LATEST EXPORT CONTROLS AND COMPLIANCE UPDATE 

March 2017 

This newsletter is a listing of the latest changes in export control regulations through March 31, 2017. The newsletter is provided as a complimentary service to assist exporters with their ITAR and EAR export compliance responsibilities. It provides a summary of recent changes to export control regulations or other regulatory matters of interest that may impact your company’s international trade and export compliance functions. Call us at 703-847-5801 or email This email address is being protected from spambots. You need JavaScript enabled to view it. with questions or comments. 

See also our “Latest Sanctions Fines & Penalties” section below for an update on companies and persons denied export privileges by the United States Government. 

REGULATORY UPDATES 

WASSENAAR ARRANGEMENT 

Numerous Minor Corrections and Clarifications to the Wassenaar Export Control List 

February 17, 2017: The Wassenaar Arrangement (WA) published an updated List of Dual-Use Goods and Technologies and Munitions List as compiled by the Wassenaar Arrangement Secretariat in February 2017 on its website at http://www.wassenaar.org/wp-content/uploads/2016/12/List-of-Dual-Use-Goods-and-Technologies-and-Munitions-List-Corr.pdf. The WA also published a table showing the changes in the List of Dual-Use Goods & Technologies and Munitions List. The table outlines the changes made by the 2016 Plenary to the 2015 List of Dual-Use Goods & Technologies and Munitions. The vast majority of changes made were administrative in nature. No major substantive additions are included in the revision. For a list of all revisions, see: http://www.wassenaar.org/wp-content/uploads/2017/03/Summary-of-Changes-to-2016-Lists.pdf

DEPARTMENT OF COMMERCE 

BIS Publishes Comments on CCL Revisions for USML Category XII Items Moved to EAR-control on December 31, 2016 Per ECR 

March 15, 2017: The Commerce Department Bureau of Industry and Security (BIS) posted the public comments it received in response to its request for comments on Jan. 17, 2017 (82 Fed. Reg. 4287), on the impact of further increasing certain controls on fire control, laser imaging, and guidance equipment that had been transferred to the Commerce Control List (CCL, 15 CFR Part 774, Supp. No. 1) from Category XII of the U.S. Munitions List (USML, 22 CFR Sec. 121.1). The comments are on the BIS website at https://efoia.bis.doc.gov/index.php/documents/public-comments/public-comments-2017/1104- increase-of-controls-infrared-detection-items/file. FD ASSOCIATES, INC. - EXPORT CONTROLS & COMPLIANCE UPDATE 

Page 2 This newsletter is provided as a service to exporters and is not intended to replace the ITAR or EAR as a reference source. If you have questions concerning the correct interpretation of the regulations please call us at (703) 847-5801 or email us at This email address is being protected from spambots. You need JavaScript enabled to view it.

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China’s ZTE and ZTE Kangxun Removed from Entity List As a Result of Settlement of Criminal and Civil Actions Related to Violations of the EAR… 

March 29, 2017 – 82 Fed. Reg. 15458: BIS removed the following persons listed under the destination of China from the Entity List (15 CFR Part 744, Supp. No. 4) in light of their settlement of criminal and civil enforcement actions with the U.S. Departments of Justice, Commerce, and Treasury (see information about these settlements in Fines and Penalties section below)

Zhongxing Telecommunications Equipment (ZTE) Corporation, Shenzhen 

ZTE Kangxun Telecommunications Ltd., Shenzhen 

Shi Lirong, Former CEO of ZTE, Added to Entity List 

In the same action, BIS added the following individual to the Entity List under the destination of China: 

Shi Lirong, Shenzhen 

Shi Lirong was the Chief Executive Officer of the ZTE companies at the time of the violations involved in the settlement. 

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Various Persons/Entities Removed from Entity List 

March 29, 2017 – 82 Fed. Reg. 15461: BIS removed the following 7 persons under 10 destinations from the Entity List: 

Germany: 

  • • Industrio GmbH, Neumarkt 
  • • Martin Hess, Neumarkt 
  • Peter Duenker, a.k.a., the following alias: Peter Dunker, Neumarkt 
  • • Wilhelm ``Bill'' Holler, Neumarkt 

Hong Kong: 

  • Frank Genin, a.k.a., the following alias: Franck Genin. Sheung Wang, Hong Kong (See also alternate addresses under U.A.E.) 

India 

  • Beaumont Trading AG, a.k.a., the following alias: -Beaumont Tradex India, New Delhi (See also alternate addresses under Switzerland and U.A.E.) 

Singapore: 

  • • Amanda Sng, Singapore 

Switzerland: 

  • Beaumont Trading AG, a.k.a., the following alias: Beaumont Tradex India, Baar (Zug Canton) (See also alternate addresses in India and the U.A.E.) 

United Arab Emirates: 

  • Beaumont Trading AG, a.k.a., the following alias: Beaumont Tradex India, Dubai, U.A.E. (See alternate addresses in India and Switzerland) 
  • Frank Genin, a.k.a., the following alias: Franck Genin, Dubai, Ras Al Khaimah, and Free Trade Zone RAK (See alternate address under Hong Kong) 

FD ASSOCIATES, INC. - EXPORT CONTROLS & COMPLIANCE UPDATE 

Page 3 This newsletter is provided as a service to exporters and is not intended to replace the ITAR or EAR as a reference source. If you have questions concerning the correct interpretation of the regulations please call us at (703) 847-5801 or email us at This email address is being protected from spambots. You need JavaScript enabled to view it.

DEPARTMENT OF STATE 

DDTC Name and Address Changes Posted to Website 

March 1, 10, 20, 21, 22, and 28, 2017: The Directorate of Defense Trade Controls (DDTC) posted the following name and/or address changes on its website at http://www.pmddtc.state.gov/licensing/name_change.html

  • • Change in Address for Bijlsma Hijs- en Heftechniek Projecten BV; 
  • Change in Name from HP Enterprise Services LLC to Enterprise Services LLC due to corporate restructuring; 
  • Change in Name from HP Enterprise Services Defence & Security to EntServ UK Limited due to corporate restructuring; 
  • Change in Name from Hewlett Packard Enterprise Services UK Ltd to EntServ UK Limited due to corporate restructuring; 
  • Change in Name from D&R Technology Operaciones Mexico S. de R.L. de C.V. to CTS Electro De Mexico, S. de R.L.de C.V. (CTS Electro de Mexico) due to corporate restructuring; 
  • Change in Name from Wesco Aircraft Europe Ltd. and Haas Group International SCM Ltd. (inclusive of their operating divisions RD Taylor and Fasteq) (collectively Wesco) to Wesco Aircraft EMEA, Ltd. (Wesco EMEA) due to corporate reorganization; 
  • Change in Name from Nammo Vanasverken AB to Nammo Sweden due to corporate reorganization; 
  • Change in Name from Nammo Vingakersverken AB to Nammo Sweden due to corporate reorganization; 
  • Change in Name from Nammo LIAB BA to Nammo Sweden AB due to corporate reorganization; and 
  • Chagne in Name from Alsalam Aircraft Company to Alsalam Aerospace Industries Company, Ltd. 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. 

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DDTC Posts Comments from Public Related to Revisions of USML Category 

March 17, 2017: DDTC posted the public comments it received in response to its request for comments on Jan. 17, 2017 (82 Fed. Reg. 4287) relating to issues regarding controls on items “specially designed for a military end user,” the scope of controls on certain laser target designators or coded target markers (Cat. XII(b)(1)), and parameters to replace “specially designed” controls. The comments are on the DDTC website at http://www.pmddtc.state.gov/licensing/documents/USML%20Cat%20XII%20NOI%20Public%20Comm ents.pdf . Many industry members lodged comments with details as to how items in normal commercial use will become captured by the revision. FD ASSOCIATES, INC. - EXPORT CONTROLS & COMPLIANCE UPDATE 

Page 4 This newsletter is provided as a service to exporters and is not intended to replace the ITAR or EAR as a reference source. If you have questions concerning the correct interpretation of the regulations please call us at (703) 847-5801 or email us at This email address is being protected from spambots. You need JavaScript enabled to view it.

DEPARTMENT OF THE TREASURY 

OFAC Issues General Rule Authorizing Transactions with Panamanian Mall and Associates Complex 

March 9, 2017: The Office of Foreign Assets Control (OFAC) published General License 4F, “Authorizing Certain Transactions Involving the Panamanian Mall and Associated Complex, Soho Panama, S.A. (a.k.a. Soho Mall Panama).” This license completely supersedes General License 4E (see January 2017 Regulatory Update). General License 4F is on the OFAC website at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/kingpin_gl4f.pdf. An FAQ describing the authorizations under this General License is on the OFAC website at https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_other.aspx#472

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Treasury Posts Quarterly List of Countries Who Support the Boycott of Israel 

March 31, 2017 – 82 Fed. Reg. 15797: 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 agencies. It is provided as a service to exporters and associates of FD Associates to remind them of the importance of extreme due diligence in all international trade and export compliance matters, particularly those involving exports subject to the ITAR or the EAR. Don't let this happen to you or your company! Call us with questions or concerns at 703-847-5801 or email This email address is being protected from spambots. You need JavaScript enabled to view it.

Sanctions 

DEPARTMENT OF COMMERCE 

March 17, 2017 – 82 Fed. Reg. 14200: BIS denied for 5 years the export privileges of Eyad Farah, currently resident at the Federal Correctional Institution in Fort Worth, TX, based on his conviction in U.S. District Court for the Middle District of Florida in December, 2015, of violating the Arms Export Control Act (22 USC Sec. 2778) by conspiring to export and actually exporting firearms without the required authorization. Farah was sentenced to 37 months in prison, 36 months of supervised release, and a $300 assessment, and was also ordered to forfeit 7 firearms traceable to the offense. Farah allegedly was part of a network of individuals who smuggled firearms from the U.S. to Jordan by concealing them in vehicles that had been purchased at used car auctions. FD ASSOCIATES, INC. - EXPORT CONTROLS & COMPLIANCE UPDATE 

Page 5 This newsletter is provided as a service to exporters and is not intended to replace the ITAR or EAR as a reference source. If you have questions concerning the correct interpretation of the regulations please call us at (703) 847-5801 or email us at This email address is being protected from spambots. You need JavaScript enabled to view it.

DEPARTMENT OF STATE 

March 29, 2017 – 82 Fed. Reg. 15547: The Department of State Bureau of International Security and Nonproliferation (ISN) determined that Rosoboronexport (ROE), a Russian entity, had engaged in activities that warranted imposition of measures under the Iran, North Korea, and Syria Nonproliferation Act (INKSNA, Pub. L. 109-353), which provides for penalties on persons that transfer certain types of sensitive items to, or acquire such items from, these countries after certain dates. Accordingly, ISN imposed the following penalties: 

No U.S. Government (USG) procurements except as the Secretary of State may otherwise determine, and except for procurements for certain specific purposes; 

No USG assistance except as the Secretary of State may otherwise determine; 

No USG sales of any item on the USML and termination of all sales of defense articles or services under the Arms Export Control Act (AECA, 22 USC Sec. 2778); and 

No exports of items controlled under the Export Administration Act of 1979 (EAA) or the Export Administration Regulations (EAR, 15 CFR Parts 730-774) and suspension of any existing such licenses. 

These penalties will remain in place for 2 years unless otherwise determined by the Secretary of State. 

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March 30, 2017 – 82 Fed. Reg. 15780: ISN determined that 29 individuals and entities in 10 countries had engaged in activities that warranted the imposition of measures under the INSKNA. The sanctioned persons were in Burma, China, Egypt, Eritrea, Iran, North Korea, Russia, Saudi Arabia, Sudan, and the UAE. Similar to the case of Rosoboronexport (see item above), ISN imposed sanctions on these persons prohibiting USG procurements from them and USG assistance to them; prohibiting USG sales to them of any items on the USML and terminating sales to them of any such item; and prohibiting individual licenses for transfer to them of any item controlled under the EAR and suspending any existing such licenses. The penalties will remain in place for 2 years unless otherwise determined by the Secretary of State. The parties are as follows: 

Ministry of Defense Directorate of Defense Industries (DDI) (Burma) and any successor, sub-unit, or subsidiary thereof; 

Beijing Zhong Ke Electric Co., LTD. (ZKEC) (China), and any successor, subunit, or subsidiary thereof; 

Dalian Zhenghua Maoyi Youxian Gongsi (China) and any successor, subunit, or subsidiary thereof; 

• Jack Qin (Chinese individual); 

Jack Wang (Chinese individual); 

Ningbo New Company Import and Export Company Limited (China) and any successor, sub-unit, or subsidiary thereof; 

• Karl Lee [aka Li Fangwei] (Chinese individual); 

Shanghai Horse Construction [aka Forrisio International Group] (China) and any successor, sub-unit, or subsidiary thereof; 

Shenzhen Yataida High-Tech Company Ltd. (China) and any successor, sub-unit, or subsidiary thereof; 

Sinotech (Dalian) Carbon and Graphite Corporation (SCGC) (China) and any successor, sub-unit, or subsidiary thereof; FD ASSOCIATES, INC. - EXPORT CONTROLS & COMPLIANCE UPDATE 

Page 6 This newsletter is provided as a service to exporters and is not intended to replace the ITAR or EAR as a reference source. If you have questions concerning the correct interpretation of the regulations please call us at (703) 847-5801 or email us at This email address is being protected from spambots. You need JavaScript enabled to view it.

Sky Rise Technology [aka Reekay Technology Limited] (China) and any successor, sub-unit, or subsidiary thereof; 

Sun Creative (Zhejiang) Technologies, Inc. (China) and any successor, sub-unit, or subsidiary thereof; 

T-Rubber Co. Ltd (China) and any successor, sub-unit, or subsidiary thereof; 

Special Defense Research Center (SDRC) (Egypt) and any successor, subunit, or subsidiary thereof; 

Eritrean Navy (Eritrea) and any successor, sub-unit, or subsidiary thereof; 

Aerospace Industries Organization (AIO) (Iran) and any successor, sub-unit, or subsidiary thereof; 

Saeng Pil Trading Corporation (SPTC) (North Korea) and any successor, subunit, or subsidiary thereof; 

150th Aircraft Repair Plant (Russia) and any successor, sub-unit, or subsidiary thereof; Aviaexport (Russia) and any successor, sub-unit, or subsidiary thereof; 

Bazalt (Russia) and any successor, sub-unit, or subsidiary thereof; 

Kolomna Design Bureau of Machine Building (KBM) (Russia) and any successor, sub-unit, or subsidiary thereof; 

Ulyanovsk Higher Aviation Academy of Civil Aviation (UVAUGA) (Russia) and any successor, sub-unit, or subsidiary thereof; 

Ural Training Center for Civil Aviation (UUTsGA) (Russia) and any successor, sub-unit, or subsidiary thereof; 

Zhukovskiy and Gagarin Academy (Z&G Academy) (Russia) and any successor, sub-unit, or subsidiary thereof; 

Madar Yara Medical Company (Saudi Arabia) and any successor, sub-unit, or subsidiary thereof; 

Giad Heavy Industries (GHI) (Sudan) and any successor, sub-unit, or subsidiary thereof; 

Military Industries Corporation (MIC) (Sudan) and any successor, sub-unit, or subsidiary thereof; 

Muhammad al-Husayn Yusuf (Sudanese individual); and 

Mabrooka Trading (United Arab Emirates) and any successor, sub-unit, or subsidiary thereof. 

Fines and Penalties 

March 2, 2017: Kolar Rahman Anees Ur Rahman, a resident of the UAE with Indian citizenship, was sentenced in federal court in Salt Lake City, UT to 5 years of probation for violating the AECA by unlawfully and willfully attempting to export ten .308 caliber sniper rifles and ammunition to Belarus without the required authorization from the Department of State, smuggling goods from the U.S., and money laundering. The action resulted from a sting in which Rahman attempted to purchase the rifles and ammunition from an undercover Special Agent of the U.S. Department of Homeland Security. Rahman sent a down payment of $13,357 to the undercover agent and informed the agent that he was aware that an export license would not be available to Belarus and there would be a need to make misrepresentations on the export paperwork. He was arrested after he came from the UAE to Chicago to discuss the rifle shipment and future business in person with the undercover agent. In addition to the sentence of probation, Rahman was also ordered to forfeit the $13,357 down payment. FD ASSOCIATES, INC. - EXPORT CONTROLS & COMPLIANCE UPDATE 

Page 7 This newsletter is provided as a service to exporters and is not intended to replace the ITAR or EAR as a reference source. If you have questions concerning the correct interpretation of the regulations please call us at (703) 847-5801 or email us at This email address is being protected from spambots. You need JavaScript enabled to view it.

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March 7, 2017: Zhongxing Telecommunications Equipment Corporation, a telecommunications corporation established in the People's Republic of China, and its subsidiaries and affiliates, as well as ZTE Kangxun Telecommunications Ltd. and its subsidiaries and affiliates (collectively "ZTE") agreed to pay penalties totaling $1.19 billion to settle criminal and civil charges by the U.S. Departments of Justice, Treasury, and Commerce of violating the Iran Transactions and Sanctions Regulations (ITSR, 31 CFR Part 560); conspiracy to violate the International Emergency Economic Powers Act (IEEPA, 50 USC chap. 35, Sec. 1701 et seq.); violating the EAR; obstruction of justice; and making a material false statement. These violations involved (i) direct or indirect exports to Iran or the Government of Iran; (ii), reexports of EAR-controlled goods with knowledge that the goods were intended specifically for Iran or the Government of Iran; and (iii) activities that evaded or avoided, attempted and/or conspired to violate, and/or caused violations of the prohibitions set forth in the ITSR. 

The violations occurred over a period of 6 years, during which the company’s highest-level managers were aware of the illegal activities and knowingly misled U.S. authorities by saying that the company had wound down and ceased its Iran-related activities. The unlawful conduct included carrying out two projects, each worth hundreds of millions of dollars and requiring U.S.-origin components, involving installing cellular and landline network infrastructure in Iran. ZTE carried out these activities using a systemic practice of utilizing third-party companies to surreptitiously supply Iran with U.S.-origin goods, including goods controlled under the CCL. 

The $1.19 billion penalty amount included $661 million under the settlement agreement with BIS (with $300 million suspended during a seven-year probationary period and then suspended if ZTE has not violated the agreement), $430.5 million in combined criminal fines and a forfeiture under a plea agreement with the Department of Justice, and $100.9 million under a settlement agreement with OFAC. In addition to the monetary penalties, ZTE also agreed to a suspended 7-year denial of export privileges, to submit to having an independent corporate compliance monitor for 3 years, and to cooperate fully with any criminal investigation by U.S. law enforcement authorities. 

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March 23, 2017: ZTE formally pleaded guilty in federal court in Dallas, TX, to one count each of conspiracy to unlawfully export in violation of IEEPA, making a material false statement, and obstruction of justice. In the plea ZTE also agreed to submit to a 3-year period of corporate probation including an independent corporate compliance monitor who will review and report on ZTE’s export compliance program. 

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March 15, 2017: Access USA Shipping, LLC of Sarasota, FL agreed to pay a civil penalty of $27 million (with $17 million suspended for two years and then waived if Access has committed no additional violations) to settle 129 charges by BIS involving evading the EAR; 17 charges of exporting or attempting to export items controlled for crime control reasons without the required authorization; and 4 charges of exporting or attempting to export items to a party on the Entity List without the required authorization. The evasion charges involved mis-describing and undervaluing the items on export control documents; allowing foreign customers to place orders through Access employees to avoid export scrutiny; destroying or altering export control documents; and failing to maintain required records related to the exports. FD ASSOCIATES, INC. - EXPORT CONTROLS & COMPLIANCE UPDATE 

Page 8 This newsletter is provided as a service to exporters and is not intended to replace the ITAR or EAR as a reference source. If you have questions concerning the correct interpretation of the regulations please call us at (703) 847-5801 or email us at This email address is being protected from spambots. You need JavaScript enabled to view it.

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March 17, 2017: Gabriel Rivero of Nogales, AZ, was sentenced in federal court in Phoenix, AZ to 92 months in prison for attempting to export ammunition to Mexico without the required authorization. According to evidence presented at Rivero’s trial, the smuggling attempt came to light when a spare tire fell off the pickup truck Rivero was driving near the Mariposa Port of Entry in Nogales. Initially, Rivero attempted to retrieve the tire, but then he got back into the truck and traveled through the border crossing into Mexico. When U.S. Customs and Border Protection officers inspected the tire, they discovered more than 5,500 rounds of pistol and rifle ammunition hidden inside. Rivero was subsequently identified using surveillance video from the port of entry and arrested. 

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March 24, 2017: Kassim Tajideen of Beirut, Lebanon, a Lebanese-Belgian dual citizen, pleaded not guilty in federal court in Washington, D.C. to an 11-count indictment charging him with conspiring to violate IEEPA and the Global Terrorism Sanctions Regulations (GTSR, 31 CFR Part 594), unlawful transactions with a Specially Designated Global Terrorist (SGDT), and conspiracy to launder monetary instruments. After Tajideen was named a SDGT by OFAC in 2009 because of his financial support of the Hizballah terror organization, he allegedly evaded restrictions on transactions with SDGTs by creating new trade names and concealing his ownership in certain entities, enabling his companies to continue to transact business with unwitting U.S. vendors and to utilize the U.S. financial and freight transportation systems, including making wire transfers of approximately $27 million to parties in the U.S. and causing dozens of illegal shipments of goods to leave U.S. ports for Tajideen’s benefit without obtaining the required licenses from the U.S. Department of the Treasury. Newspaper sources reported that Tajideen was extradited to the U.S. after being detained March 12, 2017 at the Casablanca, Morocco airport while enroute from Conakry, Guinea to Beirut. 

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March 28, 2017: Mehmet Hakan Atilla, a resident and citizen of Turkey and Deputy General Manager of International Banking at Halkbank, a Turkish state-owned bank, was arrested at Kennedy Airport and charged with conspiracies to violate the IEEPA and to commit bank fraud. Atilla appeared briefly at a hearing in Federal District Court in New York, but did not enter a plea or make any statements. He and others allegedly conspired to create and use fraudulent documents to disguise prohibited Iranian financial transactions as actions financing food that would qualify under the humanitarian exception to the sanctions regime. In this way they allegedly used U.S. financial institutions to engage in prohibited financial transactions that illegally funneled millions of dollars to Iran. 

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