While it’s not clear whether the President’s release today of an Executive Order, "Blocking the Property of Certain Persons Engaging in Significant Malicious Cyber-Enabled Activities," was purposefully timed to coincide with April Fools' Day, it is apparent that the government is ratcheting up its fight against cyberterrorism and making no joke about it. Taking a page from its playbook of sanctions enforced against supporters of the Crimean invasion, members and abettors of the Syrian regime, WMD proliferators, and numerous others who are anathema to U.S. foreign policy and economic interests, the Order authorizes imposition of blocking and freezing sanctions on persons determined to be responsible for, or complicit in, malicious cyber-enabled activities and misappropriation of trade secrets that have harmed, or are likely to harm, the national security, foreign policy, economic health or financial stability of the United States.
Citing the increasing occurrence and severity of malicious cyber-enabled activities originating from, or directed by persons located, outside the United States, President Obama has ordered that all property and interests in property that are in the U.S., that hereafter come within the U.S., or that are or hereafter come within the possession or control of any United States person, of certain enumerated categories of cyber-terrorists, “are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in.” This latter language informs all banks and other financial institutions, money services businesses, and supporting service providers, among others, that they may not process transactions involving the targeted cyber-terrorists, and must block any transaction, and freeze all accounts, funds or property, relating to such persons. The Department of the Treasury is directed to issue implementing regulations.
Broad Applicability. The targets of the Executive Order are broadly defined to include any person:
- responsible for or complicit in, or that has engaged in, directly or indirectly, cyber-enabled activities originating from, or directed by persons located, in whole or in substantial part, outside the U.S. that are reasonably likely to result in, or have materially contributed to, a significant threat to the national security, foreign policy, economic health or financial stability of the United States and that have the purpose or effect of:
- harming, or otherwise significantly compromising the provision of services by, a computer or network of computers that supports one or more entities in a critical infrastructure sector;
- significantly compromising the provision of services by one or more entities in a critical infrastructure sector;
- causing a significant disruption to the availability of a computer or network of computers; or
- causing a significant misappropriation of funds, economic resources, trade secrets, personal identifiers or financial information for commercial or competitive advantage or private financial gain;
- responsible for or complicit in, or that has engaged in, the receipt or use for commercial or competitive advantage or private financial gain, or by a commercial entity, outside the United States of trade secrets misappropriated through cyber-enabled means, knowing they have been misappropriated, where the misappropriation of such trade secrets is reasonably likely to result in, or has materially contributed to, a significant threat to the national security, foreign policy, economic health or financial stability of the U.S.;
- that has materially assisted, sponsored or provided financial, material or technological support for, or goods or services in support of, any of the foregoing activities, or any person whose property and interests in property are blocked pursuant to the Executive Order;
- owned or controlled by, or that has acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to the Order; or
- that has attempted to engage in any of the foregoing activities.
Donations. The Order also prohibits the making or receipt of donations to, or for the benefit of, any person whose property and interests in property are blocked pursuant to the Executive Order, including any contribution or provision of funds, goods or services (and even humanitarian items such as food, clothing and medicine) by, to or for the benefit of any person whose property and interests in property are blocked pursuant to the Order.
Immigration. The Order contains exclusion provisions, barring immigrant and nonimmigrant entry into the United States of aliens determined to fall into the above categories of persons.
Prior contracts and licenses. The prohibitions of the Executive Order apply notwithstanding any contract entered into or any license or permit granted prior to the effective date of the Order.
Evading, avoiding, causing or attempting. Characteristic of sanctions orders such as this, the Executive Order prohibits any transaction that evades or avoids, has the purpose of evading or avoiding, causes a violation of, or attempts to violate any of the Order’s prohibitions.
Conspiracies. Finally, the Executive Order prohibits any conspiracy formed to violate any prohibition of the Order. The impact of the Executive Order will depend on the number and identities of the persons who are identified as engaging in the prohibited activities and as being subject to the blocking and freezing requirements of the Order. Those names presumably will be published in one of the lists maintained by the U.S. Department of the Treasury’s Office of Foreign Assets Control (e.g., its Specially Designated Nationals list).