, Author at FD Associates, Inc.

JANUARY 2020 EXPORT CONTROL REGULATION UPDATES

January 2020

This newsletter is a listing of the latest changes in export control regulations through January 31, 2020. 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 Published Description of Member States’ Conformity To EU Dual-Use Export Control Regulation

Jan. 17, 2020: The European Commission published an up-to-date, country-by-country description of all measures imposed by individual Member States to conform with the European Union (EU) dual-use export control regulation, Council Regulation (EC) No 428/2009. This document is on the EU website at https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52020XC0117(02)&from=EN.

United Kingdom

UK Export Control Joint Unit Updates Export Control List

Jan. 8, 2020: The United Kingdom (UK) Export Control Joint Unit (ECJU) published an updated export control list to reflect changes made by the EU in the dual-use export control list it released in October 2019. (See October 2019 Regulatory Update.) The updated UK Consolidated List of Strategic Military and Dual-Use Items That Require Export Authorization is at https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/856510/UK_strategic_export_control_lists_20191231.pdf.

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UK Published A Notice Regarding Applicability Of Export Controls During Brexit Transition Period

Jan. 29, 2020: The ECJU published a notice describing the applicability of export controls to trade with EU countries during the transition period through Dec. 31, 2020, when the UK’s departure from the EU will become complete. Current export licensing arrangements will continue to apply during the entire transition period. A link to “Notice to Exporters 2020/03: Exporting and Trading Items Subject to Strategic Controls During the Transition Period,” is at https://www.gov.uk/government/organisations/export-control-organisation.

The President

The President Imposes Additional Sanctions On Iran

Jan. 14, 2020 – 85 Fed. Reg. 2014: President Trump issued Executive Order 13902, “Imposing Sanctions With Respect to Additional Sectors of Iran,” targeting additional sources of revenue used by Iran to fund and support its nuclear and other programs. The EO authorizes sanctions against persons involved in additional sectors of the Iranian economy, including construction, mining, manufacturing, and textiles, and on foreign financial institutions that knowingly conduct or facilitate significant transactions involving those sectors of Iran’s economy or persons sanctioned under the order. (See Treasury Department section below for an FAQ about this EO.)

Department of Commerce

The Department Of Commerce Adjusts Civil Monetary Penalties For Inflation

Jan. 3, 2020 – 85 Fed. Reg. 207: The Commerce Department issued its annual rule adjusting maximum civil monetary penalties (CMPs) for inflation. Adjusted maximum CMPs for violations involving dual-use export controls include the following:

violations of the International Emergency Economic Powers Act (IEEPA, 50 USC Sec. 1705(b)) – maximum increased from $302,584 to $307,922
violations of Export Control Reform Act of 2018 (ECRA, 50 USC Sec. 4819) – maximum increased from $300,000 to $305,292
violations of 13 USC Sec. 304 (Census, Collection of Foreign Trade Statistics -- failure to file export information, delayed filings) – maximum per day increased from $1,394 to $1,419; maximum per violation increased from $13,948 to $14,194
violations of 13 USC Sec. 305 (Census, Collection of Foreign Trade Statistics – other unlawful export information activities) – maximum increased from $13,948 to $14,194.

The new maximum CMPs will apply to violations assessed after Jan. 15, 2020, including violations that occurred prior to that date.

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BIS Amends EAR On Interim Basis Assigning ECCN 0D521 To Software That Automates The Analysis Of Geospatial Imagery

Jan. 6, 2020 – 85 Fed. Reg. 459: The Bureau of Industry and Security (BIS) amended the Export Administration Regulations (EAR, 15 CFR Parts 730-774) by classifying under Export Control Classification Number (ECCN) 0D521 software that is specially designed to automate the analysis of geospatial imagery and meets specified additional criteria. A license will be required for regional stability reasons for the export and reexport of these items to all destinations except Canada, and the only available License Exception (LE) will be LE GOV (EAR Sec. 740.11), covering exports, reexports, and in-country transfers made by or consigned to a USG department or agency. This control under ECCN 0D521 will apply for a maximum of one year; after that time it will expire unless it is extended while the USG submits a proposal to the Wassenaar Arrangement or it is reclassified under another ECCN. This interim final regulation became effective Jan. 6, 2020; comments will be accepted until March 6, 2020.

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BIS Amends EAR In Final Rule To Regulate Certain Firearms And Ammunition (Previously ITAR) For Export Effective March 9, 2020

Jan. 23, 2020 – 85 Fed. Reg. 4136: BIS amended the EAR to add 17 new ECCNs to the Commerce Control List (CCL, EAR Part 774, Supp. No. 1) to include certain commercially available firearms and ammunition items that have been determined no longer to require control under U.S. Munitions List (USML, 22 CFR Sec. 121.1) Categories I, II, and III, based on a thorough interagency review that concluded that they do not provide a critical military or intelligence advantage to the U.S. and, in the case of firearms, do not have an inherently military function. (See State Department section below for additional information about the changes in the USML. Also, see May 2018 Regulatory Update for information about a proposed rule on this topic.) Certain software and technology capable of producing firearms when posted on the Internet under specified circumstances is also controlled under this rule. The items removed from the USML will be classified under new 500 and 600 series controls in CCL Category 0. An authorization from BIS will be required to export or reexport any of these items to any country, including releases of related technology and software to foreign persons in the U.S. A 3-page BIS list of Myths and Facts about this transition is on the BIS website at https://www.bis.doc.gov/index.php/documents/regulations-docs/federal-register-notices/federal-register-2020/2516-cats-i-iii-myths-and-facts/file. Effective date of this final rule is March 9, 2020. Contact us for additional information about this rule and about its effect on specific CCL and USML items.

Attend FD Associates’ workshops February 11 and 25 or March 10 and 24 to learn about these changes.

Department of State

DDTC Name and Address Changes Posted To Website

Jan. 6, 9, 17, 28, and 30, 2020: 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:

Change in name from P3 engineering GmbH to Umlaut engineering GmbH due to corporate rebranding;
Change in name from Sogeti UK Limited to CapGemini UK due to corporate rebranding;
Change in address for Itter B.V.;
Change in name from General Dynamics European Land Systems – Santa Barbara Sistemas to Fabrica De Municiones De Granada due to acquisition of GDELS – Santa Barbara Sistemas by Fabrica De Municiones De Granada;
Change in name from Lord Corporation to Parker Hannifin Corporation due to the acquisition of Lord Corporation by Parker Hannifin;
Change in name from FERCHAU Engineering to FERCHAU France SAS due to corporate reorganization;
Change in name from Bond Offshore Helicopters Limited to Babcock Mission Critical Services Offshore Ltd. due to corporate reorganization;
Change in address for Sikorsky Aircraft Australia Limited (SAAL);
Change in address for Keysight Technologies UK Ltd; and
Change in name from Triumph Aviation Services International Ltd. to STS Aviation Services International Ltd. due to acquisition of Triumph Aviation by STS Aviation.

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 Posts FAQs Related To U.S. Persons Working Abroad

Jan. 6, 2020: DDTC posted one general FAQ and 14 specific FAQs providing guidance regarding provision of defense services by U.S. persons for foreign entities located outside the U.S. Among other things, the FAQs provide that the U.S. person employee of a foreign employer, as exporter of the services, is responsible for obtaining authorization from DDTC, usually by a General Correspondence authorization; confirmed that the foreign employer is not required to register with DDTC nor is the individual U.S. person; and discussed issues such as whether a foreign-origin defense article becomes subject to the International Traffic in Arms Regulations (ITAR, 22 CFR Parts 120-130) by virtue of the involvement of the U.S. employee. The general FAQ is on the DDTC website at https://www.pmddtc.state.gov/ddtc_public?id=ddtc_public_portal_faq_detail&sys_id=6831a4fbdbca80d05564ff1e0f961996; the 14 specific FAQs are at https://www.pmddtc.state.gov/ddtc_public?id=ddtc_public_portal_faq_cat&topic=6acdbfe8db3bc30044f9ff621f96197e&subtopic=6d00203bdbca80d05564ff1e0f9619e3#6d00203bdbca80d05564ff1e0f9619e3.

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The State Department Adjusts Civil Monetary Penalties For Inflation

Jan. 14, 2020 – 85 Fed. Reg. 2020: The State Department issued its annual rule adjusting maximum CMPs for inflation. Adjusted maximum CMPs for violations involving the ITAR are:

violations of Arms Export Control Act (AECA, 22 USC 2778 et seq.) Sec. 38(e) (ITAR Sec. 127.10(a)(1)(i)): $1,183,736
violations of AECA Sec. 39A(c) (ITAR Sec. 127.10(a)(1)(ii)): $860,683 or 5 times the amount of the prohibited payment, whichever is greater
violations of AECA Sec. 40(k) (ITAR Sec. 127.10(a)(1)(iii)): $1,024,457.

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DDTC Amends The ITAR In Final Rule Revising USML Categories I, II and III Effective March 9, 2020

Jan. 23, 2020 – 85 Fed. Reg. 3819: DDTC amended USML Categories I (Firearms, Close Assault Weapons and Combat Shotguns, to be renamed “Firearms and Related Articles’’), II (Guns and Armament), and III (Ammunition and Ordnance) to limit their scope to those articles that provide the U.S. with a critical military or intelligence advantage or, in the case of weapons, perform an inherently military function. Control over items that do not meet that standard, e.g., articles that are widely available in retail outlets in the U.S. and abroad, will be transferred to the CCL; however, all the transferred items will remain subject to export authorization requirements. and License Exception STA will not be available for them. Effective date of this final rule is March 9, 2020. (See Commerce Department section above for additional information about the changes in the CCL. Also, see May 2018 Regulatory Update for information about a proposed rule on this topic.) A DDTC Fact Sheet on these changes, including Myths and Facts, is on the DDTC website at https://www.state.gov/proposed-rules-for-oversight-of-firearms-exports-published-for-public-comment/, and DDTC transition guidance is at https://www.pmddtc.state.gov/sys_attachment.do?sysparm_referring_url=tear_off&view=true&sys_id=11608c55db664c107ede365e7c96196e [5 pp.]. Contact us for additional information on this rule, and about its effect on the specific defense articles and defense services that affect you.

Department of the Treasury

OFAC Issues Amended Venezuela-Related General Licenses

Jan. 7, 17, and 21, 2020: The Office of Foreign Assets Control (OFAC) issued the following amended Venezuela-related General Licenses (GLs):

GL 6A, “Authorizing Certain Activities Necessary to the Wind Down of Operations or Existing Contracts with Globovision Tele C.A. or Globovision Tele CA, Corp." (effective through Jan. 21, 2020) (https://www.treasury.gov/resource-center/sanctions/Programs/Documents/venezuela_gl6a.pdf);
GL 8E, “Authorizing Transactions Involving Petróleos de Venezuela, S.A. (PdVSA) Necessary for Maintenance of Operations for Certain Entities in Venezuela” (effective through April 22, 2020) (https://home.treasury.gov/system/files/126/venezuela_gl8e.pdf); and
GL 20B, "Authorizing Official Activities of Certain International Organizations Involving the Government of Venezuela" (https://www.treasury.gov/resource-center/sanctions/Programs/Documents/venezuela_gl20b.pdf).

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OFAC Posts New Iran-Related FAQ

Jan. 16, 2020: OFAC posted a new Iran-related FAQ addressing whether there is a wind-down period for EO 13902 of Jan. 14, 2020, “Imposing Sanctions With Respect to Additional Sectors of Iran,” (see The President section above) at https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_iran.aspx#816.

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

Department of Commerce

Jan. 8, 2020 – 85 Fed. Reg. 873: BIS denied the export privileges of Edgar Sanchez-Muro until June 19, 2024, based on his conviction of violating the AECA by knowingly attempting to export and exporting approximately 980 rounds of ammunition from the U.S. to Mexico without the required authorization. In the criminal case, Sanchez-Muro was sentenced to 12 months and one day in prison and a $100 special assessment.

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Jan. 8, 2020 – 85 Fed. Reg. 874: BIS denied the export privileges of Resit Tavan until Aug. 29, 2029, based on his conviction of conspiracy to violate U.S. sanctions by exporting specialized marine equipment from the U.S. to Iran without the required authorization. (See additional details in September 2019 Regulatory Update.) In the criminal case, Tavan was sentenced to 28 months in prison with credit for time served and a $100 special assessment.

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Jan. 8, 2020 – 85 Fed. Reg. 875: BIS denied the export privileges of Ruben Beltran-Ramos, a/k/a Ruben Ramos-Beltran, until Nov. 20, 2028, based on his conviction of violating the AECA by knowingly attempting to export and exporting 5,000 cartridges of ammunition from the U.S. to Mexico without the required authorization. In the criminal case, Beltran-Ramos was sentenced to 26 months in prison and a $100 special assessment.

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Jan. 24, 2020 – 85 Fed. Reg. 4271: BIS entered a 180-day Temporary Denial Order (TDO) against the following persons and businesses:

Muhammad Kamran Wali, Rawalpindi, Pakistan;
Muhammad Ahsan Wali, Mississauga, Ontario, Canada;
Haji Wali Muhammad Sheikh, Mississauga, Ontario, Canada;
Ahmed Waheed, Essex, United Kingdom;
Ashraf Khan Muhammad, Kowloon, Hong Kong;
Business World, Rawalpindi, Pakistan;
Buziness World, Mississauga, Ontario, Canada;
Business World, Kowloon, Hong Kong;
Industria Hong Kong Ltd, d/b/a Transcool Auto Air Conditioning Products, d/b/a Electro-Power Solutions, Kowloon, Hong Kong; and
Product Engineering, Rawalpindi, Punjab, Pakistan.

(See Fines and Penalties section below for indictment of 5 of these persons.)

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Jan. 24, 2020 – 85 Fed. Reg. 4276: BIS denied the export privileges of Marjan Caby of Miami, FL for 4 years based on a settlement agreement between Caby and the U.S. Attorney’s Office for the Southern District of Florida involving a charge of conspiracy to violate IEEPA by shipping various aircraft parts and equipment to Syrian Arab Airlines without the required authorization. (See related denial orders in November 2019 Regulatory Update.)

Department of State

Jan. 16, 2020 – 85 Fed. Reg. 2802: The State Department rescinded the statutory debarments of the following individuals and entities, all of whom had been debarred because they had pled guilty to violations of the AECA:

Jami Siraj Choudhury;
David Michael Janowski II;
Netria Corporation;
Jonathan Robert Reynolds; and
State Metal Industries, Inc.

As a result of this rescission, all otherwise eligible persons may engage in exports of any of the Parties’ manufactured defense articles, incorporate any of the Parties’ manufactured items into defense articles for export, or otherwise engage in transactions subject to the ITAR without providing prior written notification of the Parties’ involvement as would otherwise be required. However, the Parties’ direct export privileges have not been reinstated.

Fines and Penalties

Jan. 15, 2020: The Department of Justice announced the unsealing of an indictment returned on Oct. 16, 2019, against Muhammad Kamran Wali of Pakistan; Muhammad Ahsan Wali and Haji Wali Muhammad Sheikh, both of Mississauga, Ontario, Canada; Ashraf Khan Muhammad of Hong Kong; and Ahmed Waheed of Ilford, Essex, United Kingdom, for conspiracy to violate the IEEPA and the ECRA by exporting U.S.-origin goods without the required USG authorizations to two Pakistani entities that were included on the Commerce Department’s Entity List (15 CFR Part 744, Supp. No. 4) because they were involved in Pakistan’s cruise missile and strategic UAV programs. All 5 defendants were associated with a front company, “Business World” in Rawalpindi, Pakistan, that operated as an international procurement network for these programs.

According to the indictment, the defendants concealed the actual destination of the goods from their U.S. suppliers by using a network of front companies as the claimed purchasers, end-users, and sources of payments, allegedly causing 29 different U.S. exporters to unintentionally falsely identify the ultimate consignees of the shipments on export documents. Arrest warrants are pending for all 5 defendants; none has thus far been apprehended. (See related Temporary Denial Order in Sanctions section above.)

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Jan. 16, 2020: Majid Ghorbani, an Iranian citizen and resident of California, was sentenced in U.S. District Court in the District of Columbia to a prison term of 30 months followed by 36 months of supervised release based on his guilty plea to willfully violating the IEEPA and the Iranian Transactions and Sanctions Regulations (ITSR, 31 CFR Part 560) by providing surveillance of and collecting identifying information about the U.S. members and activities of the Mujahadeen-e-Khalq (MEK), an organization that opposes the current Government of Iran. Ghorbani provided the information and materials, including photographs of rally attendees, to a codefendant who tasked him on behalf of the Iranian regime and, among other things, paid him $2,000 provided by his Government of Iran handler.

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Jan. 26, 2020: James P. Meharg of Pensacola, FL was sentenced in U.S. District Court for the Northern District of Florida to 40 months in prison followed by 3 years of federal supervised release, and, ordered to forfeit $250,000 based on his conviction of violating the ITSR by conspiring with citizens of the United Kingdom and Iran to export a Solar Mars 90 S turbine core engine and parts, from the U.S. to a recipient in Iran. Meharg also allegedly falsified documents used to export the items from the U.S. The turbine was seized by U.S. law enforcement authorities before its transatlantic journey.

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Jan. 28, 2020: Honeywell Middle East FZE of Dubai, United Arab Emirates (UAE) agreed to pay a civil penalty of $26,250 to settle charges of violating the Antiboycott Regulations (EAR Part 760) by refusing to do business (EAR Sec. 760.2(a)) on 2 occasions and by failing to report the receipt of requests to engage in a restrictive trade practice or foreign boycott against a country friendly to the U.S. (EAR Sec. 760.5) on one occasion. The violations involved transactions with Oman and the UAE.

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Jan. 29, 2020: Airbus SE (Airbus) of Leiden, The Netherlands, agreed to pay a civil penalty of $10 million ($5 million in 3 installments and $5 million assessed for remedial compliance measures and suspended on condition of completion of remedial measures), assign a Special or Internal Compliance Officer, and take extensive remedial compliance measures to settle charges by DDTC of 75 violations of the AECA and ITAR including failure to report accurate ITAR Part 130 statements for fees or commissions paid to facilitate sales; failure to maintain required ITAR Part 130 records; unauthorized reexports of defense articles from Spain to Australia; and unauthorized retransfers of defense articles in Spain.

Separately, Airbus also entered into a deferred prosecution agreement (DPA) with the Department of Justice (DOJ) in connection with a criminal investigation charging it with conspiracy to violate the AECA and the ITAR and conspiracy to violate the anti-bribery provision of the Foreign Corrupt Practices Act (FCPA, 15 U.S.C. §§ 78dd-1, et seq.). The AECA charge involves Airbus’ willful failure to inform DDTC of commissions it paid to third-party brokers who were hired to generate sales of defense articles and defense services to foreign armed forces. Under this DPA, Airbus will pay penalties of $527 million (including $5 million to be credited by DOJ from the $10 million DDTC penalty), plus 50 million Euros (approximately $55 million) as part of the civil forfeiture agreement for the ITAR-related conduct. A DOJ press release with additional information is on the DOJ website at https://www.justice.gov/opa/pr/airbus-agrees-pay-over-39-billion-global-penalties-resolve-foreign-bribery-and-itar-case.

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Jan. 30, 2020: Mahin Mojtahedzadeh, a citizen of Iran, was sentenced in federal district court in Albany, NY to time served (443 days in jail) and a $5,000 fine for violating the IEEPA and the ITSR by conspiring to export gas turbine parts valued at more than $3,000 from the U.S. to Iran without the required license from OFAC. Mojtahedzadeh was President and Managing Director of ETCO-FZC, a supplier of spare and replacement turbine parts for power generation companies in the Middle East with an office in Dubai, UAE. Working with companies in Canada and Germany, she arranged for U.S.-origin turbine parts to be illegally trans-shipped from those countries to Iran. Two co-conspirators in these violations, Olaf Tepper and Mojtaba Biria, both citizens of Germany, pleaded guilty to violating the IEEPA and were sentenced in August 2018 and August 2019, respectively. (See August 2019 Regulatory Update.) Mojtahedzadeh will now be placed in immigration custody for removal from the U.S.

JANUARY 2020 EXPORT CONTROL REGULATION UPDATES Read More »

DECEMBER 2019 EXPORT CONTROL REGULATION UPDATES

December 2019

This newsletter is a listing of the latest changes in export control regulations through December 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

Dec. 30, 2019: The updated European Union (EU) dual-use export control list adopted by the European Commission Oct. 17, 2019 (see October 2019 Regulatory Update) entered into force. The new “Dual-Use Regulation” is in the EU Official Journal at https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:L:2019:338:FULL&from=EN

Department of Commerce – Bureau of Industry and Security

Dec. 6, 2019—84 Fed. Reg. 66840: The Bureau of Industry and Security (BIS) corrected the Federal Register citations in 3 items in its announcement of Nov. 13, 2019 (84 Fed. Reg. 61538; see November 2019 Regulatory Update), which added 22 entities to the Entity List (15 CFR Part 744, Supp. No. 4).

Department of Commerce – Census Bureau

Dec. 31, 2019: The Census Bureau updated Schedule B and the Harmonized Tariff Schedule (HTS) to accept the changes to the January 1, 2020 codes. AES and the ACE AESDirect program will continue to accept shipments with outdated codes during a grace period ending January 30, 2020. The 2020 Schedule B and HTS tables are on the Census Bureau website at http://www.census.gov/foreign- trade/aes/documentlibrary/#concordance; the current list of HTS codes that are not valid for AES is at http://www.census.gov/foreign-trade/aes/documentlibrary/concordance/hts-not-for-aes.html.

Department of Justice

Dec. 13, 2019: The Department of Justice (DOJ) National Security Division (NSD) released a revised and restated policy for business organizations regarding voluntary self-disclosures (VSDs) of potentially willful violations of the Arms Export Control Act (AECA, 22 U.S.C. § 2778), the Export Control Reform Act (ECRA, 50 U.S.C. § 4801 et seq.), and the International Emergency Economic Powers Act (IEEPA, 50

U.S.C. § 1705.) The VSD Policy – which applies only to VSDs made directly to DOJ, not to VSDs made to regulatory agencies – incentivizes VSDs by providing that absent aggravating circumstances, companies that make a VSD, fully cooperate with NSD, and timely and appropriately remediate, will receive a non- prosecution agreement and will not be assessed a fine. If aggravating circumstances are present but the other criteria are satisfied, NSD will recommend a fine that is at least 50 percent lower than would otherwise be available and will not require a monitor. The full policy, including definitions of “Voluntary Self- Disclosure,” “Full Cooperation,” and “Timely and Appropriate Remediation” and a description of “Potential Aggravating Factors,” is on the DOJ website at https://www.justice.gov/nsd/ces_vsd_policy_2019/download.

Department of State

Dec. 20, 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 names from Selex Galileo Inc. and Lasertel Inc. to Leonardo Electronics US Inc. due to corporate rebranding;
Change in name from Bell Helicopter Textron Canada Limited to Bell Textron Canada Limited due to corporate rebranding; and
Change in name from Bell Helicopter Canada International to Bell Canada International due to corporate rebranding.

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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Dec. 23, 2019: DDTC announced that the new format for Commodity Jurisdiction Form DS-4076 is now available in the Defense Export Control and Compliance System (DECCS). Guidance on creating a DECCS account is on the DDTC web site at https://deccspmddtc.service-now.com/deccs?id=cj_home.

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Dec. 26, 2019 – 84 Fed. Reg. 70887: DDTC amended the International Traffic in Arms Regulations (ITAR, 22 CFR Parts 120-130) to create a definition of “activities that are not exports, reexports, retransfers, or temporary imports” in a new ITAR Sec. 120.54. This rule covers activities including launching items into space, providing technical data to U.S. persons within the U.S. or within a single country abroad, and moving a defense article between the states, possessions, and territories of the United States and clarifies that the electronic transmission and storage of properly secured unclassified technical data via foreign communications infrastructure does not constitute an export. The rule also defines “access information” and revises the definition of “release.” In an effort to align the definitions in the ITAR and the Export Administration Regulations (EAR, 15 CFR Parts 730-774), this rule is structured similarly to EAR Sec.

734.18. This is an interim final rule effective on March 25, 2020; comments may be submitted until January 27, 2020.

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Dec. 31, 2019 – 84 Fed. Reg. 72424: The State Department published a report detailing the Administration’s implementation of the Global Magnitsky Human Rights Accountability Act (Pub. L. 114– 328, Title XII, Subtitle F) in 2019, as of Dec. 10, 2019. The Federal Register announcement includes the full text of the report.

Department of the Treasury

Dec. 9, 11, 13, 17, 19, and 20: The Office of Foreign Assets Control (OFAC) issued new sanctions-related Frequently Asked Questions (FAQs), as follows:

Dec. 9: 2 Venezuela-related FAQs regarding permissible legal actions relating to blocked property at https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_other.aspx#808;
Dec. 11: 2 Iran-related FAQs regarding the designation of the Islamic Republic of Iran Shipping Lines (IRISL) and E-Sail Shipping Limited (“E-Sail”) under Executive Order (E.O.) 13382 at https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_iran.aspx#810;
Dec. 13: 3 Counter-Terrorism-related FAQs regarding information or informational materials that are the property or subject to an interest in property of persons designated as Specially Designated Global Terrorists (SDGTs) at https://www.treasury.gov/resource- center/faqs/Sanctions/Pages/faq_other.aspx#812;
Dec. 19: Amendments to 3 Iran-related FAQs regarding sanctions on COSCO Shipping Tanker (Dalian) Co. and COSCO Shipping Tanker (Dalian) Seaman & Ship Management Co. and types of activities considered “maintenance” (FAQs ## 804, 806, and 807) at https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_iran.aspx#804 (seebelowforrelatedIran-relatedGeneralLicenseNo.K-1); and
Dec. 20: one Ukraine-/Russia-related FAQ regarding wind-down exceptions relating to the construction of Nord Stream 2 or Turkstream at https://www.treasury.gov/resource- center/faqs/Sanctions/Pages/faq_other.aspx#815.

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Dec. 9 and 18, 2019: OFAC issued Global Magnitsky General License (GL) # 1 and GL # 1A, both titled “Authorizing Certain Activities Necessary to the Wind Down of Transactions Involving Ventspils Attistibas Agentura, Biznesa Attistibas Asociacija, and Latvijas Tranzita Biznesa Asociacija,” at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/glomag_gl1.pdf and https://www.treasury.gov/resource-center/sanctions/Programs/Documents/glomag_gl1a.pdf, respectively.

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Dec. 17, 2019: OFAC released its quarterly report on certain licensing activities under the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA) from October through December 2018 involving exports of agricultural commodities, medicine, and medical devices to Iran and Sudan. The report is on the Treasury Department website at https://www.treasury.gov/resource- center/sanctions/Documents/1quarter2019.pdf.

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Dec. 19, 2019: OFAC issued Iran-related GL # K-1, “Authorizing Maintenance or Wind Down of Transactions Involving Cosco Shipping Tanker (Dalian) Co., Ltd.” This GL is on the Treasury Department website at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/iran_glk1.pdf.

LATEST SANCTIONS FINES & PENALTIES

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

Department of Commerce

Dec. 6, 2019 – 84 Fed. Reg. 66873: BIS renewed for an additional 180 days the Temporary Denial Order (TDO) against the following persons and, when acting for or on their behalf, any successors or assigns, agents, or employees:

Mahan Airways, Tehran, Iran;
Pejman Mahmood Kosarayanifard A/K/ A Kosarian Fard, Dubai, United Arab Emirates (UAE);
Mahmoud Amini, Dubai, UAE;
Kerman Aviation A/K/A Gie Kerman Aviation, Paris, France;
Sirjanco Trading LLC, Dubai, UAE;
Mahan Air General Trading LLC, Dubai, UAE;
Mehdi Bahrami, Istanbul, Turkey;
Al Naser Airlines A/K/A Al-Naser Airlines A/K/A Al Naser Wings Airline A/K/A Alnaser Airlines And Air Freight Ltd., Baghdad, Iraq, Dubai, UAE, and Amman, Jordan;
Ali Abdullah Alhay A/K/A Ali Alhay A/K/A Ali Abdullah Ahmed Alhay, Baghdad, Iraq, and Qatif, Saudi Arabia;
Bahar Safwa General Trading, Dubai, UAE;
Sky Blue Bird Group A/K/A Sky Blue Bird Aviation A/K/A Sky Blue Bird Ltd A/K/A Sky Blue Bird FZC Ras Al Khaimah Trade Zone, UAE; and
Issam Shammout A/K/A Muhammad Isam Muhammad Anwar Nur Shammout A/K/A Issam Anwar, Damascus, Syria, Beirut, Lebanon, London, United Kingdom, and Istanbul, Turkey.

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Dec. 10, 2019 – 84 Fed. Reg. 67427: BIS denied the export privileges of Oguzhan Aydin for 10 years based on his conviction of violating IEEPA by exporting, causing to be exported, and attempting to export and cause the export of a General Electric CF6-50c2 engine with the intention of directly or indirectly supplying it to Mahan Airways in Iran without the required U.S. Government authorization. In the criminal case, Aydin was sentenced to 9 months and 10 days in prison, 3 years of supervised release, and an assessment of $100.

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Dec. 10, 2019 – 84 Fed. Reg. 67428: BIS denied the export privileges of Paul Stuart Brunt for 10 years based on his conviction of violating the AECA by knowingly and willfully exporting firearms designated as defense articles on the U.S. Munitions List (USML, 22 CFR Sec. 121.1) to Turkey and Iraq without the required licenses from the U.S. Department of State. In the criminal case, Brunt was sentenced to 3 years of probation, 200 hours of community service, a fine of $20,000, and a $300 assessment.

Fines and Penalties

Dec. 2, 2019: The U.S. District Court for the Southern District of Georgia unsealed a superseding indictment charging 2 Russian nationals, 2 Italian nationals, a U.S. citizen, and companies based in Russia, Italy, and the U.S. with violating and conspiring to violate the IEEPA and the ECRA and conspiring to commit wire fraud and money laundering in a plot to purchase in the U.S. a Vectra 40G power turbine designed and manufactured for integration with generators to enable direct drive of high-power gas compressors and ultimately to export it to Russia for use by a Russian government-controlled business on a Russian Arctic deep-water drilling platform, a destination prohibited by U.S. sanctions. The conspiracy included concealing the true end user of the Vectra from the U.S. manufacturer and the U.S. Government by submitting false documentation stating that the Vectra would be used by a U.S. company in and around Atlanta. Three of the defendants – Oleg Vladislavovich Nikitin of the Russia-based company, Gabriele Villone of an Italian intermediary company, and Dali Bagrou of the U.S.-based company – were arrested in Savannah, GA while attempting to complete the illegal transaction.

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Dec. 3, 2019: Ghaddar Machinery Co., SAL, of Ghazieh, Sidon, Lebanon agreed to pay a civil penalty of

$368,000 (in scheduled payments over a 2-year period) to settle charges by BIS of 20 violations involving the reexportation from Lebanon to Syria of generator sets designated EAR99 and valued at approximately

$736,2326 without the required U.S. Government authorization. The generator sets were assembled in Lebanon and were subject to the EAR when reexported to Syria because they contained more than 10% of controlled U.S.-origin content.

*******

Dec. 10, 2019: Sunarko Kuntjoro, a citizen of Indonesia, and three Indonesian-based companies, PT MS Aero Support (PTMS), PT Kandiyasa Energi Utama (PTKEU), and PT Antasena Kreasi (PTAK), were indicted in U.S. District Court in Washington, D.C. for conspiring to evade the requirements of the IEEPA, the Iranian Transactions and Sanctions Regulations (ITSR, 31 CFR Part 560), the EAR, the Global Terrorism Sanctions Regulations (GTSR, 31 CFR Part 594), and other laws. The purpose of the conspiracy was to transport goods owned by Mahan Air to the U.S. for repair and then to re-export them to Mahan in Iran and elsewhere without obtaining the required licenses from OFAC and BIS.

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Dec. 16, 2019: Issam Shammout, of Jordan, and Ali Abdullah Alhay, of Saudi Arabia, were charged in an indictment in U.S. District Court in Washington, D.C. with 17 violations of laws including the IEEPA, the ITSR, and the EAR, in a conspiracy to purchase and deliver U.S.-origin aircraft and parts for ultimate use by Mahan Air of Iran. Shammout and Alhay are among the persons included in the TDO against Mahan and others that was extended by BIS on Dec. 6, 2019 (see above). The indictment included a criminal forfeiture allegation against 9 airplanes and $17,035,935 in funds for the benefit of Al Naser airlines, another person included in the Mahan TDO.

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Dec. 18, 2019: U.S. Immigration and Customs Enforcement (ICE) Enforcement and Removal Operations (ERO) removed Sergio Leonardo Ruchtein to his home country of Argentina after Ruchtein was convicted in U.S. District Court in Philadelphia, PA of attempting to export a defense article without a license and sentenced to time served plus two years of supervised release. Ruchtein, who entered the U.S. on March 20, 2019, was arrested by ICE Homeland Security Investigations (HSI) on March 25 after he allegedly

50 LRF Thermal Rifle Scope online and attempted to

smuggle it back to Argentina. He was released into the custody of local authorities in Argentina.

DECEMBER 2019 EXPORT CONTROL REGULATION UPDATES Read More »

NOVEMBER 2019 EXPORT CONTROL REGULATION UPDATES

November 2019

This newsletter is a listing of the latest changes in export control regulations through Nov. 30, 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

Department of Commerce – Bureau of Industry and Security

BIS Adds 22 Entities To The Entity List

Nov. 13, 2019 – 84 Fed. Reg. 61538: BIS amended the Export Administration Regulations (EAR, 15 CFR Parts 730-774) by adding 22 entities under 32 entries in 13 countries 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. A license requirement with license review policy of presumption of denial and no available license exceptions will now apply to exports, reexports, or in-country transfers to these entities of all items subject to the EAR. The rule also modified one existing entry on the Entity List and removed 3 existing entries. (List of added, modified, and removed entities is at the end of this report.)

Editor’s Note: Use of denied party screening tools for each export transaction will ensure each export transaction is properly screened for these added entities.

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BIS Extends Temporary General License Related To Huawei

Nov. 20, 2019 – 84 Fed. Reg. 64018: BIS extended through Feb. 16, 2020, the validity of the Temporary General License (TGL) – codified as Supplement No. 7 to EAR Part 744 – authorizing certain exports to Huawei Technologies Co. Ltd., and 114 of its non-U.S. affiliates (collectively “Huawei”). Specifically, this TGL authorizes “certain activities, including those necessary for the continued operations of existing networks and equipment as well as the support of existing mobile services, including cybersecurity research critical to maintaining the integrity and reliability of existing and fully operational networks and equipment.” Exports, reexports, or in-country transfers of items subject to the EAR to any of the listed Huawei entities as of the effective date they were added to the Entity List continue to require a license, with the exception of transactions explicitly authorized by the TGL and eligible for export, reexport, or in-country transfer prior to May 16, 2019, without a license or under a license exception. Applications for such licenses will continue to be reviewed under a presumption of denial, as stated in the Entity List entries for the listed Huawei entities. Exporters, reexporters, and transferors utilizing this TGL are required to maintain certifications and other records, to be made available when requested by BIS, regarding their use of the temporary general license. (See information about the original issuance of this TGL and its extension and modification in May 2019 and August 2019 Regulatory Updates.)

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BIS Issued A Proposed Rule For Procedures Involving The Information and Communications Technology and Services (ICTS) Supply Chain

Nov. 27, 2019 – 84 Fed. Reg. 65316: The Commerce Department issued a proposed rule setting out procedures the Secretary of Commerce plans to use to identify, assess, and address transactions involving the Information and Communications Technology and Services (ICTS) Supply Chain that pose an undue risk to ICTS in the United States, or, to the critical infrastructure or the digital economy in the United States, or, an unacceptable risk to national security, or to the security and safety of U.S. persons. The rule would implement Executive Order (EO) 13873 of May 15, 2019, “Securing the Information and Communications Technology and Services Supply Chain” (see May 2019 Regulatory Update). Under this rule, the Secretary of Commerce, in consultation with other agencies, will use a case-by-case, fact-specific approach to identify transactions that must be prohibited or mitigated. The parties engaged in the transaction will then be notified and will have an opportunity to submit a position, which may include proposed mitigation measures. The Secretary will provide a written final determination to the parties. A summary of the final determination will be made publicly available, as appropriate. Deviations from these procedures may occur if required by the risk of public harm or by national security interests. The rule will apply to transactions initiated, pending, or completed after May 15, 2019. Deadline for public comments is Dec. 27, 2019.

Department of Commerce – Census Bureau

Census Announced Additions To The Harmonized Tariff Schedule (HTS)

Nov. 7, 2019: The Census Bureau announced that all recent additions to the Harmonized Tariff Schedule (HTS) are now available for use in the Automated Export System (AES), and that the ACE/AESDirect program has been updated with the new HTS Codes. There have been no additions to the Schedule B table. The 2019 Schedule B and HTS tables are available for downloading at http://www.census.gov/foreign-trade/aes/documentlibrary/#concordance; the current list of HTS codes that are not valid for AES is available at https://www.census.gov/foreign-trade/aes/documentlibrary/concordance/hts-not-for-aes.txt.

Department of State

DDTC Name and Address Changes Posted To Website

Nov. 1 and 4, 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:

· Change in name from Airbus Defense and Space Inc. to Airbus U.S. Space & Defense Inc. due to corporate rebranding;
· Change in name from Harris Corporation’s (Night Vision Business) to Elbit Systems of America, LLC due to acquisition of Harris Corporation’s (Night Vision Business) by Elbit Systems of America; and
· Change in address for The Tsurumi-Seiki Co. Ltd.

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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The State Department Published An Updated List Of Restricted Entities And Subentities Associated With Cuba (CRL)

Nov. 19, 2019 – 84 Fed. Reg. 63953: The State Department published an updated List of Restricted Entities and Subentities Associated with Cuba (CRL) with which direct financial transactions are generally prohibited under the Cuban Assets Control Regulations (CACR, 31 CFR Part 515). The CRL is also considered by BIS when it reviews applications for export licenses under the EAR. The State Department noted that entities or subentities owned or controlled by another entity or subentity on the CRL are not treated as restricted unless also specified by name on the list.

Department of the Treasury

OFAC Issued Two Ukraine-related General Licenses (GLs)

Nov. 1, 2019: OFAC issued two Ukraine-related General Licenses (GLs) related to GAZ Group: GL 13M, Authorizing Certain Transactions Necessary to Divest or Transfer Debt, Equity, or Other Holdings in GAZ Group, and GL 15G, Authorizing Certain Activities Necessary to Maintenance or Wind Down of Operations or Existing Contracts with GAZ Group, and Certain Automotive Safety and Environmental Activities. GL 13M and GL 15G both extended the validity date of existing GLs to March 31, 2020. GL 15G also expanded the authorization for certain safety-related activity and added a new authorization for certain activities to comply with environmental regulatory requirements. GL 13M is on the Treasury Department website at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/ukraine_gl13m.pdf; GL 15G is at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/ukraine_gl15g.pdf.

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OFAC Amended Venezuela-related General License (GL) 34A

Nov. 5, 2019: The Office of Foreign Assets Control (OFAC) issued amended Venezuela-related General License (GL) 34A “Authorizing Transactions Involving Certain Government of Venezuela Persons” (https://www.treasury.gov/resource-center/sanctions/Programs/Documents/venezuela_gl34a.pdf) and related amended Frequently Asked Question (FAQ) 680 (https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_other.aspx#680) and new Venezuela-related GL 35 “Authorizing Certain Administrative Transactions with the Government of Venezuela” (https://www.treasury.gov/resource-center/sanctions/Programs/Documents/venezuela_gl35.pdf) and related FAQ 803 (https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_other.aspx#803)

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OFAC Revoked Syria-related GLs 2 And 3

Nov. 5, 2019: In view of the Oct. 24, 2019, removal of Syria-related sanctions that had been imposed on two Turkish ministries and three Turkish individuals (see October 2019 Regulatory Update), OFAC revoked Syria-related GLs 2 and 3, which had been issued in relation to the no-longer-effective sanctions.

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OFAC Released Its Reports Of Licensing Activities Pursuant To The Trade Sanctions Reform And Export Enhancement Act Of 2000

Nov. 5, 2019: OFAC released its Reports of Licensing Activities Pursuant to the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA) for the 2^nd, 3^rd and 4^th quarters of FY 2018, covering exports of agricultural commodities, medicine, and medical devices to Iran and Sudan. A link to these reports is at https://www.treasury.gov/resource-center/sanctions/Programs/Pages/lic-agmed-index.aspx#quarterly.

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OFAC Updates Venezuela Sanctions Regulations (VSR, 31 CFR Part 591)

Nov. 22, 2019 – 84 Fed. Reg. 64415: OFAC issued a final rule making major updates to the Venezuela Sanctions Regulations (VSR, 31 CFR Part 591) to incorporate the provisions of 6 Executive Orders issued since the VSR were issued on July 10, 2015, and to take actions including, among others, adding a general license authorizing official U.S. Government activities regarding Venezuela (new Sec. 591.509); adding an interpretive provision regarding settlement agreements and the enforcement of liens, judgments, and other orders to Sec. 591.407; and expanding the scope of prohibited transactions in existing Sec. 591.201. OFAC notes in the announcement that it intends to supplement Part 591 with a more comprehensive set of regulations.

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OFAC Updated Existing Iran-Related Frequently Asked Questions

Nov. 27, 2019: OFAC updated existing Iran-Related Frequently Asked Questions (FAQs) 303 and 804 and issued three new Iran-related FAQs: FAQ 805 concerning transactions involving non-U.S. persons outside U.S. jurisdictions and FAQs 806 and 807 concerning General License K.

LATEST SANCTIONS FINES & PENALTIES

Sanctions

Department of Commerce

Nov. 14, 2019 – 84 Fed. Reg. 61869: BIS denied the export privileges of Mojtaba Biria of Stuhr, Germany, for 10 years based on his conviction of violating the International Emergency Economic Powers Act (IEEPA, 50 USC Sec. 1701 -1707) by conspiring to export gas turbine parts and causing them to be exported from the U.S. to Germany with knowledge that they were intended for reexportation to Iran without the required export license. In the criminal case, Biria was sentenced to time served, a fine of $5,000, and an assessment of $100. He had been in U.S. custody since Nov. 23, 2017, when he was arrested at Boston’s Logan International Airport. (See additional information about this case in August 2019 Regulatory Update.)

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Nov. 14, 2019 – 84 Fed Reg. 61870 and 61872: BIS denied the export privileges of Ali Caby, a/k/a Alex Caby, of Sofia, Bulgaria and Arash Caby, a/k/a Axel Caby, of Miami, FL, respectively, for 6 years (with two years suspended and thereafter waived, provided that the Denied Person commits no further violations) based on separate agreements settling civil charges by BIS of conspiracy to violate the EAR. Both men were officers of Arrowtronic, LLC and AW-Tronics LLC. (See next item.) The purpose and object of the conspiracy was to unlawfully export goods from the United States through transshipment points to Syria, including to Syrian Arab Airlines (‘‘Syrian Air’’), the flag carrier airline of Syria and a Specially Designated Global Terrorist (‘‘SDGT’’), and in doing so evade the prohibitions and licensing requirements of the Regulations and avoid detection by U.S. law enforcement. In December 2017, in federal court in Miami, both men were found guilty of criminal charges based on the same conspiracy. Arash Caby was sentenced to 24 months in prison, 2 years of supervised release, and a $10,000 fine. Ali Caby was sentenced to 24 months in prison and 2 years of supervised release. (See December 2017 Regulatory Update.)

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Nov. 14, 2019 – 84 Fed. Reg. 61873 – and Nov. 15, 2019 – 84 Fed. Reg. 62502: BIS denied for 6 years the export privileges of Arrowtronic, LLC and AW-Tronics LLC, respectively, both of Miami, FL, and when acting for or on behalf of either company, its successors, assigns, director, officers, representatives, agents, or employees, based on separate settlement agreements whereby each company agreed to the 6-year denial order to settle a civil charge by BIS of conspiracy to violate the EAR. The charges in both actions involved an alleged conspiracy to export goods from the U.S. to Syria, including to Syrian Arab Airlines, the flag carrier airline of Syria and a Specially Designated Global Terrorist (''SDGT''), without the required U.S. Government authorization. The exports were conducted through transshipment points, including an AW-Tronics/Arrowtronic office in Sofia, Bulgaria, which were falsely identified as final destinations.

Fines and Penalties

Nov. 7, 2019: Apollo Aviation Group, LLC (now d/b/a Carlyle Aviation Partners, Ltd.), agreed to pay a civil penalty of $210,600 to settle charges by OFAC that it violated the Sudanese Sanctions Regulations (SSR, 31 CFR Part 538) during the period 2013-2015 by leasing three aircraft engines to an entity incorporated in the United Arab Emirates (UAE), which then subleased the engines to a Ukrainian airline, which then installed the engines on an aircraft “wet leased” to Sudan Airways (“Sudan Air”), which at the time was identified on the Specially Designated National and Blocked Persons List (SDN List, https://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx) as meeting the definition of “Government of Sudan.” [N.B.: The GL at SSR Sec. 538.540 that authorized all transactions prohibited under the SSR did not exist at the time of these offenses. Also, Sudan Air was subsequently removed from the SDN List on October 12, 2017.] OFAC noted that this action highlighted the importance of companies operating in high-risk industries to implement effective, thorough and on-going, risk-based compliance measures, especially when engaging in transactions concerning the aviation industry.

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Nov. 13, 2019: Cotran Corporation of Portsmouth, RI, agreed to pay a civil penalty of $136,000 ($50,000 payable in quarterly installments, with the remaining $86,000 suspended and then waived after 4 years if Cotran has committed no further violations) to settle charges by BIS that it violated the EAR by exporting electric cattle prods controlled for Crime Control reasons under Export Control Classification Number (ECCN) 0A985 and valued in total at $81,010 to various countries including Venezuela, Mexico, South Africa, and the Czech Republic without the required BIS export licenses; failing to properly monitor the expiration dates of export licenses it had been granted; and failing to observe document retention requirements. The BIS announcement noted that Cotran had previously applied for and received a number of export licenses for electric cattle prods, including some destined for the end-users at issue in this action.

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Nov. 15, 2019: Behzad Pourghannad, a citizen and resident of Iran, was sentenced to 46 months in prison for his participation in a conspiracy to export carbon fiber from the U.S. to Iran without the required export authorization. Over several years, Pourghannad and two codefendants exported and attempted to export large quantities of carbon fiber to Iran via Europe and other sites including Dubai, United Arab Emirates (UAE) and Tbilisi, Georgia, identifying it on shipping labels as “acrylic” or “polyester” on shipping labels. Pourghannad was arrested in Germany and extradited to the U.S. by the German government. His codefendants remain at large. (See additional details in report on Pourghannad’s guilty plea in September 2019 Regulatory Update.)

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Nov. 19, 2019: Aerovironment , Inc. of Simi Valley, CA, agreed to accept a $1 million civil fine ($500,000 suspended if spent on corrective actions) and undertake specified corrective actions to settle charges by DDTC of 10 violations of the Arms Export Control Act (AECA, 22 USC 2778 et seq.) and the International Traffic in Arms Regulations (ITAR, 22 CFR Parts 120-130) involving unauthorized exports of defense articles including technical data; failure to maintain required records; and violations of terms of export authorizations. The unauthorized exports included unmanned aircraft systems (UAS) to Canada; UAS user manuals to Australia, France, Canada, and Thailand; and Shrike UAS to the United Kingdom. Other violations involved failure to obtain end-use certificates for the UAS and parts, components, and accessories exported to Canada; violations of provisos, terms, and conditions of licenses and other approvals; and failure to maintain ITAR–required records. Corrective actions (CAs) required under the consent agreement include, among others, retention of a Special Compliance Officer (SCO) reporting directly to DDTC; review of compliance resources and assurance of sufficient compliance resources; a comprehensive jurisdiction/classification review of the company’s ITAR-regulated hardware and related defense services, technical data, and software; and an outside audit assessing the effectiveness of the company’s implementation of the CA.

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Nov. 25, 2019: OFAC announced that Apple, Inc., of Cupertino, CA, had agreed to pay $466,912 to settle its potential civil liability for apparent violations of the Foreign Narcotics Kingpin Sanctions Regulations (FNKSR, 31 CFR Part 598). The apparent violations involved SIS, a software company in Trzin, Slovenia, which became an app development client of Apple’s in 2008. On Feb. 24, 2015, OFAC designated SIS and Savo Stjepanovic, a director and majority owner of SIS, pursuant to the FNKSR and added them to the SDN List. Apple used its usual screening tool to screen the newly designated significant foreign narcotics traffickers (SDNTKs) against its app developer account holder names; however, this screening failed to identify that SIS had been added to the SDN List, apparently because of a failure to match the upper case name “SIS DOO” in Apple’s system with the lower case name “SIS d.o.o.” as written on the SDN List. A separate discrepancy apparently caused the screening tool to miss the designation of Stjepanovic as a SDNTK. Apple identified SIS as a potential SDNTK after it enhanced its sanctions screening tool and related processes in 2017, and ultimately voluntarily disclosed the apparent violations.

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Nov. 28, 2019: Virgil Griffith, a U.S. citizen and resident of Singapore, was arrested at Los Angeles International Airport on charges of conspiracy to violate the IEEPA by traveling to the Democratic People’s Republic of Korea (DPRK), attending the “Pyongyang Blockchain and Cryptocurrency Conference,” and delivering a presentation and technical advice on using cryptocurrency and blockchain technology to evade sanctions although the State Department had denied him permission to travel to the DPRK and he lacked the OFAC authorization required to provide goods, services, or technology to the DPRK. During the presentation, Griffith allegedly responded to specific questions from conference attendees who appeared to work for the DPRK government who asked specific questions about blockchain and cryptocurrency and prompted discussion on technical aspects of these technologies. After the DPRK Cryptocurrency Conference, Griffith allegedly began formulating plans to facilitate the exchange of cryptocurrency between the DPRK and South Korea, despite knowing that assisting with such an exchange would violate sanctions against the DPRK.

Additions, etc. to Entity List, per 84 Fed. Reg. 61538 (Nov. 13, 2019)

Added to the Entity List:

Bahrain

Marzoghi, Ltd.
Mohammed Marzoghi.

France

Dart Aviation, including four aliases (Dart Aviation Technics, Dart Aviation Marlbrine S.A.R.L., MBP Trading Ltd., and Sari IEAS).

Iran

Dart Aviation, including four aliases (Dart Aviation Technics, Dart Aviation Marlbrine S.A.R.L., MBP Trading Ltd., and Sari IEAS).

Jordan

The Jordanian Lebanese Company for Laboratory Instruments S.A.L.

Lebanon

EDO–ELEMED, including two aliases (EDO ELEMED and EDO/ELEMED)
Elemed Liban;
Rahal Corporation for Technology and Medical Supplies
Rahal Establishment.

Oman

Safe Technical Supply Co., LLC, including three aliases (Safe Technical Equipment Services LLC; Safe Technical; and SafeTech)

Pakistan

Engineering Equipment (Private) Limited
Fabcon International
Muhandis Corporation
Paktech Engineers
Rohtas Enterprises
Techlink Communications
Techlinks

Saudi Arabia

Safe Technical Supply Co., LLC, including three aliases (Safe Technical Equipment Services LLC; Safe Technical; and SafeTech).

Senegal

Dart Aviation, including four aliases (Dart Aviation Technics, Dart Aviation Marlbrine S.A.R.L., MBP Trading Ltd., and SARL IEAS).

Syria

EDO–ELEMED, including two aliases (EDO ELEMED and EDO/ELEMED)
Elemed Liban
Rahal Corporation for Technology and Medical Supplies
Rahal Establishment

Turkey

Eslem Global Pazarlama Sanayi ve Ticaret
Mehmet Yari

United Arab Emirates (UAE)

Abdullah Poor Nagar
Al Ras Gate General Trading
Bestway Line FZCO
Khaled Al Taher
Mohammed Marzoghi
Safe Technical Supply Co., LLC, including three aliases (Safe Technical Equipment Services LLC; Safe Technical; and SafeTech)

United Kingdom

Dart Aviation, including four aliases (Dart Aviation Technics, Dart Aviation Marlbrine S.A.R.L., MBP Trading Ltd., and Sari IEAS).

Modified:

Pakistan

Mushko Electronics Pvt. Ltd: License Requirement changed to “Items on the Commerce Control List (CCL) only, and in address, spelling of “Boulevad” changed to “Boulevard.”

Removed from Entity List:

Pakistan

Technology Links Pvt. Ltd.

Singapore

All Industrial Manufacturing (AIM) Pte Ltd.

UAE

Eurotech DMCC

NOVEMBER 2019 EXPORT CONTROL REGULATION UPDATES Read More »

OCTOBER 2019 EXPORT CONTROL REGULATION UPDATES

October 2019

This newsletter is a listing of the latest changes in export control regulations through October 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 Amends Council Common Position

Sep. 16, 2019: The Council of the European Union (EU) adopted a decision amending the Council Common Position of 8 Dec. 2008 on the control of arms exports to take into account new developments including the entry into force on 24 Dec. 2014 of the Arms Trade Treaty (ATT), which regulates international trade in conventional arms. All EU member states are States Parties to the ATT. The Council Decision amending Common Position 2008/944/CFSP defining common rules governing control of exports of military technology and equipment is on the Council website at https://www.consilium.europa.eu/media/40658/st10707-en19.pdf; a User’s Guide to the Council Common Position is at https://www.consilium.europa.eu/media/40659/st12189-en19.pdf.

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EU Updates The EU Dual-Use Export Control List

Oct. 17, 2019: The European Commission adopted its annual Delegated Regulation updating the EU dual-use export control list to bring it in line with decisions taken by the international non-proliferation regimes and export control arrangements in 2018. The 2019 Commission Delegated Regulation is at https://ec.europa.eu/transparency/regdoc/?fuseaction=list&coteId=3&year=2019&number=7313&version=ALL&language=en; a Comprehensive Change Note Summary 2019 providing a detailed overview of all the changes compared to the 2018 EU dual-use list is at https://trade.ec.europa.eu/doclib/docs/2019/october/tradoc_158392.pdf.

Missile Technology Control Regime (MTCR)

MTCR Technical Experts Meeting Revises The MTCR

Oct. 18, 2019: The MTCR Technical Experts Meeting conducted a regular revision of the MTCR Equipment, Software, and Technology Annex during the 32^nd MTCR plenary week, resulting in changes to the description of thrust vector control subsystems and to the accuracy parameters used for missile guidance and navigation systems. A new edition of the MTCR Annex, updated Oct. 11, 2019 and including tracked changes, is on the MTCR website at http://mtcr.info/wordpress/wp-content/uploads/2019/10/MTCR-TEM-Technical_Annex_2019-10-11-1.pdf.

U.S. Courts

The U.S. Court of Appeals for the D.C. Circuit Issues Decision In U.S. v. Burden

Oct. 11, 2019: The U.S. Court of Appeals for the D.C. Circuit held that a defendant can be convicted of willfully violating the Arms Export Control Act (AECA, 22 USC 2778 et seq.) if he or she had knowledge that the action was unlawful; conviction does not require that the defendant had knowledge of the specific provisions of the law that he or she violated. The case, U.S. v. Burden (2019 WL 3917651), involved a conviction of violating the AECA by exporting gun parts to Thailand without a license.

The President

President Issued Executive Order 13894 Imposing Sanctions On Turkey

Oct. 17, 2019 – 84 Fed. Reg. 55851: President Trump issued Executive Order 13894, Blocking Property and Suspending Entry of Certain Persons Contributing to the Situation in Syria, imposing broad sanctions against the Turkish Ministry of National Defense, the Turkish Ministry of Energy and Natural Resources, and 3 Turkish Ministers in connection with Turkey’s military offensive in Syria. The sanctions also apply to any entity in which these parties (or other parties subject to sanctions) own a 50% or greater stake. While the Executive order is still available for the President to reimpose sanctions, the Treasury Department has removed the sanctions mandated by the EO due to the de-escalation of the military offensive by Turkey in Syria. (See Treasury Department section below for General Licenses (GLs) related to these sanctions and subsequent action removing the sanctions.)

Department of Commerce – Bureau of Industry and Security

BIS Adds 28 Chinese Entities To The Entity List

Oct. 9, 2019 – 84 Fed. Reg. 54002: BIS amended the Export Administration Regulations (EAR, 15 CFR Parts 730-774) by adding 28 entities in China 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. A license requirement will apply to exports, reexports, or in-country transfers to these entities of all items subject to the EAR, and no available license exceptions will apply. A license review policy of case-by-case review will apply for Export Control Classification Numbers (ECCNs) 1A004.c, 1A004.d, 1A995, 1A999.a, 1D003, 2A983, 2D983, and 2E983 and items designated as EAR99 that are described in the Note to ECCN 1A995. A license review policy of presumption of denial will apply to all other items subject to the EAR.

List of the 28 newly added Chinese entities:

Entity List Additions

People’s Republic of China

Aksu District Public Security Bureau, including one alias (Aqsu District Public Security Bureau)

Altay Municipality Public Security Bureau

Bayingolin Mongolian Autonomous Prefecture Public Security Bureau

Boertala Mongolian Autonomous Prefecture Public Security Bureau, including one alias (Bortala Mongolian Autonomous Prefecture Public Security Bureau)

Changji Hui Autonomous Prefecture Public Security Bureau

Dahua Technology

Hami Municipality Public Security Bureau, including two aliases (Kumul Municipality Public Security Bureau; and Qumul Municipality Public Security Bureau)

Hetian Prefecture Public Security Bureau;

Hikvision

IFLYTEK

Kashgar Prefecture Public Security Bureau

Kelamayi Municipality Public Security Bureau

Kezilesu Kyrgyz Autonomous Prefecture Public Security Bureau, including one alias (Kizilsu Autonomous Prefecture Public Security Bureau)

Megvii Technology

Sense Time

Shihezi Municipality Public Security Bureau

Tacheng Prefecture Public Security Bureau

Tumushuke Municipal Public Security Bureau, including one alias (Tumxuk Municipal Public Security Bureau)

Turfan Municipality Public Security Bureau, including one alias (Turpan Municipality Public Security Bureau)

Urumqi Municipal Public Security Bureau

Wujiaqu Municipality Public Security Bureau

Xiamen Meiya Pico Information Co. Ltd.

Xinjiang Police College

Xinjiang Production and Construction Corps (XPCC) Public Security Bureau

Xinjiang Uighur Autonomous Region (XUAR) People’s Government Public Security Bureau

Yili Kazakh Autonomous Prefecture Public Security Bureau, including one alias (Ili Kazakh Autonomous Prefecture Public Security Bureau)

Yitu Technologies

Yixin Science and Technology Co. Ltd., including four aliases (Yixin Technology; Yuxin Technology; Yuxin Science and Technology; and Ecguard)

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BIS Increased Restrictions On Exports/Reexports Of Items To Cuba

Oct. 21, 2019 – 84 Fed. Reg. 56117: BIS increased restrictions on exports and reexports of items to Cuba by amending Parts 734, 740, and 746 of the EAR. The changes include establishing a general licensing policy of denial for leases of aircraft to Cuban state-owned airlines; narrowing the applicability of License Exceptions Aircraft, Vessels and Spacecraft (AVS) and Support for the Cuban People (SCP); establishing a general 10% de minimis level for Cuba; removing an authorization for promotional items that generally benefits the Cuban government; and clarifying the scope of telecommunications items that the Cuban government may receive without a license.

A compendium of 64 Cuba Frequently Asked Questions (FAQs), updated Oct. 21, 2019, is on the BIS website at https://www.bis.doc.gov/index.php/documents/pdfs/2484-bis-cuba-consolidated-faqs-1/file.

Department of State

DDTC Name and Address Changes Posted To Website

Oct. 4, 11, 18, and 31, 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:

Change in name from Silver Atena Electronic Systems Engineering GmbH to Silver Atena GmbH due to corporate restructure;
Change in name from RUAG Switzerland Ltd. Product Unit Slip Rings to RUAG Slip Rings Ltd. due to corporate restructure;
Change in name from Bellinger Instruments Pty Ltd to Bellinger Systems Pty Ltd due to corporate restructure;
Change in name from Flight Refueling Limited to Cobham Mission Systems Wimborne Limited due to corporate restructure;
Change in name and address from GKN America Corp to GKN Aerospace US Holdings due to corporate restructure as a result of GKN’s acquisition by Melrose Industries;
Change in name from FERCHAU Engineering GmbH to FERCHAU GmbH due to corporate restructure;
Change in address for Ultra Electronics Limited;
Change in name from Paul Fabrications Ltd to Dynamic Aerospace Fabrications Ltd. due to acquisition of Paul Fabrications by The Dynamic Group;
Change in names from Park Electrochemial Corp. (PEC) and Park Aerospace Technologies Corp. (PATC) to Park Aerospace Corp. (PAC) due to corporate rebranding and merger of subsidiary into parent company; and
Change in name from Saab Microwave Canada Ltd. to Saab Canada, Inc. due to corporate restructure.

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 Notifies Congress Of Licensed Permanent Exports

Oct. 7, 2019: DDTC published its Report to Congress documenting the defense articles and defense services licensed for permanent export under section 38 of the AECA to each foreign country government and international organization during FY 2018, with data on dollar values and quantities of items licensed and items actually shipped, listed by U.S. Munitions List (USML, 22 CFR Sec. 121.1) Category and by country. Various other units (e.g., for authorizations applicable to multiple countries, or licenses executed over multi-year periods) are also used. A link to the report is on the DDTC home page, https://www.pmddtc.state.gov/ddtc_public, under Announcements, 2018 Section 655 Report.

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DDTC Requests Public Comments On DECCS Voluntary Disclosure Form DS-7787

Oct. 28, 2019 – 84 Fed. Reg. 57801: DDTC requested public comments on a proposed new electronic Form DS-7787, Disclosure of Violations of the AECA, to replace the current practice of reporting violations in writing via hard copy documentation. Deadline for comments is Nov. 27, 2019.

Department of the Treasury

OFAC Issues General Licenses Related To Turkey Sanctions

Oct. 14, 2019: The Office of Foreign Assets Control (OFAC) issued three General Licenses under the Executive Order sanctioning Turkey’s activities regarding the situation in Syria (EO 138894 -- see The President section above). GL1 authorizes official business of the United States, including by its employees, grantees, and contractors; GL2 creates a 30-day wind-down period (to Nov. 13, 2019) for existing activities with the Turkish Ministry of National Defense and the Ministry of Energy and Natural Resources; and GL3 authorizes official business of the United Nations and related organizations with the Turkish Ministry of National Defense and the Ministry of Energy and Natural Resources. While the Executive order is still available for the President to reimpose sanctions, the Treasury Department has removed the sanctions mandated by the EO due to the de-escalation of the military offensive by Turkey in Syria. (See below for subsequent action removing these sanctions on Oct. 23, 2019.)

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OFAC Amends Venezuela General License GL 13D

Oct. 17, 2019: OFAC issued amended Venezuela-related GL13D authorizing all transactions and activities prohibited by EO 13850, as amended by EO 13857 of January 25, 2019, or EO 13884, where the only Government of Venezuela entities involved are Nynas AB or any of its subsidiaries, through 12:01 a.m. EDT, April 14, 2020.

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OFAC Amends Venezuela General License GL 8D

Oct. 21, 2019: OFAC issued Venezuela-related GL8D authorizing transactions involving Petróleos de Venezuela, S.A. (PdVSA) necessary for maintenance of operations for Chevron Corporation, Halliburton, Schlumberger Limited, Baker Hughes, a GE Company, and Weatherford International, Public Limited Company. This license authorizes transactions that were in effect prior to July 26, 2019, through 12:01 a.m. EST, January 22, 2020. It replaces and supersedes GL8C.

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OFAC Removes Turkey Sanctions

Oct. 23, 2019: OFAC removed the sanctions imposed on Oct. 14, 2019 on the Turkish Ministry of National Defense, the Turkish Ministry of Energy and Natural Resources, and the Minister of National Defense, the Minister of Energy and Natural Resources, and the Minister of the Interior. These sanctions were lifted due to Turkey’s pause in military operations in Syria as agreed to with the United States on October 17, 2019 (the October Ceasefire). As a result, all property and interests in property which had been blocked solely as a result of these designations are unblocked and all otherwise lawful transactions involving U.S. persons and these entities and individuals are no longer prohibited.

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OFAC Issues Iran General License K

Oct. 24, 2019: OFAC issued Iran-related General License K authorizing certain transactions ordinarily incident and necessary to the maintenance or wind down of transactions involving Cosco Shipping Tanker (Dalian) Co., Ltd., or any entity owned, directly or indirectly, 50 percent or more by Cosco Shipping Tanker (Dalian) Co., Ltd., through 12:01 a.m. EST Dec. 20, 2019.

LATEST SANCTIONS FINES & PENALTIES

Sanctions

Department of Commerce

Oct. 7, 2019 – 84 Fed. Reg.53402: BIS denied the export privileges of Benjamin James Cance of Plainwell, MI, for 10 years based on his conviction of violating the AECA by knowingly and willfully exporting gun components designated as defense articles without the required licenses from the State Department. In the criminal case, Cance was sentenced to 48 months in prison, two years of supervised release, a fine of $3,000, and an assessment of $200.

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Oct. 7, 2019 – 84 Fed. Reg. 53403: BIS denied the export privileges of Kenneth S. Chait of the Residential Reentry Office in Miami, FL, for 5 years based on his conviction of violating the International Emergency Economic Powers Act (IEEPA, 50 USC Sec. 1701-1707) by knowingly and willfully agreeing to attempt to export ceramic metal triggered spark gaps controlled on the Commerce Control List (CCL, EAR Part 774, Supp. No. 1) without the required Commerce Department export license. In the criminal case, Chait was sentenced to 12 months and 1 day in prison, supervised release for 2 years, and a $100 assessment.

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Oct. 7, 2019 – 84 Fed. Reg. 53404: BIS denied the export privileges of Arash Sepehri, a/k/a William Anderson, a/k/a Aresh Sepheri Eshtairan of Tehran, Iran, for 7 years based on his conviction of violating 18 U.S.C. Sec. 371 by knowingly and willfully conspiring to export U.S.-origin items, including high-resolution sonar equipment, data input boards, acoustic transducers and rugged laptops, to Iran without the required export licenses. In the criminal case, Sepehri was sentenced to 25 months in prison with credit for time served and a $100 special assessment.

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Oct. 7, 2019 – 84 Fed. Reg.53405: BIS denied the export privileges of Rasheed Al Jijakli of FCA Lompoc, CA, for 10 years based on his conviction of violating IEEPA by conspiring to export tactical gear including U.S.-origin laser boresighters and day- and night-vision rifle scopes, to Syria, without the required license. In the criminal case, Al Jijakli was sentenced to 46 months in prison, a fine of $5,000, an assessment of $100, and 2 years of supervised release.

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Oct. 7, 2019 – 84 Fed. Reg. 53406: BIS denied the export privileges of Eldar Rezvanov of Moshannon Valley CI, Philipsburg, PA, for 10 years based on his conviction of violating the AECA by knowingly and willfully exporting, causing the export of, and attempting to export items designated as defense articles on the USML from the United States to Russia without the required U.S. Department of State licenses. The items included assembled firearms, firearm stocks, fully assembled lower receivers, and many other firearm parts. In the criminal case, Rezvanov was sentenced to 46 months in prison, 3 years of supervised release, and an assessment of $100.

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Oct. 7, 2019 – 84 Fed. Reg. 53407: BIS denied the export privileges of Barbara Jo Luque of Tucson, AZ, for 7 years based on her conviction of violating the AECA by attempting to willfully and knowingly export and cause to be exported to Mexico items controlled under the USML, namely 5,000 rounds of FMJ Russian 7.62x39 mm ammunition and 125 AK-47 KCI thirty-round magazines. In the criminal case, Luque was sentenced to 6 months in prison, with credit for time served, two years of supervised release, and a special assessment of $100.

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Oct. 30, 2019 – 84 Fed. Reg. 58127: BIS denied the export privileges of Alexis Vlachos of Montreal, Quebec, Canada, for 7 years based on his conviction of violating the AECA by knowingly and willfully exporting and causing to be exported to Canada firearms controlled on the USML without the required licenses. In the criminal case Vlachos was sentenced to 51 months in prison and an assessment of $200.

Fines and Penalties

Sep. 19, 2019: L3Harris Technologies, Inc., agreed to take specified remedial compliance measures and pay a civil penalty of $13 million (of which $6.5 million will be suspended if it is spent on the specified compliance measures) to settle charges by DDTC that it had violated the AECA and the International Traffic in Arms Regulations (ITAR, 22 CFR Parts 120-130) in connection with unauthorized exports of defense articles, including technical data in the form of software; the provision of a false Part 130 statement on a Technical Assistance Agreement; the violation of export license provisos; the violation of terms or conditions of multiple licenses and agreements; and various violations caused by systemic administrative issues. The Consent Agreement details specific compliance measures and requires the appointment of a Designated Official to oversee their implementation.

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Oct. 1, 2019: The General Electric Company of Boston, Mass., on behalf of three GE subsidiaries - Getsco Technical Services Inc., Bentley Nevada, and GE Betz - agreed to pay a civil penalty of $2,718,581 to settle charges by OFAC of 289 alleged violations of the Cuban Assets Control Regulations (CACR, 31 CFR Part 515) involving acceptance of payments from the Cobalt Refinery Company, a Cuban Specially Designated National, for goods and services provided to a Canadian customer of GE. OFAC found that GE had provided goods and services to a customer that provided a direct and indirect benefit to a facility owned and operated by Cobalt.

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Oct. 9, 2019: Jaguar Imports, LLC of Orlando, FL agreed to pay a civil penalty of $98,000 (of which $65,000 will be suspended for 5 years and then waived if Jaguar has committed no further violations) to settle charges by BIS that it violated the EAR on 12 occasions by exporting stun guns, handcuffs, police batons, and pepper spray – all of which were controlled under the EAR for Crime Control reasons -- to Colombia, Mexico, and Panama without the required licenses from BIS.

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Oct. 16, 2019: Tao Li, a national and resident of the People’s Republic of China, was sentenced to 40 months in prison followed by 3 years of supervised release based on his plea of guilty of violating the IEEPA by conspiring to export to China without the required license radiation-hardened power amplifiers and supervisory circuits whose technological capabilities can make a significant contribution to a foreign country’s military and space programs. Li used multiple aliases to contact potential U.S. suppliers of these products and agreed to pay a “risk fee” to illegally export them to China. Li was arrested in September 2018 at Los Angeles International Airport as he attempted to travel from China to Arizona to meet with an undercover agent.

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Oct. 24, 2019: Behrooz Behroozian, an Iranian-born U.S. citizen of Columbus, OH, was sentenced in federal court in Columbus to serve 20 months in prison based on his conviction of violating IEEPA by supplying manifolds, valves, and connectors used for industrial pipelines in the gas and oil refinement industry to Iran without the required export authorizations. Behroozian made the exports over a period of 10 years through an intermediary company, Sumar Industrial Equipment, in the United Arab Emirates.

OCTOBER 2019 EXPORT CONTROL REGULATION UPDATES Read More »

SEPTEMBER 2019 EXPORT CONTROL REGULATION UPDATES

September 2019

This newsletter is a listing of the latest changes in export control regulations through September 30, 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 Revises Its Common Rules Governing Exports Of Military Technology And Equipment

Sep. 16, 2019: The Council of the European Union (EU) revised its Common Position defining the Common Rules Governing Control of Exports of Military Technology and Equipment to take account of developments at both the international and European Union levels, including the entry into force of the Arms Trade Treaty on Dec. 24, 2014. The EU Council also adopted a User’s Guide to the interpretation and implementation of the Common Position for use primarily by export licensing officials. The Council Decision adopting the revised Common Position is on the EU website at https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.L_.2019.239.01.0016.01.ENG&toc=OJ:L:2019:239:TOC; the 159-page User’s Guide is at https://www.consilium.europa.eu/media/40659/st12189-en19.pdf .

United Kingdom (U.K.)

The UK Posted Guidance For “Exporting Controlled Goods After Brexit”

Aug. 19, 2019: The U.K. Government’s Export Control Joint Unit (ECJU) posted “Exporting Controlled Goods After Brexit,” describing what will change for exporters of controlled goods if the UK leaves the EU with no deal. This guide, which the ECJU will update if the Brexit situation changes, can be found at https://www.gov.uk/guidance/exporting-controlled-goods-after-eu-exit.

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The UK Posted Guidance For “Export Military or Dual Use Goods, Services or Technology: Special Rules”

Aug. 30, 2019: The ECJU posted a guide, “Export Military or Dual Use Goods, Services or Technology: Special Rules,” at https://www.gov.uk/guidance/export-military-or-dual-use-goods-services-or-technology-special-rules. The guide describes export control requirements throughout the full export process from determining what exports require a license through the licensing process and the responsibilities of the license-holder. It includes special topics such as brokering and identifies resources for each topic. The guide notes that the requirements for exports to the EU will change when the UK leaves the EU on 31 October.

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The UK Posted Guidance For “Export Controls: Dual-Use Items, Software and Technology, Goods for Torture and Radioactive Sources”

Sep. 24, 2019: The ECJU posted a specialized guide, “Export Controls: Dual-Use Items, Software and Technology, Goods for Torture and Radioactive Sources,” on its website at https://www.gov.uk/guidance/export-controls-dual-use-items-software-and-technology-goods-for-torture-and-radioactive-sources?utm_source=c6f33883-2258-4b1e-8dd2-094480b282a0&utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate. The guide notes that these regulations will change when the U.K. leaves the EU on 31 October.

United States

Department of Commerce – Bureau of Industry and Security

BIS Published Huawei Entity List and Temporary General License Frequently Asked Questions

Sep. 19, 2019: BIS published 18 “Huawei Entity List and Temporary General License Frequently Asked Questions (FAQs),” on Sep. 18, 2019. Separately, BIS also published 8 additional “Huawei Temporary General License Extension Frequently Asked Questions (FAQs)” about the Temporary General License (TGL) of Aug. 19, 2019, which extended until Nov. 18, 2019 the term of an earlier TGL which authorized specified transactions involving Huawei entities listed on the Entity List (EAR Part 744, Supp. No. 7) (see August 2019 Regulatory Update). The Huawei Entity List and TGL FAQs are on the BIS website at https://www.bis.doc.gov/index.php/documents/pdfs/2447-huawei-entity-listing-faqs/file; the TGL FAQs are at https://www.bis.doc.gov/index.php/documents/pdfs/2446-huawei-entity-list-temporary-general-license-extension-faqs/file.

Department of State

DDTC Name and Address Changes Posted To Website

Aug. 30 and Sep. 10, 18, 19, 23, and 26, 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:

Change in address for Rolls-Royce plc;
Changes in name of the following Rheinmetall MAN Military Vehicles GmbH entities due to change in focus of Rheinmetall MAN Military Vehicles GmbH from tactical and logistic vehicles to tactical vehicles only:
- Change in name from Rheinmetall MAN Military Vehicles GmbH to Rheinmetall Military Vehicles GmbH;
- Change in name from Rheinmetall Military Vehicles Nederland B.V. to Rheinmetall Defence Nederland B.V.; and
- Establishment of new entity, Rheinmetall MAN Military Vehicles GmbH, to focus on logistics vehicles;
Change in name from EIS Holdings GmbH to QinetiQ GmbH due to acquisition of EIS by QinetiQ;
Change in name from Page Europa S.R.L. to General Dynamics Mission Systems – Italy s.r.l. due to corporate rebranding;
Change in address for General Dynamics Corporation;
Changes in name for the following Rheinmetall Defence entities due to corporate rebranding:
- Change in name from Rheinmetall Active Protection GmbH to Rheinmetall Protection Systems GmbH and change in address;
- Change in name from Rheinmetall Chempro GmbH to Branch Active Protection;
- Change in name from Rheinmetall Ballistic Protection GmbH to Branch Active Protection and change in address; and
- Change in name from IBD Deisenroth Engineering GmbH to Rheinmetall Protection Systems GmbH, Branch Development; and
Change in name from Sofradir SAS and ULIS SAS to Lynred SAS due to merger of Sofradir and ULIS.

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

Department of the Treasury

OFAC Issues Nicaragua Sanctions Regulations

Sep. 4, 2019 – 84 Fed. Reg. 46440: The Office of Foreign Assets Control (OFAC) issued the Nicaragua Sanctions Regulations (NSR, 31 CFR Part 582) to implement Executive Order 13851 of Nov. 27, 2018, “Blocking Property of Certain Persons Contributing to the Situation in Nicaragua.” The announcement states that these regulations are issued in abbreviated form in order to provide immediate guidance to the public. OFAC intends to publish more comprehensive regulations at a later time.

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OFAC Updates / Publishes FAQs regarding bunkering of non-Iranian and Iranian vessels carrying goods to or from Iran

Sep. 5, 2019: OFAC updated an existing FAQ and published two new FAQs regarding bunkering of non-Iranian and Iranian vessels carrying goods to or from Iran. Updated FAQ 296 and new FAQs 691 and 692 are on the Treasury Department website at https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_iran.aspx#296.

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OFAC Publishes FAQs On The Cuban Assets Control Regulations

Sep. 6, 2019: OFAC published a large compendium of FAQs on the Cuban Assets Control Regulations (CACR, 31 CFR Part 515), with many of the questions updated (see the following item). These FAQs are on the Treasury Department website at https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_other.aspx#cuba.

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OFAC Issues Amendments To The Cuban Assets Control Regulations

Sep. 9, 2019 – 84 Fed. Reg. 47121: OFAC issued amendments to the CACR revising 1) certain authorizations in Sec. 515.570 for remittances to Cuba and 2) the “U-turn” general license in Sec. 515.584(d) authorizing banking institutions subject to US. jurisdiction to process certain kinds of financial transactions.

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OFAC Published Venezuela-related General License (GL) 34

Sep. 9, 2019: OFAC published Venezuela-related General License (GL) 34, authorizing transactions and activities involving specified categories of individuals who meet the definition of the "Government of Venezuela" that would otherwise be prohibited by Executive Order (E.O.) 13884, “Blocking Property of the Government of Venezuela.” In conjunction with this action, OFAC also amended FAQ 680. GL 34 is on the Treasury Department website at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/venezuela_gl34.pdf; amended FAQ 680 is at https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_other.aspx#680.

LATEST SANCTIONS FINES & PENALTIES

Sanctions

Department of Commerce

Sep. 4, 2019 – 84 Fed. Reg. 47241: BIS denied the export privileges of Sammy Smith of Patchogue, NY, for 7 years, based on his conviction of violating the Arms Export Control Act (AECA, 22 USC 2778 et seq.) by attempting to export firearms listed on the U.S. Munitions List (USML, 22 CFR Sec. 121.1), to Turkey, without the required license from the State Department. In the criminal case Smith was sentenced to two months in prison, 6 months of supervised release, and an assessment of $100.

Fines and Penalties

Aug. 29, 2019: Behzad Pourghannad, a citizen and resident of Iran, pleaded guilty in Federal District Court in New York, NY, to conspiracy to violate the International Emergency Economic Powers Act (IEEPA, 50 USC Sec. 1701-1707) by exporting several tons of carbon fiber -- a substance having many uses, including in missiles, aerospace engineering, and gas centrifuges that enrich uranium -- from the U.S. to Iran without the required license from the Treasury Department. In 2009, Pourghannad and a co-defendant, Ali Reza Shokri, arranged the export of a large quantity of carbon fiber to be exported from the U.S. to Iran via “Country-1.” However, this shipment was interdicted by authorities in Country-1. In 2013, Pourghannad and Shokri allegedly arranged the shipment of more than 5 tons of carbon fiber to Iran through Tbilisi, Georgia, with the carbon fiber labels replaced by shipping labels referencing “acrylic” to evade U.S. export controls. Shokri and a third co-defendant, Farzin Faridmanesh, remain at large. Pourghannad was arrested in Germany and extradited to the U.S. by the German government.

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Aug. 29, 2019: Resit Tavan, a citizen of Turkey, was sentenced in Federal District Court in Milwaukee, WI, to imprisonment for 27 months, based on his conviction of conspiracy to violate the IEEPA by exporting specialized marine equipment from the U.S. to Iran without the required authorization. On April 2, 2019, Tavan pleaded guilty to conspiring to use his Turkish-based company to acquire U.S.-produced equipment including high powered outboard engines, marine power generators, and power boat propulsion equipment known as surface drives on behalf of an Iran-based shipbuilding cooperative that used the equipment to support the construction and development of a prototype high-speed missile attack boat for the Iranian military. A co-defendant, Fulya Kalafatoglu Oguzturk, also a citizen of Turkey, remains at large.

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Sep. 4, 2019: Roger Sobrado, of Marlton, NJ, was sentenced in Federal District Court in Camden, NJ, to 36 months in prison, 3 years of supervised release, and restitution of $8,043,977 based on his conviction of one count each of income tax evasion, conspiracy to commit wire fraud, and conspiracy to violate the AECA. The AECA violation involved Sobrado’s admission that he had applied to the Department of Defense (DOD) for access to export controlled drawings and technical data on behalf of a company owned by a family member who was a non-citizen in the U.S. illegally, and that the family member had accessed or downloaded hundreds of sensitive drawings that required special access. The other charges arose from sales to the DOD by two companies owned by Sobrado of parts that failed to conform to contract requirements that specified that they were critical application items for military equipment including fighter jets and helicopters; that they would be exactly as described in the contract; and that they would be provided by authorized manufacturers.

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Sep. 12, 2019: BIS published a Warning Letter sent to Ekman & Co. Inc. of Miami, FL, alleging violations of the Export Administration Regulations (EAR, 15 CFR Parts 730-774) involving failure to report to the Department of Commerce the receipt of three requests to take an action which would have the effect of furthering or supporting a restrictive trade practice or unsanctioned foreign boycott. The three boycott requests all sought a declaration that the carrying vessel was allowed to enter the ports of Libya. In sending the Warning Letter, BIS closed the investigation without a penalty.

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Sep. 19, 2019: L3Harris Technologies, Inc., of Melbourne, FL, agreed to pay a $13 million civil penalty and take measures including the appointment of a special compliance officer to resolve charges by DDTC of 131 violations of the AECA and the International Traffic in Arms Regulations (ITAR, 22 CFR Parts 120-130) involving unauthorized exports of defense articles including technical data in the form of software; provision of a false Part 130 statement on a Technical Assistance Agreement; violation of export license provisos; violation of terms or conditions of multiple licenses and agreements; and various violations caused by systemic administrative issues. $6.5 million of the penalty will be suspended if the funds are used for approved remedial compliance measures. DDTC declined to administratively debar L3Harris as it had acknowledged the seriousness of the violations, cooperated with the Department's review, expressed regret for these activities, and taken steps to improve its compliance programs as well as agreeing to pay the cash penalty.

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Sep. 24, 2019: Negar Ghodskani, an Iranian citizen based in Tehran, was sentenced in Federal District Court in Minneapolis, MN, to 27 months in prison based on her Aug. 9, 2019 plea of guilty of conspiracy to facilitate the illegal export of controlled technology from the U.S.to Iran. Ghodskani assisted in establishing and operating Green Wave Telecommunication, Sdn Bhn, a Malaysian company located in Kuala Lumpur, which operated as a front company for Fanavar Moj Khavar, a Specially Designated National (SDN) company based in Tehran. Ghodskani and her co-conspirators then negotiated the purchase of controlled communications technology for Fanavar Moj, falsely representing that Green Wave in Kuala Lumpur was its final destination. (See additional information in August 2019 Regulatory Update.)

SEPTEMBER 2019 EXPORT CONTROL REGULATION UPDATES Read More »

AUGUST 2019 EXPORT CONTROL REGULATION 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

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.

AUGUST 2019 EXPORT CONTROL REGULATION UPDATES Read More »

JULY 2019 EXPORT CONTROL REGULATION UPDATES

July 2019

This newsletter is a listing of the latest changes in export control regulations through July 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

JAPAN

METI Publishes English Guide To The Japanese Security Export Control System

July 24, 2019: The Japanese Ministry of Economy, Trade and Industry (METI) published a brief but comprehensive English-language guide to the basic legal structure of the Japanese security export control system covering the export of goods and the regulation of technology transfer under the Foreign Exchange and Foreign Trade Act (FEFTA). The guide is on the METI website at https://www.meti.go.jp/policy/anpo/englishpage/securityexportcontrolinjapan.pdf.

MISSILE TECHNOLOGY CONTROL REGIME

Updated MTCR Annex Released

July 22, 2019: The Missile Technology Control Regime (MTCR) released an updated version of the MTCR Equipment, Software, and Technology Annex reflecting changes agreed at the MTCR Technical Experts Meeting in May 2019. The Annex cover page identifies all amended sections. Links to the updated MTCR Annex and a tracked changes version of the Annex showing all the changes are on the MTCR website at https://mtcr.info/mtcr-annex/.

UNITED STATES

DEPARTMENT OF COMMERCE – BUREAU OF INDUSTRY AND SECURITY

BIS Posts Presentations From The Annual BIS Update Conference

July 15, 2019: The Bureau of Industry and Security (BIS) posted presentations from the annual BIS Update Conference July 9-11, 2019 on its website at https://www.bis.doc.gov/index.php/all-articles/228-bis-annual-conference-2019/1577-bis-annual-conference-2019-presentations.

The posted presentations include:

600 series	Air and Space – BIS	Air and Space – NASA
Air and Space – NOAA	Census – ACE Export Reports	Census – ACE Export Reports
CFIUS – BIS	CFIUS – ITA	Compliance – BIS
Compliance – DDTC	Compliance – OFAC	Deemed Exports
Encryption	Freight Forwarders and Routed Transactions	Proscribed Parties and Catch-all Controls
Regulatory Update	Sanctions	Section 232

Census Releases List Of HTS Codes That Are No Longer Valid For AES

July 5, 2019: The Census Bureau released the AES Export Concordance and a list of HTS codes that are not valid for AES, both updated July 3, 2019. Links to both documents are on the Census Bureau website at https://www.census.gov/foreign-trade/aes/documentlibrary/index.html#concordance.

DEPARTMENT OF STATE

DDTC Name and Address Changes Posted To Website

July 15, 17, and 22, 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:

Change in name from Sogeti España, S.L.U. to CapGemini España, S.L. due to acquisition of Sogeti by CapGemini;
Change in names from Harris Corporation and L3 Corporation, Inc. to L3Harris Technologies, Inc. due to merger of Harris and L3 Corporation;
Change in name from Spezialtechnik Dresden GmbH, to General Atomics Europe GmbH and change in address due to acquisition of Spezialtechnik Dresden by General Atomics;
Change in address for Harris Systems Limited;
Change in name from BAE Systems Global Combat Systems Ltd to Rheinmetall BAE Systems Land Limited due to acquisition of BAE Systems Global Combat Systems by Rheinmetall Defence UK; and
Changes in name for Singapore Technologies entities due to alignment of ST Engineering brand name:

Old Name	New Name
Singapore Technologies Engineering Ltd.	ST Engineering Aerospace Ltd.
Singapore Technologies Aerospace Ltd.	ST Engineering Aerospace Ltd
Singapore Technologies Electronics Limited	ST Engineering Electronics Ltd.
Singapore Technologies Kinetics Ltd.	ST Engineering Land Systems Ltd.
Singapore Technologies Marine Ltd.	ST Engineering Marine Ltd.

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 Changes Name Of Its Registration Division

July 15, 2019: The Directorate of Defense Trade Controls (DDTC) announced that the name of its Registration division will change to the Registration Compliance & Analysis (RCA) division. The structure of the division will remain unchanged, and all active registration letters issued under the old name will remain valid without change.

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DDTC Announces that All ACES Certificates Will Expire On August 1, 2020

July 17, 2019: DDTC announced that all ACES certificates, which are required to access the DTrade defense export licensing system, must expire before August 1, 2020. IdenTrust, the provider of ACES certificates, will continue to issue them, but they will be valid only until July 31, 2020. Further information is available on the IdenTrust website at https://www.identrust.com/support/aces or from the DDTC DTrade Help Desk at dtradehelpdesk@state.gov.

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DDTC Seeks Public Comment On Existing License Exemptions

July 26, 2019 – 84 Fed. Reg. 36040: DDTC requested public comments on how to consolidate and clarify the existing license exemptions that are located throughout the International Traffic in Arms Regulations (ITAR, 22 CFR Parts 120-130). Comments on these specific questions are requested:

Excluding the exemptions currently located in Part 126 of the ITAR:
Which exemptions, if any, are redundant or could be consolidated?
Which exemptions, if any, contain language that introduces significant ambiguity or hinders the exemption’s intended use?

Comments will be accepted until Aug. 26, 2019.

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DDTC Published An Updated List Of Restricted Entities And Sub-entities Associated With Cuba

July 26, 2019 – 84 Fed. Reg. 36154: DDTC published an updated List of Restricted Entities and Sub-entities Associated with Cuba (CRL, Cuba Restricted List). While this list directly affects financial transactions regulated by the Cuban Assets Control Regulations (CACR, 31 CFR Part 515), it is also considered by BIS in reviewing applications for export licenses to Cuba. The CRL is on the State Department website at https://www.state.gov/cuba-sanctions/cuba-restricted-list/list-of-restricted-entities-and-subentities-associated-with-cuba-as-of-july-26-2019/.

DEPARTMENT OF THE TREASURY

OFAC Issued An Iran-Related Civil Aviation Industry Advisory

July 23, 2019: The Office of Foreign Assets Control (OFAC) issued an Iran-Related Civil Aviation Industry Advisory. This Advisory is targeted at the civil aviation industry, including parties providing services to the industry. It highlights Iran’s deceptive practices with respect to aviation matters and also includes an extensive description of U.S. sanctions related to Iran. The Advisory is on the Treasury Department website at

https://www.treasury.gov/resource-center/sanctions/Programs/Documents/20190723_iran_advisory_aviation.pdf.

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OFAC Issued An Amended Venezuela-related General License (GL) 8B

July 26, 2019: OFAC issued amended Venezuela-related https://www.treasury.gov/resource-center/sanctions/Programs/Documents/venezuela_gl8b.pdf">General License (GL) 8B, “Authorizing Transactions Involving Petróleos de Venezuela, S.A. (PdVSA) Necessary for Maintenance of Operations for Certain Entities in Venezuela.” It authorizes certain activities involving the following entities and their subsidiaries:

Chevron Corporation
Halliburton
Schlumberger Limited
Baker Hughes, a GE Company
Weatherford International, Public Limited Company.

GL 8B is effective until Oct. 25, 2019. It is on the Treasury Department website at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/venezuela_gl8b.pdf.

LATEST SANCTIONS FINES & PENALTIES

Sanctions

DEPARTMENT OF COMMERCE – BUREAU OF INDUSTRY & SECURITY

July 8, 2019 – 84 Fed. Reg. 32413: BIS issued a 10-year denial order against Olaf Tepper of Moshannon Valley Correctional Institution in Philipsburg, PA, a citizen of Germany, based on his August 3, 2018, conviction of violating the International Emergency Economic Powers Act (IEEPA, 50 USC Sec. 1701 -1707) by willfully conspiring to export gas turbine parts, and, cause them to be exported from the U.S. to Germany, with knowledge and reason to know that they were intended specifically for re-exportation, directly and indirectly, to Iran, without having first obtained the required authorization from OFAC. In the criminal case Tepper was sentenced to 24 months in prison, a fine of $5,000, and an assessment of $400. (See related item about guilty plea by Mahin Mojtahedzadeh below.)

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July 16, 2019 – 84 Fed. Reg. 33913: BIS issued a 10-year denial order against Pouran Aazad, a.k.a. Pouran Azad, a.k.a. Pourandokt Aazad, a.k.a Pourandokt Azad, of Los Altos Hills, CA; Sadr Emad-Vaez, a.k.a. Seid Sadredin Emad Vaez, of Los Altos Hills, CA; and Ghareh Sabz Co., a.k.a. Ghare Sabz Co., a.k.a. GHS Technology, of Tehran, Iran pursuant to an agreement settling civil charges of conspiracy to violate Sec. 764.2(d) of the Export Administration Regulations (EAR, 15 CFR Parts 730-774) by purchasing a U.S.-origin micro-drill press, for export to Iran, and, causing the export of this item to Iran, via transshipment through the United Arab Emirates (‘‘UAE’’), without the required U.S. Government authorization. The settlement agreement also provided that the respondents would be jointly and severally liable for payment of a civil penalty of $300,000. Action on the respondents’ criminal plea agreements will be taken separately. The denial order notes that the charges also implicate Sec. 560.204 of the Iranian Transactions and Sanctions Regulations (ITSR, 31 CFR Part 560).

Fines and Penalties

June 13, 2019: Mitsubishi International Corporation (MIC), a U.S. company doing business in New York, agreed to pay a civil penalty of $5,000 to settle charges, by BIS, that it committed one violation of EAR Sec. 760.2(d) (furnishing information about business relationships with boycotted countries or blacklisted persons) and two violations of EAR Sec. 760.5 (failing to report the receipt of a request to engage in a restrictive trade practice or foreign boycott against a country friendly to the U.S.) in transactions involving the sale, and/or transfer, of goods and services (including information) from the U.S. to Bahrain and Oman.

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June 13, 2019: Mitsubishi International PolymerTrade Corporation (MIP), a U.S. company doing business in New Jersey, agreed to pay a civil penalty of $15,000 to settle charges, by BIS, that it committed two violations of EAR Sec. 760.2(d) (furnishing information about business relationships with boycotted countries or blacklisted persons) and 9 violations of EAR Sec. 760.5 (failing to report the receipt of a request to engage in a restrictive trade practice or foreign boycott against a country friendly to the U.S.) in transactions involving the sale and/or transfer of goods and services (including information) from the U.S. to Oman and the United Arab Emirates (UAE).

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June 26, 2019: Yi-Chi Shih, an electrical engineer and part-time resident of Los Angeles, CA, the president of Chengdu GaStone Technology Company (CGTC), a company in China that was on the Commerce Department’s Entity List (EAR Part 744, Supp. No. 4), was found guilty of conspiracy to violate IEEPA and 17 additional charges involving a scheme whereby Shih and co-defendant Kiet Ahn Mai of Pasadena, CA, defrauded a U.S. company out of its proprietary export-controlled items including its design services for monolithic microwave integrated circuits (MMICs) and shipped them to CGTC without obtaining the required export license. The applications of the MMICs produced by the victim’s company included, among others, missiles, missile guidance systems, fighter jets, and electronic warfare. Shih faces as yet unscheduled hearings on sentencing and on a government request for forfeiture. Mai pleaded guilty to one felony count of smuggling in December 2018 and will be sentenced in September 2019.

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July 11, 2019: Cristian German Barrera of Palm Beach County, FL was arrested on charges of conspiring and attempting to violate the Arms Export Control Act (AECA, 22 USC 2778 et seq.) and the International Traffic in Arms Regulations (ITAR, 22 CFR Parts 120-130) by exporting hundreds of parts and components for AR-15 assault rifles without obtaining the required licenses from the State Department. The weapons were allegedly smuggled across international borders by an Argentine weapons trafficking organization.

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July 16, 2019: The U.S. Attorney for the Southern District of New York announced the unsealing of an indictment charging Behzad Pourghannad, Ali Reza Shokri, and Farzin Faridmanesh, all citizens of Iran, with conspiracy to violate IEEPA and violation and attempted violation of IEEPA by exporting carbon fiber controlled under Export Control Classification Number (ECCN) 1C210, from the U.S. to Iran, without the required authorization. The announcement also reported the extradition of Pourghannad from Germany to the U.S. Pourghannad was arrested in Germany on May 3, 2017, and arrived in New York July 15, 2019. After allegedly arranging the successful illegal export and trans-shipment of carbon fiber to Iran via Europe and Dubai, UAE in 2007-08, the co-defendants allegedly attempted to arrange an export of carbon fiber to Iran via a different third country in 2009. However, this shipment was interdicted by authorities in the third country. A third alleged attempt in 2013 involved the purchase and unauthorized trans-shipment to Iran via Tbilisi, Georgia of more than 5 tons of carbon fiber, which was to be described as “acrylic” to evade U.S. controls on the export of carbon fiber.

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July 19, 2019: Mahin Mojtahedzadeh, a citizen of Iran, pleaded guilty in the Northern District of New York to conspiring to violate IEEPA and the ITSR. Mojtahedzadeh was President and Managing Director of ETCO-FZC, a supplier of spare and replacement turbine parts for power generation companies in the Middle East with an office in Dubai, UAE. She admitted that she violated and evaded U.S. sanctions against Iran by working with companies in Canada and Germany to acquire turbine parts from U.S. distributors, and, assure their re-shipment to ETCO’s customers, in Iran, without obtaining the required U.S. authorization. Olaf Tepper, a co-conspirator of Mojtahedzadeh, pleaded guilty and was sentenced in 2018 and debarred July 8, 2019 (see article above); another co-conspirator, Mojtaba Biria, a citizen of Germany, pleaded guilty to conspiring to violate IEEPA and is scheduled to be sentenced on Aug. 14, 2019

JULY 2019 EXPORT CONTROL REGULATION UPDATES Read More »

JUNE 2019 EXPORT CONTROL REGULATION UPDATES

June 2019

This newsletter is a listing of the latest changes in export control regulations through June 30, 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

Presidential Executive Order

Trump blocks the Supreme Leader of Iran

June 26, 2019 – 84 Fed. Reg. 30573: President Trump issued Executive Order (EO) 13876, “Imposing Sanctions with Respect to Iran” (signed June 24, 2019), blocking the U.S. property and imposing other sanctions on the Supreme Leader of Iran, the Supreme Leader’s Office, and other persons determined by the U.S. Secretary of the Treasury, in consultation with the Secretary of State, to meet specified conditions. EO 13876 also authorizes the Secretary of the Treasury to impose sanctions – including restrictions on the opening or maintenance of certain U.S. accounts -- on foreign financial institutions that are determined to have knowingly conducted or facilitated any significant financial transactions on behalf of any sanctioned person. EO 13876 states that it was issued in response to Iranian actions taken to destabilize the Middle East, promote international terrorism, and advance Iran’s ballistic missile program, as well as its actions in and over international waters, including targeting U.S. military assets and civilian vessels.

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Department of Commerce – Bureau of Industry and Security

BIS Amends The EAR

June 5, 2019 – 84 Fed. Reg. 25986: The Bureau of Industry and Security (BIS) amended the Export Administration Regulations (EAR, 15 CFR Parts 730-774) by amending Subsections (a)(2)(i), (a)(2)(ii), (d)(6), and (d), Note 1 of License Exception Aircraft, Vessels and Spacecraft (AVS, EAR Sec. 740.15) to remove the eligibility of passenger and recreational vessels and most non-commercial aircraft when they are destined for Cuba. In the same action, BIS also amended EAR Part 746.2(b) to provide that license applications for the export, or reexport, to Cuba, of items that are not eligible for License Exception AVS will be considered on a case-by-case basis and will be subject to a general policy of denial unless the export or reexport is consistent with U.S. foreign policy or national security interests.

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BIS Posts Cuba Frequently Asked Questions

June 5, 2019: BIS posted a 20-page compendium of Cuba Frequently Asked Questions (FAQs), effective and updated June 5, 2019, on its website at https://www.bis.doc.gov/index.php/documents/pdfs/1568-bis-cuba-consolidated-faqs-3/file.

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BIS Reminds Exporters Of The Annual Reporting Requirement Of Offset Agreements Exceeding $5 Million

June 6, 2019 – 84 Fed. Reg. 26399: BIS issued a notice reminding exporters of the annual reporting requirement of offsets agreements exceeding $5 million in value, related to sales to foreign countries or foreign firms, of all items controlled under the International Traffic in Arms Regulations (ITAR, 22 CFR Parts 120-130) and items controlled on the Commerce Control List (CCL, EAR Part 774, Supp. No. 1) with an Export Control Classification Number (ECCN) having the number “6” as its third character. Affected U.S. firms were required to submit the required information covering calendar year 2018, to BIS, by June 15, 2019.

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BIS Adds 5 Entities To The Entity List

June 24, 2019 – 84 Fed. Reg. 29371: BIS amended the EAR by adding 5 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. A license requirement with license review policy of presumption of denial and no available license exceptions will now apply to exports, reexports, or in-country transfers to these persons of all items subject to the EAR. The 5 entities, all under the destination China, are:

Chengdu Haiguang Integrated Circuit, including two aliases (Hygon and Chengdu Haiguang Jincheng Dianlu Sheji);
Chengdu Haiguang Microelectronics Technology, including two aliases (HMC and Chengdu Haiguang Wei Dianzi Jishu);
Higon, including five aliases (Higon Information Technology, Haiguang Xinxi Jishu Youxian Gongsi, THATIC, Tianjing Haiguang Advanced Technology Investment, and Tianjing Haiguang Xianjin Jishu Touzi Youxian Gongsi);
Sugon, including nine aliases (Dawning, Dawning Information Industry, Sugon Information Industry, Shuguang, Shuguang Information Industry, Zhongke Dawn, Zhongke Shuguang, Dawning Company, and Tianjin Shuguang Computer Industry); and
Wuxi Jiangnan Institute of Computing Technology, including two aliases (Jiangnan Institute of Computing Technology and JICT).

In addition, BIS modified the following entity in China to add one alias and 4 locations:

National University of Defense Technology (NUDT), including one alias (Hunan Guofang Keji University).

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BIS Removes 8 Chinese Persons From The Unverified List

June 27, 2019 – 84 Fed. Reg. 30593: BIS amended the EAR by removing the following 8 persons in China from the Unverified List (UVL, EAR Part 744, Supp. No. 6) on the basis that BIS had been able to verify their bona fides because of an end-use check:

(1) Beijing Bayi Space LCD Materials Technology Co., Ltd, Beijing;

(2) Hubei Flying Optical, No 1, Qianjiang;

(3) Sunder Tools (Changxing) Technology, Zhejiang Province;

(4) Wuhan Yifi Laser Equipment Co., Hubei, Wuhan;

(5) Wuxi Hengling Technology Co. Ltd., Jiangsu Province, Wuxi City;

(6) Xiamen Sanan Optoelectronics, Ximing, Xiamen;

(7) Zhejiang Xizi Aviation, Zhejiang; and

(8) Zolix Instruments Co., Beijing.

The rule also corrected the name of one person in China that remains on the UVL:

(1) Beijing Institute of Nanoenergy and Technology corrected to Beijing Institute of Nanoenergy and Nanosystems.

Department of State

DDTC Name and Address Changes Posted To Website

June 4, 11, 14, and 24, 2019: The Directorate of Defense Trade Controls (DDTC) posted the following name and/or address changes on its website at https://pmddtc.state.gov/ddtc_public?id=ddtc_kb_article_page&sys_id=bd72ca0adbf8d30044f9ff621f961981:

Change in name from Kongsberg Protech Systems Australia Pty Ltd. to Kongsberg Defence Australia Pty Ltd. due to corporate reorganization and change in address;
Change in name from Belgium Engine Center SPRL to Patria Belgium Engine Center SRL due to acquisition of Belgium Engine Center by Patria Oyj;
Change in name from Cassidian Aviation Training Services SAS to Airbus Flight Academy Europe SAS due to corporate rebranding;
Change in address for GPS Source Inc.;
Change in address for Telops USA, Inc.;
Change in address for Northrop Grumman Australia Pty Limited;
Change in address for Northrop Grumman M5 Network Security Pty Limited;
Change in name from Sensors Business Unit of Jenoptik Advanced Systems GmbH to Sensors Business Unit of Jenoptik Optical Systems GmbH due to corporate reorganization;
Change in name from Aegis Engineering Limited to Safariland UK Ltd. due to acquisition of Aegis Engineering by Safariland; and
Change in name from Safariland UK Limited to Safariland UK Holding Limited due to corporate reorganization.

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 Statutorily Debars 23 Persons

June 6, 2019 – 84 Fed. Reg. 26500: DDTC imposed statutory debarment on the following persons based on their convictions for violating, or conspiracy to violate, the Arms Export Control Act (AECA, 22 USC 2778 et seq.):

(1) Acosta-Moctezuma, Rogelio;

(2) Arredondo, Arnoldo Antonio;

(3) Barbieri, Frederik;

(4) Campos-Flores, Jose Jesus;

(5) De La Rosa, Juan Jesus;

(6) Inzunza, Shirley Trinity;

(7) Lerma, Luis Manuel;

(8) Luque, Barbara Jo;

(9) Morgovsky, Irina;

(10) Morgovsky, Naum;

(11) Nedoviz, Volodymyr;

(12) Padilla-Cruz, Ledis Omar (a.k.a. Omar Padilla);

(13) Roberts, John Parker;

(14) Rezvanov, Eldar:

(15) Sydykov, Tengiz T.;

(16) Vazquez, Eduard Roel;

(17) Verma, Bharat;

(18) Verma, Urvashi;

(19) Vibgyor Optical Systems, Inc.;

(20) Vlachos, Alexis;

(21) Wilson, Cory (a.k.a. Jason Cory Wilson);

(22) Yassine, Fadi; and

(23) Zannoni, Giovanni.

These persons are prohibited from participating directly, or indirectly, in any activities that are regulated by the ITAR for 3 years following their conviction, and, beyond that date, until they request and receive reinstatement from the State Department. During debarment, the Department may grant transaction exceptions on a case-by-case basis. The Federal Register announcement includes a detailed description of the rules applicable to statutory debarment.

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Department of the Treasury

OFAC Amends The Cuban Assets Control Regulations

June 5, 2019 – 84 Fed. Reg. 25992: The Office of Foreign Assets Control (OFAC) amended the Cuban Assets Control Regulations (CACR, 31 CFR Part 515), Sec. 515.565, to remove an authorization for group people-to-people educational travel to Cuba. A grandfather clause authorizes certain group travel if one travel-related transaction (e.g., purchasing a flight) had been completed prior to June 5, 2019.

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OFAC Posts Frequently Asked Questions Related To Cuba

June 4, 2019: OFAC posted a collection of 117 Frequently Asked Questions Related to Cuba, updated June 4 and including coverage of the CACR amendment of June 5, 2019 (see item above), on its website at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/cuba_faqs_new.pdf (36 pages).

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June 6, 2019: OFAC issued Venezuela-related General Licenses (GLs) 7B, 8A, and 13A and an FAQ, all regarding petroleum-related transactions. An announcement including links to these actions is on the OFAC website at https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20190606.aspx. (See June 26 item below for subsequent action on GL13A.)

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OFAC Increases Maximum Civil Monetary Penalties

June 14, 2019 – 84 Fed. Reg. 27714: OFAC issued its required annual adjustment in maximum civil monetary penalties (CMPs). The 2019 maximum CMPs, based on an adjustment multiplier of 1.02522, are:

Trading With the Enemy Act (50 U.S.C. 4301-4341) (TWEA)…………………………$ 89,170

International Emergency Economic Powers Act (50 U.S.C. 1701-1706) (IEEPA)……...$ 302,584

Antiterrorism and Effective Death Penalty Act of 1996 (18 U.S.C. 2339B) (AEDPA)…$ 79,874

Foreign Narcotics Kingpin Designation Act (21 U.S.C 1901-1908, at 1906) (FNKDA)..$1,503,470

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OFAC Amends Its Reporting, Procedures and Penalties Regulations

June 21, 2019 – 84 Fed. Reg. 29055: OFAC issued an interim final rule amending its Reporting, Procedures and Penalties Regulations (RPPR, 31 CFR Part 501). Included in this rule is a restatement of OFAC’s general procedures for licensing (Subpart E, Procedures, Sec. 501.801), which notes that OFAC views information submitted in furtherance of an application for a specific license as “required information” for purposes of Exemption 4 of the Freedom of Information Act (FOIA, 5 USC Part 552), which covers trade secrets or commercial or financial information that is confidential or privileged.

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OFAC Issues General License 13B For Venezuela

June 26, 2019: OFAC issued Venezuela related General License 13B, amending GL 13A (see June 6 item above) and extending its expiration date to Oct. 25, 2019. The revised text of GL 13B is on the OFAC website at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/venezuela_gl13b.pdf .

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OFAC Issues General License 13L

June 26, 2019: OFAC issued GL 13L, “Authorizing Certain Transactions Necessary to Divest or Transfer Debt, Equity, or Other Holdings in GAZ Group,” and GL 15F, “Authorizing Certain Activities Necessary to Maintenance or Wind Down of Operations or Existing Contracts with GAZ Group, or Certain Automotive Safety Activities,” replacing GL 13K and GL 15E, both issued March 6, 2019, and extending their expiration date to Nov. 8, 2019. GL 13L is on the OFAC website at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/ukraine_gl13l.pdf; GL 15F, which includes an additional authorization regarding certain auto-safety activities, is at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/ukraine_gl15f.pdf .

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OFAC Amends The North Korea Sanctions Regulations

June 28, 2019 – 84 Fed. Reg. 30868: OFAC amended the North Korea Sanctions Regulations (NKSR, 31 CFR part 510) to conform references in the NKSR to accurately reflect text that has been amended on the OFAC website after the NKSR were fully restated in March 2018 (March 5, 2018 – 83 Fed. Reg. 9182, see March 2018 Regulatory Update) and to make other changes largely relating to secondary financial sanctions and entries on the Specially Designated National and Blocked Persons (SDN) List and the Correspondent Account or Payable Through Account Sanctions (CAPTA) List.

LATEST SANCTIONS FINES & PENALTIES

Sanctions

Department of Commerce

June 12, 2019 – 84 Fed. Reg. 27233: BIS renewed for an additional 6 months the Temporary Denial Order (TDO) against Mahan Airways; Pejman Mahmood Kosarayanifard, a/k/a Kosarian Fard; Mahmoud Amini; Kerman Aviation, a/k/a GIE Kerman Aviation; Sirjanco Trading LLC; Mahan Air General Trading LLC; Mehdi Bahrami; Al Naser Airlines, a/k/a Al-Naser Airlines, a/k/a Alnaser Airlines and Air Freight Ltd.; Ali Abdullah Alhay, a/k/a Ali Alhay, a/k/a Ali Abdullah Ahmed Alhay; Bahar Safwa General Trading; Sky Blue Bird Group, a/k/a Sky Blue Bird Aviation, a/k/a Sky Blue Bird Ltd., a/k/a Sky Blue Bird FZC; and Issam Shammout, a/k/a Muhammad Isam Muhammad Anwar Nur Shammout, a/k/a Issam Anwar.

Fines and Penalties

June 4, 2019: The U.S. Department of Justice (DOJ) announced the unsealing of two indictments charging Peyman Amiri Larijani, a citizen of Iran and former resident of Istanbul, and the airline of which Larijani was the Operations Manager, Kral Havacilik IC VE DIS Ticaret Sirketi (Kral), with violations involving efforts to export U.S.-origin aviation items to Iranian customers. A 34-count indictment returned on April 22, 2015, charges Larijani and Kral with conspiracy to acquire U.S.-origin aircraft parts and goods to supply to entities and end-users, in Iran, conceal from United States companies and the U.S. government that the U.S.-origin goods were destined for Iranian aviation business end users, make financial profit for defendants and other conspirators, and evade the regulations, prohibitions, and licensing requirements of the IEEPA, the Iranian Transactions and Sanctions Regulations (ITSR, 31 CFR Part 560), and the EAR. Larijani and his co-conspirators allegedly caused these parts to be exported from the United States to Istanbul, Turkey, before shipping them to airlines, in Iran, including Mahan Air, which had been designated a Specially Designated National (SDN) for providing support to Iran’s Islamic Revolutionary Guard Corp-Qods Force and was also on the Commerce Department Denied Parties List.

A separate 4-count indictment returned on Oct. 6, 2016, charges Mahan Air, Kral, Larijani, and four additional individuals with conspiracy to export U.S.-origin commercial aircraft engines to Iran and provide services to Mahan Air, a SDN, and to defraud the U.S., the U.S. Department of the Treasury, and the U.S. Department of Commerce with unlawful exports and attempted exports to an embargoed country, provision of services to an SDN, willful violation of denial order, and conspiracy to commit money laundering for purchasing a U.S.-origin aircraft engine to supply to Mahan Air, in Iran, without obtaining an export license. (See the following item for an additional indictment of Larijani.)

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June 11, 2019: Joyce Eliabachus, a/k/a Joyce Marie Gundran Managan, of Morristown, NJ, pleaded guilty in U.S. District Court for the District of New Jersey of one count of conspiracy to violate IEEPA for her role in an international procurement network that smuggled over $2 million worth of aircraft parts to Iran. Also, on that date in the same court, a complaint was unsealed charging Peyman Amiri Larijani (see item above) with conspiracy to violate the ITSR, conspiracy to commit money laundering, and conspiracy to smuggle goods from the U.S. Eliabachus and Larijani were allegedly part of a network that unlawfully facilitated at least 49 shipments containing 23,554 U.S.-origin aircraft parts to customers in Iran including Mahan Air without the required U.S. export licenses. Eliabachus allegedly used her company to complete the purchase and acquisition of the aircraft components from various U.S. distributors, repackage them, and ship them to companies in the United Arab Emirates (UAE) and Turkey, where Larijani and other conspirators allegedly directed them to Iran. As part of her role, Eliabachus allegedly falsified the true destinations and end users of the components and falsified their true value to avoid filing export control forms.

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June 14, 2019: Haoyang Yu, a/k/a/Jack Yu, a/k/a Harry Yu, a/k/a Jack Tricon, of Lexington, MA, was arrested and charged with trade secrets violations, along with his company, Tricon MMIC LLC, based on allegations that he had stolen proprietary information from his former employer, Analog Devices, Inc. (ADI), a semiconductor company headquartered in Norwood, MA, and sold and illegally exported monolithic microwave integrated circuits (MMICs) that incorporated trade secrets stolen from ADI. While still employed at ADI, Yu created Tricon MMIC LLC, which claimed to specialize in wide band MMIC amplifiers for customers in defense and aerospace test and instrumentation, and satellite communications. Tricon then produced and sold items incorporating ADI’s trade secrets that contained specifications identical or substantially similar to ADI parts, identifying them as replacement parts for ADI products. Yu allegedly illegally exported some of these items to Spain, concealing his name and the export control classification of the parts on the shipping documents.

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June 19, 2019: Oleg Tishchenko, a citizen of Russia, was sentenced in federal court in Salt Lake City, UT, to one year and one day in prison, given credit for time served, and ordered to be deported immediately to Russia after pleading guilty to smuggling F-16 technical manuals to Moscow. Tishchenko had been extradited to the U.S. from Georgia, where he had traveled for a visit, and at the time of his plea had served more than one year in prison awaiting trial. Tishchenko, a developer for a Russian video game maker, posted in an online forum that he needed help in purchasing F-16 A/B Air Defense Fighter manuals on eBay and having them forwarded to him in Russia, as the owner would not sell the manuals to foreign bidders. After receiving the manuals from a U.S. seller, Tishchenko allegedly auctioned them on DVDs to individuals in Cyprus, Japan, Netherlands, Australia, Germany, and Taiwan.

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June 26, 2019: John James Peterson and Brunella Zuppone were arrested and charged in federal court in Miami, FL, with conspiring and attempting to violate the AECA and ITAR by exporting thousands of ITAR-controlled parts and components of AR-15 assault rifles to an Argentine weapons trafficking organization without the required authorization from the State Department. The charges arose from the cooperative efforts of agents of U.S. Homeland Security Investigations and Argentine law enforcement officials who executed search warrants in Florida and Argentina that resulted in the seizure of the equivalent of 52 AR-15 assault rifles: 189 long arms, 156 handguns, one mortar round, one hand grenade, over 30,000 rounds of assorted caliber ammunition, five vehicles, and $110,000 in cash. Twenty-five persons were arrested in Argentina by the Argentine National Gendarmeria on the day of the arrest of Peterson and Zuppone in the U.S.

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June 27, 2019: Ara Dolarian, a U.S. citizen residing in Sofia, Bulgaria, pleaded guilty in federal court for the Eastern District of California, of conspiracy to violate the AECA by brokering the sale of military-grade arms and munitions without the required license from the U.S. Department of State. Dolarian, the owner and president of Dolarian Capital Inc. (DCI), an arms brokering company operating in Fresno, CA, Washington, DC, and Sofia, Bulgaria, allegedly executed sales contracts with a French arms brokering company acting on behalf of Nigeria for the purchase and transfer of high-explosive bombs, rockets, military-grade firearms, and aircraft-mounted cannons worth more than $8.5 million and accepted approximately $8.3 million before the brokering applications he had submitted to the State Department had been adjudicated.

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June 27, 2019: Alex Yun Cheong Yue of South El Monte, CA, was indicted on charges of conspiring, attempting, and actually exporting U.S.-origin cesium atomic clocks controlled under the Commerce Control List (CCL, EAR Part 774, Supp. No. 1) for national security and anti-terrorism reasons to Hong Kong without the required export licenses from the Department of Commerce. Using a fictitious company, Yue allegedly purchased the clocks by falsely representing to the U.S. seller that they would be used solely in the U.S.; however, he actually reshipped them to a co-conspirator in Hong Kong without applying for the required license. Subsequently, when he allegedly attempted to purchase an additional cesium atomic clock, the U.S. seller required him to provide an end-user statement, and he falsely declared that he did not intend to export the cesium atomic clocks. However, when the U.S. seller insisted on a site visit to the California location where the clocks would be utilized, Yue abruptly canceled the order and requested a refund. Three days after he received the refund, he transferred the refunded money to the bank account of his Hong Kong customer.

JUNE 2019 EXPORT CONTROL REGULATION UPDATES Read More »

MAY 2019 EXPORT CONTROL REGULATION UPDATES

May 2019

This newsletter is a listing of the latest changes in export control regulations through May 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

The President

President Trump issued Executive Order 13871, Imposing Sanctions With Respect to the Iron, Steel, Aluminum, and Copper Sectors of Iran

May 10, 2019 – 84 Fed. Reg. 20761: President Trump issued Executive Order 13871, “Imposing Sanctions With Respect to the Iron, Steel, Aluminum, and Copper Sectors of Iran,” that 1) blocks the property of persons determined to have (among other actions) knowingly engaged in a significant transaction for the sale, supply, or transfer to Iran of significant goods or services used in connection with the iron, steel, aluminum, or copper sectors of Iran, and 2) strictly limits the access to the U.S. banking system of foreign financial institutions that knowingly conducted or facilitated such transactions. (See Treasury Department section below for FAQs about this Executive Order.)

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President Trump issued Executive Order 13873, Securing the Information and Communications Technology and Services Supply Chain

May 17, 2019 – 84 Fed. Reg. 22689: President Trump issued Executive Order 13873, “Securing the Information and Communications Technology and Services Supply Chain.” EO 13873 declares a national emergency based on findings that the creation and exploitation by foreign adversaries of vulnerabilities in U.S. information and communications technology (ICT) constitutes an extraordinary threat to the national security, foreign policy, and economy of the U.S. Therefore, it authorizes the Secretary of Commerce to prohibit transactions involving ICT or services designed, developed, manufactured, or supplied by persons owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary if such transactions pose specified risks to the U.S. (See Commerce Department section below for sanctions against Huawei Technologies Co., Ltd. and related persons implementing this Executive Order.)

Department of Commerce – Bureau of Industry and Security

BIS Adds 12 Entities To The Entity List

May 14, 2019 – 84 Fed. Reg. 21233, corrected by 84 Fed. Reg. 24021 (May 24, 2019): The Bureau of Industry and Security (BIS) amended the Export Administration Regulations (EAR, 15 CFR Parts 730-774) by adding 12 entities to the Entity List (EAR Part 744, Supp. No. 4) based on a determination that each of these entities has acted contrary to the national security or foreign policy interests of the U.S. A license requirement with license review policy of presumption of denial and no available license exceptions will now apply to exports, reexports, or in-country transfers of all items subject to the EAR in transactions in which these entities are purchaser, intermediate consignee, ultimate consignee, or end-user. The 12 entities (under 16 entries in four countries) are:

China

(1) Avin Electronics Technology Co., Ltd. (AETC), Guangdong;

(2) Longkui Qu, Zhejiang;

(3) Multi-Mart Electronics Technology Co, Ltd. Guangdong, Foshan;

(4) Taizhou CBM-Future New Material Science and Technology Co., Ltd., a.k.a.,: CBM Future, Linhai City, Zhejiang Province;

(5) Tenco Technology Company Ltd., a.k.a.,: Tenco International Co., Ltd.; Shenzhen Tenco Technology Co., Ltd.; and Shenzhen Shengfaweiye Electronic Co., Ltd., Shenzhen, Guangdong; and

(6) Yutron Technology Co. Ltd., Shenzhen, China.

Hong Kong

(1) Avin Electronics Technology Co., Ltd. (AETC), Kowloon;

(2) Multi-Mart Electronics Technology Co, Ltd., Kowloon;

(3) Tenco Technology Company Ltd., a.k.a.,: Tenco International Co., Ltd.; Shenzhen Tenco Technology Co., Ltd.; and Shenzhen Shengfaweiye Electronic Co., Ltd., Kowloon and Kowloon Bay; and

(4) Yutron Technology Co. Ltd., Sheung Wan and Shaitin.

Pakistan

(1) IMPEX Trade & Services, 455/A Adamjee Road, Saddar, Rawalpuindi.

United Arab Emirates

(1) Basha Asmath Shaikh, Dubai, U.A.E.;

(2) Emirates Hermes General Trading, a.k.a.: Emirates Hermes General Trading LLC; and Emirates Hermes General Trading Co., Inc., Dubai;

(3) German Sky International Trading Company LLC, a.k.a.,: Civil Trading FZE, Dubai and Ras Al Khaimah;

(4) Manohar Nair, a.k.a.,: Manoharan Nair, Dubai; and

(5) Presto Freight International, LLC, a.k.a Presto Freight International LLC (PFI), Dubai.

In addition, the following entity was removed from the Entity List:

DGL Clearing and Forwarding LLC, U.A.E.

Finally, an alias was added to the following entity:

Modest Marketing LLC, a.k.a.: Argos Composites Trading LLC. Dubai, U.A.E.

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BIS Adds Huawei Technologies Co., Ltd. and 68 Non-U.S. Affiliates To The Entity List

May 21, 2019 – 84 Fed. Reg. 22961: (Note: This rule became effective May 16, 2019, when BIS announced it and posted the text of the rule on its website.) BIS amended the EAR by adding Huawei Technologies Co., Ltd. of Shenzhen, Guangdong, China (Huawei) to the Entity List after determining that it was acting contrary to the national security or foreign policy interests of the U.S., including allegations in a Department of Justice indictment of Huawei for violating the International Emergency Economic Powers Act (IEEPA, 50 USC Sec. 1701-1707), conspiring to violate IEEPA by providing prohibited financial services to Iran, and obstruction of justice in connection with the investigation of those alleged sanctions violations.

BIS also added 68 non-U.S. affiliates of Huawei to the Entity List after determining that that they posed a significant risk to these U.S. interests due to their relationship with Huawei. The affiliates are located in Belgium, Bolivia, Brazil, Burma, Canada, Chile, China, Egypt, Germany, Hong Kong, Jamaica, Japan, Jordan, Lebanon, Madagascar, Netherlands, Oman, Pakistan, Paraguay, Qatar, Singapore, Sri Lanka, Switzerland, Taiwan, United Kingdom, and Vietnam. The list of the 68 non U.S. affiliates is available upon request.

As a result of these Entity List designations, exports, reexports, or in-country transfer of all items subject to the EAR in transactions involving Huawei or an affiliate as purchaser, intermediate consignee, ultimate consignee, or end-user will now be subject to a license requirement with a license review policy of presumption of denial, and no license exceptions will be available. (However, see the following item for Temporary General License affecting these sanctions.)

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BIS Issues Temporary General License Related To Huawei Technologies Co., Ltd. and 68 Non-U.S. Affiliates

May 22, 2019 – 84 Fed. Reg. 23468: BIS created a Temporary General License in the form of a new Supplement No. 7 to EAR Part 744 authorizing until Aug. 19, 2019, transactions involving exports, reexports, and transfers (in-country) to Huawei and its 68 non-U.S. affiliates for any of four purposes:

Continued operation of fully operational existing networks and equipment, including software updates and patches, subject to agreements with third parties executed on or before May 16, 2019;
Provision of service and support, including software updates or patches, to existing Huawei handsets that were available to the public on or before May 16, 2019;
Disclosure of information regarding security vulnerabilities in items owned by Huawei and/or the affiliates when related to the process of providing ongoing security research critical to maintaining the integrity and reliability of existing, fully operational networks and equipment and handsets; and
Engagement as necessary for development of 5G standards as part of a duly recognized international standards body.

Exports, reexports, and in-country transfers of all items subject to the EAR that involve these entities and are not for at least one of these four purposes will continue to require an export license with a license review policy of presumption of denial and no available license exceptions.

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BIS Adds Five Developed Or Developing Technologies To The CCL

May 23, 2019 – 84 Fed. Reg. 23886: BIS amended the EAR to add to the Commerce Control List (CCL, EAR Part 774, Supp. No. 1) five recently developed or developing technologies not previously controlled that are essential to the national security of the U.S., as agreed at the December 2018 Plenary meeting of the Wassenaar Arrangement. The additions involve discrete microwave transistors (additions and revisions to Export Control Classification Number (ECCN) 3A001); continuity of operation software (new ECCN 3D005); post-quantum cryptographic algorithms (additions and revisions to ECCN 5A002); underwater transducers designed to operate as hydrophones (additions and revisions to ECCN 6A001); and air-launch platforms (additions and revisions to ECCN 9A004). Other changes agreed at the Wassenaar Arrangement Plenary session will be implemented in a later rule.

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BIS Removes Venezuela From Country Group B

May 24, 2019 – 84 Fed. Reg. 24018: BIS amended Supplement No. 1 to EAR Part 740 (Country Groups) to remove Venezuela from Country Group B, thereby rendering it ineligible for export license exceptions LVS (limited value shipments), GBS (shipments to Group B countries), and TSR (technology and software under restriction), and add Venezuela to Country Groups D:1, D:2, D:3, and D:4 (countries of national security, nuclear, chemical and biological, and missile technology concerns, respectively). Consistent with these changes in Country Groups, BIS also amended Supplement No. 1 to EAR Part 738 (the Commerce Country Chart) to add an “X” to Columns NP2 and CB3 of the listing for Venezuela.

Department of State

DDTC Name and Address Changes Posted To Website

May 16, 17, and 20, 2019: The Directorate of Defense Trade Controls (DDTC) posted the following name and/or address changes on its website at :

Change in name from BAE Systems Global Combat Systems Limited to BAE Systems GCS International Limited due to corporate reorganization;
Change in name from CLS Lexi-tech Ltd. to Lionbridge Ltd. due to corporate rebranding;
Change in address for Far East Support Services, LLC;
Change in address for AeroVironment, Inc.;
Change in name from Jenoptik Advanced Systems GmbH to Jenoptik Optical Systems GmbH due to corporate reorganization; and
Change in name from Elektroskandia Polska Sp. z o.o. to Enexon Sp. z o.o. due to corporate rebranding.

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’s Commodity Jurisdiction Application Is Now Available In DECCS

May 6, 2019: DDTC announced that the Commodity Jurisdiction application is now available on the Defense Export Control and Compliance System (DECCS) Industry Service Portal at . Additional information about the DECCS system is on the DDTC website at .

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DDTC Posts Comments About USML Categories IV and XV

May 7, 2019: DDTC posted the comments it had received in response to its request for public comments on U.S. Munitions List (USML, 22 CFR Sec. 121.1) Category IV (Launch Vehicles, Guided Missiles,
Ballistic Missiles, Rockets, Torpedoes, Bombs, and Mines) and Category XV (Spacecraft and Related Articles) on its website at (141 pp.).

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DDTC Requests Comments On CJ Form DS-4076

May 13, 2019 – 84 Fed. Reg. 20945: DDTC requested public comments about Form DS-4076, Request for Commodity Jurisdiction. Deadline for comments is June 12, 2019.

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DDTC Posts Report On Blue Lantern Checks

May 14, 2019: DDTC issued its FY 2018 report on end-use monitoring of commercial exports of items controlled under the USML (“Blue Lantern” checks) on its website at .

Department of the Treasury

OFAC Posted Important Technical Notice Regarding Its Initiation Of A Renewal Of The Public Certificate Securing

May 1, 2019: The Office of Foreign Assets Control (OFAC) posted an “Important Technical Notice” regarding its initiation of a renewal of the public certificate securing the www.treasury.gov website, including OFAC’s sanctions lists downloads, on its website at .

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OFAC Published A Framework For OFAC Compliance Commitments To Its Website

May 2, 2019: OFAC published “A Framework for OFAC Compliance Commitments,” which describes the essential components of a sanctions compliance program, provides information on the way in which those components may enter into its evaluation of apparent violations and resolutions of investigations, and describes some of the root causes of apparent violations of U.S. economic and trade sanctions programs. The Framework for OFAC Compliance Commitments is on the OFAC website at .

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OFAC Publishes FAQs Regarding Iran-Related Sanctions

May 8, 2019: OFAC published six FAQs about Executive Order 13871 on Iran-related sanctions. (See The President section above.) The FAQs describe the Executive Order and provide information about its effective date, a wind-down period, the scope of the Order, exceptions, and the definition of “significant.” FAQs 666 through 671 are on the OFAC website at .

LATEST SANCTIONS FINES & PENALTIES

Sanctions

Department of State

May 22, 2019 – 84 Fed. Reg. 23627: The State Department imposed penalties pursuant to the Iran, North Korea, and Syria Nonproliferation Act (INKSNA, Pub. L. 109–353) against 21 foreign individuals and entities for transfers to, or acquisitions from, Iran, Syria, or North Korea, of items controlled under multilateral control lists or otherwise having specified military potentials. The penalties include a prohibition on exports to these countries of items controlled under the Arms Export Control Act (AECA, 22 USC 2778 et seq.) or the EAR and termination or suspension of any existing licenses for such exports. The sanctioned persons are:

Emily Liu (a.k.a. Emily Lau, Liu Baoxia] (Chinese individual);
Hope Wish Technologies Incorporated (China) and any successor, sub-unit, or subsidiary thereof;
Jiangsu Tianyuan Metal Powder Co Ltd (China) and any successor, sub-unit, or subsidiary thereof;
Li Fangwei [a.k.a. Karl Lee] (Chinese individual);
Raybeam Optronics Co., Ltd (China) and any successor, sub-unit, or subsidiary thereof;
Ruan Runling [a.k.a. Ricky Runling, Ricky Ruan] (Chinese individual);
Shanghai North Begins (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;
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;
Wuhan Sanjiang Import and Export Co Ltd (China) and any successor, subunit, or subsidiary thereof;
Yenben Yansong Zaojiu Co Ltd (China) and any successor, sub-unit, or subsidiary thereof;
Defense Industries Organization (Iran) and any successor, sub-unit, or subsidiary thereof;
Gatchina Surface-to-Air Missile (SAM) Training Center (Russia) and any successor, sub-unit, or subsidiary thereof;
Instrument Design Bureau (KBP) Tula (Russia) and any successor, sub-unit, or subsidiary thereof;
Moscow Machine Building Plant Avangard (MMZ Avangard) (Russia) and any successor, sub-unit, or subsidiary thereof;
Army Supply Bureau (ASB) (Syria) and any successor, sub-unit, or subsidiary thereof;
Lebanese Hizballah (Syria) and any successor, sub-unit, or subsidiary thereof;
Megatrade (Syria) and any successor, sub-unit, or subsidiary thereof;
Syrian Air Force (Syria) and any successor, sub-unit, or subsidiary thereof; and
Syrian Scientific Studies and Research Center (SSCR) (Syria) and any successor, sub-unit, or subsidiary thereof.

Fines and Penalties

May 15, 2019: Ara Dolarian, a U.S. citizen residing in Sofia, Bulgaria, and the owner and president of Dolarian Capital Inc. (DCI), an arms brokering company operating in Fresno, CA, Washington, DC, and Sofia, Bulgaria, was arrested in Fresno on charges of illegally brokering the sale of military-grade arms and munitions, money laundering, and conspiracy. In 2013 and 2014, DDTC denied DCI’s applications for licenses to broker international arms deals. Without these licenses, Dolarian allegedly attempted to broker a multi-million dollar sale of high-explosive bombs, rockets, military-grade firearms, and aircraft-mounted cannons from Eastern Europe and South Africa to the government of Nigeria. In June 2014, he allegedly executed sales contracts valued at more than $8.5 million for these items with a French arms brokering company acting on behalf of Nigeria and submitted a brokering application to DDTC. Although DDTC did not approve the application, Dolarian allegedly received approximately $8.3 million, part of which was funneled through a purported furniture company in Hong Kong and numerous shell accounts. The U.S. Government seized over $6 million from Dolarian’s accounts in February 2015. Civil forfeiture proceedings relating to the seizure are currently pending.

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May 15, 2019: Zurn Industries, LLC of Erie, PA, agreed to pay a $54,000 civil penalty to settle charges by BIS that it had violated the EAR on 27 occasions by failing to report the receipt of a request to engage in an unauthorized boycott. The prohibited requests, which occurred in transactions with Qatar and the United Arab Emirates (UAE) between January 2011 and November 2014, involved certification that the carrying vessel “is allowed by Arab authorities to call at Arabian ports during its voyage to the United Arab Emirates” (for the UAE) or “is permitted to enter Arab ports” (for Qatar).

MAY 2019 EXPORT CONTROL REGULATION UPDATES Read More »

APRIL 2019 EXPORT CONTROL REGULATION UPDATES

April 2019

This newsletter is a listing of the latest changes in export control regulations through April 30, 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

Department of Commerce – Bureau of Industry and Security

BIS ADDS 50 PERSONS TO THE UNVERIFIED LIST

April 11, 2019 – 84 Fed. Reg. 14608: The Bureau of Industry and Security (BIS) amended the Export Administration Regulations (EAR, 15 CFR Parts 730-774) by adding 37 persons located in China, six in Hong Kong, four in the United Arab Emirates (UAE), two in Malaysia, and one in Indonesia to the Unverified List (“UVL,” 15 CFR Part 775). All these persons were added to the UVL because BIS was unable to conduct an end-use check for reasons outside the control of the U.S. Government. This rule also adds one additional address for one person currently listed on the UVL, Ling Ao Electronic Technology Co. Ltd, a.k.a. Voyage Technology (HK) Co., Ltd., a.k.a. Xuan Qi Technology Co. Ltd., as BIS has determined that this person is receiving exports from the United States at an additional address. Further, this rule fixes minor typographical errors in two of the existing addresses for the same company.

The 50 additions to the UVL are as follows:

China

Aisin Nantong Technical Center, Nantong Development Zone, Nantong
Anhui Institute of Metrology, Baohe Industrial Development District, Hefei
Beijing Bayi Space LCD Materials Technology Co., Ltd, Yanshan, Beijing
Beijing Institute of Nanoenergy and Technology, Beijing
Center for High Pressure Science and Technology Advanced Research, Pudong, Shanghai
Changchun Institute of Applied Chemistry, Chinese Academy of Sciences, Changchun City
Changchun National Extreme Precision Optics Co Ltd, Jilin Province, Changchun
Chengde Oscillator Electronic Technology Co., Hebei Province, Chengde City
Guangdong University of Technology, Guangzhou
Gucheng Xian Fengxin Titanium Alloy, Hebei Province, Hengshui City
Hefei Institutes of Physical Science, Chinese Academy of Sciences, Shushan District, Hefei City
Huaduan (Anhui) Machine Tool Manufacturer Co., Anhui Province, Suzhou
Hubei Flying Optical, Qianjiang
Luoyang Weimi Optics, Luoyang
Ningbo Zhongxian Optoelectronic Technology Co, Ltd., Ningbo, Zhejiang
Renmin University, Haidian District, Beijing
Shaanxi Hongyuan Aviation Forging, Shaanxi
Shanghai Institute of Applied Physics, Chinese Academy of Sciences, Pudong District, Shanghai
Shanghai Institute of Technical Physics, Chinese Academy of Sciences, Shanghai
Shanghai SKEQI Automation Engineering Co., Shanghai
Shi Jia Zhuang Suin Instruments, LuQuan District, Shijiazhuang
Sunder Tools (Changxing) Technology, Zhejiang Province
Termei Torch & Tip Company, Xinbei District, Changzhou, Jiangsu
Tongji University, Shanghai
TRI Microsystems, Longgang District, Shenzhen
Wuhan Yifi Laser Equipment Co., Hubei, Wuhan
Wuxi Beetech Inc., Nanhu, Wuxi
Wuxi Hengling Technology Co. Ltd., Jiangsu Province, Wuxi City
Xiamen Sanan Optoelectronics, Ximing, Xiamen
Xi'an Caijing Opto-Electronics, Science & Technology Co., Ltd, Shaanxi Province, Xi'an City
Xi'an Micromach Photon Manufacture Technology, New High Tech Park, Xi'an
Xi'an Jiaotong University, School of Electrical Engineering, Xi'an, Shaanxi
Yunnan Observatories, Chinese Academy of Sciences (CAS), Kunming, Yunnan
Zhejiang Xizi Aviation, Zhejiang
Zhongshan Thincloud Optics Co. Ltd., Sanjiao Town, Zhongshan
Zolix Instruments Co., Tongzhou District, Beijing

Hong Kong

Able Supply Chain Limited, New Territories and Sheung Wan
Boson Technology Co., Limited., Kwun Tong, Causeway Bay and Wan Chai
HK Hengyu Storage Logistics Limited, Kwun Tong
Ling Ao Electronic Technology Co. Ltd, a.k.a. Voyage Technology (HK) Co., Ltd., a.k.a. Xuan Qi Technology Co. Ltd, Kwun Tong, Wan Chai, and Kowloon (additional address)
Rising Logistics Company Limited, New Territories, Kwun Tong and Hong Kong Island
Swelatel Technology Limited, Wan Chai
Universe Market Limited, New Territories

United Arab Emirates

EBN AUF Trading, Ras Al Khaimah
Empire of East General Trading, Dubai
Kassem IT, Dubai
Pacific Ocean Star General Trading, aka Pacific Ocean Marine Services, Dubai

Malaysia

Infomaya Tech Sdn Bhd, Kuala Lumpur
Premier Kiosk Global Supply Co., aka PKGS, aka Global Kiosk, Kuala Lumpur

Indonesia

PetroChina International Jabung Ltd., Jakarta

The final rule can be found at: https://www.bis.doc.gov/index.php/documents/regulations-docs/federal-register-notices/federal-register-2019/2386-84-fr-14608/file

In the same announcement BIS also removed the following 10 persons from the UVL:

China

Jiujiang Jinxin Nonferrous Metals Co., Ltd., Xunyang District, Jiujiang City,
Liupanshui Normal University, Guizhou, and
Yantai Salvage Bureau, Yantai, Shandong;

Finland

Net Logistics JVM OY, a.k.a. Net Logistic JVM OY, Helsinki and Kotka;

Russia

Eltech Ltd., Saint Petersburg,
MT Systems, Saint Petersburg,
Romona Inc., Yuzhno-Sakhalinsk,
Sakhalin Energy Investment Company Ltd., Yuzhno-Sakhalinsk, and
SIC Dipaul, Saint Petersburg; and

United Arab Emirates

GenX Middle East FZE, a.k.a. GenX Systems LLC, Dubai.

A new address was also added to the listing for the Hong Kong person Ling Ao Electronic Technology Co. Ltd, a.k.a. Voyage Technology (HK) Co., Ltd., a.k.a. Xuan Qi Technology Co. Ltd.

Department of Commerce – Census Bureau

CENSUS PUBLISHES ADVICE ON HOW TO CHOOSE THE CORRECT PORT OF EXPORT FOR EEI/AES FILINGS

April 25, 2019: The Census Bureau published advice on how to choose the correct port of export when an attempt to file Electronic Export Information (EEI) in the Automated Export System (AES) results in rejection by the system based on the port of export. This advice is in the Census Bureau’s Global Reach Blog, https://www.census.gov/newsroom/blogs/global-reach.html.

Department of State

DDTC NAME AND ADDRESS CHANGES POSTED TO WEBSITE

March 29, 2019 and April 1, 8, and 11, 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/?id=ddtc_kb_article_page&sys_id=bd72ca0adbf8d30044f9ff621f961981:

Change in name from Continental DataGraphics Limited to Boeing Technical Services UK Limited due to acquisition of Continental Grapics by The Boeing Company;
Revised notice of change in name from AlliedSignal Aerospace Service Corporation to AlliedSignal Aerospace Service LLC due to corporate reorganization;
Changes in name from Turkey Prime Ministry to Presidency of the Republic of Turkey and from Turkey Ministry of Defense Undersecretariat for Defence Industries (SSM) to Presidency of Defence Industries of Turkey (SSB) due to changes in the system of government in Turkey;
Change in name from L3 Communications Electronic Systems Inc. to L3 Technologies MAS Inc. due to an internal reorganization;
Change in name from Babcock Land Limited to Babcock Integrated Technology Limited due to corporate reorganization;
Change in name from Assystem Germany GmbH to Expleo Germany GmbH due to corporate rebranding;
Change in address for BAE Systems (International) Limited;
Change in address for KMWE Precision BV; and
Change in name from DutchAero BV to KMWE Aero Engine BV due to acquisition of DutchAero by KMWE.

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 AMENDS ITAR SECTION 126.4 LICENSE EXEMPTION, BY OR FOR, THE USG

April 19, 2019 – 84 Fed. Reg. 16398: The State Department amended Section 126.4 of the International Traffic in Arms Regulations (ITAR, 22 CFR Parts 120-130) to clarify when exports, reexports, retransfers, temporary imports, and performance of defense services (collectively, “transfers”) may be made by or for an agency of the U.S. Government without a license. Previously, the exemption in Sec. 126.4 had been limited to temporary exports and imports. Also, the scope of the exemption was expanded to allow transfers by third parties (i.e., contractors) acting for, or on behalf of, the U.S. Government within specific conditions and authorizations from the USG agency. The amended provision includes documentation and other requirements for the use of this exemption.

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DDTC SEEKS PUBLIC COMMENT ON NEW FORM DS-77888

April 19, 2019 – 84 Fed. Reg. 16554: DDTC invited public comments on a planned new Form DS-7788, a single license form, which will replace the existing DTrade electronic application forms for the permanent export, temporary export, temporary import, or brokering of defense articles, defense services, and related technical data, i.e., it will consolidate Forms DSP-5, DSP-6, DSP-61, DSP-62, DSP-73, DSP-74, DSP-85, DS-4294, and DS-6004. Links to samples of the data fields proposed for Form DS-7788 are in an announcement on the DDTC home page, https://www.pmddtc.state.gov/. Deadline for comments is June 18, 2019.

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DOS UPDATES ITS CUBA RESTRICTED LIST

April 24, 2019 – 84 Fed. Reg. 17228: The U.S. Department of State updated its List of Restricted Entities and Subentities Associated with Cuba (Cuba Restricted List) to add five subentities. Direct financial transactions with these entities and subentities are generally prohibited pursuant to the Cuban Assets Control Regulations (CACR, 31 CFR Part 515).

License applications submitted to BIS pursuant to the Export Administration Regulations also incorporate a review of the Cuba Restricted List while under consideration. The Cuba Restricted List as of April 19, 2019, is on the DDTC website at https://www.state.gov/e/eb/tfs/spi/cuba/cubarestrictedlist/291329.htm.

Department of Homeland Security – Customs and Border Protection

DHS UPDATED AESTIR APPENDIX O DUE TO CHANGES TO ITAR SECTION 126.4 LICENSE EXEMPTION

April 29, 2019: On behalf of U.S. Customs and Border Protection, the Census Bureau reported that AESTIR Appendix O has been updated with new DDTC ITAR exemption codes to reflect the ITAR amendment revising the licensing exemption for transfers made by or for an agency of the U.S. Government. {See information in State Department section below.) The new exemption codes are:

22 CFR 126.4 (a) Export, Re-export, Re-Transfer or Temporary Import of defense article, technical data, or defense service by agency of U.S. Government;
22 CFR 126.4 (b) Export, Re-export, Re-Transfer or Temporary Import of defense article, technical data, or defense service on behalf of U.S. Government agency; and
22 CFR 126.4 (c) Return of temporary, or permanent export of defense article, technical data, or defense service for end-use by U.S. Government agency in foreign country.

Department of the Treasury

TREASURY PUBLISHED A TECHNICAL NOTICE FOR USERS OF SANCTIONS LIST DATA FILES

April 16, 2019: The Office of Foreign Assets Control (OFAC) published a technical notice for users of its Sanctions List data files advising that corrected versions of the updated Data Specification for OFAC’s list-related flat files have been released. Given this change, OFAC will be adding 30 additional days (June 17) onto its implementation schedule for this change. At that time, OFAC will be expanding the “Program” field found in its legacy data files. Affected files include the following: SDN.DEL, SDN.PIP, SDN.FF, SDN.CSV, CONS_PRIM.DEL, CONS_PRIM.PIP, CONS_PRIM.FF, and CONS_PRIM.CSV. The notice is on the OFAC website at https://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/20190416.aspx.

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OFAC AMENDED CERTAIN GENERAL LICENSES

April 17, 2019: OFAC amended General License (GL) 3D - "Authorizing Transactions Related to, Provision of Financing for, and Other Dealings in Certain Bonds"; GL 4A - "Authorizing New Debt Transactions and Transactions involving Certain Banks Related to the Exportation or Reexportation of Agricultural Commodities, Medicine, Medical Devices or Replacement Parts and Components"; GL 9C - "Authorizing Transactions Related to Dealings in Certain Securities"; GL 15 - "Authorizing Transactions Involving Certain Banks Prohibited by Executive Order 13850 for Certain Entities"; and GL 16 - "Authorizing Maintenance of U.S. Person Accounts and Noncommercial, Personal Remittances involving Certain Banks”. It also issued two new GLs: GL 19 - "Authorizing Certain Activities Necessary to the Wind Down of Operations or Existing Contracts Involving Central Bank of Venezuela"; and GL 20 - "Authorizing Official Activities of Certain International Organizations Involving Central Bank of Venezuela.” Links to these GLs are on the Treasury Department website at https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20190417.aspx.

In a related FAQ, OFAC noted that these actions ensured that U.S. persons may continue to engage in and

facilitate non-commercial, personal remittances and the provision of humanitarian assistance to the people

of Venezuela and described GLs 4A, 16, and 20, including information about transactions involving

exporting or re-exporting items to Venezuela. FAQ 665 is on the OFAC website at

https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_other.aspx#665.

OFAC ISSUES SANCTIONS FOR FOREIGN INTERFERENCE IN U.S. ELECTION

April 29, 2019 – 84 Fed. Reg. 17950: OFAC issued the Foreign Interference in U.S. Elections Sanctions Regulations, 31 CFR Part 579, to implement Executive Order 13848 of September 12, 2018 (‘‘Imposing Certain Sanctions in the Event of Foreign Interference in a United States Election’’). In issuing these regulations, OFAC stated that it intends to supplement them with a more comprehensive set of regulations, possibly including additional interpretive and definitional guidance and additional general licenses and statements of licensing policy.

LATEST SANCTIONS FINES & PENALTIES

Sanctions

Department of Commerce

April 1, 2019 – 84 Fed. Reg. 12196: BIS denied the export privileges of Arnoldo Antonio Arredondo of Beaumont, TX, Federal Correctional Institution until Nov. 28, 2027, based on his conviction of violating Sec. 38 of the Arms Export Control Act (AECA, 22 USC 2778 et seq.) by conspiring to knowingly and willfully export and cause to be exported, from the U.S. to Mexico, .223 caliber rifles designated on the U.S. Munitions List (USML, 22 CFR Sec. 121.1) without the required licenses from the Department of State. In the criminal case Arredondo was sentenced to 46 months in prison, 3 years of supervised release, and an assessment of $100.

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April 1, 2019 – 84 Fed. Reg. 12197: BIS denied the export privileges of Mohan L. Nirala of Laurel, MD, until March 13, 2027, based on his conviction of violating Sec. 793(e) of the Espionage Act (18 USC 792-799) by unlawfully possessing and retaining a classified document and failing to deliver it to the U.S. Government employee entitled to receive it. In the criminal case, Nirala was sentenced to 12 months and one day in prison, 1 year of supervised release, and an assessment of $100.

Fines and Penalties

April 11, 2019: OFAC announced that Acteon Group Ltd. (Acteon), a subsea service provider in the oil and gas industry based in the United Kingdom, and Acteon’s subsidiary, 2H Offshore Engineering Ltd., agreed to pay $227,500 for violating U.S. prohibitions against doing business with Cuba, to settle charges of 7 violations of the Cuban Assets Control Regulations (CACR, 31 CFR part 515) by two Malaysian affiliates of 2H Offshore. The Malaysian affiliates allegedly performed engineering design analyses for oil well drilling projects in Cuban territorial waters and sent its engineers to Cuba to conduct workshops on these analyses.

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April 11, 2019: Separately, OFAC announced a settlement with KKR & Co. Inc. (KKR, a global investment firm based in New York City), Acteon, and Acteon’s subsidiaries, Seatronics Ltd., Seatronics, Inc., and Seatronics Ptd. Ltd. (collectively “Seatronics,” a geophysical services company based in the UK), whereby Acteon agreed to pay $213,866 for violating U.S. prohibitions against doing business with Cuba and Iran, to settle potential civil liability, for 13 apparent violations of the CACR, by Acteon and Seatronics, and 3 apparent violations of the Iranian Transactions and Sanctions Regulations (ITSR, 31 CFR Part 560), by KKR. The apparent violations of the CACR occurred when Seatronics rented or sold equipment for oil exploration projects in Cuban territorial waters and sent company engineers to service equipment on vessels operating in Cuban territorial waters. The apparent violations of the ITSR occurred when Seatronics’ Abu Dhabi, UAE branch rented or sold equipment to customers who apparently embarked the equipment on vessels that operated in Iranian territorial waters.

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April 23, 2019: Oben Cabalceta of Atco, NJ, the owner of two companies that supplied aircraft parts and other military equipment to the U.S. Department of Defense, pleaded guilty in federal court in Camden, NJ, to one count of conspiracy to violate the AECA and one count of wire fraud. The AECA violations occurred when Cabalceta, a citizen of Costa Rica, but not the U.S., caused other persons to submit fraudulent applications for access to export controlled drawings and technical data, and, on several occasions, when he himself accessed sensitive drawings that required DOS prior approval.

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