Thinking of doing business in the United States? This brief paper highlights the major issues to take into consideration and GLS services.

1. Buying or investing in a U.S. company?
   • The U.S., as well as the EU and UK have tightened restrictions on foreign investment in their countries. In the U.S., foreign investment is governed by the Committee on Foreign Investment in the U.S. (CFIUS) part of the U.S. Treasury Department. In 2019, its scope was greatly expanded. As a result, a number of companies purchasing and investing in US companies have been caught, after closing, for not clearing the CFIUS review process. Completing a CFIUS review after the fact can be very expensive. It can also result in the transaction being unwound, at great cost to the participants.
   • Does the company do work for the U.S. Government? Even tighter rules apply under the general heading of “Foreign Ownership, Control or Influence” (FOCI) in addition to normal U.S. government contracting laws.
   • GLS provides pre-transaction CFIUS and government contracting review. services. These services determine if CFIUS (or its counterparts in the EU, Canada, Australia, or the UK) or government contract restrictions apply to a particular investment and, if so, whether and what mitigation options are available. The cost of a pre-investment review is much less than a full CFIUS review process and orders of magnitude lower than a post-closing CFIUS or National Industrial Security Program (NISP) examination.
   • We strongly encourage discussions – prior to binding commitments being made -- concerning the regulation of foreign investment in the real estate, telecommunications, emerging technologies, or defense or defense-related industries in U.S., EU, UK, Australia and Canada.
2. Other Doing Business Considerations.
   • Know your counterparty. This is important for three reasons: Business Risk, Reputational Risk, Financial Risk.
     • Business Risk.
       • Successful business transactions depend upon sound risk evaluation.
       • Understand the benefits – and burdens – a counterparty brings to a transaction. For example, who are its owners? What is its financial standing?
       • What is the counterparty’s experience in the field? If a government contractor, what is its risk rating?
     • Reputational Risk.
       • What is the counterparty’s reputation in the area of business, the territory, with other companies and counterparties?
       • Does your U.S. counterparty understand and comply with
         1. local, state, and federal registration and “doing business” rules?
         1. State and federal work-place safety rules?
         1. State and federal labor, pension, and tax laws?
       • Failure to take account of these issues may make your first step in the U.S. a damaging one, regardless of how good your reputation may be.
     • Financial Risk.
       • Establish sound contracts that spell out each counterparty’s business as well as financial obligations clearly.
       • Balance business risk with financial obligations and rewards.
   • Understand Compliance Risks.
     • Economic sanctions
       • Every U.S. person (citizen, permanent resident, anyone in the U.S.) is responsible for complying with federal laws such as the economic sanctions programs administered by the Office of Foreign Assets Control (OFAC), part of the U.S. Treasury Department.
       • Compliance is achieved, primarily, by checking all counterparties against the OFAC Specially Designated Nationals List (SDN List), available online.
       • OFAC sanctions programs, generally speaking, prohibit any U.S. person from conducting any business with any person or company on the SDN List and require that any property owned or controlled by an SDN that comes within the custody or control of a U.S. person be blocked and reported to OFAC.
       • The economic sanctions laws are enforced by the imposition of substantial fines (banks have paid over $1 billion on more than one occasion) for violations.
     • Anti-Money Laundering (AML).
       • Background. The AML laws of the U.S. are administered by the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN). The AML laws require every U.S. person (business or individual), including financial institutions (defined to include money transmitters, banks, securities’ firms, and real estate sales in certain amounts in specified parts of the U.S.) to report cash transactions of $10,000 or above, and suspicious transactions of any amount, to FinCEN. 
     • Bank Accounts and Funds Transfers
       • All account openings are subject to federally-mandated “Customer Identification Programs” overseen by FinCEN and require identification of the account’s beneficial owners (natural persons with 25% or more ownership).
       • All accounts are monitored by the bank holding the account and federal financial institution regulators pursuant to the Bank Secrecy Act and the anti-money laundering regulations administered by FinCEN.
       • Every non-U.S. financial institution that wants to do business with a U.S. bank must have:
         • An effective AML program; and,
         • Must comply with the Foreign Account Tax Compliance Act (FATCA, requires substantial information upon account opening in foreign country).
       • Cash carried to or from the U.S. must be reported on a Currency or Monetary Instrument Report (CMIR).
   • Anti-Corruption.
     • The U.S. has strict anti-corruption laws, at every level of the U.S. federal system.
     • The anti-corruption laws prohibit the giving of anything (with very few exceptions) for the purpose of obtaining or retaining government business.
     • Similarly, the anti-corruption laws apply to the receiver as well as the giver of anything of value.
     • In the U.S., these laws are enforced.
3. Political Activity. Political activity and contributions are heavily regulated in the U.S.
   • Political activity is regulated at every level of the U.S. government, federal, state, and, in some instances (such as New York City) at the municipal level, with registration and reporting obligations. (Lobbying Disclosure Act and similar laws)
   • Non-U.S. persons (individual, corporate, or governmental) seeking to influence U.S. policy and governmental activities at any level (federal, state, county or municipal) are subject to registration and disclosure requirements with the National Security Division, U.S. Department of Justice. (Foreign Agents Registration Act).
   • It is illegal for a candidate for office in the U.S. to accept a contribution from a foreign individual or company, directly or indirectly. It is also illegal for a foreign individual or company to contribute to a campaign in the U.S.
4. Taxes. Taxes are an important consideration with regard to conducting any business in the U.S., as are issues such as repatriation of profits, exchange rates, and restrictions on property ownership by foreigners.
5. Local Law. Local laws are of critical importance in the U.S. It is critical that a foreign company entering the U.S. market have sound counsel at the operational level.

GLS is structured to provide you with high quality advice in each of these areas. We combine legal, investigative and due diligence talent to ensure that you are affiliated with counterparties that will enhance your business and promote you standing in the business community. We understand all aspects of entering the U.S. market and will tailor our services to meet your needs so that your experience in the U.S. is successful and profitable.