See also our “Latest Sanctions Fines & Penalties” section below for an update on companies and persons denied export privileges by the United States Government.
Department of Commerce
BIS Proposes Rule to Harmonize Definitions of Key Terms Under the ITAR and the EAR
June 3, 2015 – 80 Fed. Reg. 31505: As part of the Export Control Reform effort, the Bureau of Industry and Security (BIS) proposed amendments to the Export Administration Regulations (EAR, 15 CFR Parts 730-774) to harmonize the definitions of the terms “technology,” “required,” “peculiarly responsible,” “proscribed person,” “published,” results of “fundamental research,” “export,” “reexport,” “release,” “transfer,” and “transfer (in-country)” with comparable terms in the International Traffic in Arms Regulations (ITAR, 22 CFR Parts 120-130). (See State Department section below for revisions of definitions in the ITAR.) BIS noted that these amendments were intended to clarify and harmonize the defined terms, but not to materially change their scope. BIS also proposed amendments to the Scope sections of the EAR to update and clarify the application of the EAR to electronically transmitted and stored technology and software. Deadline for comments on these important proposed amendments is August 3, 2015.
June 4, 2015 -- 80 Fed. Reg. 31834: BIS amended the EAR by adding Corporacion Nacional de Telecommunicaciones (CNT), of Quito, Ecuador, the state-owned telecommunications utility in Ecuador, to the Entity List (EAR Part 744, Supplement No. 4). A license will be required for any transaction in which items classified under Export Control Classification Numbers (ECCNs) 5D002 or 5A002 are to be exported, reexported, or transferred to this entity, and no license exceptions will be available for such transactions.
BIS Posts FAQs on Its Website Related to Proposed Rules Adopting Wassenaar Agreement Restrictions on the Export of Technology for the Development of Intrusion Software/Systems
June 9, 2015: BIS posted 32 Frequently Asked Questions (FAQs) providing guidance on the new controls it proposed on May 20, 2015 regarding systems, equipment or components specially designed for the generation, operation, or delivery of, or communication with, intrusion software. (See May 2015 Regulatory Update.) The FAQs are on the BIS website at http://www.bis.doc.gov/index.php/policy-guidance/faqs.
BIS Publishes Rule Concerning the Amendment of the EAR to Reflect Australia Group Agreements Related to Exports of Items That Could Contribute to the Proliferation of Chemical And Biological Weapons
June 16, 2015 – 80 Fed. Reg. 34266: In a final rule, BIS implemented decisions adopted in 2014 by the Australia Group (the multilateral export control organization concerned with exports that might contribute to the development of chemical or biological weapons) by amending ECCN 1C351 and deleting ECCN 1C352 to reflect the merger of the Australia Group’s List of Animal Pathogens and List of Biological Agents; amending ECCN 2B350; adding a technical note to ECCN 1C350; and making conforming changes in other EAR provisions.
BIS Publishes Proposed ECR Rules to Amend the EAR related to Commodities Proposed for Transfer from USML Category XIV and XVIII
June 17, 2015 – 80 Fed. Reg. 34562: Continuing the Export Control Reform effort, BIS proposed to amend the EAR to incorporate into the Commerce Control List (CCL, 15 CFR Part 774, Supplement No. 1) articles that had been determined not to require continued control under Category XIV (Toxicological Agents, Including Chemical Agents, Biological Agents, and Associated Equipment) or Category XVIII (Directed Energy Weapons) of the U.S. Munitions List (USML, 22 CFR Part 121). (See State Department section below for proposed concurrent amendments of the USML.) The Category XIV items – primarily dissemination, detection, and protection “equipment” and related articles – would be controlled under new ECCNs 1A607, 1B607, 1C607, 1D607, and 1E607. The Category XVIII items – primarily tooling, production “equipment,” test and evaluation “equipment,” test models, and related articles for Directed Energy Weapons – would be controlled under new ECCNs 6B619, 6D619, and 6E619. Deadline for comments on these proposed amendments is August 17, 2015.
Department of State
DDTC Name Changes
June 1 and 17, 2015: The Directorate of Defense Trade Controls (DDTC) posted the following name and address changes on its website at http://www.pmddtc.state.gov/licensing/name_change.html:
- Boeing Singapore Pte Ltd Address Change; and
- Alliant Techsystems, Inc. Name Change to Orbital ATK, Inc. and Address Change (due to merger)
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 Proposes Rule to Harmonize Definitions of Key Terms Under the ITAR and the EAR, Including Controversial Changes in the Definition of Technical Data Under the ITAR
June 3, 2015 – 80 Fed. Reg. 31525: As part of the Export Control Reform effort, DDTC proposed amendments to the ITAR to revise the definitions of “defense article, “defense services,” “technical data,” “public domain,” “export,” and “reexport or retransfer” and create new definitions of “required,” “technical data that arises during, or results from, fundamental research,” “release,” “retransfer,” and “activities that are not exports, reexports, or retransfers” to clarify the scope of covered activities and information and to harmonize the definitions with the definitions of comparable terms in the EAR. (See Commerce Department section above for revisions of definitions in the EAR.) The proposal would also –
- Detail the scope of licenses, unauthorized releases of information, and the “release” of secured information;
- Revise the sections on “exports” of “technical data” to U.S. persons abroad;
- Provide that the electronic transmission of unclassified “technical data” abroad is not an “export” if it is sufficiently secured to prevent access by foreign persons; and Allow for the electronic storage of unclassified “technical data” abroad if the data is secured to prevent access by unauthorized parties.
Importantly, DDTC also released the following documents to assist understanding of these proposals:
- A 25-page chart comparing the DDTC and BIS proposals at http://www.pmddtc.state.gov/FR/2015/Definitions%20Rule%20Harmonization%20Chart.pdf, and
- A fact sheet on the proposed definition revisions at http://www.pmddtc.state.gov/FR/2015/Defintions_Rule_Fact_sheet_2015_03_06.pdf.
Deadline for comments on these proposed amendments is Aug. 3, 2015.
DDTC Publishes Proposed ECR Rules to Amend the ITAR related to USML Category XIV and XVIII Items
June 17, 2015 – 80 Fed. Reg. 34572: Also in furtherance of the Export Control Reform effort, DDTC proposed amendments to USML Category XIV (Toxicological Agents, Including Chemical Agents, Biological Agents, and Associated Equipment) and Category XVIII (Directed Energy Weapons) to more precisely describe the articles in these categories that require continued control under the USML. (See Commerce Department section above for proposed concurrent amendments that would control under the CCL the items determined not to require control under these categories of the USML.) In this notice DDTC specifically identified several topics on which it particularly invites comment from the public, including information about items remaining on the USML that may be in normal commercial use and information about the consistency of these proposed amendments with the control lists of the Wassenaar Arrangement. Deadline for comments on these proposed amendments is August 17, 2015.
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
June 10, 2015 – 80 Fed. Reg. 32936: BIS denied the export privileges of Luis Armando Collins-Avila of Big Spring Correctional Institution in Big Spring, TX for 10 years based on his conviction in the U.S. District Court for Arizona of exporting 6,000 rounds of ITAR-controlled ammunition to Mexico without the required State Department authorization. In the criminal case Collins-Avila was sentenced to 46 months of imprisonment, 3 years of supervised release, and a $200 assessment.
June 24, 2015 – 80 Fed. Reg. 36317: BIS denied the export privileges of Armin Shir Mohammadi of Lake Forest, CA for 10 years based on his conviction in U.S. District Court for the Southern District of California of conspiring to export and causing the export of satellite communication equipment, navigation equipment, and related goods from the U.S. to persons in third countries with knowledge that such goods were intended to be re-exported to Iran without the required authorization from the Treasury Department, Office of Foreign Assets Control (OFAC). In the criminal case Mohammadi was sentenced to one year and one day of imprisonment.
Department of State
June 5, 2015 – 80 Fed. Reg. 32193: The State Department posted a notice describing the temporary and limited sanctions relief that has been in effect since November 24, 2013, in order to continue negotiations between the U.S., France, the United Kingdom, Russia, China, and Germany (the P5+1) and Iran to achieve a long-term comprehensive solution ensuring that Iran’s nuclear program will be exclusively peaceful. Among other things, the notice specified that this sanctions relief did not apply to actions by U.S. persons and foreign entities owned or controlled by U.S. persons, and that all the suspended sanctions would resume on July 1, 2015, unless further action is taken by the P5+1 and Iran.
Department of the Treasury
June 30, 2015: The State Department and Treasury Department announced that the P5+1 had agreed with Iran to extend negotiations on Iran’s nuclear program for another 7 days, and that limited sanctions relief would continue in effect for that period. Guidance on this extension is on the OFAC website at http://www.treasury.gov/resource-center/sanctions/Programs/Documents/guidance_ext_20150630.pdf.
Fines and Penalties
June 11, 2015: Alexander Brazhnikov Jr. of Mountainside, NJ, a Russian-born U.S. citizen, pleaded guilty in U.S. District Court for the District of New Jersey to conspiracy to commit money laundering, conspiracy to smuggle electronics from the U.S., and conspiracy to violate the International Emergency Economic Powers Act (IEEPA) in an alleged wide-reaching operation that was responsible for nearly 2,000 illegal shipments of export-controlled sensitive electronics components, many of which wound up in the hands of Russian military and security forces. As part of the plot, Brazhnikov routinely falsified the true identity of the end-user of the components and the true value of the components in order to avoid completing required export control forms. Sentencing is scheduled for September 15. Brazhnikov has already agreed to the entry of a forfeiture money judgment of $65 million.
June 16, 2015: Teledyne LeCroy, Inc., of Chestnut Ridge, NY agreed to pay a civil penalty of $75,000 to settle charges by BIS that it violated the EAR by exporting two oscilloscopes controlled under ECCN 3A292.d and valued at $13,008 and $2,594 to a university in China that was listed on the Entity List without the required authorization from BIS and by failing to file accurate Shippers Export Declarations/AES Filings in connection with these transactions by listing an intermediary party as the “ultimate consignee.”
June 25, 2015: Kunlin Hsieh, a sales manager for Junbon Enterprises Co., Ltd in Taiwan, pleaded guilty in Federal District Court in San Antonio, TX to conspiracy to violate IEEPA and the Iranian Transaction and Sanctions Regulations (ITSR, 31 CFR Part 560) by conspiring with others to obtain circuit boards with U.S.-made laminates from U.S. companies without disclosing that the parts were destined for Iran. The circuit boards were usable in systems such as missile guidance systems, secure tactical radio communications, and military radar networks. An alleged co-conspirator, Agris Indricevs, a citizen of Latvia, did not plead guilty and it is scheduled for trial on August 10, 2015. Hsieh and Indricevs have been in federal custody since being arrested by federal authorities in Albuquerque, New Mexico, on August 13, 2014.
June 30, 2015: Teoman Tosun of Kesan/Edirne, Turkey, agreed to pay a civil penalty of $75,000 (of which $50,000 will be suspended for two years and then waived if Tosun has not committed any further violations) and have his export privileges denied for two years to settle charges by BIS that he had violated a BIS Temporary Denial Order against Mahan Airways by facilitating the acquisition of a U.S.-origin MD-82 aircraft by Mahan and that he had caused, aided, or abetted a violation of the EAR by facilitating the reexport of the MD-82 aircraft from Turkey to Mahan in Iran.