AUGUST 2019 UPDATES

August 2019

This newsletter is a listing of the latest changes in export control regulations through August 31, 2019.  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 info@fdassociates.net 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

EUROPEAN UNION

EU Publishes Guidance For Internal Compliance Programs For Dual-Use Trade Controls

Aug. 5, 2019:  The European Union released an English-language version of its guidance for internal compliance programmes (ICPs) for dual-use trade controls.  The guidance, which describes 7 essential core elements of an effective ICP and for each specifies the possible solutions for developing or implementing appropriate compliance procedures, is in the Official Journal of the European Union at https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32019H1318&from=EN.

UNITED KINGDOM

UK Publishes List Of Strategic Military And Dual-Use Items Requiring Export Authorization

Aug. 14, 2019:  The U. K. Department for International Trade published an updated compilation of the following lists of strategic military and dual-use items that require export authorization:

  • UK Military List [Schedule 2 to the Export Control Order 2008]
  • UK Dual-Use List [Schedule 3 to the Export Control Order 2008]
  • EU Non-military Firearm List [Annex I to Regulation (EU) No. 258/2012]
  • EU Human Rights List [Annexes II, III & IV of Regulation (EU) No. 125/2019]
  • UK Security and Human Rights List [Articles 4A and 9 to the ECO 2008]
  • UK Radioactive Source List [Schedule to the Export of Radioactive Sources (Control) Order 2006]
  • EU Dual-Use List [Annex I to Council Regulation (EC) No. 428/2009]:
    • Category 0 Nuclear materials, facilities and equipment
    • Category 1 Special materials and related equipment
    • Category 2 Materials processing
    • Category 3 Electronics
    • Category 4 Computers
    • Category 5 Telecommunications and “information security”
    • Category 6 Sensors and lasers
    • Category 7 Navigation and avionics
    • Category 8 Marine
    • Category 9 Aerospace and Propulsion
  • EU Dual-Use List [Annex IV to Council Regulation (EC) No. 428/2009]

This resource is on the Internet at https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/824747/UK_strategic_export_control_lists_20190814.pdf.

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UK Export Control Joint Unit Publishes Guidance Regarding No Deal Brexit

Aug. 19, 2019:  The U.K. Export Control Joint Unit (ECJU) and Department for International Trade published updated guidance explaining what will change for exporters of controlled goods if the UK leaves the EU with no deal.  This guidance is on the Internet at https://www.gov.uk/guidance/exporting-controlled-goods-after-eu-exit?utm_source=e328a4ef-4d5b-440b-874e-5a20cdf5b620&utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate#exporting-civil-nuclear-material.

UNITED STATES

President Trump

Trump Administration Blocks Property Of The Government Of Venezuela

Aug. 7, 2019 – 84 Fed. Reg. 38843:  President Trump issued Executive Order 13884, Blocking Property of the Government of Venezuela.  See Treasury Department section below for implementation of this Executive Order.

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Trump Administration Continues Sanctions Aspects Of The Export Administration Act Of 1979 Via IIEPA

Aug. 15, 2019 – 84 Fed. Reg. 41881:  President Trump continued, for an additional year, the national emergency regarding the unusual and extraordinary threat to the national security, foreign policy and economy of the U.S. that has existed since the Export Administration Act of 1979, as amended (EAA, 50 USC 4601 et seq.) expired in 2001.  While the Export Control Reform Act of 2018 (“ECRA”) is the formal statutory authority for the majority of the Export Administration Regulations (EAR, 15 CFR Parts 730-774), there is still a need for the International Emergency Economic Powers Act (IEEPA, 50 USC 1701 et seq.) to implement certain sanctions imposed under the EAR that the ECRA does not directly authorize.

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Trump Administration Designates Brazil As A Major Non-NATO Ally

Aug. 19, 2019 – 84 Fed. Reg. 43035:  President Trump issued Presidential Determination No. 2019-21, designating Brazil as a major non-NATO ally for purposes of the Foreign Assistance Act of 1961 (22 USC Sec. 2321(k)) and the Arms Export Control Act (AECA, 22 USC 2778 et seq.), effective immediately.  DDTC will amend the definition of “major non-NATO ally” in Sec. 120.32 of the International Traffic in Arms Regulations (ITAR, 22 CFR Parts 120-130) accordingly.

U.S. Congress — Congressional Research Service

U.S. Congress Publishes “The International Emergency Economic Powers Act: Origins, Evolution, and Use”

Aug. 1, 2019:  The Congressional Research Service (CRS) released “The International Emergency Economic Powers Act: Origins, Evolution, and Use” a comprehensive description of the International Emergency Economic Powers Act (IEEPA, 50 USC Sec. 1701 -1707) including, in addition to the history of the Act, sections on Current Uses of IEEPA, Judicial Interpretation of IEEPA, and Issues and Options for Congress.  This 66-page document is on the CRS website at https://crsreports.congress.gov/product/pdf/R/R45618.

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U.S. Congress Publishes “Arms Sales: Congressional Review Process”

Aug. 14, 2019:  CRS published “Arms Sales: Congressional Review Process” a detailed description of the process and procedures that apply to congressional consideration of foreign arms sales proposed by the President, on the CRS website at  https://crsreports.congress.gov/product/pdf/RL/RL31675.

Department of Commerce – Bureau of Industry and Security

BIS Adds 17 Entities To The Entity List

Aug. 14, 2019 – 84 Fed. Reg. 40237: BIS amended the Export Administration Regulations (EAR, 15 CFR Parts 730-774) by adding 17 entities to the Entity List (EAR Part 744, Supp. No. 4) based on a determination that each of these entities had acted contrary to the national security or foreign policy interests of the U.S.  The added entities are in Armenia, Belgium, Canada, the People’s Republic of China (China), Georgia, Hong Kong, Malaysia, The Netherlands, Russia, the United Arab Emirates (U.A.E.), and the United Kingdom.  The rule also modified 23 entries in China, Hong Kong, and Russia, and removed 3 entities in China and the U.A.E.  Contact us for the full list of added, modified, and deleted entries. 

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BIS Requests Comments On The Impact On Commercial Activities Of The Proposed Additions Of Five Chemical Families To Schedule 1 Of The Annex On Chemicals To The Chemical Weapons Convention

Aug. 14, 2019 – 84 Fed. Reg. 40389:  BIS invited public comments on the impact on commercial activities of the proposed additions of five chemical families to Schedule 1 of the Annex on Chemicals to the Chemical Weapons Convention (CWC), as implemented through the Chemical Weapons Convention Implementation Act (CWCIA) and the Chemical Weapons Convention Regulations (CWCR).  Deadline for comments is Sep. 13, 2019.

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BIS Issues “General Advisory Opinion Concerning Prohibited Activities in the Standards Setting or Development Context When a Listed Entity Is Involved”

Aug. 19, 2019:  BIS issued a “General Advisory Opinion Concerning Prohibited Activities in the Standards Setting or Development Context When a Listed Entity Is Involved” in response to many questions it had received regarding the disclosure of technology or software subject to the EAR among members of standard setting or development groups or bodies.  These issues were raised in the context of the addition of Huawei Technologies Co., Ltd. and many of its non-U.S. affiliates to the Entity List and the issuance of a Temporary General License (TGL) relating to these entities.  This General Advisory Opinion is on the BIS website at

https://www.bis.doc.gov/index.php/documents/advisory-opinions/2437-general-advisory-opinion-concerning-prohibited-activities-in-the-standards-setting-or-development-context-when-a-listed-entity-is-involved/file.

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BIS Adds 46 Huawei Technologies Co. Ltd., Affiliates To The Entity List

Aug. 21, 2019 – 84 Fed. Reg. 43493:  BIS amended the Entity List by designating 46 Huawei Technologies Co., Ltd. affiliates in addition to Huawei and 68 of its non-U.S. affiliates which were designated on May 16, 2019 (84 Fed. Reg. 22961—see May 2019 Regulatory Update).  Of the 46 entities, 27 were added as new, separate entries, and 19 are being added under the existing entry for Huawei.  These 46 entries are located in Argentina, Australia, Bahrain, Belarus, Belgium, Brazil, China, Costa Rica, Cuba, Denmark, France, India, Indonesia, Italy, Kazakhstan, Mexico, New Zealand, Panama, Portugal, Romania, Russia, South Africa, Sweden, Thailand, and the United Kingdom.  The rule also moves three Chinese affiliates from separate entries to inclusion under the entry for Huawei, adds one alias and 4 addresses to the Huawei entry, and modifies the entries for 5 Huawei affiliates in China, Belgium, and Brazil.  Contact us for the full list of added and modified entries.

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BIS Issues New Temporary General License Related To Huawei

Aug. 21, 2019 – 84 Fed. Reg. 43487:  BIS issued a new Temporary General License (TGL) extending through Nov. 18, 2019 the term of the TGL issued May 22, 2019 that temporarily authorized engagement in specified transactions involving the export, reexport, or in-country transfer of items subject to the EAR to Huawei entities listed on the Entity List.  (See May 2019 Regulatory Update.)  The extension is intended to afford U.S. consumers the time necessary to transition away from Huawei equipment.   The new TGL, which applies to transactions with Huawei and all its non-U.S. affiliates that are currently listed on the Entity List, also (1) revises and clarifies the description of the transactions to which it applies, and (2) changes the certification requirement for transactions relying on it.  This new TGL is codified as Supplement No. 7 to EAR Part 744.

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BIS Issues Guidelines for Exporters, Reexporters, and In-country Transferors of US-Origin Technology to Parties in Pakistan Related to Nuclear or Missile Activities

Aug. 30, 2019:  BIS published a guide to due diligence for exports, reexports, and in-country transfers (together, “exports”) to Pakistan.  The guide focuses on exports destined for nuclear or missile activities and best practices for screening customers in Pakistan to prevent diversion of items subject to the EAR to unauthorized Pakistani end users and end users.  The guide is on the BIS website at https://www.bis.doc.gov/index.php/policy-guidance/pakistan-due-diligence-guidance

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BIS Announces Intention to Eliminate EAR License Exception Civil End Use (“CIV”)

BIS has announced that it intends to eliminate License Exception CIV from the EAR, without providing any detail regarding its reasons for eliminating the License Exception.  License Exception CIV is not a widely applicable exception in the EAR’s Commerce Control List (CCL) , but the License Exception does authorize the unlicensed export of a number of items controlled for “national security” (NS) reasons “provided the items are destined to civil end-users for civil end-uses in Country Group D:1,” which includes China.

Examples of items that may currently be exported under License Exception CIV include specific types of bearings, semiconductors, semiconductor production equipment, materials for semiconductor production, computers, telecommunication equipment, acoustic systems, optical equipment and materials, radar equipment, marine systems, and civil aircraft engine production equipment. The exception also authorizes the release to Chinese and other foreign nationals of a small number of technologies and software related to several of these items.

Although the notice did not articulate the Commerce Department’s basis for its plan to eliminate the exception, the action is likely in response to a requirement in the Export Control Reform Act (ECRA) that Commerce review the EAR’s licensing policies with respect to exports involving countries subject to arms embargoes, such as China.

In order to officially remove License Exception CIV, BIS will need to do so in a Notice and Comment rulemaking fashion with proposed rulemaking published in the Federal Register.  A proposed rule for this change has not yet been published by BIS.

U.S. Customs and Border Protection

CBP Publishes Guidelines For Merchandise Seized For Violations Of Export Control Regulations

July 30, 2019:  U.S. Customs and Border Protection (CBP) published updated remission guidelines for merchandise seized for violations of export control regulations. The new guidelines are on the CBP website    at https://www.cbp.gov/sites/default/files/assets/documents/2019-Jul/H291261_Export%20Guidelines_7-29-19.508.pdf.

U.S. Department of State

DDTC Name and Address Changes Posted To Website

August 7 and 16, 2019:  The Directorate of Defense Trade Controls (DDTC) posted the following name and/or address changes on its website at    

https://www.pmddtc.state.gov/ddtc_public?id=ddtc_kb_article_page&sys_id=bd72ca0adbf8d30044f9ff621f961981:
  • Changes in name due to corporate reorganization and address changes for Bell Companies:

                          From                                                                       To

Bell Helicopter Textron Inc. Bell Textron Inc.
Bell Helicopter Services Inc. Bell Textron Services Inc., Delaware
Bell Helicopter Miami Inc. Bell Textron Miami Inc., Delaware
Bell Helicopter Rhode Island Inc. Bell Textron Rhode Island Inc., Delaware
Bell Helicopter Korea Inc. Bell Textron Korea Inc., Delaware
Bell Technical Services Inc. Bell Textron Services Inc., Delaware
Bell Helicopter Asia (Pte) Ltd. Bell Textron Asia (Pte) Ltd., Singapore
Bell Helicopter Prague, a.s. Bell Textron Prague, a.s., Czech Republic
Bell Technical Services Inc. – Tainan Branch Bell Textron Services Inc. – Tainan Branch, Thailand
Bell Technical Services Inc. – Abu Dhabi Branch Bell Textron Services Inc. – Abu Dhabi Branch, United Arab Emirates
Bell Technical Services Inc. – Dubai Branch Bell Textron Services Inc. – Dubai Branch, United Arab Emirates
Bell Technical Services Inc. – Columbia Branch Bell Textron Services Inc. – Columbia Branch, Colombia
Bell Technical Services Inc. –Turkey Liaison Office Bell Textron Services Inc. – Turkey Liaison Office, Turkey
Bell Helicopter Asia (Pte) Ltd. – Thailand Rep. Office Bell Textron Asia (Pte) Ltd. – Thailand Rep. Office, Thailand
Bell Helicopter India Operations, a division of TIPL Bell Textron India Operations, a division of TIPL, India
Bell Helicopter Supply Center, B.V. Bell Textron Supply Center, B.V., Netherlands
  • Change in name from Sofradir EC Inc. to Lynred USA Inc. due to corporate name change and reorganization; and
  • Change in name from Hitachi Kokusai Yagi Solutions Inc. (HYS) to HYS Engineering Service Inc. (HYSES) due to corporate reorganization and merger of Hitachi Kokusai Electric Group, Hitachi Kokusai, Yagi Solutions Co., Ltd., Kokusai Electric Techno Service Co., Ltd., and HSS Service Co., Ltd. and change in address.

Each announcement includes a link to a notice detailing the change and its effects on pending and currently approved authorizations involving the listed entity.

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DDTC Publishes New FAQ Regarding USML Category XI(c)(1)

Aug. 19, 2019:  DDTC published a Frequently Asked Question (FAQ) offering guidance on determining whether an integrated circuit (IC) that is unique to a defense article and includes programmable elements is controlled under U.S. Munitions List (USML, 22 CFR Sec. 121.1) Category XI(c)(1).  This FAQ is on the State Department website at https://www.pmddtc.state.gov/ddtc_public?id=ddtc_public_portal_faq_detail&sys_id=8215c8a9db9bb3807ede365e7c9619d5.

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DDTC Amends The USML Regarding Certain Radars

Aug. 30, 2019 – 84 Fed. Reg. 45652:  DDTC amended the USML to exclude from coverage of certain lower-performing radars, including radars in driver-assisted and self-driving ground vehicles and in detect-and-avoid systems for autonomous aerial systems, by reserving the control for certain air surveillance radar in paragraph (a)(3)(ix) of USML Category XI and adding a note to Category XI that removes certain radars and radar components from the USML.  The rule also extends until Aug. 30, 2021, a temporary modification of USML Category XI(b) that had been scheduled to expire on Aug. 30, 2019. 

U.S. Department of the Treasury

OFAC Implements Executive Order 13884, “Blocking Property of the Government of Venezuela”

Aug. 6, 2019: To implement Executive Order 13884, “Blocking Property of the Government of Venezuela,” which prohibited transactions with the Venezuelan government and froze its assets, OFAC issued 12 amended general licenses (GLs) (GLs 2A, 3F, 4C, 7C, 8C, 9E, 10A, 13C, 15B, 16B, 18A, and 20A) and 13 new general licenses (GLs 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, and 33).  Among others, these licenses authorize certain transactions involving the export or reexport to Venezuela of agricultural commodities (including food), medicine, or medical devices ( GL 4C);  activities ordinarily incident and necessary to the operation or use of ports or airports in Venezuela (GL 30); and transactions with the government of Interim President Juan Guaido and the Venezuelan National Assembly and its members  (GL 31).  Links to all these amended and new GLs are on the Treasury Department website at https://www.treasury.gov/resource-center/sanctions/Programs/Pages/venezuela.aspx#gl.

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OFAC Publishes FAQs Regarding Venezuela

Aug. 6, 2019:  OFAC published 3 FAQs regarding implementation of EO 13884 regarding Venezuela (see item above) and a guidance document on the provision of humanitarian assistance.  FAQs 679-681 are on the Treasury Department website at https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_other.aspx#679; “Guidance Related to the Provision of Humanitarian Assistance and Support to the Venezuelan People” is at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/20190805_vz_humanitarian_guidance.pdf.

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OFAC Publishes FAQs Regarding Iran’s Iron, Steel, Aluminum And Copper Sectors

Aug. 6, 2019:  OFAC issued 15 FAQs regarding Executive Order 13871 of May 8, 2019, “Imposing Sanctions with Respect to the Iron, Steel, Aluminum, and Copper Sectors of Iran.”  (See May 2019 Regulatory Update.)   The FAQs, which include definitions of many terms used in this EO, are on the Treasury Department website at https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_iran.aspx#666.  (See also the following related item.)

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OFAC Amends The Iranian Financial Sanctions Regulations

Aug. 7, 2019 – 84 Fed. Reg. 38545:  OFAC amended the Iranian Financial Sanctions Regulations (IFSR, 31 CFR Part 561) to implement financial requirements of EO 13871, “Imposing Sanctions with Respect to the Iron, Steel, Aluminum, and Copper Sectors of Iran.”  (See related item above.

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 info@fdassociates.net.

Sanctions

U.S. Department of Commerce

Aug. 13, 2019 – 84 Fed. Reg. 40023:  BIS denied the export privileges of Juan Jesus De La Rosa of  Oakdale Federal Correctional Institution (FCI), LA, for 10 years based on his conviction of violating the AECA by aiding, abetting, and attempting the export, to Mexico, approximately 1,000 rounds of 7.62x39mm ammunition without the required license from the Department of State.  In the criminal case, De La Rosa was sentenced to 27 months in prison, 3 years of supervised release, and an assessment of $100.

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Aug. 13, 2019 – 84 Fed. Reg. 40024:  BIS denied the export privileges of Michael Shapovalov, a/k/a Mikhail Shapovalov, of Moshannon Valley FCI, PA, for 7 years, based on his conviction of violating the AECA by exporting, and causing to be exported, to Latvia, a barrel and breech casing for a Glock carbine pistol without the required license from the State Department.  In the criminal case Shapovalov was sentenced to 34 months in prison, 3 years of supervised release, and an assessment of $100.

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Aug. 13, 2019 – 84 Fed. Reg. 40025:   BIS denied the export privileges of Si Chen, a/k/a Cathy Chen, a/k/a Celia Chen, a/k/a Cecelia Chen, a/k/a Chunping Ji, of Carswell Federal Medical Center, TX, for 10 years, based on her conviction of violating IEEPA by conspiring and agreeing to export space communications technology, to Hong Kong, without the required license from the Commerce Department and without filing Electronic Export Information.  In the criminal case, Chen was sentenced to 46 months in prison, 3 years of supervised release, and a $300 special assessment. 

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Aug. 22, 2019 – 84 Fed. Reg. 43787, 43788, 43789, and 43791:  BIS denied the export privileges of the following 4 persons for 10 years based on their convictions of violating the AECA by attempting and causing the export to Lebanon of firearms, ammunition, parts, accessories, attachments and associated military equipment without the required licenses from the State Department:

  • Adam Al Herz of Rochester FCI, MN, sentenced to 240 months in prison, 3 years of supervised release, and an assessment of $300;
  • Bassem Afif Herz of Ray Brook FCI, NY, sentenced to 997 months in prison, 3 years of supervised release, and an assessment of $300;
  • Sarah Majid Zeaiter of Waseca FCI, WI, sentenced to 87 months in prison, 3 years of supervised release, and an assessment of $300; and
  • Ali Afif Al Herz of Greenville FCI, IL, sentenced to 342 months in prison, 3 years of supervised release, a fine of $150,000, and an assessment of $400.

(See additional information in April 2017 Regulatory Update.)

U.S. Department of State

Aug. 26, 2019 – 84 Fed. Reg. 44671: The State Department Bureau of International Security and Nonproliferation (ISN) imposed sanctions on Russia under the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991, as amended (CBW Act, 22 U.S.C. Sec. 5601-5606).  These sanctions supplement the sanctions imposed Aug. 27, 2018 (83 Fed. Reg. 43723 – see details in Aug 2018 Regulatory Update) in response to the March 2018 poisoning of a former Russian intelligence officer and his daughter in the United Kingdom. The new sanctions apply to exports of all dual-use goods controlled by the Commerce Department (excluding food and other agricultural commodities and products), subject to the following waivers, each under limited conditions specified in the Federal Register notice, with most including a case-by-case license requirement:

  • CBW: Exports and reexports of goods or technology controlled for reason CB (Chemical and Biological Weapons) for Russian state-owned or state-funded enterprises;
  • Other Reasons for Control: Exports and reexports of goods or technology controlled for AT (Anti-Terrorism), CC (Crime Control), FC (Firearms Convention), MT (Missile Technology), NP (Nuclear Nonproliferation), and RS (Regional Stability);
  • License Exceptions: Exports and reexports of goods or technology eligible under License Exceptions GOV, ENC, RPL, BAG, TMP, TSU, APR, CIV, and AVS;
  • Safety of Flight: Exports and reexports of goods or technology necessary for the safety of flight of civil fixed-wing passenger aviation;
  • Deemed Exports/Reexports: Exports and re-exports of goods or technology pursuant to new licenses for deemed exports and reexports to Russian nationals;
  • Wholly-Owned U.S. and Other Foreign Subsidiaries: Exports and reexports of goods or technology pursuant to new licenses for exports and reexports to wholly-owned U.S. and other foreign subsidiaries in Russia;
  • Space Flight: Exports and reexports of goods or technology in support of government space cooperation and commercial space launches; and
  • Commercial End-Users: Exports and reexports of goods or technology pursuant to new licenses for commercial end-users civil end-uses in Russia.

Consult us for further information, including details about waivers and licensing policies. 

Fines and Penalties

Aug. 5, 2019:  Andy Lloyd Huebschmann of New Holstein, WI, pleaded guilty in Federal District Court for the Eastern District of Wisconsin and was convicted of one count of violating the AECA by exporting numerous firearms and firearm parts including rifle kits containing the components of rifles that could function with semi-automatic or fully automatic triggers to an Australian in containers designed to hide the presence of firearms without the required license from the Department of State.

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Aug. 8, 2019:  PACCAR Inc. of Bellevue, WA, agreed to pay $1,709,325 to settle potential civil liability for 63 apparent violations of the Iranian Transactions and Sanctions Regulations (ITSR, 31 CFR Part 560) by DAF Trucks N.V. (“DAF”), a wholly owned subsidiary of PACCAR headquartered in Eindhoven, the Netherlands.  The apparent violations involved the sale or supply of 63 trucks to customers in Europe that DAF knew or had reason to know were ultimately intended for buyers in Iran.  PACCAR voluntarily disclosed the apparent violations.

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Aug. 8, 2019:  OFAC issued a Finding of Violation to DNI Express Shipping Company of McLean, VA, for violating the Reporting, Procedures and Penalties Regulations (RPPR, 31 CFR Part 501) by providing information to OFAC, including a subpoena response, that contained contradictory, false, materially inaccurate, materially incomplete, and misleading statements.   Mitigating factors cited by OFAC in this case were (1) DNI appears to be a small business; (2) DNI has no prior OFAC sanctions history; and (3) DNI’s narrative responses appear to have been filtered through DNI’s outside attorney.

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Aug. 8, 2019:  OFAC issued a Finding of Violation to Southern Cross Aviation, LLC, a Florida company, for violating the RPPR by failing to provide complete information to OFAC in response to an Administrative Subpoena.  Mitigating factors cited by OFAC in this case were (1) Southern Cross appears to be a small-to-medium-sized business; (2) Southern Cross has no prior OFAC sanctions history; and (3) the underlying potential sale in question does not appear to have occurred.

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Aug. 9, 2019:  Negar Ghodskani, a citizen of Iran, pleaded guilty in federal court in Minneapolis, MN to conspiracy to illegally export controlled technology from the U.S. to Iran.  According to her plea, Ghodskani was an employee of Fanavar Moj Khavar, a company located in Tehran, Iran that was designated as a Special Designated National in 2017 for providing support to the Iranian Revolutionary Guard Corps (IRGC).  In 2009 Ghodskani and others established Green Wave Telecommunication in Kuala Lumpur, Malaysia, as a front for Fanavar Moj and then solicited purchase agreements with U.S. producers of export-controlled technology, concealing the intended ultimate destination.  After their receipt in Malaysia, the goods were repackaged and shipped to Fanavar Moj in Tehran.  A co-conspirator, Alireza Jalali, an Iranian employee of Green Wave, pleaded guilty in the same court on March 20, 2018, and was sentenced to 15 months in prison.  (See additional information in March 2018 Regulatory Update.)

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Aug. 14, 2019:  Mojtaba Biria, a citizen of Germany and managing director of Energy Republic GmbH, of Cologne, Germany, was sentenced in federal court in Albany, NY to time served and a fine of $5,000 based on his plea of guilty of violating IEEPA and the ITSR by conspiring to acquire energy turbine parts to be shipped to Germany and then re-shipped to Iran.  Biria was arrested at Boston’s Logan International Airport Nov. 23, 2017, and had been in U.S. custody since that date.  His co-conspirators Mahin Mojtahedzadeh and Olaf Tepper had pleaded guilty earlier.  (See June 2019 and July 2019 Regulatory Updates.)

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Aug. 20, 2019:  Rami Najm Asad-Ghanem, a/k/a Rami Ghanem, a naturalized U.S. citizen living in Egypt, was sentenced in federal district court in Los Angeles, CA to 30 years in federal prison based on his guilty plea to 6 federal crimes including unlicensed arms brokering and export of weapons and ammunition stemming from arms-trafficking activities, and his subsequent conviction in a jury trial of conspiracy to use and transfer missile systems designed to destroy aircraft to Libya, the United Arab Republic, Iraq, and the leadership of Hezbollah and brokering the services of mercenary missile operators to a militant faction in Libya.  Ghanem was arrested in December 2015 in Athens, Greece as a result of an undercover investigation by U.S. Immigration and Enforcement (ICE) Homeland Security Investigations (HSI).  He was extradited to the U.S. in April 2016 and thereafter held in custody without bond.