JULY 2024 EXPORT CONTROL REGULATIONS UPDATES
This newsletter is a listing of the latest changes in export control regulations through July 31, 2024. 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.
In this newsletter, we have added a specific DDTC FAQs section which we think will be of interest to our readers.
REGULATORY UPDATES
President
President Biden Continued the National Emergency with Respect to Hong Kong
July 10, 2024: On July 14, 2020, by Executive Order 13936, the President declared a national emergency pursuant to the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.) to deal with the unusual and extraordinary threat to the national security, foreign policy, and economy of the United States constituted by the situation with respect to Hong Kong.
The situation with respect to Hong Kong, including recent actions taken by the People’s Republic of China to fundamentally undermine Hong Kong’s autonomy, continues to pose an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States. For this reason, the national emergency declared on July 14, 2020, must continue in effect beyond July 14, 2024. Therefore, in accordance with section 202(d) of the National Emergencies Act (50 U.S.C. 1622(d)), President Biden continued for 1 year the national emergency declared in Executive Order 13936 with respect to the situation in Hong Kong.
https://www.whitehouse.gov/briefing-room/presidential-actions/
*******
President Biden Launches the Ukraine Compact
July 11, 2024: President Biden launched the Ukraine Compact at the 33rd NATO Summit in Washington D.C., an event with 23 allies and partners as part of the U.S. commitment to Ukraine’s long-term security. This Compact fulfills the promise President Biden and these countries made in Vilnius in 2023 to negotiate long-term bilateral security agreements with Ukraine to support Ukraine as it defends itself now, and to deter aggression against Ukraine in the future as part of its bridge to NATO membership. The signatories committed to providing Ukraine with ammunition, weapons, and training to resist Russian aggression. Leveraging each of the agreements, this historic Compact creates a unified and comprehensive security architecture to support Ukraine today and, in the future, in war and in peace.
https://www.whitehouse.gov/briefing-room/presidential-actions/page/4/
*******
President Biden Continued the National Emergency with Respect to Hostage-Taking and the Wrongful Detention of United States Nationals Abroad.
On July 16, 2022, by Executive Order 14078, President Biden declared a national emergency pursuant to the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.) to deal with the unusual and extraordinary threat to the national security, foreign policy, and economy of the United States constituted by hostage-taking and the wrongful detention of United States nationals abroad.
Hostage-taking and the wrongful detention of United States nationals are heinous acts that undermine the rule of law. Terrorist organizations, criminal groups, and other malicious actors who take hostages for financial, political, or other gain — as well as foreign states that engage in the practice of wrongful detention, including for political leverage or to seek concessions from the United States — threaten the integrity of the international political system and the safety of United States nationals and other persons abroad. Hostage-taking and the wrongful detention of United States nationals abroad continue to pose an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States. For this reason, the national emergency declared in Executive Order 14078 of July 19, 2022, must continue in effect beyond July 19, 2024. Therefore, in accordance with section 202(d) of the National Emergencies Act (50 U.S.C. 1622(d)), President Biden continued for 1 year the national emergency declared in Executive Order 14078 with respect to hostage-taking and the wrongful detention of United States nationals abroad.
https://www.whitehouse.gov/briefing-room/presidential-actions/page/3/
*******
Department of State, Directorate of Defense Trade Controls (DDTC)
Proposed Rule: Revisions to Definition of Defense Services and Enhancement
July 25, 2024: 89 Fed. Reg. 60980: On July 29, 2024, the Department of State published in the Federal Register a proposed rule to revise the definition of defense service and the scope of related controls in the International Traffic in Arms Regulations (ITAR).
The Department of State undertook a review of the definition of defense service in the ITAR (ITAR 120.32). This review focused on identifying activities of U.S. persons that (1) provide a critical military or intelligence advantage such that they warrant control under the ITAR and are activities that are not currently subject to the ITAR; or (2) are controlled under the ITAR, but the current control language would benefit from additional clarity. Following the review, the Department of State proposes a revised definition of defense service to better describe existing controls and the scope of activities it would regulate through the revised definition and proposes certain additions to the ITAR’s United States Munitions List (“USML”).
Included in this proposal is specific language regarding the furnishing of intelligence-related assistance that is not directly related to a defense article to certain types of foreign persons (i.e., a foreign unit, force, or government) or their proxies or agents. The Department of State assessed that these activities warrant and require control equivalent to those of intelligence-related defense articles since such assistance (including training or consulting) similarly furnishes a critical military or intelligence advantage to the foreign person. Review of such activity by the Department of State for consistency with U.S. foreign policy and national security interests is necessary prior to any furnishing of such services. Further, the inclusion of the activities in this proposed rule is reflective of the stated aims of AECA § 38(a)(2) (22 U.S.C. 2778(a)(2)) and principles in the United States Conventional Arms Transfer Policy.
First, a proposed revision would amend the definition of defense services at § 120.32(a)(1) by revising the list of regulated activities currently found in (a)(1) to include “assistance, including training or consulting, to foreign persons in the development (including, e.g., design), production (including, e.g., engineering and manufacture), assembly, testing, repair, maintenance, modification, disabling, degradation, destruction, operation, processing, use, or demilitarization of a defense article.” This revised list moves several activities currently individually specified in (a)(1) (i.e., design, engineering, and manufacture) into parentheticals following defined terms in which they are included. Those activities were folded into the revised definitions of “production” and “development” at § 120.43 by a recent ITAR rule (87 FR 16396, Mar. 23, 2022).
In addition, the revised list of activities includes two new references, “disabling” and “degradation.” The Department of State proposes these terms to make explicit that the act of harming a military capability through the disabling or degradation of defense articles via any method remains controlled. In assessing non-traditional methods of disrupting a nation's military capabilities during its review, the Department of State noted that, while the current definition of defense service includes such activities, advances in technology that facilitate such activities merit explicit reference. The proposed revision clarifies that cyber services, or any other activities, that disable and degrade defense articles, but fall short of total destruction or demilitarization, are included within the definition of defense service at § 120.32(a)(1).
The Department of State also proposes a clarifying addition to the introductory text of paragraph (a)(1) to better describe the scope of activities controlled by the definition. In describing the assistance covered by the paragraph, the Department of State proposes to replace the parenthetical “(including training)” with a new clause clarifying that assistance includes training or consulting. In so doing, the Department of State does not intend to add a new level of control to its existing control of defense services, but rather intends to clarify that it does not treat training to mean only direct instructional activity. The proposed addition would reaffirm that providing the tools or means of furnishing training to a foreign person so that the foreign person may conduct training in lieu of the regulated person is included in the control. Such consulting is not limited to the furnishing of a completed product ,but includes assisting in the development of such training.
Second, the proposed amendments would remove § 120.32(a)(2) from the definition of defense service as redundant since the furnishing of technical data to a foreign person is already a controlled event described in §§ 120.50 through 120.52. Further, the proposed amendments would remove current paragraph (a)(3). In their stead, these two provisions are replaced by a proposed new paragraph (a)(2) that directs persons to the USML where descriptions of services to be controlled under ITAR are provided. The Department of State includes a proposed note to § 120.32 directing the regulated community to the new location.
Specifically, the proposed paragraph (a)(2) directs persons to two new proposed USML entries in Category IX that would control defense services related to intelligence and military assistance. The proposed entries differ from the type of defense services described in paragraph (a)(1), which directly relate to defense articles and already have corresponding entries in each USML category (e.g., Category I(i), Category II(k), etc.).
The two new entries are proposed for 2 reserved paragraphs of USML Category IX, and the category is proposed to be renamed “Military Training Equipment, Intelligence Defense Services, and Military Defense Services” to more accurately describe the controls in the category. The Department proposes to reserve new paragraph (s)(1) for use as a future entry and to place the new controls in proposed paragraphs (s)(2) and (3) within that category. For purposes of this preamble, the intelligence assistance controlled by paragraph (s)(2) is referred to as “intelligence assistance” and the military and paramilitary assistance controlled by paragraph (s)(3) are referred to by the singular “military assistance.”
The introductory text of proposed new USML Category IX(s)(2) describes defense services relating to intelligence assistance that do not necessarily involve defense articles. Following the introductory control text of proposed USML Category IX(s)(2), subsequent paragraphs would provide specified carve-outs to the general description of activities described in paragraph (s)(2). Similar carve-out provisions are also proposed to the military assistance control in USML Category IX(s)(3). The Department of State determined that rather than relying solely on the definition of defense service, it would be better to direct users to the USML to conduct their classification analysis since this approach is similar to how users currently conduct defense article classification analysis, and it allows for a more detailed articulation of certain specific activities meriting ITAR control. Moreover, AECA § 38(a)(1) (22 U.S.C. 2778(a)(1)) provides that defense services, like defense articles, are to be designated on the USML. By adding specific entries in addition to the existing USML paragraphs controlling defense services, including those furnished in connection with a defense article, the Department of State brings additional clarity to the regulations. Further to that effort, the Department of State proposes to amend § 120.11, which describes the order of review, to include a proposed paragraph (d) specific to defense services and to redesignate current paragraph (d) as paragraph (e).
As to the objective of the proposed additions to the USML, the Department of State determined revised and clarified controls are warranted and necessary to address the risks to U.S. national security and foreign policy interests posed by U.S. persons furnishing assistance in intelligence activities. In particular, the Department of State determined that certain intelligence activities that do not involve defense articles provide a critical military or intelligence advantage such that they warrant and require revised controls under the ITAR.
The proposed USML Category IX(s)(3) describes defense services relating to military assistance that do not necessarily involve defense articles and provides specified carve-outs to the controls. Persons furnishing certain military assistance to foreign persons can cause local and regional instability in a manner equal to or greater than the supply of a tangible article or weapon to a foreign person end-user. The proposed inclusion of certain specific forms of military assistance as a defense service within the USML is intended to provide U.S. persons with clear notice that such activities require authorization as, depending on the circumstances, the activities may be counter to U.S. national security or foreign policy interests, the stated aims of AECA § 38(a)(2) (22 U.S.C. 2778(a)(2)), Conventional Arms Transfer Policy objectives, or shared interests with our allies and partners.
To ensure that the military assistance controls are consistent with ITAR § 120.3(b) and only control those activities that provide a critical military or intelligence advantage, the proposed controls described in USML Category IX(s)(3) would regulate a higher level of support than front-line combatant activities. The Department of State notes, however, that although not intended for control in proposed Category IX(s)(3), such activities may be otherwise regulated by other provisions in the ITAR, or by regulations administered by other agencies of the U.S. Government. In conjunction with the addition of this proposed USML entry, the Department of State is proposing to remove the existing USML entry for military training at current Category IX(e)(3). In so doing, the Department does not intend to narrow the scope of what is controlled by that existing military training entry, but rather aims to bring additional clarity to that control as part of new text proposed as Category IX(s)(3).
See the following links for the full text of the proposed rule including the USML additions:
https://www.pmddtc.state.gov/ddtc_public/ddtc_public?id=ddtc_public_portal_news_and_events and
DDTC Name And Address Changes Posted To Website
July 25 through July 26, 2024: The Directorate of Defense Trade Controls (DDTC) posted the following name and/or address changes on its website at
- Change in Name from Babcock Land Limited to Babcock Land Defence Limited due to internal corporate restructuring;
- Change in Address for Landes High End Machining b.v. from Magelhaenstraat 15, 7825VL, Emmen, Netherlands to Maxwellstraat 31, 7825 GA, Emmen, Netherlands;
- Change in Name from Air Liquide advanced Technologies to Aerospace & Defense Oxygen Systems due to corporate restructuring;
- Change in Name from Safran Data Systems to Safran Defense & Space, Inc due to corporate restructuring.
- Change in Name from SeaTec Consulting Inc. to Oliver Wyman Government Services LLC due to merger;
- Change in Address for Metrea Management Limited, MAFX UK Limited, Metrea Discovery Partners Limited, and Metrea Discovery Partners Holding 1 Limited from Third Floor, O’Gorman House, 37 Ixworth Place, London, SW3 3QH, United Kingdom to Third Floor, The Aircraft Factory, 100 Cambridge Grove, London, W6 0LE, United Kingdom;
- Change in Name from Ferranti Technologies Limited to ESUK Aerospace and Simulation Limited due to corporate rebranding;
- Change in Name from CASS Professional Services, Corp. dba Metrea Strategic Mobility to Metrea Strategic Mobility Inc. due to corporate rebranding;
- Change in Name from Teledyne FLIR Surveillance, Inc. to Teledyne FLIR Defense, Inc., due to corporate rebranding;
- Change in Name from Airbus Helicopters International Services to Airbus International Services DAC due to corporate rebranding;
- Change in Name and Address from Assistance Aéronautique et Aérospatiale SAS, 10 rue Mercoeur, 75011 Paris, France to Daher Industrial Services SAS at Immeuble BELAÏA, 7 avenue de l’Union, F-94390 ORLY, FRANCE, due to merger;
- Change in Name from Ayesa Air Control Ingenieria Aeronautica, S.L. to Alten Soluciones Productos Auditoria E Ingenieria SAU due to merger; and
- Change in Address for ATEXIS France from 10/12 Boulevard Pythagore, 13127 Vitrolles, France to 14 Draille Des Tribales, 13127 Vitrolles, France, and all other locations in France.
- Change in Name from Rafaut SAS to ARESIA-Villeneuve due to merger.
- Change in Name from Alkan SAS to ARESIA-Valenton due to merger.
- Change in Address for Metrea Simulations AB formerly at Stora Skondals Vag 9, Skondal 128 63, Sweden to Metrea Simulations AB at Luntmakargatan 66, 113 51 Stockholm, Sweden
- Change in Name from Globes Elektronik GmbH & Co KG to Milexia Deutschland GmbH due to merger.
Please note the DDTC website was revamped on 7/31/2024 and the name and address announcements are now found under a tab “Amending Authorizations”.
*******
DDTC FAQs
On March 25, 2024, DDTC published a short series of Frequently Asked Questions regarding joint ventures and how those contractual arrangements affect an exporter’s DDTC registration. The following are a few of the key points from the FAQs.
- DDTC views joint ventures as separate legal entities, rather than as a subsidiary or affiliate of the parties to the joint venture agreement. If the entity formed from a joint venture will be engaging in military or defense related activities that are subject to the ITAR, the joint venture entity must separately incorporate and register with DDTC.
- If a DDTC registered entity enters into a joint venture that results in 50% or more ownership of the new entity, the joint venture must be added to the registrant’s existing DDTC registration as a subsidiary. The same rule applies even if it is a foreign incorporated joint venture. Alternatively, if the DDTC registered entity owns less than 50% of the joint venture but is responsible for managing the day-to-day operations of the joint venture, then the joint venture entity would still be added to the existing DDTC registration and listed as a controlled affiliate.
- If a joint venture entity is equally owned (50/50) by two DDTC registered companies and control of business operations is also equally shared, then DDTC will consider other factors in deciding under which entity the joint venture will be registered, such as which of the registered entities is engaging in more ITAR specific activities or projects. If the joint venture is independently managed, then the joint venture entity must register with DDTC independently.
- If a U.S. incorporated joint venture is managed by foreign persons but will be engaging in ITAR-controlled activities, a U.S. person must be appointed as a senior officer for the U.S. joint venture and the joint venture can then apply for independent DDTC registration. If no U.S. person is acting as a senior officer of the joint venture, then it cannot register with DDTC and cannot conduct ITAR-controlled activities.
*******
Department of Defense, Defense Security Cooperation Agency (DSCA)
DSCA Notifies Congress of Potential FMS Sale To the Czech Republic
July 17, 2024: The U.S. Department of Defense's Defense Security Cooperation Agency (DSCA) notified Congress that The Government the Czech Republic has requested to buy two hundred (200) Hellfire Air-to-Ground Missiles, AGM-114R; four (4) Hellfire Captive Air Training Missiles (CATM); and six hundred (600) WGU-59A/B Advanced Precision Kill Weapon System (APKWS) II (single variant). The following non-MDE (Major Defense Equipment) is also included: support equipment; dummy cartridge rounds; containers; training material; inert components; publications; repair of repairables; and training and technical support. The estimated total cost is $138.26 million. The principal contractors will be Lockheed Martin, located in Orlando, FL, and BAE Systems, Inc., located in Nashua, NH. There are no known offset agreements proposed in connection with this potential sale.
https://www.dsca.mil/major-arms-sales/archive-date/202407
*******
DSCA Notifies Congress of Potential FMS Sale To Saudi Arabia
July 23, 2024: The U.S. Department of Defense's Defense Security Cooperation Agency (DSCA) notified Congress that The Kingdom of Saudi Arabia has requested to buy follow-on logistics support and services, including for Joint Mission Planning Software (JMPS) hardware and support; KIV-77/78 cryptographic devices and support; spares and repair parts, consumables and accessories, and repair and return support; calibration support and test equipment; ground and personnel equipment; classified and unclassified software and software support, classified and unclassified publications and technical documentation; personnel training and training equipment; U.S. Government and contractor engineering, technical, and logistics support services; and other related elements of logistics and program support, in support of, but not limited to, KC-130J, C-130, E-3, RE-3, KE-3, KA 350, Bell 212, and Bell 412 aircraft. The estimated total program cost is $2.8 billion. There will be various contractors associated with the provision of equipment and services involved with this case, and there is no prime contractor. There are no known offset agreements proposed in connection with this potential sale.
https://www.dsca.mil/major-arms-sales/archive-date/202407
*******
DSCA Notifies Congress of Potential FMS Sale To Belgium
July 25, 2024: The U.S. Department of Defense's Defense Security Cooperation Agency (DSCA) notified Congress that The Government of Belgium has requested to buy up to one hundred ninety-six (196) Guided Bomb Unit (GBU)-53/B Small Diameter Bombs-Increment II (SDB-II) All-Up-Rounds (AURs). Also included are SDB-II Weapons Load Crew Trainers (WLCT); training aids and devices; spare and repair parts, consumables, accessories, and repair and return support; unclassified software delivery and support; unclassified publications and technical documentation; major modifications and maintenance support; training and training equipment; munitions support and support equipment; transportation support; studies and surveys; U.S. Government and contractor engineering, technical, and logistics support services; and other related elements of logistics and program support. The estimated total cost is $115 million. The principal contractor will be RTX Corporation, located in Arlington, VA. There are no known offset agreements proposed in connection with this potential sale.
https://www.dsca.mil/press-media/major-arms-sales/belgium-small-diameter-bomb-increment-ii and
https://www.dsca.mil/major-arms-sales/archive-date/202407
*******
DSCA Notifies Congress of Potential FMS Sale To Slovakia
July 31, 2024: The U.S. Department of Defense's Defense Security Cooperation Agency (DSCA) notified Congress that The Government of Slovakia has requested to buy twelve (12) AH-1Z attack helicopters; twenty-six (26) T-700 GE 401C engines (24 installed, 2 spares); one thousand six hundred eighty (1,680) Advanced Precision Kill Weapon Systems (APKWS), WGU-59/B; and fourteen (14) Honeywell embedded global positioning systems (GPS)/inertial navigation systems (INS) (EGIs) (12 installed, 2 spares). The following non-MDE items will also be included: support and test equipment; aircraft; weapons and munitions; countermeasures; integration and test support; spare and repair parts; communications equipment; mission planning; software delivery and support; Helmet Mounted Display System/Optimized TopOwl, Target Sight Systems and containers; technical refresh mission computers; ANVIS-9 night vision cueing displays; AN/ARC-210 Generation 6 receiver-transmitter 2036 radio equipment; AN/APX-123A identification friend or foe (IFF) Mode 5 mounting trays and batteries; cartridge actuated devices/propellant actuated devices (CAD/PADs); facilities and construction support; transportation; publications and technical documentation; personnel training and training equipment; countermeasures, including M299 launchers, LAU-61C/A and LAU-68F/A rocket launchers, M151 high explosive warheads for airborne 2.75 inch rockets; MK66 MOD 4, 2.75-inch rocket motors; WTU-1B warheads; M197 20 mm armament pod gun assemblies; 20 mm PGU-27A/B target practice rounds; 20 mm PGU-28A/B semi armor piercing high explosive incendiary rounds; AN/ALE-47 chaff and flare countermeasures system; MJU-32A/B and MJU-49B decoy flares; SMB875B/ALE flare simulators; RR-129A/AL chaff cartridges; RR-144A/AL training chaff cartridges; CCU-136A/A impulse cartridges; AN/AAR-47 missile warning system; AN/APR-39C radar warning receiver and conversion kits; KIV-78A cryptographic appliques; AN/PYQ-10C Simple Key Loader with KOV-21 cryptographic card; U.S. Government and contractor engineering; field service representative services; technical and logistical support services; studies and surveys; and other related elements of logistics and program support. The estimated total cost is $600 million. The principal contractors will be Bell Textron, located in Fort Worth, TX; and the General Electric Company, located in Lynn, MA. There are no known offset agreements in connection with this potential sale.
https://www.dsca.mil/press-media/major-arms-sales/slovakia-ah-1z-attack-helicopters
*******
Department of Commerce – Bureau of Industry and Security (BIS)
BIS Releases New Edition of “Don’t Let This Happen to You!”
July 1, 2024: the Department of Commerce’s Bureau of Industry and Security (BIS) Export Enforcement published an updated version of “Don’t Let This Happen to You!”, a compendium of case examples highlighting BIS criminal and administrative enforcement efforts. The publication was last updated in March 2024.
The updated version includes new enforcement cases involving a voluntary self-disclosure by an academic institution, violations of the antiboycott regulations, firearms export violations, export violations related to China and Iran, and non-compliance with a BIS settlement agreement. Exporters are encouraged to review the publication, which provides useful illustrations of the type of conduct that gets companies and universities in trouble.
BIS Export Enforcement protects and promotes U.S. national security by aggressively investigating violations of export control and antiboycott regulations and by partnering with industry and academia to facilitate compliance with those regulations.
https://www.bis.gov/press-release/bis-releases-new-edition-dont-let-happen-you and
https://www.bis.gov/sites/default/files/files/DLTHTY%21_7-1-2024.pdf
*******
BIS Issues Guidance on Addressing Export Diversion Risks
July 10, 2024: The Department of Commerce’s Bureau of Industry and Security (BIS) published guidance outlining the different actions that BIS takes to inform industry and academia about parties – beyond those identified on public screening lists like the Entity List – those present risks of diversion of items subject to BIS export controls to countries or entities of concern. The guidance also outlines certain responsibilities companies and universities must comply with BIS regulations, as well as additional steps they should take to mitigate diversion risks.
https://www.bis.gov/press-release/bis-issues-guidance-addressing-export-diversion-risks
*******
BIS Sets Higher KYC Standards for Companies and Universities Over Russia Diversion Concerns
July 10, 2024: The U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) released new guidance (the “July 10 Release”) outlining different types of precautionary letters (“supplier list” letters, “Project Guardian” requests, “red flag” letters, and “is informed” letters) that BIS may send to “companies and universities” to notify them of “parties of national security concern, such as those that present a risk of diverting [Export Administration Regulations (“EAR”)] items to restricted end uses or end users in Russia.
*******
BIS Issues Statement on Export Controls and Restrictions Against Russia
July 15, 2024: As part of BIS’ regular consultations on export control cooperation, the European Commission hosted a meeting with counterparts from Japan, the United Kingdom and the United States on 10 July 2024, to discuss ongoing efforts to align and enhance export restriction measures imposed in response to Russia’s illegal invasion of Ukraine.
The swift, unprecedented and massive export restrictions that have been collectively imposed since February 2022 have been calculated and continuously adjusted over time to maximize their effect on Russia’s military industrial base. As Russia intensifies illicit procurement attempts, it must not be given access to those items needed to manufacture its weapons and supply its military —either directly from the coalition of partner nations, or indirectly through transshipment networks often involving non-sanctioning third countries. Companies that seek to profit from selling coalition commodities, software and technology into Russia do so at the collective’s expense.
The regulatory services for each government will continue to enhance and expand, as appropriate, regulatory requirements in light of information from the battlefield, in order to maintain the effectiveness of the measures placed. The national competent authorities will continue to hold those who violate the laws accountable.
BIS and its foreign government counterparts are grateful for the efforts of industry to devote appropriate resources to know their customers and counter the risks of illegal transshipment. BIS and Industry has collectively developed specific tools to support industry compliance, such as the Common High Priority List (CHPL) of battlefield items. BIS is also actively identifying companies associated with Russia’s military-industrial complex and involved in the circumvention of our measures. BIS will continue to issue public guidance to improve the reach and effect of our export restrictions imposed in response to Russia’s illegal invasion of Ukraine.
BIS encourages industry to take advantage of the significant information and guidance issued to improve its compliance screening. BIS calls on responsible exporters to improve export compliance systems and exercise enhanced due diligence. This includes making efficient use of sources such as public business registries, commercially available trade databases, and information collected by non-profit organizations to identify companies that present a high risk of future diversion. These would notably include companies with a prior record of diverting controlled items from any of the aligned export control systems to Russia.
The ability of industry to identify high-risk transactions can make a difference. The collective actions will be both complementary and coordinated so that BIS and counterparts continue to effectively address the ongoing threat to international security.
https://www.bis.gov/press-release/statement-export-controls-and-restrictions-against-russia and
*******
BIS Announces Major Update to Participation in Global Standards Development
July 18, 2024: 89 Fed. Reg. 58265: The U.S. Commerce Department’s Bureau of Industry and Security (BIS) published an interim final rule (IFR) amending the Export Administration Regulations (EAR) to reinforce the United States’ leadership and participation in global standards development, while continuing to prevent transfers of technology that harm our national security. This IFR ensures that U.S. companies can actively participate in the development of international standards without being unreasonably hindered by export controls and associated compliance concerns. Without the revisions to the EAR announced, there is greater risk that standards would be developed without the participation and input of U.S. companies, which harms U.S. national security.
Key updates include:
- Revising the definition of standards-related activities to accurately reflect the U.S. model of public-private cooperation in standards to further global innovation and trade.
- Clarifying the applicability of export controls to specific “software” and “technology” for “standards-related activity” to promote transparency and effectiveness in U.S. contributions to global standards.
In addition, this rule is essential in supporting ongoing efforts under the U.S. Government National Standards Strategy for Critical and Emerging Technology (USG NSSCET), which aims to enhance U.S. leadership in the development of standards for critical technologies. By facilitating easier participation, the rule advances U.S. interests in global technology standards, which are pivotal in shaping the future of industries and ensuring security benefits derived from technological advancements.
https://www.whitehouse.gov/wp-content/uploads/2023/05/US-Gov-National-Standards-Strategy-2023.pdf
*******
BIS Expands The Scope of the Foreign Direct Product Rule Concerning Iran
July 24, 2024: The Department of Commerce’s Bureau of Industry and Security (BIS) implemented an expansion of controls on the export, reexport, or transfer (in-country) of certain foreign-produced items located in or destined to Iran, to address ongoing concerns regarding Iran’s potential use of U.S. technology in weapons systems.
This rule implements the requirements of the No Technology for Terror Act (the Act), which was passed in April as part of emergency supplemental appropriations for the current fiscal year. As required by the Act, the BIS rule expands the scope of the Export Administration Regulations’ (EAR) Iran Foreign Direct Product rule (FDPR). The expansion, effective July 23, 2024, is designed to further impede Iran’s ability to procure technology and components critical for military systems, including advanced drones that pose threats to U.S. forces and allies.
The expanded controls build upon existing restrictions on Iran that apply under the Iran FDPR by imposing licensing requirements for the export, reexport, and transfer (in-country) of additional foreign-produced items located in or destined to Iran and by adding a new end-user scope that targets transactions involving such items in which the Government of Iran is a party.
This rule reflects BIS’ efforts to ensure robust enforcement of export controls and to prevent the proliferation of weapons systems that threaten U.S. troops overseas or key allies.
https://www.bis.gov/press-release/iran-fdp-media-advisory and
*******
BIS Proposes Restrictions on U.S. Persons’ Support for Foreign Military, Intelligence, and Security Services and Controls to Protect National Security and Human Rights
July 25, 2024: 89 Fed. Reg. 60985: The U.S. Commerce Department’s Bureau of Industry and Security (BIS) published proposed rules seeking public comment on enhanced restrictions on exports, reexports, or support to military or intelligence end users and end uses in countries of concern, consistent with the Fiscal Year 2023 National Defense Authorization Act (NDAA). These rules complement proposed revisions, also published, regarding the scope of defense services controlled by the Department of State’s Directorate of Defense Trade Controls (DDTC) pursuant to the International Traffic in Arms Regulations (ITAR). BIS is seeking public comment on the proposed rules, which include expanding restrictions against exporting items to, or providing support for, military or intelligence services in countries of concern.
The specific controls proposed in these rules include:
- S. Persons’ Activity Controls: Expanded restrictions on U.S. persons’ support activities regarding end uses and end users of concern, including facilitating the acquisition of certain foreign-origin items by military, intelligence, and security services of concern, as well as performing maintenance, repair, and overhaul of such foreign-origin items.
- End-Use and End-User Controls: Expanded restrictions to apply to all items subject to the EAR when destined to the armed forces or national guard of countries subjected to a U.S. arms embargo as well as civilian or military intelligence agencies (e.,intelligence end users) of over 40 countries of concern. Such controls are also proposed to apply to all items on the Commerce Control List when destined to foreign-security end users (e.g., police and security agencies) or military-support end users (e.g., defense contractors) in countries subject to a U.S. arms embargo.
- Item Controls: New restrictions on the export of certain facial recognition technologies that can enable mass surveillance to protect and promote human rights.
*******
BIS Issues Standards-Related Activities and the Export Administration Regulations; Corrections
July 25, 2024: 89 Fed. Reg. 60302: On July 18, 2024, BIS published in the Federal Register the interim final rule (IFR), “Standards-Related Activities and the Export Administration Regulations” (89 FR 58265) that revised parts 734, 744 and 772 of the EAR. The revisions in the July 18, 2024, rule inadvertently reverted changes to part 744 that were amended in a final rule that BIS published on June 18, 2024 (89 FR 51644). This document corrects the inadvertent revisions introduced in the Federal Register on July 18, 2024, specifically to §§ 744.11, 744.16, and supplement no. 4 to part 744, to reintroduce language that was added in the June 18, 2024, rule that reflected the addition of paragraph (f) under § 744.16.
*******
End-Use and End-User Based Export Controls, Including U.S. Persons Activities Controls: Military and Intelligence End Uses and End Users
July 29, 2024: 89 Fed. Reg. 60985: The Department of Commerce, Bureau of Industry and Security (BIS), seeks public comment on proposed changes to existing restrictions under the Export Administration Regulations (EAR) on military and intelligence end uses and end users and related U.S. persons activities controls, as well as the proposed addition of a military-support end-user control. These proposed revisions and additions to the EAR's end-use, end-user, and “U.S. persons” activity controls would implement expanded Export Control Reform Act of 2018 (ECRA) authority to control certain “U.S. persons” activities under the EAR. Specific to the EAR's “U.S. persons” activities controls, BIS is proposing amendments to control `support' furnished by “U.S. persons” to military end users and military-production activities, as well as intelligence end users that are not otherwise already regulated under or prohibited by U.S. law. In addition, BIS is proposing to revise the definition of `support' set forth in the EAR's “U.S. person” activity control provision in response to requests by the public for clarification. The revisions and additions, along with clarifications, to end use, end user, and “U.S. persons” activity controls under the EAR, would further the national security and the foreign policy of the United States.
*******
U.S. Census Bureau
Schedule B and Harmonized Tariff Schedule (HTS) Updated in the Automated Export System (AES)
July 1, 2024:
Effective immediately, the Schedule B, Harmonized Tariff Schedule (HTS), and HTS Codes That Are Not Valid for AES tables have been updated to accept the changes to the July 1, 2024 codes.
AES will accept shipments with outdated codes during a grace period for 30 days beyond the expiration date of June 30, 2024. Reporting an outdated code after the 30-day grace period will result in a fatal error.
The ACE AESDirect program has been updated with the 2024 codes and will accept shipments with outdated codes during the grace period as well.
The 2024 Schedule B and HTS tables are available for downloading at:
https://www.census.gov/foreign-trade/aes/concordance.html
The current list of HTS codes that are not valid for AES are available at:
https://www.census.gov/foreign-trade/aes/documentlibrary/concordance/hts-not-for-aes.txt
*******
Tips on How to Resolve AES Response Messages
July 18, 2024
When a shipment is filed to the AES, a system response message is generated and indicates whether the shipment has been accepted or rejected. If the shipment is accepted, the AES filer receives an Internal Transaction Number (ITN) as confirmation. Though the shipment is accepted, the filer may still receive a Verify Message, Compliance Alert, Informational Message or Warning Message along with their ITN. However, if the shipment is rejected, a Fatal Error notification is received and must be corrected to receive a valid ITN.
To help you take the appropriate action for the different AES Response Messages, here are some tips on how to address the most frequent messages that were generated in AES for this month.
Response Code: 531
Narrative: Foreign/Domestic Origin Indicator Not Allowed For HH
Severity: Fatal
Reason: When the Export Information Code reported is HH for household goods, the Foreign/Domestic Origin Indicator is not allowed.
Resolution: The Foreign/Domestic Origin Indicator should not be reported when the Export Information Code is HH for household goods.
Verify the Export Information Code and Foreign/Domestic Origin Indicator, correct the shipment and resubmit.
Response Code: 8W1
Narrative: Shipping Weight/Quantity 1 Out of Range
Severity: Verify
Reason: For the reported Schedule B/HTS Number, the Shipping Weight/Quantity (1) ratio is outside of the expected range.
Resolution: For a particular Schedule B/HTS Number reported, the shipping weight divided by the first quantity should fall within a certain parameter based on historical statistical averages for that commodity. Ratios outside this pre-determined parameter might indicate either a keying error or misclassification of the product.
Verify the Shipping Weight, Quantity 1, and Schedule B/HTS Number, correct the shipment and resubmit (if necessary). If the line item is verified correct as reported, no action is necessary.
*******
Office of Foreign Assets Control (OFAC)
July 5, 2024: the Department of the Treasury's Office of Foreign Assets Control (OFAC) issued its OFAC Guidance: Production Submission Standards, updating OFAC’s former data delivery standards. This guidance provides technical and general guidance to persons submitting material to OFAC and applies primarily to persons providing responses to administrative subpoenas, requests for information, disclosures, and especially for submissions that may entail voluminous documentation.
https://ofac.treasury.gov/recent-actions/20240705
*******
July 8, 2024: OFAC issued updated Venezuela General License 40C, Authorizing Certain Transactions Involving the Exportation or Reexportation of Liquefied Petroleum Gas to Venezuela.
General License 40C:
All transactions related to the exportation or reexportation, directly or indirectly, of liquefied petroleum gas to Venezuela, involving the Government of Venezuela, Petróleos de Venezuela, S.A. (PdVSA), or any entity in which PdVSA owns, directly or indirectly, a 50 percent or greater interest, that are prohibited by E.O. 13850 of November 1, 2018, as amended by E.O. 13857 of January 25, 2019, or E.O. 13884 of August 5, 2019, each as incorporated into the Venezuela Sanctions Regulations, 31 CFR part 591 (the VSR), are authorized through 12:01 a.m. eastern daylight time, July 8, 2025.
This general license does not authorize:
Any payment-in-kind of petroleum or petroleum products; or
Any transactions otherwise prohibited by the VSR, including transactions involving any blocked persons other than PdVSA, any entity in which PdVSA owns, directly or indirectly, a 50 percent or greater interest, or any Government of Venezuela person that is blocked solely pursuant to E.O. 13884.
Effective July 8, 2024, General License No. 40B, dated July 10, 2023, is replaced and superseded in its entirety by this General License No. 40C.
https://ofac.treasury.gov/media/933001/download?inline
https://ofac.treasury.gov/recent-actions/20240708
*******
OFAC Basics Video Series - My Funds are Blocked, Now What?
July 12, 2024: The Department of the Treasury's Office of Foreign Assets Control (OFAC) released the second video in its “OFAC Basics” video series, "My Funds Are Blocked, Now What?" This video provides viewers with guidance on what it means when funds are blocked in connection with OFAC sanctions, as well as recommended steps for what to do if your funds have been blocked.
The “OFAC Basics” series serves as a companion series to the “Introduction to OFAC” series, available here. For more information on this video series, please see the blog post below:
https://ofac.treasury.gov/recent-actions/20240712_33 and
https://www.youtube.com/watch?v=rc8jvauiEtc and
https://ofac.treasury.gov/ofac-video-series
*******
Updates to OFAC Licensing Portal Application Status and Hotline
July 18, 2024: The Department of the Treasury’s Office of Foreign Assets Control (OFAC) took additional steps to provide greater transparency and information to specific license applicants by providing more detailed updates regarding the status of their applications via the public Licensing Portal. Applicants will now receive one of ten following case statuses to better indicate where their application is in the processing timeline.
- Received
- Guidance Issued
- Returned Without Action
- Pending Management Review
- Pending Interagency Review
- Pending Treasury Coordination
- Pending with Applicant
- Approved
- Denied
- Closed
Concurrently, OFAC is implementing updates to the Licensing Division hotline, including updating menus and transitioning to a callback-only system. These changes are aimed at helping the public access the information they need faster, reducing call wait times, and improving the overall customer experience.
https://licensing.ofac.treas.gov/Apply/Introduction.aspx and https://ofac.treasury.gov/recent-actions/20240718_33
*******
July 22, 2024: The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) released guidance addressing questions raised by recent legislation that extended the statute of limitations for violations of certain sanctions that the agency administers. As explained in the guidance, OFAC may now commence an enforcement action for civil violations of International Emergency Economic Powers Act- or Trading with Enemy Act-based sanctions prohibitions within 10 years of the latest date of the violation if such date was after April 24, 2019.
https://ofac.treasury.gov/media/933056/download?inline and https://ofac.treasury.gov/recent-actions/20240722
*******
July 23, 2024: As part of implementing the historic Rebuilding Economic Prosperity and Opportunity for Ukrainians Act (the “REPO for Ukrainians Act”), the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued a new reporting requirement for financial institutions holding Russian sovereign assets. Pursuant to section 104(a) of the REPO for Ukrainians Act, all financial institutions at which Russian sovereign assets are located, and that know or should know of such assets, must provide notice of such assets to OFAC no later than August 2, 2024, or within 10 days of the detection of such assets, and can do so via OFAC’s new form.
As described in more detail in the full instructions and in the REPO for Ukrainians Act Report Form, financial institutions should not re-report information on Russian sovereign assets that was previously reported to OFAC. A notice of these reporting instructions will be published in the Federal Register.
https://home.treasury.gov/news/press-releases/jy2479 and
https://ofac.treasury.gov/media/933066/download?inline and
https://ofac.treasury.gov/media/933061/download?inline
| 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.
Fines and Penalties
July 2, 2024: Douglas Edward Robertson, 56, of Olathe, Kansas, the former vice president of KanRus Trading Company Inc., pleaded guilty for his role in a years-long conspiracy to circumvent U.S. export laws by filing false export forms with the U.S. government and, after Russia’s unprovoked invasion of Ukraine in February 2022, continued to sell and export sophisticated and controlled avionics equipment to customers in Russia without the required licenses from the U.S. Department of Commerce.
As a result of the guilty plea, Robertson faces a statutory maximum penalty of five years in prison for the conspiracy count, 20 years in prison for each of the two Export Control Reform Act counts, and 20 years in prison for the money laundering count. A sentencing hearing is scheduled for October 3, 2024.
*******
July 9, 2024: Nikolay Goltsev, 38, of Montreal, and Salimdzhon Nasriddinov, 53, of Brooklyn, New York, pleaded guilty to conspiracy to commit export control violations for their roles in a global procurement scheme on behalf of sanctioned Russian companies, including Russian military companies. Some of the electronic components shipped by the defendants were later found in seized Russian weapons platforms and signals intelligence equipment in Ukraine.
Goltsev and Nasriddinov are scheduled to be sentenced on Dec. 10 and Dec. 11, respectively. They each face a maximum penalty of 20 years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
*******
July 16, 2024: 89 Fed. Reg. 57853: On April 9, 2021, in the U.S. District Court for the District of Arizona, Ruben Arnulfo Chavarin (“Chavarin”) was convicted of violating 18 U.S.C. 554(a). Specifically, Chavarin was convicted of smuggling ammunition from the United States to Mexico. As a result of his conviction, the Court sentenced Chavarin to 78 months of imprisonment, with credit for time served, three years of supervised release, a $100 special assessment and additional monetary penalties of $10,307.20.
*******
July 16, 2024: 89 Fed. Reg. 57852: On December 4, 2023, in the U.S. District Court for the Southern District of New York, Robert Wise (“Wise”) was convicted of violating 18 U.S.C. 371. Specifically, Wise was convicted of conspiring to commit international money laundering by using international wire transfers to conduct U.S. dollar transactions for the benefit of a sanctioned Russian oligarch. As a result of his conviction, the Court sentenced Wise to time served, two years of supervised release, with the first 12 months in home detention, and a $100,000 fine.
*******
July 17, 2024: 89 Fed. Reg 58103: In the U.S. District Court for the District of Arizona, Melanie Ann Espinoza (“Espinoza”) was convicted of violating 18 U.S.C. 554(a). Specifically, Espinoza was convicted of smuggling approximately 7,000 rounds of Wolf 7.62 x 39 caliber ammunition, 1,500 rounds of Wolf .223 caliber ammunition, 2,000 rounds of Wolf 9 mm caliber ammunition and 50 rounds of Magtech Super .38 ammunition. As a result of her conviction, the Court sentenced Espinoza to nine months of imprisonment, with credit for time served, three years of supervised release, and a $100 special assessment.
*******
July 17, 2024: Maxim Marchenko was sentenced by U.S. District Judge Nelson S. Román to three years in prison for his role in procuring dual-use, military grade OLED micro-displays for Russian end users. Marchenko previously pled guilty to money laundering and smuggling charges before U.S. Magistrate Judge Victoria Reznik on February 29, 2024.
In addition to the prison term, Marchenko, 52, a Russian citizen who resided in Hong Kong, was sentenced to three years of supervised release.
*******
July 17, 2024: 89 Fed. Reg. 58103: On December 14, 2023, in the U.S. District Court for the Southern District of New York, Charles McGonigal (“McGonigal”), was convicted of violating 18 U.S.C. 371. Specifically, McGonigal was convicted of conspiring to violate U.S. sanctions against Russia by going to work for a Russian oligarch whom he once investigated. As a result of his conviction, the Court sentenced McGonigal to 50 months in prison, three years of supervised release, a $100 special assessment and a fine of $40,000.
Pursuant to section 1760(e) of the Export Control Reform Act (“ECRA”),[1] the export privileges of any person who has been convicted of certain offenses, including, but not limited to, 18 U.S.C. 371, may be denied for a period of up to ten (10) years from the date of his/her conviction. 50 U.S.C. 4819(e). In addition, any Bureau of Industry and Security (“BIS”) licenses or other authorizations issued under ECRA, in which the person had an interest at the time of the conviction, may be revoked. Id.
*******
July 22, 2024: Ray Hunt, also known as Abdolrahman Hantoosh, Rahman Hantoosh and Rahman Natooshas, 70, of Owens Cross Roads, Alabama, pleaded guilty to conspiracy to export U.S.-origin goods to the Islamic Republic of Iran in violation of trade sanctions.
Hunt pleaded guilty to a conspiracy charge and faces a maximum penalty of five years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
https://www.justice.gov/opa/pr/alabama-man-pleads-guilty-violating-iran-sanctions and
*******
July 26, 2024: The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) announced a $7,452,501 settlement with State Street Bank and Trust Company (State Street), a Massachusetts-based financial institution, on behalf of itself and its subsidiary, Charles River Systems, Inc. (Charles River). State Street agreed to settle its potential civil liability for 38 apparent violations of OFAC's Ukraine-/Russia-Related sanctions. The apparent violations involved invoices that were redated or reissued by Charles River between 2016 and 2020 for certain customers who were subject to Directive 1 of Executive Order 13662, as well as certain payments outside of the applicable debt tenor accepted by Charles River from these customers. The settlement amount reflects OFAC's determination that the apparent violations were not voluntarily self-disclosed and were egregious.
https://ofac.treasury.gov/media/933081/download?inline and https://ofac.treasury.gov/media/933076/download?inline
Sanctions
Department of the Treasury, Office of Foreign Assets Control (OFAC)
July 1, 2024: The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned a Mexico-based money launderer and China-based members of a money laundering organization with criminal links to the Sinaloa Cartel as part of ongoing efforts to disrupt the flow of illicit narcotics into the United States. This action is the result of the U.S. government’s ongoing efforts, in cooperation with the Mexican government, to disrupt the trafficking of fentanyl and save lives — a priority under the President’s Unity Agenda. The action furthers efforts by Treasury’s Counter-Fentanyl Strike Force, which leverages Treasury’s unique expertise and capabilities to disrupt the illicit financial networks relied upon by the cartels.
The following individuals have been added to OFAC's SDN List:
- Acosta Ovalle, Diego of Mexico;
- He, Jiaxuan of China; and
- Tong, Peiji of China.
https://ofac.treasury.gov/recent-actions/20240701
https://ofac.treasury.gov/recent-actions?page=2
*******
June 10, 2024: The Department of the Treasury's Office of Foreign Assets Control (OFAC) issued Russia-related General License 13J, "Authorizing Certain Administrative Transactions Prohibited by Directive 4 under Executive Order 14024."
General License 13J:
U.S. persons, or entities owned or controlled, directly or indirectly, by a U.S. person, are authorized to pay taxes, fees, or import duties, and purchase or receive permits, licenses, registrations, certifications, or tax refunds to the extent such transactions are prohibited by Directive 4 under Executive Order 14024, Prohibitions Related to Transactions Involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation, provided such transactions are ordinarily incident and necessary to the day-to-day operations in the Russian Federation of such U.S. persons or entities, through 12:01 a.m. eastern daylight time, October 9, 2024.
This general license does not authorize:
Any debit to an account on the books of a U.S. financial institution of the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation; or
Any transactions otherwise prohibited by the Russian Harmful Foreign Activities Sanctions Regulations, 31 CFR part 587 (RuHSR), including transactions involving any person blocked pursuant to the RuHSR, unless separately authorized.
Effective July 10, 2024, General License No. 13I, dated April 12, 2024, is replaced and superseded in its entirety by this General License No. 13J.
https://ofac.treasury.gov/media/933006/download?inline and https://ofac.treasury.gov/recent-actions/20240710
*******
July 11, 2024: The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Tren de Aragua, a Venezuela-based transnational criminal organization that is expanding throughout the Western Hemisphere and engaging in diverse criminal activities, such as human smuggling and trafficking, gender-based violence, money laundering, and illicit drug trafficking.
The following individuals have been added to OFACs SDN List:
- Ben Haim, Reut of Israel;
- Manne, Isachar of Israel; and
- Sarid, Aviad Shlomo of Israel.
The following entities have been added to OFAC’s SDN List:
- Hamohoch Farm of the West Bank;
- Lehava of Israrel;
- Manne Farm Outpost of the West Bank;
- Meitarim Farm of the West Bank;
- Neriya’s Farm of the West Bank;
- Tren de Aguara of Venezuela, Colombia, Chile, Peru, Ecuado, Brazil, Bolivia, Panama, United States.
https://ofac.treasury.gov/recent-actions/20240711 and https://ofac.treasury.gov/recent-actions
*******
July 16, 2024: The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned three Mexican accountants and four Mexican companies linked, directly or indirectly, to timeshare fraud led by the Cartel de Jalisco Nueva Generacion (CJNG). Concurrently, the Financial Crimes Enforcement Network (FinCEN) issued a Notice, jointly with OFAC and FBI, to financial institutions that provides an overview of timeshare fraud schemes in Mexico associated with CJNG and other Mexico-based transnational criminal organizations.
The following individuals have been added to OFAC’s SDN List:
- Arredondo Pinzon, Griselda Margarita of Mexico;
- Foubert Cadena, Xeyda Del Refugio of Mexico; and
- Sanchez Martinez, Emiliano of Mexico.
The following entities have been added to OFAC’s SDN List:
- Bona Fide Consultores FS S.A.S., of Mexico;
- Constructora Sandgris, S. DE R.L. DE C.V., of Mexico;
- Pacifica Axis Real Estate, S.A. DE C.V., of Mexico; and
- Realty & Maintenance BJ, S.A. DE C.V. of Mexico.
https://home.treasury.gov/news/press-releases/jy2465 and https://ofac.treasury.gov/media/933016/download?inline= and https://ofac.treasury.gov/recent-actions/20240716
*******
July 18, 2024: The Treasury’s Office of Foreign Assets Control (OFAC) sanctioned the Abdul Karim Conteh Human Smuggling Organization (Karim HSO), a transnational criminal organization (TCO) based in Tijuana, Mexico. Human smuggling is a federal crime in which criminals smuggle noncitizens into the United States, as well as transport and harbor noncitizens already in the country illegally, all in deliberate violation of U.S. immigration laws. Together with Department of Homeland Security and Department of Justice components, and other U.S. and foreign partners, OFAC targets these networks to disrupt their finances and illicit profits and ultimately dismantle their operations, which threaten the national security of the United States,
The following individuals have been added to OFAC’s SDN List:
- Conteh, Abdul Karim of Mexico;
- Kamara, Issa of Mexico;
- Pidoukou, Pasaman Francis Marin Abee of Mexico; and
- Roblero Pivaral, Veronica of Mexico.
The following entities have been added to OFAC’s SDN List;
- Abdul Karim Conteh Human Smuggling Organization of Mexico;
https://home.treasury.gov/news/press-releases/jy2470 and https://ofac.treasury.gov/recent-actions/20240718
*******
July 18, 2024: The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated and identified as blocked property a dozen persons and vessels, respectively, that have played a critical role in financing the Houthis’ destabilizing regional activities as part of the network of Sa’id al-Jamal. This action included Indonesia-based Malaysian and Singaporean national Mohammad Roslan Bin Ahmad and People’s Republic of China (PRC)-based Chinese national Zhuang Liang, who have facilitated illicit shipments and engaged in money laundering for the network. Sa’id al-Jamal’s network continues to provide tens of millions of dollars in revenue to the Houthis in Yemen through its shipment of Iranian commodities, including oil, a funding stream underpinning the Houthis’ ongoing attacks against commercial shipping in the Red Sea. This action targets numerous aspects of this illicit network across the spectrum of its operations, from clients and facilitators to insurance providers, vessels, and ship management firms.
The following individuals have been added to OFAC’s SDN List:
- Bin Ahmad, Mohammad Rosland of Indonesia; and
- Zhuang, Liang of China.
The following entities have been added to OFAC’s SDN List:
- Alpha Shine Marine Services L.L.C of the United Arab Emirates;
- Ascent General Insurance Company of Thailand;
- Barco Ship Management Inc, of the United Arab Emirates;
- Fornacis Energy Trading Co. L.L.C of the United Arab Emirates; and
- Sea Knot Shipping Inc. of the Marshall Islands.
The following vessels have been added to OFAC’s SDN List:
- Kasper, Crude Oil Tanker Panama flag; Vessel Registration Identification IMO 9293143; (vessel);
- Mirova Dynamic, Crude Oil Tanker Unknown flag; Vessel Registration Identification IMO 9237618 (vessel);
- Oceanic II, Products Tanker Hong Kong flag; Vessel Registration Identification IMO 9275995 (vessel);
- Tirex, Crude Oil Tanker Panama flag; Vessel Registration Identification IMO 9203772 (vessel); and
- Wanji, Chemical/Products Tanker Panama flag; Vessel Registration Identification IMO 9215103 (vessel).
https://ofac.treasury.gov/recent-actions/20240718 and https://ofac.treasury.gov/recent-actions?page=0
*******
July 19, 2024: The United States designated Yuliya Vladimirovna Pankratova (Pankratova) and Denis Olegovich Degtyarenko (Degtyarenko), two members of the Russian hacktivist group Cyber Army of Russia Reborn (CARR) for their roles in cyber operations against U.S. critical infrastructure. These two individuals are the group’s leader and a primary hacker, respectively.
The following individuals have been added to OFAC’s SDN List:
- Degtyarenko, Denis Olegovich of Russia; and
- Pankratova, Yuliya Vladimirovna.
https://home.treasury.gov/news/press-releases/jy2473 and https://ofac.treasury.gov/recent-actions/20240719
*******
July 23, 2024: The United States has taken action against a network of three individuals associated with the expanded activities of the Islamic State of Iraq and Syria (ISIS) on the African continent. These individuals serve as key financiers and trusted operatives, enabling the activities of ISIS and its leaders across Central, Eastern, and Southern Africa. They also serve as critical links between far-flung ISIS operations, including ISIS affiliates in the Democratic Republic of the Congo (DRC), Mozambique, Somalia, and ISIS cells in South Africa, allowing ISIS leadership to leverage each affiliate’s capabilities to conduct terrorist attacks that undermine peace and security in the region.
The following individuals have been added to OFAC’s SDN List:
- Gangat, Zayd of South Africa;
- Nabagala, Hamidah of the Democratic Republic of the Congo; and
- Swalleh, Abubakar of South Africa.
https://ofac.treasury.gov/recent-actions/20240723 and https://home.treasury.gov/news/press-releases/jy2477
*******
July 23, 2024: The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned two Mexican members of Cartel de Jalisco Nueva Generacion (CJNG) and two Mexican companies. CJNG, a Mexico-based criminal organization, is one of the largest producers and traffickers of illicit fentanyl to the United States. OFAC coordinated this action with the Government of Mexico, including its financial intelligence unit, La Unidad de Inteligencia Financiera (UIF), as well as U.S. Government partners, including the U.S. Attorney’s Office for the Central District of California, the Drug Enforcement Administration, Homeland Security Investigations, and Internal Revenue Service – Criminal Investigations.
The following individuals have been added to OFAC’s SDN List:
- Banuelos Ramires, Jaun Carlos of Mexico; and
- Rivera Ibarra Gerardo of Mexico.
The following entities have been added to OFAC’s SDN List:
- Fornely Lab S.A. DE C.V. of Mexico; and
- Inmobiliaria Universal DEJA VU S.A. DE C.V. of Mexico.
https://ofac.treasury.gov/recent-actions/20240723 and https://home.treasury.gov/news/press-releases/jy2478
*******
July 24, 2024: The Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned a network of six individuals and five entities based in the People’s Republic of China (PRC), involved in the procurement of items supporting the Democratic People’s Republic of Korea’s (DPRK) ballistic missile and space programs. In flagrant violation of multiple United Nations (UN) Security Council Resolutions (UNSCR), the DPRK has continued to conduct launches using ballistic missile technology, including a recent failed effort to place a military satellite into orbit in late May 2024. Moreover, the DPRK has supplied ballistic missiles to the Russian Federation, which continues to target civilian population centers and infrastructure in Ukraine, sustaining Russia’s brutal and unprovoked war.
The following individuals have been added to OFAC’s SDN List:
- Chen, Tianxin of China;
- Du, Jiaxin of China;
- Han, Dejian of China;
- Shi, Anhui of China;
- Shi, Qianpei of China; and
- Wang, Dongliang of China.
The following entities have been added to OFAC’s SDN List:
- Beijing Jinghua Qidi Electronic Technology Co., LTD. of China;
- Beijing Sanshuda Electronics Science And Technology Co., LTD.
- Qidong Hengcheng Electronics Factory of China;
- Shenzen City Mean Well Electronics Co., LTD. of China; and
- Yidatong Tianjin Metal Materials Co., LTD.
https://home.treasury.gov/news/press-releases/jy2482 and https://ofac.treasury.gov/recent-actions/20240724
*******
July 25, 2024: The Treasury’s Office of Foreign Assets Control (OFAC) sanctioned the Lopez Human Smuggling Organization (Lopez HSO), a transnational criminal organization (TCO) based in Guatemala. Human smuggling is a federal crime that includes bringing migrants into the United States illegally, as well as unlawfully transporting and harboring migrants already in the country. Working with Department of Homeland Security (DHS) components and other U.S. and foreign partners, OFAC sanctions aim to disrupt and ultimately dismantle these networks’ operations, which threaten the national security of the United States.
The following individuals have been added to OFAC’s SDN List:
- Hernandez Vanegas, Karen Stefany of Guatemala;
- Lopez Ambrosio, Whiskey Hans of Guatemala; and
- Lopez Escobar, Ronaldo Galindo of Guatemala.
The following entities have been added to OFAC’s SDN List:
- Lopez Human Smuggling Organization of Guatemala
https://ofac.treasury.gov/recent-actions/20240725 and https://ofac.treasury.gov/media/933071/download?inline=
*******
July 25, 2024: The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) imposed sanctions on the Congo River Alliance, known by its French name Alliance Fleuve Congo (AFC), a coalition of rebel groups that seeks to overthrow the government of the Democratic Republic of Congo (DRC) and is driving political instability, violent conflict, and civilian displacement. The principal member of AFC is the U.S.- and UN-sanctioned March 23 Movement (M23), an armed group with a long history of destabilizing the DRC’s North Kivu province and perpetrating human rights abuses. OFAC is also targeting individuals and entities associated with AFC, including Bertrand Bisimwa, the president of M23; Twirwaneho, an AFC-affiliated armed group in the DRC’s South Kivu province; and Charles Sematama, a commander and deputy military leader of Twirwaneho.
The following individuals have been added to OFAC’s SDN List:
- Bismwa, Bertrand of The Democratic Republic Republic of the Congo; and
- Sematama, Charles of The Democratic Republic of the Congo.
The following entities have been added to OFAC’s SDN List:
- Congo River Alliance of The Democratic Republic of the Congo; and
- Twirwanheo of The Democratic Republic of the Congo.
https://ofac.treasury.gov/recent-actions/20240725 and https://ofac.treasury.gov/recent-actions?page=0
*******
July 30, 2024: The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) targeted five individuals and seven entities based in Iran, the People’s Republic of China (PRC), and Hong Kong that have facilitated procurements on behalf of subordinates of Iran’s Ministry of Defense and Armed Forces Logistics (MODAFL). Those designated procure various components, including accelerometers and gyroscopes, which serve as key inputs to Iran’s ballistic missile and unmanned aerial vehicle (UAV) program. Iran’s acquisition of critical missile and UAV components continues to enable its proliferation of weapons systems to its proxies in the Middle East and to Russia.
The following individuals have been added to OFAC’s SDN List:
- Abdollahi, Mohammad of Iran;
- Hashemi, Sayyed Ali Seraj of Iran;
- Javar, Saeed Hamidi of Iran;
- Sorbani, Ezzatullah Ghasemian of Iran; and
- Tong, Thomas Ho Ming of China.
The following entities have been added to OFAC’s SDN List:
- Azmoon Pajohan Hesgar Limited Liability Company of Iran;
- Bright Shore Inc Limited of China;
- BTW International Limited of China;
- Buy Best Electronic Pars Company of Iran;
- Cloud Element Company Limited of China;
- Shenzhen Rion Technology Co., Ltd. of China; and
- Tas Technology Company Limited of China.
https://home.treasury.gov/news/press-releases/jy2510 and https://ofac.treasury.gov/recent-actions?page=0
JULY 2024 EXPORT CONTROL REGULATIONS UPDATES Read More »