LATEST EXPORT CONTROLS AND COMPLIANCE UPDATE
See also our “Latest Sanctions Fines & Penalties” section below for an update on companies and persons denied export privileges by the United States Government.
EU Removes Most Trade Restrictions Involving Iran
On Jan. 16, 2016 the European Union (EU) removed nearly all of its restrictive measures concerning trade with Iran, after confirming that the International Atomic Energy Agency (IAEA) had ruled that Iran had taken all measures specified in the Joint Comprehensive Plan of Action (JCPOA),
The official EU action is Council Decision (CFSP) 2016/37 of 16 January 2016 (http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.LI.2016.011.01.0001.01.ENG&toc= OJ:L:2016:011I:TOC). A detailed Information Note is on the EU website at http://eeas.europa.eu/top_stories/pdf/iran_implementation/information_note_eu_sanctions_jcpoa_en.pdf.
Department of Commerce
BIS Clarifies Rules Pertaining to Export and Re-exports to Cuba
Jan. 27, 2016 – 81 Fed. Reg. 4580: The Bureau of Industry and Security (BIS) amended the Export Administration Regulations (EAR, 15 CFR Parts 730-774) to modify the general policies of review for applications for exports or re-exports to Cuba (EAR Sec. 746.2). The changes further expand the scope of permissible trade with Cuba.
The following exports and re-exports will now be subject to a general policy of approval:
- Items necessary to ensure the safety of civil aviation and commercial aircraft engaged in commercial international air transportation;
- Under certain circumstances, items intended to strengthen civil society in Cuba;
- Items for use by U.S. news bureaus;
- Telecommunications items to improve communications to, from, and among the Cuban people; and
- Items necessary for the environmental protection of the U.S. and international air quality, waters, or coastlines (including items related to renewable energy or energy efficiency).
A case-by-case review policy will now apply to exports and re-exports of items to meet the needs of the Cuban people, including exports and re-exports for such purposes made to state-owned enterprises and agencies and organizations of the Cuban government that provide goods and services to the Cuban people.
However, a general policy of denial will continue to apply to applications to export or re-export items for use for certain purposes by state-owned enterprises, agencies, or other Cuban government organizations that primarily generate revenue for the state. Applications for items destined to the Cuban military, police, intelligence, and security services will also remain subject to a general policy of denial.
Department of State
DDTC Name Changes Posted to DDTC Website in January 2016
Jan. 5, 6, 7, 12, 19, 28, and 29, 2016: The Directorate of Defense Trade Controls (DDTC) posted the following name and/or address changes on its website at:
- Change in Name from Supply Technologies (UKG) Limited to Supply Technologies (UKGRP) Limiteddue to corporate reorganization;
- Change in Name for International Rectifier Company Great Britain, Ltd., International Rectifier Company (GB) Ltd. (A&D Import Hub), and International Rectifier Co. Ltd. to Infineon Technologies Reigate Ltd. due to acquisition of International Rectifier by Infineon Technologies;
- Change in Name from NEC AERO to SMS SAS due to corporate reorganization;
- Paint Services Group Limited Address Change;
- Change in Name for General Dynamics C4 Systems, Inc. and General Dynamics Advanced Information Systems, Inc. to General Dynamics Mission Systems, Inc. due to corporate reorganization;
- Change in Name from Advanced System Design (Actel.ru) to "Advanced System Design Actel" Limited (“ASD Actel” Ltd.) due to corporate reorganization and Address Change;
- Change in Name from Atlantis Systems Corp. to Bluedrop Training & Simulation Inc. due to acquisition of Atlantis Systems by Bluedrop Training & Simulation;
- Change in Name from Transfield Services Limited and Transfield Services (Australia) Pty Limited to Broadspectrum Limited and Broadspectrum (Australia) Pty Limited due to acquisition of Transfield Services by Broadspectrum;
- Saab AB (publ) dissolved business area Security and Defence Solutions (SDS) and placed its 4 business units under other Saab business areas under corporate restructure;
- Change in Name from Airbus DS Limited to Airbus Defence and Space Limited due to corporate reorganization;
- Change in Name from BAE Systems Deployed Systems Limited to BAE Systems Surface Ship Limited due to corporate reorganization; and
- Change in Name from BAE Systems Surface Ships Integrated Support Limited to BAE Systems Surface Ship Limited and BAE Systems Integrated System Technologies (Overseas) Limited due to corporate reorganization.
Each announcement includes a link to a notice specifying the effects of the change on pending and currently approved authorizations involving the listed entity.
DDTC Published Revisions to Guidelines for Preparing Agreements
Jan. 6, 2016: DDTC posted proposed revisions to the Guidelines for Preparing Agreements. The new draft is on the DDTC website at
http://www.pmddtc.state.gov/Licensing/documents/DraftGuidelinesforPreparingAgreementsRev43.pdf. Comments are requested by February 5, 2016.
Department of the Treasury
OFAC Extends Validity Period for Specific Licenses Related to the Safety of Iran’s Civil Aviation Industry
Jan. 16, 2016: In connection with JCPOA Implementation Day, the Office of Foreign Assets Control (OFAC) extended to May 31, 2016, the validity of all specific licenses that were issued pursuant to OFAC’s Second Amended Statement of Licensing Policy on Activities Related to the Safety of Iran’s Civil Aviation Industry and have an expiration date on or before July 14, 2015. (See additional actions below and in Sanctions section.)
OFAC Announces Favorable Licensing Policy for Engagements with Iran Pertaining to Commercial Passenger Aircraft and Parts
Jan. 16, 2016: Also in connection with JCPOA Implementation Day, OFAC announced a favorable licensing policy under which U.S. and non-U.S. persons may request specific authorization from OFAC to engage in transactions for the sale of commercial passenger aircraft and related parts and services to Iran, provided such transactions do not involve any person on OFAC's Specially Designated Nationals and Blocked Persons List ("SDN List"). The full statement is on the OFAC website at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/lic_pol_statement_aircraft_jcpoa.pdf.
OFAC Amends Cuban Sanctions to Facilitate Financial Institutions’ Ability to Engage in Certain Travel-Related Funding Activities
Jan. 27, 2016 – 81 Fed. Reg. 4583: OFAC amended the Cuban Assets Control Regulations (CACR, 31 CFR Part 515) by removing some payment and financing restrictions for authorized exports and re-exports to Cuba and authorizing various types of travel-related and other additional transactions. Updated FAQs about the Cuban sanctions are on the Treasury Department website at www.treasury.gov/resource-center/sanctions/Programs/Documents/cuba_faqs_new.pdf. Updated guidance on travel to Cuba is at www.treasury.gov/resource-center/sanctions/Programs/Documents/guidance_cuba_travel.pdf.
OFAC Issues First Quarter 2016 Lists of Boycott Supporting Countries
Jan. 27, 2016 – 81 Fed. Reg. 4739: The Treasury Department published its quarterly list of countries that require or may require participation in, or cooperation with, an international boycott. The list remains unchanged since it was last published. It includes Iraq, Kuwait, Lebanon, Libya, Qatar, Saudi Arabia, Syria, the United Arab Emirates (UAE), and Yemen.
LATEST SANCTIONS FINES & PENALTIES
This section of our newsletter provides information on the latest sanctions, fines and penalties for export violations or matters of non-compliance with the ITAR or EAR issued by the US government enforcement
Department of Commerce
Jan. 15, 2016 – 81 Fed. Reg. 2161: BIS renewed for an additional 180 days a temporary denial order (TDO) against Mahan Airways, Pejman Mahmood Kosarayanifard, Mahmoud Amini, Kerman Aviation, Sirjanco Trading LLC, Ali Eslamian, Mahan Air General Trading LLC, Skyco (Uk) Ltd., Equipco (Uk) Ltd., Mehdi Bahrami, Al Naser Airlines, Ali Abdullah Alhay, Bahar Safwa General Trading, Sky Blue Bird Group, and Issam Muhammad. This TDO, originally issued in 2008, is based on a finding that the denied parties are engaging, and are likely to continue engaging, in unlawful conduct regarding the re-export of aircraft to Iran.
Jan. 26, 2016 – 81 Fed. Reg. 4250: BIS entered a 180-day TDO against the following 5 parties:
- Ribway Airlines Company Limited;
- Af-Aviation Limited;
- Andy Farmer;
- John Edward Meadows; and
- Jeffrey John James Ashfield.
BIS stated that these 5 parties are attempting to sell two U.S.-origin aircraft to Caspian Airlines, an Iranian airline that was added to the Treasury Department list of Specially Designated Nationals in 2014 because of its support to a terrorist entity.
Department of the Treasury
OFAC Lifts Nuclear-Related Sanctions on Iran; HOWEVER, Most Export Transactions with Iran are Still Prohibited…
Jan. 16, 2016: On Implementation Day, following the verification by the IAEA that Iran had implemented the key nuclear-related measures called for by the JCPOA, OFAC lifted many nuclear-related sanctions against Iran and removed hundreds of persons from the SDN List and other lists of prohibited parties. In general, foreign subsidiaries of U.S. companies will now be able to pursue certain opportunities in Iran, while U.S. persons will remain subject to a broad primary embargo against Iran. The specifics of the actions that now are permitted or are not permitted are very complicated. OFAC has posted a guide describing all the sanctions changes and their effects on its website at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/implement_guide_jcpoa.pdf. Links to FAQs and other relevant documents are on the OFAC website at https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/jcpoa_implementation.aspx.
Fines and Penalties
Jan. 7, 2016: FIMCO, an Iranian corporation, was sentenced in U.S. District Court in Harrisburg, PA to a criminal fine of $100,000 based on its plea of guilty to charges of conspiracy to evade export licensing requirements. FIMCO earlier agreed in a civil settlement with BIS to pay a fine of $837,500, of which $250,000 would be suspended for two years and waived if FIMCO complies with the terms of the plea agreement and with certain additional conditions. The case involved a conspiracy to transship a bar peeling machine valued at more than $800,000 and used in the production of high grade steel for the manufacture of automobile and aircraft parts to Iran via the United Arab Emirates (UAE). (See July 2015 Regulatory Update for additional details of this case.)
Jan. 18, 2016: Amin al-Baroudi, a Syrian-born naturalized U.S. citizen formerly of Irvine, CA, pleaded guilty in U.S. District Court for the Eastern District of Virginia of conspiracy to violate U.S. sanctions on Syria by exporting U.S. goods to Syria without the required authorization. In the plea agreement al-Baroudi admitted that he and his co-conspirators exported U.S. tactical equipment including sniper rifle scopes, night vision goggles, laser bore sighters, speed loaders, and bullet-proof vests to Syria by traveling with the goods on commercial flights to Turkey and then transporting the goods into Syria or providing the goods to others for transport to Syria.
Jan. 20, 2016: Ruben Sosa of Mexico City, Mexico was sentenced in U.S. District Court in Brownsville, TX, to serve two years in federal prison for violating the Arms Export Control Act (AECA, 22 USC Sec. 2778) by exporting rifle conversion kitsto Mexico without the required authorization. The conversion kits attach to a Glock pistol, thereby enhancing it in several ways including lengthening the barrel and converting the pistol into a tactical carbine. Sosa will be deported to Mexico after his release from prison since he entered the U.S. illegally.
Jan. 20, 2016: As part of the U.S.-Iran prisoner swap that freed Washington Post reporter Jason Rezaian and other U.S. citizens from Iranian prisons, the U.S. freed 6 U.S.-Iranian dual nationals and one Iranian national who were serving sentences in U.S. prisons based on their convictions of export control charges. Bahram Mechanic, Tooraj Faridi, and Khosrow Afghahi belonged to a network that allegedly transshipped microelectronics, uninterruptible power supplies, and other commodities valued at over $24 million to Iran via Taiwan and Turkey. (See April 2015 Regulatory Update.) Nader Modanlo forfeited a $10 million fee and was serving an 8-year prison sentence for his role in helping Iran launch its first satellite. (See June 2013 and December 2013 Regulatory Updates.) Ali Saboonchi was convicted of unauthorized exports of industrial products used in petroleum refineries, nuclear plants, and the oil and gas industry to Iran. (See February 2015 Regulatory Update.) Arash Ghahreman was convicted in a case involving a scheme to purchase marine navigation equipment and military electronic equipment for illegal export to Iran. (See April 2015 Regulatory Update.)
Although these persons have been freed from U.S. prisons, there convictions have not been vacated and export transactions involving these individuals are still prohibited under the ITAR and the EAR.
Jan. 28, 2015: Sihai Cheng, a/k/a Chun Hai Cheng, a/k/a Alex Cheng, a citizen of the People's Republic of China (PRC), was sentenced in U.S. District Court in Boston to 9 years in federal prison based on his plea of guilty to two counts of conspiring to commit export violations and smuggle goods from the United States to Iran and four counts of illegally exporting U.S.-manufactured pressure transducers to Iran. The smuggled goods were to be transshipped to Iran via the PRC. (See additional information about this case in December 2015 Regulatory Update.)