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.
Department of Commerce
BIS Expands TMP License Exception to Include Temporary Exports of Cell Phones and Wi-Fi Equipped Computers to Sudan for Use in Humanitarian Efforts
Sep. 2, 2015 – 80 Fed. Reg. 52962: The Bureau of Industry and Security (BIS) amended Sec. 740.9(a)(2) of the Export Administration Regulations (EAR, 15 CFR Parts 730-774) to expand the coverage of License Exception TMP (temporary imports, exports, reexports and transfers) to authorize employer-owned devices such as cell phones and Wi-Fi-equipped computers to be exported or reexported to Sudan by persons engaged in humanitarian efforts as “tools of trade”. A prior amendment (Feb. 18, 2015 – 80 Fed. Reg. 8520) had unintentionally limited the exception to devices that were donated or sold.
Various Parties Added to BIS Entity List
Sep. 2, 2015 – 80 Fed. Reg. 52963: BIS added 29 persons to the Entity List (Supp. No. 4 to EAR Part 744) to assure the efficacy of existing sanctions against Russia for violating international law and fueling the conflict in eastern Ukraine. The new listings appear under 33 entries under the destinations Crimea region of Ukraine, Cyprus, Finland, Romania, Russia, Switzerland, Ukraine, and the United Kingdom. Fourteen of the entities will have a license requirement with presumption of denial for all items subject to the EAR. The remaining 15 entities are all subsidiaries of Rosneft, which was added to the Entity List on September 17, 2014 (79 Fed. Reg. 55612). These persons will be subject to a license requirement with presumption of denial when the exporter, reexporter, or transferor knows that the item will be used, directly or indirectly, in a sanctioned petroleum-related activity in Russia or is unable to determine whether the item will be used in such a project.
EAR Amendments Permit Expanded Travel to Cuba and Greater Ability to Export Telecomm Equipment
Sep. 21, 2015 – 80 Fed. Reg. 56898: BIS announced new amendments to the EAR further facilitating interchanges with Cuba. These amendments follow earlier amendments affecting exports to Cuba on Jan 16, 2015 (80 Fed. Reg. 2286 and 2291). Among many other changes, the new amendments facilitate some travel to Cuba; expand general licenses for telecommunications and internet-based services; allow certain persons to establish a physical presence and maintain bank accounts in Cuba to use for authorized purposes; create a new licensing policy to help ensure the safety of civil aviation; and modify the license requirements for deemed exports and reexports to Cuba. A list specifying the license exceptions that are now effective for Cuba can be found in EAR Sec. 746.2(a)(1). A detailed list of the changes is on the BIS website at https://www.commerce.gov/news/press-releases/2015/09/commerce-and-treasury-announce-further-amendments-cuba-sanctions[OG1], and a link to Frequently Asked Questions (FAQs) is at http://www.bis.doc.gov/index.php/policy-guidance/country-guidance/sanctioned-destinations/cuba[OG2]. These amendments were published simultaneously with amendments to the Cuban Assets Control Regulations (CACR, 31 CFR Part 515) published by the Treasury Department Office of Foreign Assets Control (OFAC) (see below).
Department of State
DDTC Posts Web Notices Regarding Name Changes of Parties to Licenses/Agreements
Sep. 14, 17, 24, 28, and 29, 2015: 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[OG3]:
- Change in name for B/E Aerospace Consumables Management GmbH, subsidiary of KLX, Inc., to KLX Aerospace Solutions GmbH due to corporate restructure;
- Change in name from LSC Group Limited (Company No. 02275471) (LSC Group)to Babcock Information Analytics and Security Limited (Babcock) due to acquisition of LSC Group by Babcock;
- Change in name from System Planning Corporation to SPC Federal, LLC due to corporate restructure;
- Change in name from Aeroflex Airflyte (Aeroflex) to Cobham Slip Rings Naples Inc. (Cobham) due to corporate acquisition of Aeroflex by Cobham;
- Change in name from Airbus DS Limited to Airbus Defence and Space Limited due to corporate rebranding;
- Change in name from Persides Consultancy Services Limited (Persides) to ERA Technology Limited (ERA) due to corporate acquisition of Persides by ERA;AgustaWestland S.pA., Alenia Aermacchi S.p.A., Selex ES S.p.A., OTO Melara S.p.A., and Whitehead Sistemi Subacquei S.p.A. (the Operating Companies) are merging operations with the parent company, Finmeccanica S.p.A., Italy. AgustaWestland S.p.A, Alenia Aermacchi S.p.A,and Selex ES S.p.A will survive as subsidiaries under Finmeccanica S.p.A.OTO Melara S.p.A. and Whitehead Sistemi Subacquei S.p.A. will change their corporate names to Finmeccanica S.p.A.;
- Change in name from NewSat Limited (NewSat)to SpeedCast Australia Pty Ltd (SpeedCast) due to corporate acquisition of NewSat by SpeedCast;
- Change in name from GE Aviation Hydraulic Actuation (GEAHA) to Triumph Actuation Systems-IOM, Ltd. (Triumph) due to corporate acquisition of GEAHA by Triumph;
- Thales SafarePons S.A.S, France merges with Thales Underwater Systems S.A.S.; and
- Pearson Engineering Limited changes address.
Each announcement includes a link to a notice specifying the effects of the change on pending and currently approved authorizations involving the listed entity.
Department of the Treasury
OFAC Amends Rules to Permit More Commerce to Be Undertaken in Cuba
Sep. 21, 2015 – 80 Fed. Reg. 56915: OFAC amended the CACR to further ease sanctions against Cuba affecting, among others, travel, telecommunications, internet-based services, business operations in Cuba, remittances, provision of goods and services to Cuban individuals outside Cuba, legal services, and educational activities. These amendments were published simultaneously with amendments to the EAR by BIS (see above). FAQs about the new rules are on the Treasury Department website at http://www.treasury.gov/resource-center/sanctions/Programs/Documents/cuba_faqs_new.pdf[OG4].
LATEST SANCTIONS FINES & PENALTIES
Department of Commerce
Sep. 4, 2015 – 80 Fed. Reg. 53489: Air Bashkortostan Ltd. of Moscow, Russia, agreed to the denial of its export privileges for one year and to pay a civil penalty of $350,000 (suspended for one year and thereafter waived if it commits no further EAR violations) to settle charges by BIS that it re-exported four Boeing 757 aircraft valued at a total of $4.5 million and controlled under Export Classification Control Number (ECCN) 9A991.b to Iran without the required authorization. The aircraft were re-exported to Eram Air, an Iran-based airline.
Sep. 20, 2015 – 80 Fed. Reg. 56439: BIS renewed for 180 days the Temporary Denial Order (TDO) against Flider Electronics, LLC, d/b/a Trident International Corporation (and other names); Pavel Semenovich Flider; and Gennadiy Semenovich Flider. The original TDO was based on an ongoing pattern of unauthorized exports to Russia of items controlled under the EAR involving bank transfers of more than $60 million. (See March 2015 Regulatory Update for more information on this case.)
Sep. 24, 2015 – 80 Fed. Reg. 57572: BIS imposed denial orders against the following persons in connection with a conspiracy to export and reexport web monitoring and controlling equipment and software to Syria, including to the state-run Syria Telecommunications Establishment:
- Aiman Ammar, UAE – 5 years;
- Rashid Albuni, UAE – 6 years;
- Engineering Construction and Contracting, Syria – 7 years;
- Advanced Technology Solutions, Syria – 7 years; and
- iT-Wave FZCO, UAE – 4 years.
The exported goods, which were designed for use in monitoring and controlling internet traffic, were exported with false documentation identifying the destinations as Iraq, Afghanistan, Turkey, Egypt, and the UAE.
Department of State
Sep. 2, 2015 – 80 Fed. Reg. 53222: The Department of State imposed nonproliferation measures including a prohibition on individual export licenses of items controlled under the EAR and suspension of existing licenses against several entities in Iran, North Korea, Sudan, Syria, and the following Chinese, Russian, Turkish, and United Arab Emirates (UAE) Entities:
- China: BST Technology and Trade Company; Dalian Sunny Industries, a/k/a/ LIMMT; Li Fang Wei, a/k/a Karl Lee; Tianjin Flourish Chemical Company; Polestar Trading Company, Ltd.;
- Russia: Instrument Design Bureau (KBP); Joint Stock Company Katod; JSC Mic NPO Mashinostroyenia; Rosoboronexport (ROE); Russian Aircraft Corporation (RAC) Mig;
- Turkey: Multimat Ic ve Dis Ticarete Pazarlama Limited;
- UAE: Eliya General Trading.
Fines and Penalties
Sep. 9, 2015: Alexander Fishenko of Houston, TX, a dual citizen of the U.S. and Russia, pleaded guilty in federal court in Brooklyn, NY to conspiring to export and illegally exporting analog-to-digital converters, static random access memory chips, microcontrollers, and microprocessors and other high-technology products to Russia without the required authorization; money laundering; obstruction of justice; acting as an unregistered agent of the Russian government; and other crimes. The illegal exports were valued at approximately $50 million, and the alleged end users included Russian military and intelligence agencies. Fishenko; 10 other individuals; Apex System, LLC, a firm located in Moscow, Russia; and Arc Electronics, Inc., a Texas company founded by Fishenko, were indicted in 2012. (See details in October 2012 Regulatory Update.) Four members of the conspiracy have pleaded guilty; three were scheduled to commence trial on Sep. 21, 2015; and three remain at large in Russia.
Sep. 1, 2015: Streit Goup, a UAE corporation, its subsidiaries in the UAE and U.S., and two corporate officers agreed to pay civil penalties totaling $3.5 million, accept a 3-year denial of export privileges (suspended for 3 years), and submit to two audits of each company’s export control compliance programs to settle charges by BIS that they had exported U.S.-origin vehicles retrofitted with ballistic steel and bullet proof glass to end users in the UAE, Venezuela , Afghanistan, Iraq, Nigeria, the Philippines, and Singapore without the required authorizations from the Commerce Department. The fines were $1.6 million ($750,000 suspended for 3 years) on Streit Group, UAE and its subsidiary Streit Middle East, UAE; $1.6 million ($750,000 suspended for 3 years) on Streit USA of South Carolina; $250,000 on Guerman Gouturov, Chairman and CEO of the two UAE companies, and $50,000 on Eric Carlson, President of Streit USA.
Sep. 25, 2015: Production Products, Inc. of Charlotte Hall, MD agreed to pay a civil penalty of $50,000 (suspended for 2 years and then waived), undergo an audit of its export compliance program, and have three senior officers complete an EAR compliance course to settle charges by BIS that it exported three EAR99 spiral duct production machines and related accessories valued at $500,000 to China National Precision Machinery Import/Export Corporation in Beijing, China, a party listed on the Treasury Department List of Specially Designated Nationals and Blocked Persons, without the required authorization.