Jurisdiction, Control, Direction: What Triggers Coverage Under the Connected Vehicle Rule?
Understand the blurry line companies must navigate to assess China or Russia-linked entities.
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Jurisdiction, Control, Direction: What Triggers Coverage Under the Connected Vehicle Rule?
Transcript
The way that this test is set out, there are a number of other, national security regulatory regimes that look at similar types of issues.
The test for this regime is broader than pretty much any other one, and and that's true across the ICTS, regulatory regime. It is very broad because it covers ownership control, jurisdiction, and then also direction of, China or Russia.
And in the guidance, they they say that that, direction means continuous and ongoing relationships between the regulated entity and China and Russia. What what that means is very nebulous, and they do have a number of examples in the in the regulations.
And almost every single one of them explains scenarios where a relationship is caught. And it doesn't explain where relationships aren't caught, which, makes it very challenging to say, like, where is the actual line?
So we're spending a lot of time with clients trying to figure out, you know, what is the line that is a sufficient nexus to, you know, China and Russia, it seems like it's a, it's a lower threshold than you would expect, in in many cases and probably not what you would think would be potentially, given some of the guidance that they're, they're providing. And so that comes up in context like minority investments by, Chinese or Russian entities, board membership.
If companies are undergoing transition plans to, come in compliance with these rules, you know, what is sufficient?
We're seeing, you know, a a lot of ambiguity there, and, and that's something that, you know, given this is a new regime is, is it's something that I think is really evolving in terms of where those lines are.