New U.S. Import Tariffs on Certain Automobiles and Parts
On March 26, 2025, President Trump signed an executive order directing new 25% tariffs on certain automobiles and automobile parts imported into the U.S. from all countries on or after April 3, 2025. This executive order comes as businesses await the outcome of the broader reciprocal trade plan also expected to be released on April 2.
The executive order builds on an investigation undertaken during President Trump’s first term focused on U.S. imports of passenger vehicles (sedans, sport utility vehicles, crossover utility vehicles, minivans and cargo vans), light trucks (collectively, automobiles) and certain automobile parts (engines and engine parts, transmissions and powertrain parts and electrical components — collectively, automobile parts) and their effect on the national security of the U.S. under Section 232 of the Trade Expansion Act of 1962, as amended (19 U.S.C. 1862) (Section 232). When the U.S. Department of Commerce (DOC) issued findings and recommendations to the President in February 2019, the President did not take any tariff action in response to the DOC’s determination that those imports threatened to impair the national security of the United States. Now, however, President Trump has determined that changes in import trends since the initial investigation and 2019 report have exacerbated risks to U.S. manufacturing, noting that “[t]oday, only about half of the vehicles sold in the United States are manufactured domestically[.]”
These new 25% tariffs, building on the prior investigation, will largely be effective for certain automobiles (to be identified in a subsequent notice in the Federal Register) on or after 12:01 a.m. Eastern Daylight Time on April 3, 2025. The effective date for parts could be deferred; the executive order specifies an effective date to be published in the Federal Register “but no later than May 3, 2025.
Automobiles and parts eligible for the U.S.-Mexico-Canada free trade agreement (USMCA) preferential treatment will be treated differently than all other imports. Where automobiles qualify for preferential tariff treatment under USMCA, importers of those automobiles may be permitted to submit documentation identifying or substantiating the amount of U.S. content in each model imported into the United States and pay duties only on the remainder. Where automobile parts qualify for preferential treatment under USMCA, those parts will be exempted from duties until such time that the DOC, in consultation with Customs, establishes a process to apply the tariff exclusively to the value of the non-U.S. content of such automobile parts and publishes notice in the Federal Register. “U.S. content” refers to the value of the automobile attributable to parts wholly obtained, produced entirely or substantially transformed in the United States.
The duties imposed by this order will be supplemental to duties on imports already imposed pursuant to other legal tools, including IEEPA (e.g. Canada, China and Mexico), Section 232 of the Trade Expansion of 1962 (e.g. steel and aluminum), Section 301 of the Trade Act of 1974 (e.g. China) and any other authority.
These duties will be imposed concurrent with other action taken under the President’s Reciprocal Trade Plan, which is expected to announce new tariffs on April 2, 2025, and with any new tariffs imposed under the President’s March 25, 2025 executive order granting the State Department discretion to impose 25% import duties on U.S. imports from countries that themselves import Venezuelan oil on or after April 2, 2025.
AI Governance: Steps to Adopt an AI Governance Program
There are many factors to consider when assisting clients with assessing the use of artificial intelligence (AI) tools in an organization and developing and implementing an AI Governance Program. Although adopting an AI Governance Program is a no-brainer, no form of a governance program is insufficient. Each organization has to evaluate how it will use AI tools, whether (and how) it will develop its own, whether it will allow third-party tools to be used with its data, the associated risks, and what guardrails and guidance to provide to employees about their use.
Many organizations don’t know where to start when thinking about an AI Governance Program. I came across a guide that I thought might be helpful in kickstarting your thinking about the process: Syncari’s “The Ultimate AI Governance Guide: Best Practices for Enterprise Success.”
Although the article scratches the surface of how to develop and implement an AI Governance Program, it is a good start to the internal conversation regarding some basic questions to ask and risks that may be present with AI tools. Although the article mentions AI regulations, including the EU AI Act and GDPR, it is important to consider state AI regulations being introduced and passed daily in the U.S. In addition, when considering third-party AI tools, it is important to question the third-party on how it collects, uses, and discloses company data, and whether company data is being used to train the AI tool.
Now is the time to start discussing how you will develop and implement your AI Governance Program. Your employees are probably already using it, so assess the risk and get some guardrails around it.
CLP Changes And What They Mean For Commercial Operations — A Conversation with Karin Baron and Lioba Oerter [Podcast]
This week I had the pleasure of speaking with Lioba Oerter, Director of Expert Services, 3E Expert Service Processing Centre (ESPC), and Karin F. Baron, Director of Hazard Communication and International Registration Strategy at B&C and our consulting affiliate, The Acta Group, about the significant changes to product classification, labeling, and packaging (CLP) in the European Union (EU). Lioba and I shared a podium recently and found we also have a shared belief that these forthcoming CLP changes will have a profound commercial impact on product classification, labeling, and packaging globally and that with everything going on in the world these days, this impact may be a bit underappreciated. Karin and I spoke about these matters last year, and I welcomed an opportunity to consider them again with Karin and Lioba in light of the new CLP developments as of December 2024. Karin, Lioba, and I discuss the CLP changes, including those recently made, why they came to be, what they mean for commercial operations, and conclude with some tips on staying ahead of this coming storm.
China Releases New Rules Regarding the Use of Facial Recognition Technology
On March 21, 2025, the Cyberspace Administration of China and the Ministry of Public Security jointly released the Security Management Measures for the Application of Facial Recognition Technology (the “Measures”), which will become effective on June 1, 2025. Below is a summary of the scope and certain of the key requirements of the Measures.
Scope of Application of the Measures
The Measures apply to activities using facial recognition technology to process facial information to identify an individual in China. However, the Measures do not apply to activities using facial recognition technology for research or algorithm training purposes in China.
Facial information refers to biometric information of facial features recorded electronically or by other means, relating to an identified or identifiable natural person, excluding information that has been anonymized.
Facial recognition technology refers to individual biometric recognition technology that uses facial information to identify an individual’s identity.
Specific Processing Requirements for Facial Recognition Technology
The Measures include specific processing requirements which must be complied with when activities are in scope of the Measures. These include:
Storage: The facial information should be stored in the facial recognition device and prohibited from external transmission through the Internet, unless the data handler obtains separate consent from the data subject or is otherwise permitted by applicable laws and regulations.
Privacy Impact Assessment (“PIA”): The data handler should conduct a PIA before processing the data.
Public Places: Facial recognition devices can be installed in public places, subject to the data handler establishing the necessity for maintenance of public security. The data handler shall reasonably determine the facial information collection area and display prominent warning signs.
Restriction: The data handler should not use facial recognition as the only verification method if there is any other technology that may accomplish the same purpose or meet the equivalent business requirements.
Filing Requirement: If the data handler processes facial information of more than 100,000 individuals through facial recognition technology, it should conduct a filing with the competent Cyberspace authority at the provincial level or higher within 30 business days upon reaching that threshold. The filing documents should include, amongst other things, basic information of the data handler, the purpose and method of processing facial information, the security protection measures taken, and a copy of the PIA. In cases of any substantial changes of the filed information, the filing shall be amended within 30 business days from the date of change. If the use of facial recognition technology is terminated, the data handler shall cancel the filing within 30 business days from the date of termination, and the facial information involved shall be processed in accordance with the law.
Mexico’s New Personal Data Protection Law: Considerations for Businesses
On March 20, 2025, Mexico’s new Federal Law on the Protection of Personal Data held by Private Parties (FLPPDPP) published in the Official Gazette of the Federation. Effective March 21, the new law replaces the FLPPDPP published in July 2010.
Among the key changes the decree and new FLPPDPP introduce is the dissolution of the National Institute of Transparency, Access to Information, and Protection of Personal Data (INAI). Before the decree’s publication, INAI served as an autonomous regulatory and oversight authority for matters related to transparency, information access, and personal data protection. As of March 21, 2025, these responsibilities will be transferred to the Ministry of Anticorruption and Good Governance (Ministry), a governmental body reporting directly to the executive branch. The Ministry will now supervise, oversee, and regulate personal data protection matters.
Related to personal data protection, companies may wish to consider the following points when preparing to comply with the new FLPPDPP:
The definition of “personal data” is amended to remove the previous limitation to natural persons, expanding the scope to any identifiable individual—when their identity can be determined directly or indirectly through any information.
The law now requires that the data subject give consent “freely, specifically, and in an informed manner.”
Public access sources are now limited to those the law explicitly authorizes for consultation, provided no restrictions apply, and are only subject to the payment of the applicable consultation fee.
The scope of personal data processing expands to encompass “any operation or set of operations performed through manual or automated procedures applied to personal data, including collection, use, registration, organization, preservation, processing, communication, dissemination, storage, possession, access, handling, disclosure, transfer, or disposal of personal data.”
As a general rule, the data subject’s tacit consent is deemed sufficient for data processing, unless the law expressly requires obtaining prior explicit consent.
Regarding the privacy notice, the new FLPPDPP requires data controllers to specify the purposes of processing that require the data subject’s consent. Additionally, the express obligation to disclose data transfers the controller carries out is eliminated.
Resolutions the Ministry issues may be challenged through amparo proceedings before specialized judges and courts.
Takeaways
1.
Although this amendment does not introduce substantial changes with respect to the obligations of those responsible for processing personal data, companies should review their privacy notice and, if necessary, adjust it to the provisions of the FLPPDPP including, where appropriate, replacing references to the INAI.
2.
If any data protection proceedings were initiated before the INAI while the previous law was in effect, the provisions of the prior law will continue to govern such proceedings, with the exception that the Ministry will now handle them.
3.
The executive branch will have 90 days to issue the necessary amendments to the new FLPPDPP regulations. Companies should monitor for the amendments’ publication to identify changes that may impact their compliance obligations under the new law.
Read in Spanish/Leer en español.
HMRC Supports a UK Restructuring Plan with its Change in Approach – Good News for Future RPs?
You may have read our previous blog about the Outside Clinic Restructuring Plan (RP) which asked whether 5p was enough to cram down HMRC and thought, well surely if that’s not enough, 10p would work? The Enzen Restructuring Plans (RPs) that were sanctioned this week also sought to compromise HMRC’s secondary preferential debt proposing a payment that would see HMRC recover 10p in the £ compared to nil in the relevant alternative. The Enzen RPs were not only sanctioned but also supported by HMRC – does this signal a change in attitude by HMRC?
In 2022 and 2023 we saw a number of RPs seeking to compromise HMRC secondary preferential debt in one way or another, and HMRC opposing those. Their reasons for not supporting often centered around the fact that HMRC is an involuntary creditor and that it has preferential status (in respect of certain of its debts) in an insolvency and therefore should be treated differently to other unsecured creditors in an RP.
The risk of HMRC challenge seemed to dissuade many (at least in the mid-market) from using the RP as a tool to restructure after plans proposed by the Great Annual Savings (GAS), Nasmyth and Prezzo were all opposed by HMRC. It was following those cases that HMRC then issued guidance outlining its expectations. Other RPs that have involved HMRC debt included Fitness First where HMRC’s debt was rescheduled, rather than compromised, and Clinton Cards, where HMRC’s debt also remained intact. It is perhaps not therefore surprising we haven’t seen many “HMRC” RPs since these due to the risk (and not to mention the cost) of a potential challenge from HMRC.
The Enzen RPs therefore seem to signal a change in attitude by HMRC who, for the first time, positively supported the plans. But why the change?
There were two plans proposed by Enzen entities, (Enzen Global Limited (EGL) and Enzen Limited (EL). HMRC was owed £5,286,674 by EGL in respect of preferential debts, and £4,319,890 by EL.
The EGL plan proposed to pay HMRC £250,000 in cash, equivalent to a return of 4.2p in the £ compared to 0.1p in the relevant alternative (in this case administration). Under the EL plan HMRC was also to receive a £250,000 cash payment resulting in a return of 5.6p in the £ compared to nil in the relevant alternative – which would also be administration. Essentially HMRC would receive a payment of approximately 10p in the £ under both plans.
Certain other preferential debts (VAT, NIC and PAYE) which were being paid when they fell due, were treated as critical payments under the RPs so were not compromised.
Although HMRC made noises at the convening stage suggesting that it might oppose the RPs there was no indication as to the basis on which it would do so. At this point HMRC’s position was governed by the fact that it hadn’t had enough time to consider its stance ahead of the convening hearing, given the substantial amount of material they had to review.
Between the convening hearing and sanction, HMRC raised its concerns in correspondence with the plan companies (although there is no specific detail about those concerns) save that they highlighted:
that the court should not cram down HMRC without good reason (following Naysmyth)
HMRC has a critical public function, and its views should carry considerable weight (following GAS).
Following this HMRC negotiated an additional £100,000 payment from both EGL and EL which increased its returns under the RPs to 6.6p under the EGL plan and to 8.1p under the EL plan. On that basis HMRC voted in favour of the RPs.
At the sanction hearing HMRC made their position on the RP clear and made the following statements indicating a new approach:
HMRC told the court that they knew they had opposed plans in the past (referencing Naysmith and GAS in particular), but they wanted their stance to the Enzen plan to prove indicative of a more proactive approach in relation to RPs.
HMRC also made it clear it is looking to participate as fully as possible with RPs where it can in the future.
The main reason HMRC supported in this case was because of the increased payment EML and EL were willing to give them, which meant there was a material increase to them.
There are at least two more plans that are coming before the court for sanction soon – Outside Clinic and Capricorn – that include an element of HMRC debt. Following the Enzen RPs it will be interesting to see, in light of HMRC’s positive engagement on Enzen, whether HMRC will support those.
The Enzen RPs will no doubt spark interest from the mid-market given HMRC’s stance to date has arguably been a blocker on mid-market RPs, but the costs of tabling an RP are still likely to be a concern given the litigious nature of many. Also if it is HMRC’s policy to now participate in restructuring plan hearings (even if they support) who bears those costs?
Annabelle McKeeve also contributed to this article.
Trump Administration Terminates Humanitarian Parole for Citizens of Cuba, Haiti, Nicaragua, Venezuela
Department of Homeland Security (DHS) Secretary Kristi Noem announced the termination of humanitarian parole for citizens of Cuba, Haiti, Nicaragua, and Venezuela, also known as the CHNV program, in the Federal Register on March 25, 2025. Humanitarian parole for citizens of these countries will expire no later than 30 days from March 25, 2025, or April 24, 2025.
CHNV beneficiaries who did not file some other immigration benefit application prior to publication of the termination notice must depart the United States on or before April 24, 2025, or the expiration of their humanitarian parole, whichever date is sooner. DHS will prioritize removal of CHNV beneficiaries without pending immigration applications who remain in the United States beyond the expiration of their humanitarian parole.
DHS has determined that, after termination of the parole, the condition upon which employment authorizations were granted no longer exists, and DHS intends to revoke parole-based employment authorizations.
The CHNV program was instituted by DHS under former President Joe Biden. It allowed citizens of Cuba, Haiti, Nicaragua, and Venezuela who obtained U.S. financial sponsors to enter the United States by humanitarian parole for up to two years. Once in the United States, parolees could apply for work authorization. Humanitarian parole was renewable, however, on Oct. 4, 2024, the Biden Administration announced it would not renew the program. About 530,000 individuals benefited from the CHNV program.
Seeking to enjoin termination of the program, on Feb. 28, 2025, Haitian Bridge Alliance and several individuals affected by the termination of the CHNV program filed a lawsuit in U.S. District Court for the District of Massachusetts, alleging violations of the Administrative Procedure Act and the Due Process Clause of the Fifth Amendment. The lawsuit is pending.
Operation Allies Welcome, the humanitarian parole program for Afghanis who assisted U.S. forces during the war in Afghanistan, and Uniting for Ukraine, the humanitarian parole program for individuals fleeing the war in Ukraine, are unaffected by the latest announcement.
FCA Review of Private Fund Market Valuation Practices
Go-To Guide:
The United Kingdom’s Financial Conduct Authority (FCA) is increasing its scrutiny of private fund market valuation practices, highlighting the need for stronger governance, transparency, and conflict-of-interest management across fund managers.
Fund managers are expected to apply consistent valuation methodologies, maintain functional independence in valuation processes, and address gaps in ad hoc valuation procedures.
The FCA has emphasised the importance of engaging third-party valuation advisers and has reminded fund managers of the importance of ensuring the independence of valuers.
Private fund managers should consider conducting gap analyses and strengthening their valuation frameworks to align with the FCA’s expectations.
Background
The FCA has embarked on a level of engagement with the private funds sector not seen since the consultation and engagement exercises surrounding the implementation of the Alternative Investment Fund Managers Directive (AIFMD) in 2013.
On 26 February 2025, the FCA issued a letter to the CEOs of all asset management and alternative firms, setting out its priorities for the year and informing them that it intends to:
engage with the UK fund management industry in a review of the UK’s implementation of the AIFMD, with a view to streamlining certain UK regulatory requirements (i.e. after maintaining a post-Brexit status quo, the FCA is now finally considering how UK private fund managers and their affiliated entities should be regulated); and
launch a review of conflict of interest management within UK fund managers. As part of this, the FCA will assess how firms oversee the application of their conflict of interest frameworks through their governance bodies and evaluate how investor outcomes are protected. (Note that the FCA will likely expect to see actual living processes deployed to prevent conflicts at all levels of a fund’s structure, with the efficiency of those processes tested by UK managers).
Subsequently, on 5 March 2025, the FCA published its findings from its review of private market valuation practices (the “Review’s Findings”).
Context of the FCA Review
The FCA’s review stemmed from its concern that private market assets, unlike public market assets, are not subject to frequent trading or regular price discovery. This necessitates firms to estimate values using judgment-based approaches, which can pose risks of inappropriate valuations due to conflicts of interest or insufficient expertise.
Private fund managers in the UK deploy a variety of different structures:
many of the valuation-related issues are more pronounced for open-ended funds that permit redemptions during the fund’s life, compared to closed-ended funds, where the true value and performance can only be determined at the end of the fund’s life when assets are sold.
funds that invest into a variety of assets, from relatively liquid ones (as is common with many hedge funds) to illiquid assets whose value may evolve as managers improve the asset (e.g. real estate funds and certain private equity funds).
We expect that the FCA will continue to focus on this area and will likely require all compliance teams across UK fund managers – regardless of their fund strategies – to conduct a gap analysis against the Review’s Findings.
The Review’s Findings
The FCA identified examples of good practice in firms’ valuation processes, including:
high-quality reporting to investors;
comprehensive documentation of valuations; and
use of third-party valuation advisers to enhance independence, expertise, and the consistent application of established valuation methodologies.
Overall, the FCA found that firms recognised the importance of robust valuation processes that prioritise independence, expertise, transparency and consistency.
The Review’s Findings, however, also identified areas requiring improvement, particularly in managing conflicts of interest. For example, conflicts can arise between a manager and its investors in the valuation process, such as when fees charged to investors depend on asset valuations. While firms acknowledged conflicts relating to fee structures and remuneration policies, the FCA found that other potential valuation-related conflicts were inadequately recognised or documented. These include:
conflicts in investor marketing, where unrealised performance of existing funds may be used to market new funds;
secured borrowing, where valuations may be inflated to secure higher borrowing levels; and
pricing of redemptions and subscriptions based on a fund’s net asset value.
The FCA expects firms to identify, document, and assess all potential and relevant valuation-related conflicts, determine their materiality, and take actions needed to mitigate or manage them.
The Review’s Findings also highlighted variations in firms’ approaches to independence within valuation processes. The FCA noted that functional independence within valuation functions and voting membership of valuation committees are critical for effective control and expert challenge. Additionally, the FCA found that many firms lacked clearly defined processes or consistent approaches for conducting ad hoc valuations during market or asset-specific events. Given the importance of ad hoc valuations in mitigating the risk of stale valuations, the FCA encouraged firms to consider the types of events and quantitative thresholds that could trigger such valuations and document how they are to be conducted.
The FCA flagged the following key areas for managers to consider reviewing and potentially improving:
the governance of their valuation processes;
the identification, documentation, and management of potential conflicts within valuation processes;
ensuring functional independence for their valuation process; and
incorporating defined processes for ad hoc valuations.
Breakdown of the Review’s Findings
Governance arrangements
The FCA found that while most firms had specific governance arrangements in place for valuations, including valuation committees responsible for making valuation decisions or recommendations, there were instances where committee meeting minutes lacked sufficient detail on how valuation decisions were reached. The FCA emphasised that firms must keep detailed records to enhance confidence in the effectiveness of oversight for valuation decisions.
Conflicts of interest
The FCA expects firms to identify, avoid, manage and, when relevant, disclose conflicts of interest. The Review’s Findings identified specific areas where conflicts are likely to arise, including investor fees, asset transfers, redemptions and subscriptions, investor marketing, secured borrowing, uplifts and volatility and employee remuneration. While the FCA found that conflicts around fees and remuneration were typically identified and mitigated through fee structures and remuneration policies, other potential conflicts were only partially identified and documented. Many managers had not sufficiently considered or documented these conflicts, often relying on generic descriptions.
The FCA expects firms to thoroughly assess whether valuation-related conflicts are relevant and, if so, to properly document them and the actions taken to mitigate or manage them. This may include engaging third-party valuation advisers.
Functional independence and expertise
The FCA reviewed the extent to which firms maintained independent judgment within their valuation processes, by looking at independent functions and the expertise of valuation committee members.
Only a small number of managers clearly demonstrated functional independence by maintaining a dedicated valuation function or an independent control function to lead on valuations. Such functions were responsible for developing valuation models and preparing recommendations for decisions made by valuation committees.
The FCA noted that examples of good practice to ensure independence included establishing a separate function to lead valuations and ensuring sufficient independence within the voting membership of valuation committees to guarantee effective control and expert challenge.
Policies, procedures and documentation
Unsurprisingly, the FCA emphasised that clear, consistent and appropriate policies, procedures and documentation are core components of a robust valuation process. These elements ensure a consistent approach to valuations and enable auditors and investors to verify adherence to the valuation process.
The FCA found that not all firms provided sufficient detail on their rationales for selecting methodologies and their limitations, nor did they include a description of the safeguards in place to ensure the functional independence of valuations or potential conflicts in the process. The FCA also observed examples of vague rationales for key assumption changes, such as adjustments in discount rates.
The FCA stated that it would encourage firms to engage with auditors appropriately, by inviting them to observe valuation committee meetings, raising auditor challenges at those meetings and taking proactive measures of managing conflicts of interest involving the audit service provider. It also stated that back-testing results can help firms inform their approach to valuations, by identifying insights about current market conditions and potential limitations in models, assumptions and inputs and encouraged firms to consider investing in technology to improve consistency and reduce the risk of human error in valuation processes.
Frequency and ad hoc valuations
The FCA noted that infrequent valuation cycles risk stale valuations, which may not accurately reflect the current conditions of investors’ holdings. This can lead to potential harm, such as inappropriate fees or investors redeeming at inappropriate prices.
The FCA emphasised that conducting ad hoc valuations (outside of the regular valuation schedule) can help mitigate the risk of stale valuations if material events cause significant changes in market conditions or how an asset performs.
Most firms, however, were found to lack formal processes for conducting ad hoc valuations. The FCA urged firms to incorporate a defined process for ad hoc valuations, including defining the thresholds and types of events that would trigger an ad hoc valuation (such as movement in the average multiple of the comparable set, company-specific events and fund-level triggers). It found that most firms waited for changes to flow through at the next valuation cycle instead of conducting ad hoc valuations. Only a few firms formally incorporated ad hoc valuations into their valuation processes by having defined types of events that would trigger these. The FCA stated firms should consider incorporating defined ad hoc valuation processes to mitigate the risk of stale valuations.
Transparency to investors
The FCA emphasised that transparency to investors increases confidence in their decision-making around private assets and enables them to make better informed decisions. The FCA urged full-scope UK AIFMs to provide investors with clear information about valuations and their calculations and encouraged all FCA-regulated firms to pay close attention to the information and needs of their clients.
The Review’s Findings highlighted that most firms demonstrated good practice by reporting both quantitative and qualitative information on performance at the fund and asset-levels, as well as holding regular conference calls with investors. Some firms further enhanced their reporting by including a ‘value bridge’ in their investor reports, showing the different components driving changes in asset values or net asset values, helping investors to better understand the factor influencing valuation changes. The FCA noted that some firms faced barriers limiting their ability to share information with investors. These barriers included restrictions arising from non-disclosure agreements and concerns about the commercial sensitivity of sharing valuation models.
The FCA urged firms to consider whether they can improve investor reporting and engagement by providing detail on fund-level and asset-level performance to increase transparency and investor confidence in the valuation process.
Application of valuation methodologies
The FCA stressed that valuation methodologies must be applied consistently for valuations to be appropriate and fair. In its review, the FCA observed that while firms applied valuation methodologies generally consistently by asset class, there were instances where firms employed different approaches, such as comparable sets and discount rate components for private equity assets. While firms could reasonably justify the use of different assumptions, the FCA expressed concerns that these variations might impair investors’ ability to compare valuations across firms. Firms demonstrating good practice were those that employed another established methodology as a sense check to validate their primary valuation and confirm their judgment.
The FCA expects firms to apply valuation methodologies and assumptions consistently, making valuation adjustments solely based on fair value. It also emphasized the need for valuation committees and independent functions to focus on these adjustments to ensure decisions are robust and well-documented.
Use of third-party valuation advisers
The FCA noted that it is good practice to seek further validation for internal valuations through third-party valuation advisors, particularly after identifying material conflicts of interest, such as calculating fees, pricing redemptions and subscriptions, transferring asset using valuations.
The FCA found that most managers engaged third-party valuation advisers and discussed their controls to assess the quality of service and independence provided by these advisers. Examples of good practice included conducting an annual exercise whereby the firm used a valuation from an alternative provider for the same asset and compared the quality of valuations from both providers.
Firms that adopted good practices had considered the limitations of the service provided, taken steps to ensure the independence of the third-party valuation advisers, and retained responsibility for valuation decisions.
The FCA urged firms to consider the strengths and limitations of the service provided and to disclose the nature of these services to investors, including the portfolio coverage and frequency of valuations. Additionally, firms need to be aware of potential conflicts of interest when using third-party valuation advisers and should ensure that investment professionals are kept at arm’s length to maintain the independence of third-party valuations.
Next Steps
The FCA indicated that the Review’s Findings will inform its review of the AIFMD and will be taken into consideration when updates are made to the FCA’s Handbook rules. Furthermore, the FCA indicated that the Review’s Findings will inform its contribution to the International Organization of Securities Commission’s review of global valuation standards to support the use of proportionate and consistent valuation standards globally in private markets.
In the meantime, the FCA has said that managers should assess the Review’s Findings and address any gaps in their valuation processes to ensure they are robust and are supported by a strong governance framework with a clear audit trail. Boards and valuation committees should also be provided with regular and sufficient information on valuations to ensure effective oversight.
In light of the above, fund managers and other regulated firms in the UK performing key functions related to funds should:
consider reviewing the FCA’s findings and identify any gaps in their valuation approach, taking action to address deficiencies where applicable;
ensure their governance arrangements provide accountability for valuation processes;
assess whether their valuation committees have sufficient independence and expertise to make valuation decisions; and
enhance oversight of third-party valuation advisers and consider the strengths and limitations of service providers.
China Releases Draft Implementation Measures for the Protection of Drug Trial Data Including Data Exclusivity for Foreign-Originated Drugs
On March 19, 2025, China’s National Medical Products Administration (NMPA) released Implementation Measures for the Protection of Drug Trial Data (Trial, Draft for Comments) (药品试验数据保护实施办法(试行，征求意见稿))and Working Procedures for the Protection of Drug Trial Data (Draft for Comments) (药品试验数据保护工作程序(征求意见稿)) that provides up to 6 years of data exclusivity of clinical trial data required to be submitted to the NMPA to prove safety and efficacy of a new drug to prevent generic drug manufacturers from relying on this data in their own applications. In contrast, the US generally provides 5 years of exclusivity. However, for foreign-originated drugs, the Chinese data protection period will be 6 years minus the time difference between the date on which the drug’s marketing authorization application in China is accepted and the date on which the drug first obtains marketing authorization overseas. Comments are due before May 18, 2025. The original documents as well as spreadsheets to submit comments are available here (Chinese only).
A translation of the Implementation Measures follows.
Article 1 (Purpose and Basis) These Measures are formulated in accordance with the Drug Administration Law of the People’s Republic of China, the Regulations for the Implementation of the Drug Administration Law of the People’s Republic of China, the Drug Registration Management Measures and other relevant regulations in order to encourage drug innovation and meet the public’s demand for medicines.
Article 2 (Management Mechanism) The State Drug Administration (hereinafter referred to as the NMPA ) is responsible for the protection of drug trial data (hereinafter referred to as data protection) and is responsible for establishing a data protection system and implementing management work in accordance with the principles of fairness, openness and impartiality.
The Drug Technical Review Center of the National Drug Administration (hereinafter referred to as the Drug Review Center) is responsible for the specific implementation of data protection.
Article 3 (Definition of Concepts) Data protection means that when drugs containing new chemical ingredients and other qualified drugs (see the attached table for details) are approved for marketing, the National Medical Products Administration shall protect the test data and other data submitted by the applicant that are obtained independently and not disclosed, and grant a data protection period of no more than 6 years.
During the data protection period, if other applicants apply for drug marketing authorization or supplementary application relying on the data in the preceding paragraph without the consent of the drug marketing authorization holder (hereinafter referred to as the holder), the National Medical Products Administration will not grant permission; unless other applicants obtain the data on their own.
During the data protection period, if other applicants submit drug registration applications using data obtained by themselves, their applications shall be approved if they meet the requirements and no longer be granted the data protection period, but the data shall not be relied upon by other subsequent applicants .
Article 4 (Conditions of protected data) Undisclosed trial data and other data refer to trial data in the complete application materials that are not disclosed in the application for drug marketing authorization for the first time in the country.
After a drug is approved, test data obtained when subsequent research work is completed in accordance with the requirements of the drug regulatory authorities will no longer be given new data protection.
Article 5 (Data Protection Related to Innovative Drugs) A six-year data protection period is granted for innovative drugs from the date of their first domestic marketing authorization.
If an original research drug that has been marketed overseas but not in China applies for marketing in China, the data protection period is 6 years minus the time difference between the date on which the drug’s marketing authorization application in China is accepted and the date on which the drug first obtains marketing authorization overseas. The data protection period is calculated from the date on which the drug obtains marketing authorization in China.
The scope of drug data protection in this clause includes all test data used in the drug marketing authorization application materials to prove the safety, efficacy and quality controllability of the drug.
For innovative drugs that have been approved for multiple indications but have the same approval number, each indication will be given data protection according to the registration category, and the scope of data protection for newly added indications will be the clinical trial data that support its marketing.
During the data protection period, the National Medical Products Administration will not approve the marketing application or supplementary application for improved new drugs, chemical generic drugs and biosimilar drugs submitted by other applicants without the consent of the holder, relying on the protected data of the holder , unless other applicants submit data obtained by themselves.
Article 6 (Protection of data related to improved new drugs) A three-year data protection period will be granted from the date of the first domestic marketing authorization for the improved new drug.
If a modified drug that has been marketed overseas but not in China applies for marketing in China, the data protection period is 3 years minus the time difference between the date on which the drug’s application for marketing authorization in China is accepted and the date on which the drug first obtains marketing authorization overseas. The data protection period is calculated from the date on which the drug obtains marketing authorization in China.
The scope of drug data protection in this clause includes new clinical trial data that demonstrates that the drug has significant clinical advantages over drugs with known active ingredients (marketed biological products), but does not include bioavailability, bioequivalence and immunogenicity data of vaccines.
During the data protection period, the National Medical Products Administration will not approve the marketing application or supplementary application for chemical generic drugs and biosimilar drugs submitted by other applicants without the holder’s consent and relying on the protected data of the holder , unless other applicants submit data obtained by themselves.
Article 7 (Data Protection Related to Generic Drugs) A three-year data protection period is granted to the first approved generic drugs (including drugs produced overseas) and biological products of original research drugs that have been marketed overseas but not in China. The data protection period is calculated from the date on which the generic drug or biological product obtains marketing authorization.
The scope of data protection for drugs in this clause includes necessary clinical trial data to support approval, but does not include bioavailability, bioequivalence and immunogenicity data of vaccines.
During the data protection period, the National Medical Products Administration will not approve the marketing application or supplementary application for chemical generic drugs and biosimilar drugs submitted by other applicants without the holder’s consent and relying on the protected data of the holder , unless other applicants submit data obtained by themselves.
Article 8 (Application and supporting documents) If the applicant intends to apply for data protection, he/she shall submit an application for data protection at the same time as submitting the application for drug marketing authorization. If there are any questions about data protection-related issues, he/she may apply for communication.
Article 9 (Technical Review) When conducting technical review of drug registration applications, the Center for Drug Evaluation shall confirm the scope and duration of data protection in accordance with the provisions of these Measures.
Article 10 (Granting of Protection Period and Publicity) For drugs that meet the data protection conditions, the National Medical Products Administration will mark the drug’s data protection information in the drug approval certificate.
The Center for Drug Evaluation has established a data protection column on its website to publish relevant information on drug data protection.
Article 11 (Acceptance, Review and Approval) After a drug obtains data protection, other applicants can submit drug marketing applications and supplementary applications that rely on the protected data within one year before the expiration of the data protection period . The Drug Evaluation Center will suspend the review time after completing the technical review, and the relevant drugs will be approved for marketing after the data protection period expires.
an applicant claims that the data was obtained independently when submitting a drug marketing application and a supplementary application , but it is discovered during the technical review process that the application relies on protected data of other applicants, the application will not be approved.
Article 12 (Termination of Data Protection) Data protection shall terminate if the drug approval document is revoked, suspended, or cancelled, if the holder voluntarily waives data protection, or in other circumstances prescribed by laws and regulations.
If data protection is terminated, the National Medical Products Administration will issue a notice on the termination of data protection, and the Drug Evaluation Center will update the relevant information in the data protection column based on the notice. From the date on which the National Medical Products Administration issues the notice on the termination of data protection, it can accept or approve drug registration applications submitted by other applicants that rely on the protected data.
Article 13 ( Incompliance with data protection information ) If, during the review process, it is found that the documents proving the first overseas marketing authorization for drugs submitted by the applicant in accordance with Articles 5 and 6 of these Measures do not match the actual situation , data protection will not be granted; if data protection has already been granted, the data protection will be cancelled.
Article 14 (Data Protection Procedure) The specific working procedures for data protection will be separately formulated by the Drug Evaluation Center.
Article 15 (Effective Date) This regulation shall come into force from now on.
Schedule 1
Chemical Drug Registration Classification and Data Protection Period
Classification
content
Data protection period
Category 1
Innovative drugs that have not been launched in the domestic or overseas markets.
6 years
Category 2
Improved new drugs that have not been marketed domestically or abroad.
3 years
Category 3
Domestic applicants copy original drugs that are marketed overseas but not in China.
3 years
Category 4
Domestic applicants copy original drugs that have been marketed domestically.
none
Category 5
Drugs that have been marketed overseas can apply for domestic marketing approval.
5.1
Original research drugs that have been marketed overseas apply for domestic marketing.
6 years – (domestic acceptance time – overseas listing time)
Improved drugs that have been marketed overseas may apply for domestic marketing approval.
3 years – (domestic acceptance time – overseas listing time)
5.2
Generic drugs that have been marketed overseas apply for domestic marketing.
3 years
Schedule 2
Registration classification and data protection period for preventive biological products
Classification
content
Data protection period
Category 1
Innovative vaccines
6 years
Category 2
Improved vaccines
3 years
Category 3
3.1 Application for listing of vaccines produced overseas and marketed overseas but not marketed domestically
6 years – (domestic acceptance time – overseas listing time)
3.2 Vaccines that have been marketed overseas but not in China can be produced and marketed in China
3 years
3.3 Vaccines already on the market in China
none
The Perils of Interpreting Your Own Rules Too Strictly, Especially When They Don’t Exist (UK)
So here it is, 2025’s first serious contender for the What On Earth Were They Thinking? Awards, an unfair dismissal case with a common-sense answer so clear you could see it from Mars, but which it nonetheless took five years and the Court of Appeal to arrive at.
Mr Hewston was employed by Ofsted as a Social Care Regulatory Inspector. In 2019, in the course of a school inspection, he brushed water off the head and touched the shoulder of a boy of 12 or 13 who had been caught in a rainstorm.
That contact was reported to Ofsted by the school as a case of “inappropriate touching”. The terms of the school’s reports were, said the Court of Appeal, “redolent with hostility against the inspectors and the inspection”. They described the incident in fairly hyperbolic terms – that contact had created a “very precarious situation” and had “put the safety of a student at risk”, both allegations which Ofsted itself quickly dismissed as arrant nonsense. It knew that the same school had made complaints about a number of previous inspectors, allegations not necessarily unconnected with its having serially failed to receive the Ofsted gradings it wanted.
Ofsted itself never made any suggestion that there had been any improper motivation on Hewston’s part. It accepted from the outset that the conduct was “a friendly act of sympathy and assistance”. Nonetheless, it dismissed Hewston for gross misconduct a month later. Why?
The disciplinary charges referred to his having without consent or invitation touched a child on the head and shoulder “contrary to Ofsted core values, professional standards and the Civil Service Code”. It was not Ofsted’s case that any of those values or standards or the Code contained any explicit reference to the circumstances in which school inspectors should make physical contact with a child, still less any blanket no-touch rule. Nonetheless, Hewston found himself in an impossible position at the disciplinary Hearing – even though promising that he had learnt his lesson, the more he denied that he had acted improperly (not least in the absence of any such rule), the more fuel he added to Ofsted’s claimed view that he could not be trusted not to do it again.
By the time the question reached the Court of Appeal, the issues had for practical purposes been boiled down to whether it was reasonable for Ofsted to treat that conduct as justifying Hewston’s dismissal, and as part of that, whether even without that no-touch rule, Hewston should have appreciated that his conduct could lead to his dismissal.
The ruling was clear that Hewston’s actions had been a misjudgement, however well-intentioned, but also that Ofsted could not reasonably have determined that they were sufficient to justify his dismissal. There had never been any safeguarding issue nor any risk to the child. Hewston had made it clear that he would undertake whatever training was required and would not repeat his conduct. Even if Ofsted thought that he harboured some continuing doubt about whether he had in fact acted inappropriately, it had no real reason to fear a recurrence. In any case, it was not allowed to turn sub-dismissable conduct into gross misconduct merely because Hewston didn’t seem in its perception to show the appropriate remorse or understanding.
Most of all, Hewston’s trip to the Court of Appeal was successful for the reasons in one short paragraph in a judgement of nearly 30 pages – the “fundamental point was that in the absence of a no-touch rule or other explicit guidance covering a situation of the relevant kind, Hewston had no reason to believe that he was doing anything so seriously wrong as to justify dismissal”. As a result, said the Court, it seemed “deeply regrettable that [Hewston], who was an experienced inspector with an unblemished disciplinary record on safeguarding issues, should have been summarily dismissed for conduct which, on any reasonable appraisal, amounted to no more than a momentary and well-meaning lapse of professional judgement of a kind which he was most unlikely ever to repeat”.
So for employers, the immediate moral of this story is that if you have a principle of conduct in your business which is as important to you as Ofsted said its non-existent no-touch rule was to it, make it express. And the more stringent that rule is, the more it might lead to dismissal for conduct which isn’t on its face that big a deal, the louder you have to shout about it.
But even then, that is not necessarily the end of the matter. As employer, you cannot safely go straight from breach of that rule to dismissal without consideration of the specific circumstances of the case. That is particularly the position where the wider the rule, the easier it is to breach it for wholly innocuous reasons. Even writing as a committed adherent to the instructions on packs of dishwasher tablets to “keep well away from children”, there are limits. Could a school inspector touch a child to help it up after a playground accident? To pull it out of the way of a car or a collision with another child, something corrosive spilt in the Chemistry Lab, an errant javelin on Sports Day? Could you sit it down and dry its tears if it were clearly distressed about something, or help it to the Sick-room? Exactly where is the line between protecting a child’s physical health and safety on the one hand and its comfort, happiness or wellbeing on the other? With the possible exception of that one about not taking the boron rods out of nuclear reactors, every hard rule has its fuzzy edges.
As soon as Ofsted accepted that no harm to the child had been intended or done, that should have been the end of the matter. A warning at its absolute highest. However, to pursue the principle of a rule which did not exist as far as the Court of Appeal at vast cost to both Hewston and the taxpayer shows, with respect, a serious loss of self-awareness from the point of dismissal and ever since. Don’t let this happen to you – remember that fairness trumps rules every time.
DHS Terminates Parole Programs
On March 25, 2025, the Department of Homeland Security (DHS) published a Federal Register notice terminating parole programs for Cuba, Haiti, Nicaragua, and Venezuela (CHNV) as of April 24, 2025, unless Secretary Kristi Noem makes an individual determination to the contrary. This is being carried out pursuant to Executive Order 14165, titled “Securing Our Borders.” The termination of these programs affects 532,000 individuals from these countries. DHS will notify affected individuals through their online myUSCIS accounts.
Unless those under a CHNV program have a separate underlying immigration status to which they can revert, they will be deemed “undocumented” and subject to expedited removal (deportation) from the United States. The subjects of expedited removal do not appear before immigration judges for full hearings, making the deportation process swift. Any work authorization issued to them will also end on April 24, 2025, even if their employment authorization documents contain later expiration dates.
New Office of Financial Sanctions Implementation Financial Services Threat Assessment
On 13 February 2025, the Office of Financial Sanctions Implementation (OFSI) published its assessment of suspected sanctions breaches involving financial services firms since February 2022 (the Assessment). The Assessment forms part of a series of sector-specific assessments by OFSI that address threats to UK financial sanctions compliance by UK financial or credit institutions.
The Assessment highlights three areas of main concern:
Compliance;
Russian-Designated Persons (DPs) and enablers; and
Intermediary Countries.
This alert provides a summary of these concerns and suggests action financial services firms can take to combat these threats when developing their risk-based approach to compliance.
Compliance
OFSI has identified several compliance issues and advised steps that firms can take to improve and strengthen their compliance. These include:
Improper Maintenance of Frozen Assets
All DPs accounts and associated cards, including those held by entities owned or controlled by DPs, must be operated in accordance with asset freeze prohibitions and OFSI licence permissions. Financial institutions should review existing policies or contracts as these can often automatically renew, resulting in debits from DP accounts.
Breaches of Specific and General OFSI Licence Conditions
Firms need to carefully review permissions when assisting with transactions they believe are permitted under OFSI licences. Firms must ensure that OFSI licenses are in date, bank accounts are specified in OFSI licences and licence reporting requirements are adhered to.
Inaccurate Ownership Assessments
Firms must be able to identify entities that are directly owned by Russian DPs, and subsidiaries owned by Russian conglomerates that are themselves designated or majority owned by a Russian DP. Firms should conduct increased due diligence where necessary and regularly update due diligence software.
Inaccurate UK Nexus Assessments
Firms should take extra care to understand the involvement of UK nationals or entities in transaction chains when assessing the application of a UK nexus. They must also ensure they understand the difference between United Kingdom, European Union and United States sanctions regimes to make correct assessments of how UK sanctions might be engaged.
Russian DPs and Enablers
OFSI defines an enabler as “any individual or entity providing services or assistance on behalf of or for the benefit of DPs to breach UK financial sanctions prohibitions.” Broadly, there are two types of enablers:
professional enablers that provide professional services “that enable criminality. Their behaviour is deliberate, reckless, improper, dishonest and/or negligent through a failure to meet their professional and regulatory obligations”; and
non-professional enablers, such as family members, ex-spouses or associates.
Maintaining Lifestyles and Assets
Most identified enabler activity has been in relation to maintaining the lifestyles of Russian DPs and assets as they face growing liquidity pressures from UK sanctions.
OFSI urges firms to scrutinise the following red flags:
New individuals or entities making payments to satisfy obligations formerly met by a DP;
Individuals connected to Russian DPs receiving funds of substantial value;
Regular payments between companies owned or controlled by a DP;
Crypto-asset to fiat transactions involving close associates of a Russian DP;
Family member of a DP that is an additional cardholder on a purchasing card that uses the card for personal expenses and overseas travel; and
Deposits of large sums of cash without sufficient explanation;
Fronting
With a significant value of the assets of DPs having been frozen in the United Kingdom, an increasing amount of enablers are attempting to front on behalf of DPs and claim ownership of frozen assets. The links between enablers fronting on behalf of DPs are not always clear, and so OFSI has outlined several red flags for firms to be aware of:
Individuals with limited profiles in the public domain, for instance, those with limited related professional experience;
Inconsistent name spellings or transliterations;
Recently obtained non-Russian citizenships; and
Repeated or unexplained name changes or declared location of operation.
Utilising Alternative Payment Methods to Breach Prohibitions
Financial services firms need to remain diligent when assessing the threat posed by the increasingly sophisticated methods employed by DPs and enablers to evade UK financial sanctions prohibitions. Particular attention should be paid to attempts at money laundering on behalf of Russian DPs, including any indications of high value crypto-asset to cash transfers.
Intermediary Countries
Emphasis is placed on the use of intermediary jurisdictions in suspected breaches of UK financial sanctions prohibitions. The following jurisdictions are utilised most often: British Virgin Islands, Guernsey, Cyprus, Switzerland, Austria, Luxembourg, United Arab Emirates and Turkey. These jurisdictions offer secrecy or particular commercial interests.
There has also been a change in the third countries referenced in suspected breach reports, with increased activity in the Isle of Man, Guernsey, United Arab Emirates and Turkey. Indeed, the United Arab Emirates accounted for the largest section of suspected breaches reported to OFSI in the first quarter of 2024. This shift has likely been caused by various factors, including capital flight by Russians to jurisdictions that do not have sanctions on Russia.
The Assessment helpfully outlines a non-exhaustive list of specific activities in various countries that could be indicative of UK financial sanctions breaches. Financial institutions are encouraged to review and familiarise themselves with this list so that they can identify potential threats to sanctions compliance. Businesses should then consider the involvement of these jurisdictions when conducting due diligence, and evaluate the risks associated with various transactions.
Conclusion
The recent expansion of the United Kingdom’s financial sanctions regime, particularly in relation to Russia’s invasion of Ukraine, has resulted in sanctions evasion becoming increasingly sophisticated and widespread. Considering the scale of evasion being conducted, financial institutions need to remain proactive and vigilant in identifying transaction activity that may be indicative of attempts to circumvent UK sanctions regimes.
When designing sanctions compliance programmes, financial institutions should refer to the Assessment to account for methodologies of evasion and recognise specific behaviours that might present warning signs. By taking a proactive approach to prevent their services from being exploited as instruments of circumvention, financial institutions will contribute to efforts to combat sanctions evasion, whilst avoiding the financial and reputational repercussions of non-compliance.
If you have any questions on the Assessment or want further advice on developing your policies for UK sanctions compliance, please do not hesitate to contact our Policy and Regulatory practice.