises (OECD Guidelines), which also includes factors to be considered in determining appropriate action, such as whether and how to responsibly end relationships when a business lacks the ability to prevent or mitigate adverse impacts.

This advisory discusses four primary types of potential supply chain exposure to entities engaged in human rights abuses:

(1) Assisting or investing in the development of surveillance tools for the PRC government in Xinjiang, including tools related to genetic collection and analysis;

(2) Sourcing labor or goods from Xinjiang, or from entities elsewhere in China connected to the use of forced labor of individuals from Xinjiang, or from entities outside of China that source inputs from Xinjiang;

(3) Supplying U.S.-origin commodities, software, and technology to entities engaged in such surveillance and forced labor practices; and

(4) Aiding in the construction and operation of internment facilities used to detain Uyghurs and members of other Muslim minority groups, and/or in the construction and operation of manufacturing facilities that are in close proximity to camps and reportedly operated by businesses accepting subsidies from the PRC government to subject minority groups to forced labor.

II. Heightened Risk for the Provision of Certain Goods, Services, and Surveillance Technology in Xinjiang

a. Background on Surveillance

The PRC government has established an unprecedented, intrusive, high-technology surveillance system across Xinjiang, as part of a region-wide apparatus of oppression, aimed primarily against traditionally Muslim minority groups. PRC authorities justify mass surveillance and various restrictions under the guise of combatting what the PRC government labels as “terrorism,” “religious extremism,” and “alleviating poverty” in Xinjiang. However, the Xinjiang surveillance infrastructure is facilitating human rights abuses, including abuses of the right to be free from arbitrary or unlawful interference with privacy, freedom of religion or belief, freedom of movement, and freedom of expression, which are enshrined in the Universal Declaration of Human Rights (UDHR).

Surveillance systems, many of which are equipped with artificial intelligence, facial recognition, gait recognition, and infrared technology, are being used throughout Xinjiang to track movements, monitor behaviors, and identify individuals for detention.

The “Strike Hard against Violent Terrorism Campaign,” launched by the PRC government in 2014, primarily in Xinjiang, has been used to justify the collection of biometric data from all Xinjiang residents ages 12 to 65. Authorities have collected DNA samples, fingerprints, iris

scans and blood types, and are centralizing this information in cloud databases. Furthermore, during what Xinjiang officials advertised as free health checks, residents’ faces were scanned, blood was drawn, and fingerprints were collected. Voice samples of individuals are also being collected when they apply for passports, raising further concerns about privacy. This involuntarily collected biometric data is linked to individuals’ identification numbers and centralized in searchable databases used by police.

One of the main systems for mass surveillance in Xinjiang is a mobile app used by police. The app uses artificial intelligence to track movements, monitor behavior and identify individuals for detention. The app allows authorities to input personal data about residents, such as identifying information, physical data, and data about religious practices, among other identifiers, into a dataset. The app was used to identify roughly 20,000 individuals for detention in one week, according to leaked official government documents.

Chinese surveillance and technology companies earn billions of dollars in contracts from the PRC government, but there is evidence that these businesses also get support from foreign academics, scientists, and businesses, and are funded in part by international investors.

b. Heightened Risk for the Provision of Goods, Services, and Technology with a Nexus to Xinjiang Surveillance

Businesses and individuals engaged in the following activities or otherwise linked, directly or indirectly, to those in Xinjiang engaged in these activities may face reputational risks and/or trigger U.S. criminal or civil enforcement or administrative and other actions, depending on the facts and circumstances of their involvement:

• Investment in PRC Companies Directly and Indirectly Linked to Surveillance in Xinjiang: Provision of financial support, including by venture capital and private equity firms, to Chinese companies that contribute to the PRC government’s vast and growing surveillance network linked to human rights abuses in Xinjiang.

• Certain Activities with Cameras, Tracking Technology, Biometric Devices, or Other Goods and Services: Selling or providing biometrics devices; items intended for surveillance; items used for genetic collection and analysis; microchips and microprocessors; tracking technology, or equipment, software, and technology related to the aforementioned products; providing maintenance or other services in support of such products, including those that have been known to arbitrarily track and control the movements of Uyghurs or others in Xinjiang; or selling or providing any goods, software, or technology used as inputs, or to support the production of inputs, used in the manufacture of the aforementioned products.

• Certain Technology Joint Ventures, and Research Partnerships: Involvement in joint ventures with PRC government officials and departments, or Chinese companies whose intellectual property has been known to aid the development or deployment of a surveillance system used arbitrarily against members of minority groups or others. This may include granting PRC government officials access to genetic databases or aiding the PRC government in involuntary collection of genetic data; participation in facial recognition research related to minority groups in Xinjiang; conducting research partnerships with Chinese technology facial recognition firms known to be involved with enabling China’s surveillance activities or inviting such parties to conferences where technical issues on surveillance-related activities will be discussed; or attending conferences related to surveillance activities and facial recognition technology in which such entities play a leading role, such as through organizing or sponsoring these conferences.

• Certain Services Provided to Xinjiang’s Internment Camps or Surveillance State: Provision of services to internment camps or training of Xinjiang authorities, police, or PRC government officials that enable arbitrary detention, or arbitrary or unlawful surveillance on the basis of ethnic group, religion, or other protected class.

• Companies on the U.S. Department of Commerce Entity List: The Department of Commerce’s Entity List identifies entities reasonably believed to be involved, or to pose a significant risk of being or becoming involved, in activities contrary to the national security or foreign policy interests of the United States. The Department of Commerce has added multiple PRC government entities and commercial companies to the Entity List that are implicated in human rights violations and abuses in the implementation of the PRC government’s campaign of repression, mass arbitrary detention, and high-technology surveillance against Muslim minority groups from Xinjiang, including conducting genetic analyses. Exports, reexports, or transfers (in- country) of items subject to the Export Administration Regulations (EAR) where such entities are a party to the transaction (e.g., end-user, purchaser, intermediate or ultimate consignee) require a license from the Department of Commerce’s Bureau of Industry and Security (BIS). The list is available here: Commerce Entity List. For additional information about the Entity List, please see Annex 5 below.

• Entities on the U.S. Department of the Treasury’s Non-SDN Chinese Military- Industrial Complex Companies List: E.O. 13959, as amended, imposes certain investment-related prohibitions with respect to certain entities related to China’s defense and related materiel sector or surveillance technology sector. So far, 59 entities have been publicly listed and are subject to the E.O.’s investment prohibitions. Entities subject to the prohibitions in E.O. 13959, as amended, are identified on the Department of the Treasury’s Office of Foreign Assets Control’s (OFAC) Non- Specially Designated Nationals (SDN) Chinese Military-Industrial Complex Companies List (NS-CMIC List). The list is available here: NS-CMIC List. For additional information about the NS-CMIC, please see Annex 5 below.

III. Heightened Risk for Forced Labor in Xinjiang

a. Background on Xinjiang Labor Abuses

The PRC government has implemented programs with a stated objective of eradicating poverty across the country. However, certain programs targeting predominantly members of Muslim minority groups are coupled with discriminatory social control, pervasive surveillance, and a large-scale internment program. There is evidence of forced labor, under the guise of “vocational training” obtained using threats, force, detention, debt bondage, and other abusive practices occurring in the internment camps, large industrial parks, PRC companies outside Xinjiang, and among the non-detained rural residents of Southern Xinjiang where the majority of Uyghurs live.

Internment camps are often euphemistically referred to as Educational Training Centers or Vocational Training Centers. There are reports of forced labor in the internment camps themselves, as well as reports of individuals “graduating” from the camps and then being required to work at nearby facilities or sent to satellite factories in their home region or other provinces. There have been reports of Vocational Training Centers located within and adjacent to industrial parks.

• Government Subsidies and Labor Abuse: Xinjiang government documents indicate the existence of a large-scale PRC government plan, known as the “mutual pairing assistance” program, for companies from other parts of China to establish satellite factories in Xinjiang in conjunction with the internment camps. Reports indicate that, through the PRC government’s mutual pairing assistance program, 19 cities and developed provinces, generally in the eastern part of China, are spending billions of Chinese yuan to establish factories in Xinjiang. Some factories directly involve the use of internment camp labor, while other factories are part of abusive labor programs that require parents to leave children as young as 18 months old, while the parents are forced or coerced to work full-time under constant surveillance. The children are sent to state- controlled orphanages and other facilities.

The pairing strategy relies generally on low-skilled labor industries that only require a limited amount of job training. PRC government authorities incentivize Chinese companies to open factories near the internment camps, and local governments receive additional funds for each individual from the camps forced to work in these sites at a fraction of minimum wage or without any compensation. In April 2019, Xinjiang authorities began rolling out a plan to attract textile and garment companies. Under the plan, local governments receive funds to build production sites for these companies near the camps and companies receive a subsidy of approximately 260 USD to train each inmate they employ, as well as other incentives. The subsidies create a windfall for these Chinese companies, and the artificially low labor costs create unfair competition in the supply chain in the form of cheaper goods.

• Involuntary Transfer of Xinjiang Laborers to Chinese Factories: There have been credible reports of mass forced labor transfers of Uyghurs and members of other ethnic minority groups from Xinjiang who are then subject to forced labor in certain industries inside and outside Xinjiang. Laborers are sometimes transferred directly from camps to factories, are forced to attend “patriotic education” and Mandarin studies, and are subjected to constant surveillance. Many of these workers are assigned minders and have limited freedom of movement. The factories produce goods that are inputs in a variety of industries including apparel and textiles, electronics, solar energy, and automotive.

• Forced Labor in Prisons in Xinjiang: There is evidence of forced prison labor in Xinjiang, including in the apparel and textile sector, and agricultural industries, including cotton, and in the mining of coal, uranium, and asbestos. Prisoners are forced to work under threat of penalties, such as solitary confinement. Working conditions are harsh with long hours, poor food quality, and little to no pay. See Annex 3 on the Xinjiang Cotton, Textile, and Garment Supply Chain.

• Forced Labor in Agriculture in Xinjiang: Recent research has shed light on the extensive use of forced labor in the agricultural sector, including cotton and tomatoes grown in Xinjiang. Xinjiang’s cotton lint production provides for over 85 percent of China’s total cotton production and 20 percent of global output, and many companies in the cotton industry have ties to the U.S.-sanctioned Xinjiang Production and Construction Corps (XPCC), which is also a major producer of cotton and tomatoes.

• Forced Labor in the Cotton Supply Chain: Recent research corroborates reports of forced labor involving Uyghur and other minority groups in cotton supply chains originating in Xinjiang, particularly in cotton production, processing, and export in the garment sector. Reports indicate that a large number of companies in China and in the Asia region produce and sell cotton products tainted with this forced labor for use in the final production of garments. See Annex 3 on the Xinjiang Cotton, Textile, and Garment Supply Chain.

• Forced Labor in the Solar Supply Chain in Xinjiang: The PRC dominates global solar supply chains, and mounting evidence indicates that solar products and inputs at nearly every step of the production process, from raw silicon material mining to final solar module assembly, are linked to known or probable forced labor programs. In 2020, PRC solar companies controlled 70 percent of the global supply for solar-grade polysilicon, and 45 percent was manufactured in Xinjiang. China also controls market shares of the downstream solar supply chain, including the production of wafers, solar cells, and solar panels. Some of the world’s largest suppliers of solar panel materials and components reportedly have ties to U.S.-sanctioned XPCC. See Annex 4 on the Xinjiang Solar Supply Chain.

See Annex 2 for a list of industries in which the U.S. government is aware of reported instances of companies involved in activity that may constitute human rights abuses, specifically in connection with Xinjiang.

b. Warning Signs of Forced Labor in the Operating Environment in Xinjiang

• Lack of Transparency: Firms operating in Xinjiang using shell companies to hide the origin of their goods or conceal their ownership of the companies, writing contracts with opaque terms, and conducting financial transactions in such a way that it is difficult to determine where the goods were produced, or by whom.

• Social Insurance Programs: Companies operating in Xinjiang disclosing high revenue but having very few employees paying into the government’s social security insurance program.

• Terminology: Any mention of internment terminology (e.g., Education Training Centers (职业教育培训中心) or Legal Education Centers) coupled with poverty alleviation efforts (e.g. Xinjiang Aid, Mutual Assistance Programs), ethnic minority graduates, or involvement in reskilling vocational training, or re-education.

• Government Incentives: Companies operating in Xinjiang receiving government development assistance as part of the government’s poverty alleviation efforts or vocational training programs; companies involved in the mutual pairing assistance program or companies receiving subsidies for energy, transportation, and labor costs.

• Government Recruiters: Companies operating in Xinjiang implementing nonstandard hiring practices and/or hiring workers through government recruiters.

• Any XPCC Affiliates: XPCC-affiliated entities are part of the prison labor system and manufacture goods beyond cotton products. In July 2020, the Department of the Treasury sanctioned the XPCC pursuant to its Global Magnitsky sanctions authority.3 The XPCC, including the XPCC Public Security Bureau, is on the Department of Commerce’s Entity List. Exports, reexports, or transfers (in-country) of items subject to the EAR where the XPCC or XPCC Public Security Bureau are a party to the transaction (e.g., end-user, purchaser, intermediate or ultimate consignee) require a license from the U.S. Department of Commerce’s BIS. Additionally, U.S. CBP issued a WRO against XPCC cotton.

• Business Location and Affiliation: Companies operating in Xinjiang located within the confines of the internment camps and prisons; near internment camps and prisons; or within the confines of or adjacent to industrial parks involved in the government’s poverty alleviation efforts are at increased risk of forced labor. New factories built near internment camps and prisons are also suspect. Any businesses owned by or contracting with a prison enterprise are very likely engaged in forced labor.

• Goods Included on the U.S. Department of Labor’s List of Goods Produced by Child Labor or Forced Labor: The Department of Labor maintains a list of goods and their source countries which it has reason to believe are produced by child labor or forced labor in violation of international standards (the TVPRA List). To date, the Department of Labor has identified 18 goods produced by forced labor in China, including six goods on the TVPRA List that are produced by forced labor by members of Muslim minority groups, including Uyghurs ethnic Kazakhs, ethnic Kyrgyz, and members of other ethnic and Muslim minority groups, in Xinjiang. The six goods are gloves, hair products, polysilicon, textiles, thread/yarn, and tomato products. The Department of Labor continues its research into forced labor issues in China, including the use of ethnic and religious minorities forced to produce goods in Xinjiang and in other regions in China.

• Companies on the U.S. Department of Commerce’s Entity List: The Department of Commerce’s Entity List identifies entities reasonably believed to be involved, or to pose a significant risk of being or becoming involved, in activities contrary to the national security or foreign policy interests of the United States. Since June 2020, the Department of Commerce has added multiple Chinese entities to the Entity List implicated in or participating in the practice of forced labor involving members of Muslim minority groups from Xinjiang. Exports, reexports, or transfers (in-country) of items subject to the EAR where such entities are a party to the transaction (e.g., end-user, purchaser, intermediate or ultimate consignee) require a license from the Department of Commerce’s BIS. The list is available here: Commerce Entity List. For additional information about the Entity List, please see Annex 5 below.

• Companies and Products under Customs and Border Protection Withhold Release Orders: WROs are issued based on information available that reasonably but not conclusively indicates that merchandise within the purview of 19 U.S. C. § 1307 is being or is likely to be imported into the United States. CBP has issued WROs against nine Chinese companies, XPCC cotton, and all Xinjiang cotton and tomatoes as well as products using Xinjiang cotton or tomatoes as inputs. A list of goods and entities subject to WROs is available here: WRO List.

• Entities on the U.S. Department of the Treasury’s Specially Designated Nationals and Blocked Persons List: The Department of the Treasury’s OFAC’s List of Specially Designated Nationals and Blocked Persons (SDN List) includes eight Chinese officials and two entities, including XPCC, that are subject to economic sanctions. All property and interests in property with respect to such sanctioned entities (and any entities 50 percent or more owned, directly or indirectly, individually or in the aggregate, by one or more blocked persons) are blocked, and U.S. persons are generally prohibited from conducting transactions or dealings with such blocked persons unless the activity is exempt or authorized by OFAC. OFAC’s searchable online SDN list is available here: OFAC SDN List.

IV. Human Rights Due Diligence

In line with internal risk assessments, businesses and individuals should undertake heightened due diligence to ensure compliance with U.S. law and to identify potential supply chain or other exposure to companies operating in Xinjiang, linked to Xinjiang (e.g., through the pairing program or Xinjiang supply chain inputs), or utilizing Uyghur and other Muslim minority laborers from Xinjiang. In the event of identifying linkages to prohibited entities linked to Xinjiang, businesses and individuals must avoid unlawful activities.

Given the severity and extent of these abuses, including widespread, state-sponsored forced labor and intrusive surveillance taking place amid ongoing genocide and crimes against humanity in Xinjiang, businesses and individuals that do not exit supply chains, ventures, and/or investments connected to Xinjiang could run a high risk of violating U.S. law. Potential legal risks include: violation of statutes criminalizing forced labor including knowingly benefitting from participation in a venture, while knowing or in reckless disregard of the fact that the venture has engaged in forced labor; sanctions violations if dealing with designated persons; export control violations; and violation of the prohibition of importations of goods produced in whole or in part with forced labor or convict labor.

The UN Guiding Principles, the OECD Guidelines, the International Labor Organization (ILO) publication, “Combating Forced Labour: A Handbook for Employers and Business,” and the Office of the High Commissioner for Human Rights guide on “The Corporate Responsibility to Respect Human Rights,” (OHCHR guide) provide guidance for heightened due diligence in high-risk and conflict-affected regions and factors to be considered in determining appropriate action, including whether and how to responsibly end relationships when a business lacks the leverage to prevent or mitigate adverse impacts and is unable to increase its leverage.

Businesses and individuals providing or receiving goods and services directly or indirectly to or from Chinese entities or engaging in ventures with Chinese entities are likely to face obstacles to conducting adequate due diligence to fully identify and avoid complicity in human rights abuses linked to Xinjiang. Government controls, the lack of government and corporate transparency, the threat of detention of auditors and workers, and a police state atmosphere in Xinjiang impose significant obstacles to ensuring the reliability of audits on working conditions and respect for human rights, which has led audit companies to refuse to conduct audits in this region.

Businesses and individuals should consider these difficulties, as well as any warning signs and the credible reports of the prevalence of forced labor and other human rights abuses in the region.

The use of multilateral targeted financial sanctions against corrupt actors and human rights violators has created a need for businesses to shift to a proactive corporate risk and due diligence strategy that takes into account both human rights and corruption issues. Sanctions have proven to U.S. and global businesses that human rights violations and corruption directly impact them. The recent actions of the U.S. government and multilateral partners have shown that the cost of companies performing increased due diligence is less than that of economic and reputational impacts of economic sanctions.

a. Due Diligence Related to Banking, Financial Institutions, and other Investors

Entities with ties to the U.S. financial system should be aware that U.S. financial institutions3 are required to comply with a range of anti-money laundering (AML),4 countering the financing of terrorism (CFT), and countering proliferation financing (CPF) related requirements under the Bank Secrecy Act (BSA).5 These BSA obligations generally apply to a variety of financial institutions.6 In complying with these AML/CFT/CPF BSA requirements, financial institutions are expected to take a risk-based approach to identify, assess, and mitigate the money laundering and terrorist financing risks to which they are exposed and take measures commensurate with those risks in order to