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SEPTEMBER 2020 UPDATES

SEPTEMBER 2020

This newsletter is a listing of the latest changes in export control regulations through September 30, 2020. The newsletter is providedas a complimentary service to assist exporters with their ITAR and EAR export compliance responsibilities. It provides a summary of recent changes to exportcontrol regulations or other regulatory matters of interest that may impact your company’s internationaltrade and export compliance functions. Call us at 703-847-5801 or email info@fdassociates.net withquestions 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

Miscellaneous

The Department of State, OFAC and BIS Issued an Advisory on North Korea’s Ballistic Missile Procurement Activities

Sep. 1, 2020: The U.S. Department of State’s Bureau of International Security and Nonproliferation, the Department of the Treasury’s Office of Foreign Assets Control (OFAC), and the Department of Commerce’s Bureau of Industry and Security (BIS) jointly issued an advisory onNorth Korea’s ballistic missile procurement activities. The Advisory provides extensive information including key North Korean entities and deceptive techniques, key materials and equipment used in the missile program, and an overview of U.S. sanctions authorities and North Korea-related sanctions enforcement resources. This advisory was issued because industry is on the front line of detecting and thwarting North Korea’s procurement attempts. It is critical that private sector companies and individuals be aware of key items sought by the North Korean weapons programs, North Korean procurement tactics and techniques, the risks of involvement in North Korea’s ballistic missilerelated procurements, and the potential consequences they face if determined to be engaging in conduct that is subject to UN and/or U.S. sanctions authorities.This Advisory is on the Treasury Department website at

https://home.treasury.gov/system/files/126/20200901_nk_ballistic_missile_advisory.pdf (19 pp.).

Department of Commerce – Bureau of Industry and Security

BIS Amended the CCL and EAR Per The Wassenaar Plenary

Sep. 11, 2020 – 85 Fed. Reg. 56294: BIS amended the Commerce Control List (CCL, 15 CFR Part 774, Supp. No. 1) and corresponding parts of the Export Administration Regulations (EAR, 15 CFR Parts 730-774) to implement changes to the Wassenaar Arrangement List of Dual-Use Goods and Technologies and Munitions List (WA Lists) made at the December 2018 plenary meeting of the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies (WA). (New controls involving five emerging technologies essential to U.S. national security that were also agreed to at the December 2018 WA plenarywere implemented in changes in the CCL on May 23, 2019. See May 2019 Regulatory Update.) The new rule implements the following changes:• Revisions to Export Control Classification Numbers (ECCNs)0A617, 1C001, 2A001, 2B003, 2B006, 3A001, 3A002, 3B001, 3E003, 5E001, 5A002, 5D002, 5E002, 5E992, 6A003, 6A005, 7A002, 7A003, 7A005, 7D003, 7D005, 8A001, 8A002, 8B001, 9A010, 9A610, 9B001, and 9E003;• License exception revisions to ECCNs 1C004 (GBS); 8A001 (LVS, STA); 8D001 (TSR, STA); and 8E001 (TSR, STA); • New ECCN 6B002 (masks and reticles for optical sensors specified in 6A002.a.1.b or 6A002.a.1.d); • Conforming changes to ECCNs 0A606, 1A008, 3A991, 6A002, 6E001, 6E002, 8D001, and 8E001; and• Revisions in some reporting requirements.

Please contact us for additional details if your commodities are regulated by one of the referenced ECCNs to learn the specific nature of the change.

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BIS Added 47 Entities in Canada, China, Hong Kong, Iran (15 entries including 5 individuals), Malaysia, Oman, Pakistan, Thailand, Turkey, the United Arab Emirates (UAE), and the United Kingdom to the Entity List

Sep. 24, 2020 – 85 Fed. Reg. 59419: BIS amended the EAR by adding 47 entities in Canada, China, Hong Kong, Iran (15 entries including 5 individuals), Malaysia, Oman, Pakistan, Thailand, Turkey, the United Arab Emirates (UAE), and the United Kingdom 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 will apply to 39 of the 47 entities, and no license exceptions will now apply to exports, reexports, or in-country transfers of all items subject to the EAR to 39 of these persons. The remaining 8 entities will be subject to the licensing policy described under EAR Sec. 744.2 (Restrictions on Certain Nuclear End-Uses). No license exceptions will be available for exports, reexports, or transfers (in-country) to any of these entities.

(The Entity List (Supplement No. 4 to part 744) identifies persons reasonably believed to be involved, or to pose a significant risk of being or becoming involved, in activities contrary to the national security or foreign policy interests of the United States. Editors’ Note: Use of the consolidated screening tool will ensure your company screening includes these added entities.)

Department of Commerce – Census Bureau

Census Seeks Comments Regarding The Impact on Removal of EEI Requirements for Exports to Puerto Rico and the U.S. Virgin Islands

Sep. 17, 2020—85 Fed. Reg. 58016: The Census Bureau Economic Management Division invited public comments on the possible impact on statistics, data users, businesses, and any others of removing the Electronic Export Information (EEI) filing requirement for shipments between the U.S. and Puerto Rico and the U.S. Virgin Islands, and to identify any other possible impacts. Removal of this requirement has been requested by the Government of Puerto Rico and members of the international trade community because it seems to treat Puerto Rico like a foreign country when in fact it is a U.S. territory and part of the U.S. customs area and because the filing requirement imposes a burden on interstate commerce and impedes economic development in Puerto Rico. However, removal of the requirement could impact the quality and availability of key federal statistics. Deadline for comments is Nov. 16, 2020.

Department of State

DDTC Name And Address Changes Posted To Website

Sep. 11, 14, 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 Meggitt Training Systems Pty Ltd. to InVeris Training Solutions Pty Ltd. due to corporate rebranding;• Change in Name from Meggitt Training Systems Ltd. to InVeris Training Solutions Limited. Due to corporate rebranding;• Change in Name from Meggitt Training Systems, Inc. changed name to InVeris Training Solutions, Inc. due to corporate rebranding;• Change in Name from Rheinmetall Military Vehicles GmbH to Rheinmetall Landsysteme GmbH due to an intracompany merger;• Change in Name from Meggitt Training Systems Pte Ltd. to InVeris Training Solutions Pte. Ltd.due to corporate rebranding;• Change in Name from Meggitt Training System Europe B.V. changed name to InVeris Training Solutions Europe B.V. due to corporate rebranding;• Change in Name from Sonovision ITEP-Spain, S.A.U. to Sonovision Ingenieros España S.A.U. due to corporate rebranding and Change in Address;• Change in Address for Ascent Vision Technologies, LLC;• Change in Name from TELEFUNKEN Radio Communication Systems GmbH & Co. KG to Elbit Systems Deutschland GmbH & Co. KG due to corporate rebranding and consolidation by Elbit of its wholly owned subsidiary, TELEFUNKEN Radio Communication Systems; and• Change in Name from Meggitt Training Systems (Quebec), Inc. to InVeris Training Solutions Canada Inc. 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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DDTC Invited Public Comments on the Revision of Form DS-6004, Request to Change End-User, End-Use and/or Destination of Hardware

Sep. 2, 2020 – 85 Fed. Reg. 54613: DDTC invited public comments on the revision of Form DS-6004, Request to Change End-User, End-Use and/or Destination of Hardware. Comments will aid DDTC in evaluating its accuracy in estimating the time and cost burden for this collection, including the validity of the methodology and assumptions used; enhance the quality, utility, and clarity of the information to be collected; and minimize the reporting burden on those who are to respond, including the use of automated collection techniques or other forms of information technology. Deadline for comments is Nov. 2, 2020.

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DDTC Temporarily Removed Restrictions on Exports, Reexports, Retransfers, and Temporary Imports of Non-lethal Defense Articles and Defense Services Destined for or Originating in Cyprus

Sep. 28, 2020 – 85 Fed. Reg. 60698: The Department of State amended International Traffic in Arms Regulations (ITAR, 22 CFR Parts 120-130) Sec. 126.1(r) to temporarily remove prohibitions on exports, reexports, retransfers, and temporary imports of non-lethal defense articles and defense services destined for or originating in Cyprus. Under the new rule, the U.S. Department of State will deny applications for licenses or other approvals for exports or imports of defense articles and defense services destined for or originating in Cyprus, except that a license or other approval may be issued, on a case-by-case basis, for the United Nations Forces in Cyprus (UNFICYP) or for civilian end-users. However, the policy of denial will not apply to exports, reexports, retransfers, and temporary imports of non-lethal defense articles and defense services destined for or originating in Cyprus if: (1) the request is made by or on behalf of the Government of the Republic of Cyprus; (2) the end-user of such defense articles or defense services is the Government of the Republic of Cyprus; and (3) there are no credible human rights concerns. This temporary rule is effective Oct. 1, 2020 through Sep. 30, 2021. An announcement and 5 FAQs about this rule are on the DDTC home page at https://www.pmddtc.state.gov/ddtc_public .

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The Department Of State Published the Cuba Prohibited Accommodations List

Sep. 28, 2020 – 85 Fed. Reg. 60855: The State Department published the Cuba Prohibited Accommodations List (CPA List) identifying properties owned or controlled by the Cuban government, prohibited officials of the Cuban government, and other prohibited parties. TheCuban Assets Control Regulations (CACR, 31 CFR Part 515), as amended by the Treasury Department Office of Foreign Assets Control (OFAC) on Sep. 28, 2020 (see Treasury Department section below), prohibit persons subject to U.S. jurisdiction from lodging, paying for lodging, or making any reservation for a third party to lodge at any listed property when the terms of the general or specific license expressly exclude such a transaction. The CPA List is accessible on the State Department website at

https://www.state.gov/cuba-sanctions/cuba-prohibited-accommodations-list/cuba-prohibited-accommodations-list-initial-publication/.

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The Department of State Published an Updated List of Entities and Subentities Associated With Cuba

Sep. 29, 2020 – 85 Fed. Reg. 61079: The State Department published an updated List of Entities and Subentities Associated With Cuba (Cuba Restricted List)with which direct financial transactions are generally prohibited under the CACR. The announcement noted that the Department of Commerce’s BISalso will generally deny applications to export or reexport items for use by entities or subentities on the Cuba Restricted List. The Cuba Restricted List and additional information concerning it are on the Department of State website at https://www.state.gov/cuba-sanctions/cuba-restricted-list/.

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DDTC Posted New FAQ Regarding the ITAR and the U.S. Patent and Trademark Office

Sep. 30, 2020: DDTC posted a new FAQ describing the circumstances under which the U.S. Patent and Trademark Office (USPTO) is, and is not, restricted from including ITAR-controlled technical data that is submitted by a patent applicant.The FAQ advises that information published by the USPTO as part of a patent application and available at any patent office is public domain information (see ITAR section 120.11(a)(5)). By definition, it is not technical data (see ITAR section 120.10(b)). Technical data submitted as part of a patent application and not published and available at any patent office is not information in the public domain and remains ITAR-controlled.Access this FAQ on the DDTC public portal at https://www.pmddtc.state.gov/ddtc_public?id=ddtc_public_portal_news_and_events .

Department of the Treasury

OFAC Issued an Interim Final Rule Regarding Amounts of Civil Monetary Penalties

Sep. 3, 2020 – 85 Fed. Reg. 54911: OFAC issued an interim final rule adjusting the amounts of civil monetary penalties (CMPs) for failure to comply with certain recordkeeping and reporting requirements that are included in the Trading with the Enemy Act (50 U.S.C. 4315) (TWEA) and the International Emergency Economic Powers Act (50 U.S.C. 1705) (IEEPA), among others. The new amounts account for a catch-up adjustment that would have become effective for these CMPs August 1, 2016, plus annual adjustments for 2017 through 2020. The new CMPs, which vary depending upon the offense, range from $1,189 to $59,522, up from $1,000 to $50,000.The new amounts are applicable only to CMPs assessed after October 5, 2020, whose associated violations occurred after November 2, 2015.Deadline for comments was Oct. 5, 2020.*******

The U.S. Treasury Department, Office of Investment Security Published a Final Rule RegardingCFIUS Prior Notification If The U.S. Business Produces, Designs, Tests, Manufactures, Fabricates Or Develops Critical Technologies That Require “U.S. Regulatory Authorization”

Sep. 15, 2020 – 85 Fed. Reg. 57124: The U.S. Treasury Department Office of Investment Securitypublished a final rule that gave U.S. export control requirements an entirely new role. As background, the 2018 Foreign Investment Risk Review Modernization Act (FIRRMA)created a requirement that required parties to submit to the Committee on Foreign Investment in the United States (CFIUS) a prior notification of investments by non-U.S. persons in any U.S. business that produces, designs, tests, manufactures, fabricates, or develops any critical technologies, with a description of the types of industries that constituted a critical technology. Under the new rule, however, the prior notificationrequirement depends upon the more concrete issue of whether the export, re-export, transfer (in-country) of the technology in question requires “U.S. regulatory authorization,” with “U.S. regulatory authorization” defined to mean a license issued by the State Department under the ITAR, a license from the Commerce Department under the EAR, or a license issued by the Department of Energy or the Nuclear Regulatory Commission under specified regulations. Extensive additional rules about the nature and extent of the proposed foreign ownership also apply to the determination of whether a particular transaction will trigger a mandatory prior declaration. Effective date of the new rule is Oct. 15, 2020.

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OFAC Amended the Cuban Assets Control Regulations

Sep. 24, 2020 – 85 Fed. Reg. 60068: OFAC made extensive amendments to the Cuban Assets Control Regulations (CACR, 31 CFR Part 515) to implement the President’s policy to deny the Cuban regime sources of revenue. The changes:• add a new prohibition at CACR Sec. 515.210 for persons subject to U.S. jurisdiction regarding lodging and related transactions at certain properties in Cuba identified on a new list maintained by the State Department (see State Department section above) and amend an interpretive provision and several general licenses to incorporate this new prohibition;• amend four general licenses to restrict the importation into the United States of Cuban-origin alcohol and tobacco products;• amend a general license to remove the authorization for persons subject to U.S. jurisdiction to attend or organize professional meetings or conferences in Cuba;• remove a general license that authorizes persons subject to U.S. jurisdiction to participate in or organize certain public performances, clinics, workshops, other athletic or non-athletic competitions, and exhibitions and replace it with a specific licensing policy; and• make numerous technical and conforming changes.

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OFAC Posted 37 New and Updated Cuba Sanctions FAQs

Sep. 24, 2020: OFAC posted 37 new and updated Cuba Sanctions FAQs on its website at https://home.treasury.gov/policy-issues/financial-sanctions/faqs/topic/1541.

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OFAC Published a New FAQ On Issues Involved in Dealing With an Official of the Government of the Hong Kong Special Administrative Region

Sep. 25, 2020: OFAC published a new FAQ on issues involved in dealing with an official of the Government of the Hong Kong Special Administrative Region (HKSAR) who is designated as a Specially Designated National (SDN). The designation of an official of the Government of the HKSAR does not itself block the HKSAR government or any government agency where the SDN is an official or otherwise exercises control. FAQ 840 is on the OFAC website at https://home.treasury.gov/policy-issues/financial-sanctions/faqs/840.

President / U.S. Department of Commerce

The President’s August 6, 2020, Executive Orders And U.S. Department of Commerce’s Restrictions Related to Stopping Transactions With WeChat and TikTok

On August 6, 2020, the President issued two Executive Orders related to stopping transactions with Chinese apps WeChat and TikTok. The Executive Orders gave the U.S. Department of Commerce the authority to implement restrictions on transactions with WeChat and TikTok. The Executive Orders gave the Department of Commerce 45 days to implement the restrictions, which was September 20, 2020. On September 18, 2020, the U.S. Department of Commerce issued rules for public inspection regarding its proposed restrictions on WeChat and TikTok. The restrictions on TikTok are on-hold pending its corporate parent’s, ByteDance, spin off of TikTok in the U.S. to a new company-owned 20% by Oracle and 20% by Walmart. The restrictions on WeChat are on hold due to a preliminary injunction issued on Saturday, September 19, 2020, that prevents implementation of the WeChat restrictions announced by the U.S. Department of Commerce on September 18, 2020.

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.

Sep. 24, 2020 – 85 Fed. Reg. 60131:BIS denied the export privileges of Walid Chehade of Westlake, OH,for 7 yearsbased on his May 8, 2019 conviction in U.S. District Court for the Western District of Michigan of violating 18 US.C. 371 by knowingly and willfully conspiring to export from the U.S. to Lebanon guns and gun parts designated as defense articles on the U.S. Munitions List (USML, 22 CFR Sec. 121.1) without first obtaining the required licenses from the U.S. Department of State. In the court case,Chehade was sentenced to time served, one year of supervised release, a $5,000 fine, and a $100 special assessment.

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Sep. 1, 2020: Colin Fisher, a citizen of the United Kingdom, pleaded guilty in Federal Court for the Northern District of Florida to violating IEEPA and attempted smuggling in an effort to export a Solar Mars 90 S turbine core engine and parts that could be used to provide needed energy to the oil fields of Iran from the U.S. to a conspirator in Iran who was linked to an Iranian energy company. Fisher was arrested when he arrived in Pensacola, FL, from the United Arab Emirates (UAE) to consummate the illegal transaction. The turbine was seized by U.S. federal authorities before its transatlantic journey.

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Sep. 1, 2020: Carl Zeiss SBE LLC of Thornwood, NY, agreed to pay $55,000 to settle allegations by BISof 10 violations of the EAR involving exports of rifle scopeswith an estimated value of $889,170 that were controlled for Firearms Convention reasons under ECCN 0A987 to Canada without the required authorization from BIS.Carl Zeiss SBE LLC knew or had reason to know that a license was required for these exports because it had previously applied for and been granted a license from BIS for the same or similar exports that were also controlled under ECCN 0A987.

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Sep. 16, 2020: Yang Yang of Jacksonville, FL, an employee of Shanghai Breeze Technology Co., Ltd., of Shanghai, China, pleaded guilty to conspiring to submit false export information through the Automated Export System (AES) and to fraudulently export maritime raiding craft and engines to China, and attempting to fraudulently export that equipment in violation of U.S. law. According to the plea agreement, at the direction of co-conspirators in China she attempted to order seven military-model combat rubber raiding craft equipped with multi-fuel enginesfrom a U.S. manufacturer, falselyidentifying the purchaser as an entity in Hong Kong. By misrepresenting the purchaser, Yang caused the entry of false information in the AES. On Aug. 13, 2020,Yang’s co-defendant, Zheng Yan, pleaded guiltyto conspiring to submit false export information and to fraudulently export the raiding craft and engines. Co-defendants Fan Yang and Ge Songtao are scheduled to go on trial Feb. 1, 2021.

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Sep. 17, 2020: Comtech Telecommunications Corp. of Melville, NY, and its wholly-owned subsidiary, Comtech EF Data Corp, of Tempe, AZ, which sell advanced communications systems, software, and services, agreed to pay $894,111 to settle potential civil liability for four apparent violations of the Sudanese Sanctions Regulations (SSR, 31 CFR Part 538). The apparent violations involved indirect exports of warrantied satellite equipment and facilitation of services and training to a government-owned Sudanese entity. As part of the settlement, Comtech also committed to add three senior export compliance positions to its staff. In reporting this case, OFAC noted that companies engaging in high-risk international transactions should understand their obligations under OFAC regulations and recognize that they cannot shift those obligations onto their foreign customers or counterparties.

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Sep. 24, 2020: Keysight Technologies, Inc. of Santa Rosa, CA, on behalf of its former Finnish subsidiary, Anite Finland Oy, a designer and seller of test and measurement instruments and related software products to the wireless industry, agreed to pay $473,157 to settle its potential civil liability for Anite’sviolation of Sec. 560.205 of theIranian Transactions and Sanctions Regulations (ITSR, 31 CFR Part 560)by re-exportinggoods that incorporated 10 percent or more of U.S.-export controlled content with the knowledge that such goods were destined for end-users in Iran. The illegally exported goods were valued at $331,089. After Keysight acquired Anite and implemented its policy to restrict sales to Iran, Anite employees continued sales to Iran, obfuscating the sales from Keysight. Keysight and Anite subsequently implemented remedial measures to prevent future unauthorized sales.

SEPTEMBER 2020 UPDATES Read More »

AUGUST 2020 EXPORT CONTROL REGULATION UPDATES

August 2020

This newsletter is a listing of the latest changes in export control regulations through August 31, 2020. The newsletter is provided as a complimentary service to assist exporters with their ITAR and EAR export compliance responsibilities. It summarizes 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 Issues Executive Order To Extend The Export Administration Act Of 1979

Aug. 14, 2020 -- 85 Fed. Reg. 49939: President Trump issued Executive Order (EO) 13222 pursuant to the International Emergency Economic Powers Act (IEEPA, 50 USC 1701 et seq.), continuing 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. This action is needed to provide authority for carrying out certain sanctions under the IEEPA that are not authorized by other legislation.

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Department of Commerce – Bureau of Industry and Security

BIS Adds 38 Non-U.S. Huawei Affiliates In 21 Countries To The Entity List And Updates General Prohibition # 3 “The Foreign Direct Product” Rule

Aug. 20, 2020 -- 85 Fed. Reg. 51596: BIS further restricts access by Huawei Technologies (“Huawei”) and its non-U.S. affiliates to U.S. products subject to the Export Administration Regulations (“EAR”) by adding 38 non-U.S. Huawei affiliates in 21 countries to the Entity List (EAR Part 744, Supp. No. 4). Specifically, BIS advised that the 38 listed Huawei affiliates needed to be added to the Entity List – and prohibited from receiving the benefit of U.S. exports because the entities “present a significant risk of acting on Huawei’s behalf contrary to the national security or foreign policy interests of the United States.”

The entities added are:

Huawei Cloud Computing Technology;
Huawei Cloud Beijing;
Huawei Cloud Dalian;
Huawei Cloud Guangzhou;
Huawei Cloud Guiyang;
Huawei Cloud Hong Kong;
Huawei Cloud Shanghai;
Huawei Cloud Shenzhen;
Huawei OpenLab Suzhou;
Wulanchabu Huawei Cloud Computing Technology;
Huawei Cloud Argentina;
Huawei Cloud Brazil;
Huawei Cloud Chile;
Huawei OpenLab Cairo;
Huawei Cloud France;
Huawei OpenLab Paris;
Huawei Cloud Berlin;
Huawei OpenLab Munich;
Huawei Technologies Dusseldorf GmbH;
Huawei OpenLab Delhi;
Toga Networks;
Huawei Cloud Mexico;
Huawei OpenLab Mexico City;
Huawei Technologies Morocco;
Huawei Cloud Netherlands;
Huawei Cloud Peru;
Huawei Cloud Russia;
Huawei OpenLab Moscow;
Huawei Cloud Singapore;
Huawei OpenLab Singapore;
Huawei Cloud South Africa;
Huawei OpenLab Johannesburg;
Huawei Cloud Switzerland;
Huawei Cloud Thailand;
Huawei OpenLab Bangkok;
Huawei OpenLab Istanbul;
Huawei OpenLab Dubai; and
Huawei Technologies R&D UK.

For these entities, there is a license requirement for all items subject to the EAR, except certain items under specified circumstances relating to “standards organizations,” with a presumption of denial and no available license exceptions. The rule also revised the following four existing Entity List entries: Huawei Device Co., Ltd. (Dongguan); Huawei Device (Shenzhen) Co., Ltd.; Huawei do Brasil Telecomunicacões Ltda; and Huawei Technologies Co., Ltd. (Huawei).

In the same rule, BIS removed the temporary general license (TGL) that it had renewed most recently on May 18, 2020 (85 Fed. Reg. 29610; see May 2020 Regulatory Review). The TGL partially restored the licensing requirements and policies under the EAR for exports, reexports, and transfers (in-country) to Huawei Technologies Co., Ltd. and its listed non-U.S. affiliates (collectively “Huawei”) for a narrow subsection of transactions necessary to permit, for example, U.S. telecommunications carriers with Huawei equipment to maintain their systems (e.g., cybersecurity updates). The purpose of the TGL was to ensure the continued secure operation of portions of telecommunications systems using Huawei products while allowing time for affected companies and persons to identify and shift to other sources of equipment, software, and technology. While most of the TGL was removed, this rule still permits limited disclosures of information to listed Huawei entities for the sole purpose of providing ongoing security research critical to maintaining the integrity and reliability of existing and currently “fully operational networks” and equipment using Huawei products.

Finally, this rule provides an additional expansion on the EAR’s General Prohibition Three, the Foreign Direct Product Rule (“FDP Rule”), which was previously amended in May 2020 to target Huawei’s acquisition of semiconductors that are the direct product of certain U.S. software and technology. (See May 2020 Regulatory Update.) Under the revised FDP Rule, there is a requirement for a license for the export, re-export, or transfer of any foreign produced item that is a direct product of U.S.-origin software or technology falling under ECCNs 3D001, 3D991, 3E001, 3E002, 3E003, 3E991, 4D001, 4D993, 4D994, 4E001, 4E992, 4E993, 5D001, 5D991, 5E001, or 5E991 or a direct product of a foreign plant or major component of a plant that has been developed with U.S. origin software or technology under the preceding ECCNs:

(1) where U.S. software or technology is the basis for the foreign-produced item that will be incorporated into, or will be used in the “production” or “development” of any “part,” “component,” or “equipment” produced, purchased, or ordered by any Huawei entity on the Entity List; or

(2) when any Huawei entity on the Entity List is a party to such transaction, such as a “purchaser,” “intermediate consignee,” “ultimate consignee,” or “end-user”.

This expansion of the FDP Rule means that any party exporting software or technology to China under the above ECCNs – whether to a business partner, supplier, customer, or affiliate -- needs to obtain clear written assurances from the party to whom they are exporting software and technology that the party will not be supplying any product to Huawei using the U.S.-origin software or technology under the referenced ECCNs.

See EAR Section 736.2(b)(3) for the full details of the FDP Rule. The effective date of this rulemaking was August 17, 2020.

If you are considering any transaction involving the export of software or technology falling under the above-listed ECCNs and China, please contact FD Associates for support with performing the appropriate due diligence to ensure compliance with the EAR. Likewise, if you have knowledge that a customer in China is providing products to a Huawei-related company, please contact us to discuss the best way to structure your transactions to ensure compliance with the EAR.

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BIS Amends EAR Secs. 744.11 And 744.16

Aug. 20, 2020 -- 85 Fed. Reg. 51335: BIS amended EAR Secs. 744.11 (License requirements that apply to entities acting contrary to the National Security or Foreign Policy interests of the United States) and 744.16 (The Entity List (Supplement No. 4 to part 744), which identifies persons reasonably believed to be involved, or to pose a significant risk of being or becoming involved, in activities contrary to the national security or foreign policy interests of the United States) to clarify that the Entity List’s supplementary license requirements apply to every export, reexport, and transfer (in-country) in which a party listed on the Entity List acts as a purchaser, intermediate consignee, ultimate consignee, or end-user.

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BIS Adds 60 Entities (Under 61 Entries) To The Entity List

Aug. 27, 2020 – 85 Fed. Reg. 52898: BIS added 60 entities (under 61 entries) to the Entity List – 24 entities in the People’s Republic of China (China), and the remaining 36 shared among France, Hong Kong, Indonesia, Malaysia, Oman, Pakistan, Russia, Switzerland, and the United Arab Emirates (UAE). In the same rule, BIS also revised one existing Entity List entry each under the destinations of Canada, Germany, Hong Kong, Iran, and the UAE.

A license requirement for exports of all items subject to the EAR and a prohibition on license exceptions for exports, reexports, or transfers (in-country) will apply to all the added entities. License review policies as a presumption of denial for 51 entities, case-by-case review for one entity, and, for license applications involving certain nuclear end uses for eight entities, policies dictated by considerations detailed in EAR Sec. 744.2(d).

The reasons for adding an entity in this group to the Entity List include involvement in the attempted diversion of controlled U.S.-origin aircraft parts to Iran; contributions to unsafeguarded nuclear activities and missile proliferation activities; involvement in a scheme to falsify information submitted in support of BIS license applications in order to divert U.S.-origin items to Iran; risks that U.S.-origin items exported, reexported, or transferred (in-country) to these entities will be used in military end-use activities in China; involvement with Russian military and biological weapons programs; actual and attempted acquisition of U.S.-origin items for a person on the Entity List and in support of programs for China’s People’s Liberation Army; affiliation with a company already on the Entity List; enabling China to reclaim and militarize disputed outposts in the South China Sea; and involvement in China’s land reclamation efforts in the South China Sea. Contact us for the names of the 60 entities and details of the terms applicable to each entity.

Editors Note: Feeling overwhelmed with the constant updates to the EAR Entity List? Concerned you might not be taking the correct actions with your international transactions. BIS expects your company to complete a Denied Party Screening for each transaction to ensure the parties in your transaction are not on the Entity List. BIS offers the Consolidated Screening Tool on their website for use in conducting Denied Party Screening. FD Associates also provides screening services. Contact us for assistance.

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BIS Requests Comments On The Definition Of “Foundational Technologies”

Aug. 27, 2020 – 85 Fed. Reg. 52934: BIS issued an Advance Notice of Proposed Rulemaking (ANPRM) requesting comments from the public on the definition of, and the criteria for identifying, “foundational technologies” that are “essential to the national security,” i.e., technologies “that may warrant stricter controls if a present or potential application or capability of that technology poses a national security threat to the United States,” including items that currently are classified as either EAR99 or those that are controlled only for anti-terrorism (AT) reasons. The BIS announcement includes several additional requirements about the scope of the desired definition, e.g., the technology must be within the scope of the EAR. It also specifies eight topics: (1) How to further define foundational technology to assist in identification of such items; (2) sources to identify such items; (3) criteria to determine whether controlled items identified in AT level Export Control Classification Numbers (ECCNs), in whole or in part, or covered by EAR99 categories, for which a license is not required to countries subject to a U.S. arms embargo, are essential to U.S. national security; (4) the status of development of foundational technologies in the United States and other countries; (5) the impact specific foundational technology controls may have on the development of such technologies in the U.S.; (6) examples of implementing controls based on end-use and/or end-user rather than, or in addition to, technology based controls; (7) any enabling technologies, including tooling, testing, and certification equipment, that should be included within the scope of a foundational technology; and (8) any other approaches to the issue of identifying foundational technologies important to U.S. national security, including the stage of development or maturity level of an foundational technology that would warrant consideration for export control) about which comments are desired and notes that the Export Control Reform Act (ECRA, 50 U.S.C. § 4801 et seq.) requires the establishment of appropriate controls on the export, reexport, or transfer (in country) of emerging and foundational technologies. The deadline for comments is Oct. 26, 2020.

Department of Commerce – Census Bureau

Census Posts Guidance On Exports Between The U.S. And Puerto Rico

Aug. 17, 2020: The Census Bureau’s Global Reach Blog posted “Exports Between the United States and Puerto Rico – When to File Electronic Export Information,” the third and final installment of its series on this topic, on the Census Bureau website at https://www.census.gov/newsroom/blogs/global-reach/2020/08/exports_between_the.html. This installment discusses routed export transactions. (See the June and July 2020 Regulatory Updates for earlier installments of this series.)

Department of State

DDTC Name And Address Changes Posted To Website

Aug. 17 and 25, 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 Showa Optronics Co., Ltd. to KYOCERA SOC Corporation and Change of Address due to acquisition of Showa by KYOCERA CORPORATION, effective Oct. 1, 2020;
Change in Name from Force Protection Europe Limited (FPE) to General Dynamics United Kingdom Limited (GDUK) due to acquisition of FPE by GDUK;
Change in Address for Proact Netherlands B.V.;
Change in Name of the Northrop Grumman Corporation entities listed below due to Northrop Grumman Corporation Internal Legal Entity Restructuring as follows:
- Change in Name from Northrop Grumman Innovation Systems Inc. to Northrop Grumman Innovation Systems LLC;
- Change in Name from Orbital Sciences Corporation to Orbital Sciences LLC;
- Change in Name from ATK Space Systems Inc. to ATK Space Systems LLC; and
- Change in Name from ATK Launch Systems Inc. to ATK Launch Systems LLC; and
Change in Address for Thales Alenia Space UK 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.

Department of the Treasury

OFAC Changes The Definition Of “Applicable Schedule Amount”

Aug. 11, 2020 – 85 Fed. Reg. 48474: The Office of Foreign Assets Control (OFAC) amended its regulations (31 CFR part 501, Appendix A, Sec. 1.B.6 and Sec. 1.B.7) to change the definition of “applicable schedule amount” (“ASA”), such that in the case of transactions valued at $100,000 or more, but less than $200,000, the ASA is now $200,000, and in the case of transactions valued at $200,000 or more, the ASA is now $307,922. The new ASAs correspond with the current civil monetary penalties (CMPs) for violations of the IEEPA.

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OFAC Posts New Sudan Program and Darfur Sanctions Guidance

Aug. 11, 2020: OFAC posted a new Sudan Program and Darfur Sanctions Guidance and updated, amended, and removed several FAQs to reflect that Sudan has not been a comprehensively sanctioned country since Oct. 12, 2017. The Sudan Program and Darfur Sanctions Guidance is on the Treasury Department website at https://home.treasury.gov/system/files/126/sudan_guidance_20200811.pdf. Additional information is at https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions/20200811 and in TSRA Question 5 at https://home.treasury.gov/policy-issues/financial-sanctions/ofac-license-application-page/trade-sanctions-reform-and-export-enhancement-act-of-2000-tsra-program/trade-sanctions-reform-and-export-enhancement-act-of-2000-tsra-program-information.

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

Aug. 25, 2020 – 85 Fed. Reg. 52321: BIS issued a 180-day Temporary Denial Order (TDO) against the following persons and when acting for or on their behalf, any successors or assigns, agents, or employees:

Sunarko Kuntjoro, Jakarta, Indonesia;
Satrio Wihargo Sasmito, Jakarta, Indonesia;
Triadi Senna Kuntjoro, Jakarta, Indonesia;
PT MS Aero Support, Jakarta, Indonesia;
PT Antasena Kreasi, Jakarta, Indonesia; and
PT Kandiyasa Energi Utama, Jakarta, Indonesia.

The TDO was based on these parties’ operation of an international procurement network of aircraft parts suppliers and repair facilities to acquire and repair U.S.-origin aircraft parts on behalf of Mahan Air, a BIS Denied Person since 2008. (See December 2019 Regulatory Update for the indictment of Sunarko Kuntjoro, PT MS Aero Support, PT Antasena Kreasi, and PT Kandiyasa Energi Utama for conspiracy to evade several U.S. laws in connection with this enterprise. )

Fines and Penalties

July 23, 2020: Independent Freight International LLC of Elk Grove Village, IL, agreed to pay $7,500 to settle charges by BIS of three charges of failure to report boycott requests in connection with the sale and/or transfer of goods or services (including information) to Qatar and the UAE.

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Aug. 4, 2020: Vladimir Volgaev of Sarasota, FL, was sentenced in Federal District Court in Tampa, FL to two years and nine months in federal prison and ordered to forfeit $6,835 based on his guilty plea and conviction of theft of government property and smuggling goods from the U.S. in violation of the International Traffic in Arms Regulations (ITAR, 22 CFR Parts 120-130). Volgaev allegedly shipped more than 1,600 firearm components, including barrels, slides, receivers, and frames from the U.S. to Ukraine, where they were used to construct fully functional firearms, including handguns and rifles.

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Aug. 6, 2020: Chong Sik Yu, a/k/a Chris Yu, of Oradell, NJ, the president America Techma Inc. (ATI), a U.S. company, and Yunseo Lee of Fort Lee, NJ, a sales representative of ATI, were arrested on charges of conspiracy to unlawfully export dual-use electronics components in violation of the Export Control Reform Act (ECRA, 50 U.S.C. § 4801 et seq.) and conspiracy to commit wire fraud, bank fraud, and money laundering. ATI allegedly exported electronic components controlled under the Commerce Control List (CCL, EAR Part 774, Supp. No. 1) to Hong Kong for apparent re-export to other countries, including China, without the required export licenses. After U.S. law enforcement detained such a shipment, Yu and Lee allegedly sought to evade future law enforcement scrutiny by transshipping packages through South Korea and by using a separate New Jersey shipper to send shipments to Hong Kong; however, the required export licenses allegedly were not obtained for any of these shipments.

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Aug. 10, 2020: Alex Yun Cheong Yue of South El Monte, CA pleaded guilty in federal court in Boston, MA, to conspiracy to violate the EAR, unlawful exports and attempted exports to Hong Kong and smuggling of U.S.-origin cesium atomic clocks controlled under the CCL without the required export licenses. A co-defendant, Victor Zee, remains at large in Hong Kong. Yue purchased the clocks using a fictitious company, “Ecycle Tech International Ltd.,” by falsely representing to the seller that they would be used solely in the U.S. for cordless phone research and development, and then reshipped them to Zee in Hong Kong without obtaining an export license. Later, when Yue attempted to purchase an additional cesium atomic clock, he provided an end-user certificate stating that the clocks would be used in a calibration lab in California. However, when the U.S. seller insisted on a site visit to the California location, Yue abruptly canceled the order.

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Aug. 19, 2020: Amin Mahdavi, an Iranian national resident in the UAE, and Parthia Cargo LLC, a freight forwarding company located in the UAE, were charged in U.S. District Court in Washington, D.C. with conspiracy to defraud the U.S. and to violate the IEEPA and the Iranian Transactions and Sanctions Regulations (ITSR, 31 CFR Part 560). Mahdavi, the Managing Director of Parthia, allegedly agreed to use Parthia’s services to help ship a U.S.-origin commercial aircraft part to an Iranian transport company without the required export license, and then Mahdavi and Parthia conspired with individuals and business organizations outside the U.S. to carry out the illegal shipment, including falsely stating to a U.S.-based aircraft parts supplier that the goods would not be shipped to Iran unless authorized by the U.S. Government.

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Aug. 25, 2020 – 85 Fed. Reg. 52312: Acting Under Secretary of Commerce for Industry and Security Cordell Hull upheld the $31,425,760 civil monetary penalty that had been imposed in March 2020 on Nordic Maritime Pte. Ltd. (Nordic) and its Chairman and Majority Shareholder, Morten N. Minnhaug, both of Singapore, and determined that no suspension of this penalty was warranted. (See earlier action in March 2020 Regulatory Update.) The actions that resulted in this penalty involved the unauthorized re-export of controlled equipment to perform a 3D offshore seismic survey in a natural gas field in Iranian territorial waters and the provision of false information to BIS.

AUGUST 2020 EXPORT CONTROL REGULATION UPDATES Read More »

JULY 2020 EXPORT CONTROL REGULATION UPDATES

July 2020

This newsletter is provided as a service to exporters and is not intended to replace the ITAR or EAR as a reference source. If you have questions concerning the correct interpretation of the regulations please call us at (703) 847-5801 or email us at info@fdassociates.net.

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

United Kingdom

UK Departments Published Guidance On Licenses, Certificates And Special Rules For Taking Goods Out Of The UK

July 10, 2020: Several United Kingdom government departments, including the Department for International Trade and the Export Control Joint Unit, published Guidance on Licenses, certificates, and special rules for taking goods out of the UK from 1 January 2021 at https://www.gov.uk/guidance/export-licences-and-certificates-from-1-january-2021?utm_source=ff1300f0-6364-48d0-907f- bd4316d7851b&utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate.

Guidance specific to controlled goods is at https://www.gov.uk/guidance/exporting-controlled-goods-after-eu-exit.

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The UK’s Export Control Joint Unit Announced That The U.K. Will Extend An Arms Embargo To Hong Kong

July 22, 2020: The Export Control Joint Unit announced that the U.K. will extend to Hong Kong the arms embargo that has applied to mainland China since 1989. The announcement is at https://www.gov.uk/government/publications/notice-to-exporters-202012-the-extension-of-the-china-arms-embargo-to-hong-kong/notice-to-exporters-202012-the-extension-of-the-china-arms-embargo-to- hong-kong.

Canada

Canada Announced Export Control List Items To Hong Kong Will Be Treated The Same As China

July 7, 2020: The Canadian Minister of Foreign Affairs announced that effective July 3, 2020, Canada will treat exports to Hong Kong of items listed on the Export Control List in the same way as those destined for China, and, will not permit the export of sensitive military items to Hong Kong. This announcement is at https://www.international.gc.ca/trade-commerce/controls-controles/notices-avis/1003.aspx?lang=eng.

U.S. Congress

The Hong Kong Autonomy Act Passed By U.S. Congress And Signed By The President

July 14, 2020: The U.S. Congress passed and President Trump signed into law the Hong Kong Autonomy Act (HKAA, H.R. 7440, Public Law 116-149), which retaliates against China’s passage of the Law of the People’s Republic of China on Safeguarding National Security in the Hong Kong Administrative Region (the “National Security Law”), which effectively ended the “One Country, Two Systems” arrangement which had guaranteed certain civil liberties to Hong Kong. The HKAA requires the imposition of specified sanctions on (1) foreign persons who contribute to China’s failure to observe its international obligations regarding Hong Kong, and (2) foreign financial institutions that knowingly conduct “significant” transactions with such persons. See items below about actions by the President and the Commerce Department on this topic.

The President

The President Issued Executive Order (EO) 18936, Directing U.S. Agencies To Eliminate Or Suspend Rules Or Practices That Provide Different Treatment For Hong Kong Than For China

July 14, 2020 (85 Fed. Reg. 43413, July 17, 2020): President Trump issued Executive Order (EO) 18936, which directs U.S. agencies to eliminate or suspend rules or practices that provide different treatment for Hong Kong than for China, including revoking license exceptions that provide different treatment for exports to Hong Kong than for exports to China. Other preferential treatments to be eliminated, including immigration, export controls, national security, foreign investment and customs; license exceptions that differ between Hong Kong and China; license suspensions applying to exports of defense articles to Hong Kong persons physically located outside of Hong Kong and China; and others. EO 18936 also calls for the imposition of sanctions including blocking interests in property of persons who have been involved in developing or implementing the new Chinese National Security Law or have otherwise undermined democratic processes in Hong Kong, and persons who have aided persons in the first group.

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The President Changes Export Treatment Of Certain “Category I” Unmanned Aerial Systems

July 24, 2020: The White House Press Secretary announced that President Trump will invoke national discretion to change the treatment of certain Unmanned Aerial Systems (UAS) which cannot travel faster than 800 km per hour being treated as a Missile Technology Control Regime (MTCR) Category I item to MTCR Category II, which will overcome the MTCR’s strong presumption of denial (for Category I items). The change will improve the capabilities of our partners and expand the UAS market to U.S. industry. The announcement stated that the U.S. is taking this action unilaterally because the current standards are outdated, but the MTCR has failed to act after more than two years of discussion. The announcement is at https://www.whitehouse.gov/briefings-statements/statement-press-secretary-unmanned-aerial-systems- exports/.

U.S. Department of Commerce – Bureau of Industry and Security

The Departments Of Commerce, State, Treasury, and Homeland Security Issued A Business Advisory For Businesses With Supply Chain Exposure To Entities Engaged In Forced Labor And Other Human Rights Abuses In The Xinjiang Uyghur Autonomous Region (XUAR) Of China

July 1, 2020: The Departments of Commerce, State Treasury, and Homeland Security issued a business advisory to highlight the reputational, economic, and legal risks and considerations for businesses with supply chain exposure to entities engaged in forced labor and other human rights abuses in the Xinjiang Uyghur Autonomous Region (XUAR) of China. The guide does not have the force of law but provides extensive concrete information including, names of enterprises involved, locations, indicators of abuse, and descriptions of industries. Read it at https://www.bis.doc.gov/index.php/documents/pdfs/2569-xinjiang- supply-chain-business-advisory-final-for-508/file.

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BIS Issued 107 FAQs Regarding The Transfer Of Former USML Category I, II and III Items To The EAR

July 7, 2020: BIS published guidance in the form of 107 FAQs and several definitions relating to the Jan. 23, 2020, rules that transferred export controls on certain firearms, armament, and ammunition from Categories I, II, and III of the U.S. Munitions List (USML, 22 CFR Sec. 121.1) to the Commerce Control List (CCL, 15 CFR Part 774, Supp. No. 1) (85 Fed. Reg. 3819 and 85 Fed. Reg. 4136, respectively – see detailsinJanuary2020RegulatoryUpdate). Topic areas covered include specific Export Control Classification Numbers (ECCNs), specific license exceptions, brokering controls, 3D printing of firearms, licensing process, conventional arms reporting, export clearance requirements, entry clearance requirements for temporary imports, recordkeeping, and enforcement, as well as definitions of 14 key terms. This 62-page document is on the BIS website at https://www.bis.doc.gov/index.php/documents/policy-guidance/2572-faqs-for-the-commerce-category-i-iii-firearms-rule-posted-on-bis-website-7-7-20/file.

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BIS Seeks Comments on Items Controlled For Crime Control And Detection

July 17, 2020 – 85 Fed. Reg. 43532: BIS requested public comments on the list of items controlled on the CCL for crime control and detection (CC) reasons. The comments will inform BIS’ decisions on making additions and removals to this list and related licensing requirements. Issues of particular interest are noted in the announcement. The deadline for comments is Sep. 15, 2020.

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BIS Added 11 Entities In China To The Entity List

July 22, 2020 – 85 Fed. Reg. 44159: BIS amended the Export Administration Regulations (EAR, 15 CFR Parts 730-774) by adding 11 entities in China to the Entity List (EAR Part 744, Supp. No. 4) because they had been implicated in human rights violations and abuses targeting Uyghurs, Kazakhs, and other members

of Muslim minority groups from the XUAR. For these entities, a license requirement will now apply for all items subject to the EAR. In view of the current pandemic, there will be a license review policy of case-by-case review for specific ECCNs and for certain EAR99 items that protect against chemical or biological agents that are consumer goods, packaged for retail sale or personal use, or medical products, and for items subject to the EAR that are necessary to detect, identify and treat infectious disease. A license review policy of presumption of denial will apply to all other items subject to the EAR. In addition, no license exceptions are available for exports, reexports, or transfers (in-country) to the entities being added to the Entity List. The 11 entities are:

Changji Esquel Textile Co. Ltd.;
Hefei Bitland Information Technology Co. Ltd.;
Hefei Meiling Co. Ltd.;
Hetian Haolin Hair Accessories Co. Ltd.;
Hetian Taida Apparel Co., Ltd.;
KTK Group;
Nanjing Synergy Textiles Co. Ltd.;
Nanchang O-Film Tech;
Tanyuan Technology Co. Ltd.;
Xinjiang Silk Road BGI; and
Beijing Liuhe BGI.

Also, in view of the current pandemic, BIS modified the license review policy for the 37 entities added to the Entity List on June 5, 2020, (85 Fed. Reg. 34503 – see June 2020 Regulatory Update) to provide case-by-case license review for items subject to the EAR that are necessary to detect, identify and treat infectious disease. This modification will be accomplished by a new Hong Kong-specific paragraph in EAR Sec. 740.2.

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BIS Amended The EAR To Suspend The Availability Of All License Exceptions For Items Subject To The EAR That Provides Differential Treatment For Hong Kong Than For China

July 31, 2020 – 85 Fed. Reg. 45998: In response to the security measures newly imposed by China on Hong Kong, BIS amended the EAR to suspend the availability of all License Exceptions for items subject to the EAR that provide differential treatment for Hong Kong than from China. The changes, including a limited savings clause, appear in amended EAR Sec. 740.2(a)(12) and (13) and new Sec. 740.2(a)(23).

Department of Commerce – Census Bureau

Census Reported The 2020 Schedule B, Harmonized Tariff Schedule (HTS), And HTS Codes Are Updated For Codes Not Valid For AES

July 1, 2020: The Census Bureau reported that the Schedule B, Harmonized Tariff Schedule (HTS), and HTS Codes that are not valid for AES tables had been updated to accept the changes to the July 1, 2020 codes. The 2020 Schedule B and HTS tables are available for downloading at https://www.census.gov/foreign-trade/aes/documentlibrary/index.html#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.

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Census Posted Guidance On Exports Between The U.S. and Puerto Rico

July 21, 2020: The Census Bureau posted “Exports Between the United States and Puerto Rico: When to File Electronic Export Information,” the second installment of its series on U.S.-Puerto Rico shipping regulations, on its website at https://www.census.gov/newsroom/blogs/global-reach/2020/07/exports_between_the.html. (See information on the first installment in June 2020 Regulatory Update.)

Department of State

DDTC Name and Address Changes Posted To Website

July 14, 15, 27, and 28, 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 FABRICA DE MUNICIONES DE GRANADA, S.R.L. (FMG) to MSM Group S.R.O. of Slovakia due to the acquisition of FMG by MSM Group;
Change in the address for Rossell Techsys (Division of Rossell India Limited);
Change in the address for B.E. Meyers & Co. Inc.; and
Changes in the name for Elbit Systems entities due to corporate reorganization::
- Change in name from Elbit Systems Land and C4I Ltd. to Elbit Systems C4I and Cyber Ltd.; and
- Change in name of Elbit Systems’ “Land Division” business from Elbit Systems Land and C4I Ltd. to Elbit Systems Land Ltd. and change in address for this entity.

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 Changed Its Policy On Exports Of Firearms Sound Suppressors

July 10, 2020: DDTC announced that effective immediately, it has changed its policy on exports of firearms sound suppressors and will now handle them in a manner consistent with other USML-controlled technologies. Details are on the DDTC website at https://www.pmddtc.state.gov/ddtc_public.

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DDTC Posted Three FAQs Regarding Hong Kong

July 15, 2020: DDTC posted an announcement and three FAQs about EO 13936. The FAQs clarified the effect of EO 13936 on the issuance of licenses for exports of defense services to certain Hong Kong persons; the validity of previously approved authorizations naming Hong Kong as a transfer territory; and the breadth of applicability of the presumption of denial of license requests. The announcement and FAQs are on the DDTC website at https://www.pmddtc.state.gov/ddtc_public?id=ddtc_public_portal_news_and_events.

DDTC Announced The Addition Of A New “Other” Category To Block 4 Of The DS-6004 Reexport/Retransfer Application

July 16, 2020: DDTC announced the addition of a new “Other” category to Block 4 of the DS-6004 Reexport/Retransfer Application – ITAR Part 123.9 and specified the circumstances for which it should be selected when submitting General Correspondence (GC) requests. This announcement is on the DDTC website at https://www.pmddtc.state.gov/ddtc_public?id=ddtc_public_portal_news_and_events.

The “Other” category to Block 4 of the DS-6004 Reexport/Retransfer Application is used for submitting General Correspondence (GC) requests related to Mergers and Acquisitions (for license transfers), U.S. and Foreign Entity Name/Address Changes or Registration Code Changes, and U.S. Persons providing defense services abroad.

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DDTC Amends Prohibited Destination Central African Republic Adding Additional Exemptions From The Embargo

July 22, 2020 – 85 Fed. Reg. 44188: DDTC amended the International Traffic in Arms (ITAR, 22 CFR Parts 120-130) Sec. 126.1(u) to implement reductions in the arms embargo on the Central African Republic (CAR). The reduction was made in accordance with a resolution of the United Nations Security Council (UNSC) that provided additional exemptions from the embargo in support of the CAR government’s work to implement a peace agreement with 14 armed groups in the country and to extend state control over the entire territory of the country.

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The Department Of State, Bureau Of Energy Resources Published Updated Guidance On Its Implementation Of Section 232 Of The Countering America's Adversaries Through Sanctions Act Of 2017

July 23, 2020 – 85 Fed. Reg. 44561: The Department of State, Bureau of Energy Resources published updated guidance on its implementation of Section 232 of the Countering America's Adversaries Through Sanctions Act of 2017 (CAATSA, 22 USC 9201 et seq.), notably including information on the expansion of its focus, which will no longer exclude projects for which contracts or investments were signed before August 2, 2017, and will now include Russian energy export pipelines such as Nord Stream 2 and the second line of TurkStream. This guidance includes 8 FAQs. It is also on the State Department website at https://www.state.gov/caatsa-crieea-section-232-public-guidance/ and https://www.state.gov/wp-content/uploads/2020/07/Updated-CAATSA-Section-232-Guidance-July-15-2020.pdf.

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July 23, 2020: DDTC posted new FAQs to aid registrants in the submission of registration-related notifications. The new FAQs on Mergers, Acquisitions, and Divestitures can be accessed from https://www.pmddtc.state.gov/ddtc_public. Also, DDTC announced the establishment of a new, all-electronic mechanism for submitting 60-day advance notifications of foreign acquisitions of ITAR registrants pursuant to ITAR Sec. 122.4(b). The new instructions are on the DDTC website at https://www.pmddtc.state.gov/ddtc_public.

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DDTC Announced Updates To The Extension Of Temporary Suspensions, Modifications And Exceptions To The ITAR Due To COVID-19

July 29, 2020 – 85 Fed. Reg. 45513: DDTC announced that it had made the following decisions regarding the possible extension of the four temporary suspensions, modifications, and exceptions to the ITAR it had announced on May 1, 2020, in response to the SARS-COV2 public health emergency May 1, 2020 (85 Fed. Reg. 25287 – see description in May 2020 Regulatory Update):

The two-month extension of annual registration renewals expiring July forward will not be issued;
The 6-monthextension on the duration of ITAR licenses and agreements will not be further extended;
The suspension of the requirement that a regular employee work at the company’s facilities, that allows the employee to work at a remote location (except Russia or a country listed in ITAR Sec. 126.1) is extended until Dec. 31, 2020; and
The suspension authorizing a regular employee of a licensed entity who is working remotely in a country not currently authorized by a technical assistance agreement, manufacturing license agreement, or exemption to send, receive, or access any technical data authorized for export, reexport, or retransfer to their employer via a technical assistance agreement, manufacturing license agreement, or exemption (so long as the regular employee is not located in Russia or a country listed in ITAR § 126.1) is extended until Dec. 31, 2020.

Department of the Treasury

OFAC Issued Two Ukraine-Related General Licenses

July 16, 2020: The Office of Foreign Assets Control (OFAC) issued two Ukraine-Related General Licenses (GLs) related to GAZ Group. GL 15I authorizes specified transactions and activities that are ordinarily incident and necessary to the manufacture and sale of specified vehicles and components produced by GAZ Group until Jan. 22, 2021, and GL 13O supersedes GL 13N and authorizes certain transactions necessary to divest or transfer debt, equity, or other holdings in GAZ group, also until Jan. 22, 2021. (See July 22 item below for FAQs about these GLs.)

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OFAC Amended The Nicaragua Sanctions Regulations

July 17, 2020 – 85 Fed. Reg. 43436: OFAC amended the Nicaragua Sanctions Regulations (NSR, 31 CFR Part 582) to make technical edits and expand and clarify the provisions on prohibited transactions in Sec.

582.201. OFAC also added as new Sec. 582.509 a general license authorizing all transactions that are for the conduct of the official business of the United States Government by USG employees, grantees, or contractors.

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OFAC Published 9 Amended FAQs To Reflect The Issuance Of Ukraine-Related General Licenses

July 22, 2020: OFAC published 9 amended FAQs to reflect the issuance of Ukraine-Related GLs 13O and 15I. FAQs 570, 571, 586, 588, 589, 590, 591, 592, and 625 are on the Treasury Department website at https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_other.aspx#571,

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

July 8, 2020 – 85 Fed. Reg. 40966: BIS denied the export privileges of Mahin Mojtahedzadeh, a.k.a. Mahin Toussi Mojtahedzadeh, a.k.a. Mahin Mojtahedzadeh Toussi, for 10 years based on her conviction on January 30, 2020, of violating the International Emergency Economic Powers Act (IEEPA, 50 USC Sec. 1701-1707) by conspiring to export gas turbine parts from the U.S. to Iran without the required U.S. authorization. (See details of this case in January 2020 Regulatory Update.) In the criminal case, Mojtahedzadeh was sentenced to time served, a $100 special assessment, and a fine of $5,000, and was placed in immigration custody for removal from the U.S.

Department of State

July 2, 2020 – 85 Fed. Reg. 39967: The Department of State published a correction and restatement of its notice of May 20, 2020 (85 Fed. Reg. 30783) imposing statutory debarment on 23 persons. (See May 2020 Regulatory Update.) The statutory debarments remain effective and unchanged. However, the July 2 notice restates and clarifies the description of the Department’s policies on statutory debarment that was included in the Supplementary Information portion of the May notice.

Fines and Penalties

June 26, 2020: Angelica O. Preti, of Ontario, Canada, the export operations manager at a Canadian forwarding and customs brokerage service provider, was sentenced in Federal District Court in Columbus, OH to 18 months in prison for conspiring to violate the IEEPA by illegally exporting gas turbine engine parts from the U.S. to Iran. Preti facilitated the shipment of the gas turbine engine parts and related items, to Iran, by directing the filing of false electronic export information (EEI), attesting that the final destination of the goods was not Iran and employing additional methods to obscure the fact that Iran was the end-user for the shipments.

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July 8, 2020: OFAC announced that Amazon.com, Inc., of Seattle, WA, agreed to pay $134,523 to settle its potential civil liability for apparent violations of multiple OFAC sanctions programs. The violations included the provision of goods and services to persons located in Crimea, Iran, and Syria; to individuals located in or employed by the foreign missions of Cuba, Iran, North Korea, Sudan, and Syria; and persons named on OFAC’s List of Specially Designated Nationals and Blocked Persons (the “SDN List”) pursuant to eight separate sanctions programs. Amazon also failed to timely report hundreds of transactions it conducted under a GL that included a mandatory reporting requirement. The primary cause of the apparent violations was the failure of Amazon’s automated screening processes to analyze all transaction and customer data relevant to compliance with OFAC’s sanctions regulations. Factors in determining the settlement amount included OFAC’s determination that the apparent violations – whose total transaction value was approximately $269,000 – were non-egregious and voluntarily self-disclosed, and that Amazon had implemented significant remedial measures upon discovery of the apparent violations. The OFAC announcement of this case, which includes an extensive discussion of Amazon’s remedial measures and a broader description of OFAC’s compliance considerations and resources, is on the Treasury Department website at https://www.treasury.gov/resource-center/sanctions/CivPen/Documents/20200708_amazon.pdf.

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July 16, 2020: Aiden Davidson, a/k/a Hamed Aliabadi, of Brighton, MA, a citizen of the U.S. and Iran, was sentenced in Federal District Court in Concord, NH, to serve 46 months in prison for exporting ten or more containers of industrial goods including motors, pumps, and other items, to Iran, without the required authorization. Davidson, as the registered agent of a New Hampshire company, arranged the exportations, falsely naming a company in Turkey as the Ultimate Consignee.

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July 20, 2020: OFAC announced that Essentra FZE Company Limited, a cigarette filter and tear tape manufacturer in the United Arab Emirates, agreed to pay $665,112 to settle its potential civil liability for three apparent violations of the North Korea Sanctions Regulations (NKSR, 31 CFR part 510). Essentra allegedly exported cigarette filters with an alleged commercial value of $333,272 to North Korea through a network of front companies in China and other countries using deceptive practices and received payment into its bank accounts at the foreign branch of a U.S. bank.

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July 20, 2020: Usama Darwich Hamade, a national of Lebanon, was sentenced in U.S. District Court in Minneapolis, MN to 42 months in prison for conspiring to export goods and technology in violation of the IEEPA, the Export Administration Regulations (EAR, 15 CFR Parts 730-774), the Arms Export Control Act (AECA, 22 USC 2778 et seq.), and the ITAR. According to his guilty plea and documents filed in court, Hamade conspired to export U.S.-origin goods and technology including inertial measurement units suitable for use in un-crewed aerial vehicles (UAVs), digital compasses suitable for UAV use, a jet engine, piston engines, and recording binoculars for ultimate use by Hizballah without the required export authorizations. Hamade’s indictment was announced by the U.S. Justice Department in February 2019, when Hamade was in custody in South Africa and the U.S. was seeking his extradition.

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July 28, 2020: OFAC announced that Whitford Worldwide Company, LLC, a cookware coating manufacturer based in Elverson, PA, agreed to pay $824,314 to settle its potential civil liability for 74 apparent violations of the Iranian Transactions and Sanctions Regulations (ITSR, 31 CFR Part 560). Whitford’s subsidiaries in Italy and Turkey facilitated in some cases by U.S. persons employed by

Whitford allegedly sold coatings intended for customers in Iran and conducted other trade-related transactions with Iran. Whitford voluntarily disclosed the apparent violations. The Treasury Department’s Enforcement Release noted that according to Whitford when Whitford became aware of Iran General License H, it realized that its foreign subsidiaries had likely violated U.S. sanctions and hired outside counsel to conduct an investigation, submitted a disclosure to OFAC, cooperated with OFAC’s the investigation, and took significant corrective actions.

JULY 2020 EXPORT CONTROL REGULATION UPDATES Read More »

JUNE 2020 EXPORT CONTROL REGULATION UPDATES

June 2020

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

Department of Commerce – Bureau of Industry and Security

BIS Published A Restatement On Expansion of Export, Reexport, and Transfer (in-Country) Controls for Military End-Use or Military End Users in the People’s Republic of China, Russia, and Venezuela

June 3, 2020 – 85 Fed. Reg. 34306: The Bureau of Industry and Security (BIS) published a restatement of the final rule it published April 28, 2020 (85 Fed. Reg. 23459 – see April l 2020 Regulatory Update) on Expansion of Export, Reexport, and Transfer (in-Country) Controls for Military End-Use or Military End Users in the People’s Republic of China, Russia, or Venezuela. The restatement did not make any substantive changes in the original rule but published each revised Export Control Classification Number (ECCN) in full, replacing the April 28 version which published only the revised portion of each ECCN.

Editors note: Refer to our recent constant contact article on this subject or our website at Consultant Corner for an expansive explanation of this important rule change that is now in effect.

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BIS Added 24 Entities In China, Hong Kong And The UK To The Entity List

June 5, 2020 – 85 Fed. Reg. 34495: BIS amended the Export Administration Regulations (EAR, 15 CFR Parts 730-774) by adding 24 entities in the People’s Republic of China (China), Hong Kong and the United Kingdom (U.K.) 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 license exceptions will now apply to exports, reexports, or in-country transfers to these persons of all items subject to the EAR. The 24 entities (under 25 entries) are:

China

Beijing Cloudmind Technology Co., Ltd.;
Beijing Computational Science Research Center;
Beijing Jincheng Huanyu Electronics Co., Ltd.;
Center for High Pressure Science and Technology Advanced Research;
Chengdu Fine Optical Engineering Research Center;
China Jiuyuan Trading Corporation;
Harbin Chuangyue Technology Co. Ltd.;
Harbin Engineering University;

Harbin Institute of Technology;

Harbin Yun Li Da Technology and Development Co., Ltd.;
JCN (HK) Technology Co., Ltd.;
Kunhai (Yanjiao) Innovation Research Institute;
Peac Institute of Multiscale Science;
Qihoo 360 Technology Company;
Shanghai Nova Instruments Co., Ltd.;
Sichuan Dingcheng Material Trade Co., Ltd.;
Sichuan Haitian New Technology Group Co., Ltd.;
Sichuan Zhonghe Import and Export Trade Co., Ltd.;
Skyeye Laser Technology Limited; and
Zhu Jiejin.

Hong Kong

Cloudminds (Hong Kong) Limited;
JCN (HK) Technology Co., Ltd.; and
K Logistics (China) Limited.

United Kingdom

Cloudminds Inc.; and
Qihoo 360 Technology Co. Ltd.

In the same announcement, BIS also modified the following three existing entries under the destination of China:

China Electronics Technology Group Corporation 38th Research Institute (CETC 38);
China Electronics Technology Group Corporation 55th Research Institute (CETC55); and
Chinese Academy of Engineering Physics.

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BIS Added 9 Entities In China To The Entity List Based On A Determination That Each Of These Entities Acted Contrary To The National Security Or Foreign Policy Interests Of The U.S.

June 5, 2020 – 85 Fed. Reg. 34503: BIS amended the EAR by adding 9 entities in China to the Entity List based on a determination that each of these entities had acted contrary to the national security or foreign policy interests of the U.S. For these entities a license requirement will now apply for all items subject to the EAR with a case-by-case review for ECCNs 1A004.c, 1A004.d, 1A995, 1A999.a, 1D003, 2A983, 2D983, and 2E983 and for items designated as EAR99 that are described in the Note to ECCN 1A995 and a presumption of denial for all other items, and no license exceptions will apply to exports, reexports, or in-country transfers to these persons of all other items subject to the EAR. The 9 entities are:

Aksu Huafu Textiles Co.;
CloudWalk Technology;
FiberHome Technologies Group;
Intellifusion;
IS’Vision;
Ministry of Public Security’s Institute of Forensic Science of China;
Nanjing FiberHome Starrysky Communication Development Co.;
NetPosa; and
SenseNets.

In the same announcement, BIS also modified the following three existing entries under the destination of China:

Hangzhou Hikvision Digital Technology Co., Ltd (originally identified as Hikvision);
Beijing Sensetime Technology Development Co., Ltd (originally identified as Sensetime); and
Kezilesu Kyrgyz Autonomous Prefecture Public Security Bureau.

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BIS Amended Three ECCNs Per Decisions Made By The Australia Group In 2020

June 17, 2020 – 85 Fed. Reg. 36483: BIS implemented decisions made by the Australia Group in 2020 by amending three ECCNs: ECCN 1C350 by adding 24 precursor chemicals as well as mixtures in which at least one of these chemicals constitutes 30 percent or more of the weight of the mixture; ECCN 1C351.a.30 by adding Middle East respiratory syndrome-related coronavirus (MERS-related coronavirus); and ECCN 2B352 by adding a Technical Note to indicate that single-use cultivation chambers with rigid walls are controlled under ECCN 2B352.b.2.b. BIS also clarified that “software” or “technology” related to the added items is controlled under one or more of these ECCNs if it falls within the parameters of the controls described therein. BIS noted that the inclusion of precursor chemicals and single-use cultivation chambers on the control list is consistent with the Export Control Reform Act (ECRA, 50 U.S.C. § 4801 et seq.) because they are emerging technologies that are essential to U.S. national security.

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BIS Amended The EAR To Authorize Releases To Huawei For The Purpose Of Contributing To The Revision Or Development Of A “Standard” In An International “Standards Organization”

June 18, 2020 – 85 Fed. Reg. 36719: BIS amended the EAR to authorize the release without a license of technology designated EAR99 or controlled only for anti-terrorism (AT) reasons to Huawei and 114 of its foreign affiliates on the Entity List if the release is made for the purpose of contributing to the revision or development of a “standard” in an international “standards organization.” This authorization does not apply to releases of technology for commercial purposes, and the rule adds definitions of ‘‘standard’’ and ‘‘standards organization’’ to EAR Sec. 772.1 (Definitions). BIS requested comments on the impact of these revisions. This interim final rule became effective June 18, 2020. Deadline for comments is Aug. 17, 2020.

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BIS Published 32 FAQs Regarding The Expansion of Export, Reexport, And Transfer (in-Country) Controls For Military End Use Or Military End Users In The People’s Republic Of China, Russia, And Venezuela

June 26, 2020: BIS published 32 FAQs about the final rule on Expansion of Export, Reexport, and Transfer (in-Country) Controls for Military End Use or Military End Users in the People’s Republic of China, Russia, or Venezuela issued on April 28, 2020 (85 FR 23459—See April 2020 Regulatory Update). The FAQs appear under 5 headings: Changes to Section 744.21; Military End User; Military End Use; License Review Policy; and Electronic Export Information (EEI) Filing Requirement in the Automated Export System (AES). These FAQs are on the BIS website at https://www.bis.doc.gov/index.php/documents/pdfs/2566-2020-meu-faq/file.

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BIS Clarified The Effective Dates Of New EEI Filing Requirements

June 26, 2020: BIS posted an announcement clarifying the effective dates of new Electronic Export Information (EEI) filing requirements that had been established in the April 28, 2020 rule on “Revisions to EEI Filing Requirements Pursuant to Revisions to Section 744.21 (China/Russia/Venezuela military end use/end user rule).” (See preceding item.) The effective date for filing EEI for items subject to Supplement No. 2 to Part 744 destined for China, Russia, and Venezuela is June 29, 2020, and the effective date of the EEI filing requirement for exports to China, Russia or Venezuela of items controlled by ECCNs not listed in Supplement No. 2 to Part 744 is September 27, 2020. This announcement is on the BIS website at https://www.bis.doc.gov/index.php/all-articles/2-uncategorized/1686-revisions-to-eei-filing-requirements-pursuant-to-revisions-to-section-744-21-china-russia-venezuela-military-end-use-end-user-rule.

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U.S. Commerce Secretary Wilbur Ross Announced The Impending Suspension Of Commerce Department Regulations That Afford Preferential Treatment To Hong Kong Over China

June 29, 2020: U.S. Commerce Secretary Wilbur Ross announced the impending suspension of Commerce Department regulations that afford preferential treatment to Hong Kong over China, specifically including the availability of export license exceptions (see the following item), but stating that additional actions to eliminate differential treatment between Hong Kong and China are also being evaluated. These measures result from the imposition by the Chinese Communist Party of new security measures on Hong Kong, with the resulting risk that sensitive U.S. technology will be diverted to the China’s People’s Liberation Army or the Ministry of State Security. Secretary Ross’ statement is on the Commerce Department website at https://www.commerce.gov/news/press-releases/2020/06/statement-us-secretary-commerce-wilbur-ross-revocation-hong-kong. (See below for counterpart statement by Secretary of State Pompeo.)

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BIS Suspended All License Exceptions (LEs) For Exports And Reexports To Hong Kong And Transfers (in-country) Within Hong Kong

June 30, 2020: BIS issued a notice suspending all License Exceptions (LEs) for exports and reexports to Hong Kong and transfers (in-country) within Hong Kong of items subject to the EAR that provide differential treatment than those available to China. This rule is effective June 30, 2020, but a savings clause permits completion of shipments and deemed export/reexport transactions already in process on June 30 under a previous LE eligibility until Aug. 28, 2020, subject to specified documentation requirements. BIS states that this action is in response to new security measures imposed on Hong Kong by the Chinese Communist Party that undermine its autonomy and thereby increase the risk that sensitive U.S. items will be illegally diverted to the Chinese People’s Liberation Army or Ministry of State Security, Iran, or North Korea. This rule is on the BIS website at https://bis.doc.gov/index.php/documents/pdfs/2568-suspension-of-license-exceptions-for-exports-and-reexports-to-hong-kong/file.

Department of Commerce – Census Bureau

Census Issued The First In A Three-part Series Designed To Explain Export Regulations Between The U.S. And Puerto Rico

June 23, 2020: The Census Bureau’s Global Reach Blog issued the first in a three-part series designed to explain export regulations between the U.S. and Puerto Rico. This first installment includes a general overview of filing requirements for shipments between the U.S. and all the U.S. territories, as well as a more detailed description of the requirements and exemptions that apply to filing Electronic Export Information (EEI) in the Automated Export System (AES) for shipments between the U.S. and Puerto Rico. This post is on the Census Bureau website at https://www.census.gov/newsroom/blogs/global-reach.html.

Department of Homeland Security – Customs and Border Protection

DHS/CBP Announced That It Will Host A Series Of Technical Support Calls On New Requirements For Processing Entries Subject To The U.S. Mexico Canada Agreement

June 10, 2020: In view of the scheduled deployment on July 1, 2020, of the U.S. Mexico Canada Agreement (USMCA) enhancement of the Automated Commercial Environment (ACE), Customs and Border Protection (DHS/CBP) announced that it will host a series of technical support calls on new requirements for processing entries subject to the USMCA. These include calls July 6, 7, and 8 at 2:00 p.m. This bulletin, including WebEx meeting links and passwords for each call, is on the DHS/CBP website at https://content.govdelivery.com/bulletins/gd/USDHSCBP-2901903?wgt_ref=USDHSCBP_WIDGET_2.

Department of Justice

The U.S. Department Of Justice Criminal Division Released An Updated Version Of Its Memorandum On “Evaluation of Corporate Compliance Programs”

June 1, 2020: The U.S. Department of Justice Criminal Division released an updated version of its memorandum on “Evaluation of Corporate Compliance Programs,” a 20-page manual that provides prosecutors with concrete guidance for determining the effectiveness of a corporation’s compliance program by answering three basic questions: whether the program is well designed; whether it is being applied earnestly and in good faith; and whether it actually works in practice. The updated manual is on the Justice Department website at https://www.justice.gov/criminal-fraud/page/file/937501/download.

Department of State

DDTC Name and Address Changes Posted To Website

June 8, 15, 16, and 30, 2020: The Directorate of Defense Trade Controls (DDTC) posted the following name and 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 Meggitt PLC and its UK subsidiaries, Meggitt PLC, Meggitt Aerospace Ltd, Meggitt UK Ltd., and Meggitt Training Systems Ltd.;
Change in Address for Aerotech Helicopters;
Change in Name from BFFT aeromotive GmbH to EDAG aeromotive GmbH due to corporate rebranding to complete prior acquisition of BFFT by EDAG Group;
Change in Name from Chemring Ordnance, Inc. to Nammo Perry Inc. due to acquisition of Chemring Group PLC by Nammo Defense Systems Inc.;
Change in Name from KPN Consulting B.V. to Cegeka Consulting B.V. due to acquisition of KPN by Cegeka;
Change in Name from MHI Plant Engineering & Construction, Ltd. (MHIPEC) to Mitsubishi Heavy Transportation and Construction Engineering, Ltd. (MHITC) due to corporate restructure;
Change in Address for Babcock Corporate Services Limited entities BCDA Vodafone, Internet Solutions Center and BCDB Vodaphone Data Centre;
Change in Name from Pennant Training Systems Limited to Pennant International Limited due to corporate restructure; and
Changes in Name for American Outdoor Brands Corporation entities due to corporate restructure as follows:

o Change in Name from American Outdoor Brands Corporation to Smith & Wesson Brands, Inc.,

o Change in Name from American Outdoor Brands Sales Company to Smith & Wesson Sales Company; and

o Change in Name from Battenfield Technologies, Inc., to AOB Products Company.

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 Requested Public Comment On Changes Made Due To COVID-19

June 10, 2020 – 85 Fed. Reg. 35376: DDTC requested comments from the public on the temporary suspensions, modifications, and exceptions to several provisions of the ITAR that it announced May 1, 2020 (85 Fed. Reg. 25287 -- see May 2020 Regulatory Update). Deadline for comments was June 25, 2020.

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

June 12, 2020 – 85 Fed. Reg. 35972: DDTC published an updated List of Restricted Entities and Sub-entities Associated with Cuba (CRL, Cuba Restricted List) with which direct financial transactions are generally prohibited under the Cuban Assets Control Regulations (CACR, 31 CFR Part 515) because they are under the control of, or acting for or on behalf of, the Cuban military, intelligence, or security services or personnel with which direct financial transactions would disproportionately benefit such services or personnel at the expense of the Cuban people or private enterprise in Cuba. 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 an entity or subentity on the CRL are not treated as restricted unless also specified by name on the list. The CRL is also available on the State Department website at https://www.state.gov/cuba-sanctions/cuba-restricted-list/.

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DDTC Released Its 2019 “Blue Lantern Report”

June 15, 2020: DDTC released its report on End-Use Monitoring of Defense Articles and Defense Services Commercial Exports FY 2019 (the 2019 “Blue Lantern Report”). The checks it reported included the first-ever joint checks between the Departments of State and Defense as well as the first tranche of “Blue Lantern” visits tailored to assess the risk of diversion of U.S. defense articles due to the acquisition of foreign companies by entities that pose a potential enhanced risk of diversion. Among other successes, the report noted that DDTC had enhanced its work with posts, resulting in the posts conducting the checks in a more timely and effective manner, with DDTC initiating 187 checks and posts closing 181 checks, and DDTC recommending non-approval of more than 130 license applications, compared to 57 during FY 2018 thanks to better execution of Blue Lantern checks and other improvements described in the report. The full 2019 Blue Lantern Report, which includes many detailed statistics of the Blue Lantern results, is on the DDTC website at https://www.pmddtc.state.gov/sys_attachment.do?sysparm_referring_url=tear_off&view=true&sys_id=c13d692b1b9154102dc36311f54bcb2b.

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U.S. Secretary Of State William Pompeo Announced That The U.S. Will Take Steps Toward Imposing The Same Restrictions On U.S. Defense And Dual-Use Technology Exports To Hong Kong As It Does For China

June 29, 2020: U.S. Secretary of State William Pompeo announced that the U.S. “will today end exports of U.S.-origin defense equipment and will take steps toward imposing the same restrictions on U.S. defense and dual-use technologies to Hong Kong as it does for China” to protect U.S. national security in view of China’s actions to treat Hong Kong as “One Country, One System.” However, the statement did not announce any formal regulatory action. Secretary Pompeo’s statement is on the State Department website at https://www.state.gov/u-s-government-ending-controlled-defense-exports-to-hong-kong/. (See above for counterpart statement by Secretary of Commerce Ross.)

Department of the Treasury

OFAC Published A Final Rule Establishing The Syria-Related Sanctions Regulations

June 5, 2020 – 85 Fed. Reg. 34510: The Office of Foreign Assets Control (OFAC) published a final rule establishing the Syria-Related Sanctions Regulations (SRSR, 31 CFR Part 569) based on Executive Order (EO) 13894 of Oct. 14, 2019, “Blocking Property and Suspending Entry of Certain Persons Contributing to the Situation in Syria” (Oct. 17, 2019 – 84 Fed. Reg. 55851; also reproduced as Appendix to the new SRSR. See October 2019 Regulatory Update for information about earlier actions under EO 13894.) The Syrian Sanctions Regulations (SSR, 31 CFR Part 542) remain in effect, separate from the SRSR.

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OFAC Released FAQs Regarding “Imposing Sanctions With Respect to Additional Sectors of Iran”

June 5, 2020: OFAC released four Frequently Asked Questions (FAQs) related to EO 13902, “Imposing Sanctions With Respect to Additional Sectors of Iran” (Jan. 14, 2020 – 85 Fed. Reg. 2003 – See January 2020 Regulatory Update). The FAQs address the scope of the sanctions, including issues such as the definitions of the “construction,” “mining,” “manufacturing”, and “textiles” sectors of the Iranian economy and the “goods” and “services” used in connection with those industry sectors, clarification of the status of medical-related activities, and the interpretation of the terms “knowingly” and “significantly.” .FAQs 830-833 are on the Treasury Department website at https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_iran.aspx#830.

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OFAC Posted An Important Technical Notice For Users Of The OFAC Website And Sanctions List Data Files Regarding The Annual Renewal Of The Public Certificate Securing The www.treasury.gov Website

June 22, 2020: OFAC posted an Important Technical Notice for Users of the OFAC Website and Sanctions List Data Files regarding the annual renewal of the public certificate securing the www.treasury.gov website. The existing certificate will expire July 10, 2020; the new one was made available on June 25, 2020. For full information see the Notice, on the Treasury Department website at https://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/20200622.aspx.

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

June 4, 2020 – 85 Fed. Reg. 34405: 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.

Fines and Penalties

June 12, 2020: Qingshan Li, a Chinese national, was sentenced in U.S. District Court in San Diego, CA, to three years in federal custody based on his conviction of conspiracy to attempt to export defense articles without the required license from DDTC. Specifically, Li attempted to export a Harris Falcon III AN/PRC 152A radio that was controlled under the International Traffic in Arms Regulations (ITAR, 22 CFR Parts 120-130). Li allegedly purchased the radio and other military radios, antennas, and additional military equipment while he was in the U.S. on a tourist visa for a scheduled a 9-day visit, informing the seller of the radio that he planned to take it to Tijuana, Mexico and ship it to China from there in light of the lack of export control rules in Mexico. After he was stopped by law enforcement agents with the radio and other military equipment in his bag, he allegedly told the agents that he knew the radio was export-controlled, that it was illegal to transport it to China, and that he had purchased it with the intent to ship it to China, knowing that this would violate U.S. law.

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June 16, 2020: Seyed Sajjad Shahidian, a citizen of Iran, pleaded guilty in U.S. District Court in Minneapolis, MN to conspiracy to commit offenses against and to defraud the U.S. for his role in conducting financial transactions in violation of U.S. sanctions against Iran. Shahidian was founder and CEO of Payment24, an internet-based Iranian financial services company whose primary business was helping Iranian citizens conduct prohibited financial transactions including the unlawful exportation of computer servers, software, and software licenses with U.S.-based businesses, utilizing devices including PayPal accounts opened with false documentation, a remote IP address from the United Arab Emirates (UAE), fraudulent passports and other false residency documentation, material misrepresentations to U.S.-based businesses regarding the destination of U.S.-origin goods, and advice on creating accounts with a foreign identity. The guilty plea occurred after Shahidian was arrested in London, England on Nov. 11, 2018, indicted in the U.S. on Dec. 18, 2018, and extradited to the U.S. on May 15, 2020.

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June 18, 2020: Gabriele Villone, an Italian national, was sentenced in U.S. District Court in Savannah, GA, to 28 months in prison for conspiring to violate the International Emergency Economic Powers Act (IEEPA,

50 USC Secs. 1701-1707) and the Export Control Reform Act of 2018 (ECRA, 50 USC Secs. 4801 et seq.). Villone allegedly conspired with two Russian nationals, an Italian national, a U.S. citizen, and various unnamed companies to attempt to purchase a power turbine valued at approximately $17.3 million from a U.S. manufacturer and export it without the required export license for use by a Russian company on a Russian Arctic deepwater drilling platform. The conspiracy included concealing the true end-user of the turbine from both the U.S. manufacturer and the U.S. government by submitting false documentation stating that the turbine would be used near Atlanta, Georgia by a U.S. company. The case against Russian and U.S. defendants remains under investigation.

JUNE 2020 EXPORT CONTROL REGULATION UPDATES Read More »

MAY 2020 EXPORT CONTROL REGULATION UPDATES

May 2020

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

The President

The President Directs Agencies To Modify Requirements Due To Effects Of COVID-19

May 19, 2020 – 85 Fed. Reg. 31353: President Trump issued Executive Order 13924, directing federal agencies to modify some of their requirements to recognize the efforts of businesses attempting to cope with federal regulatory requirements while taking action to recover from the effects of the COVID-19 pandemic. To accomplish this goal, EO 13924 directs agencies to modify some of the standards under which they operate by taking actions such as not requiring subjects of enforcement actions to bear the burden of proving compliance, providing guidance on what the law requires, granting extensions of time for compliance with agency requirements, accelerating procedures for receiving pre-enforcement rulings regarding proposed conduct, and temporarily or permanently waiving regulations and other requirements that may inhibit economic recovery.

Department of Commerce – Bureau of Industry and Security

BIS Extends Temporary General License Regarding Huawei

May 18, 2020 – 85 Fed. Reg. 29610: BIS extended through Aug. 13, 2020, the Temporary General License (TGL) authorizing certain exports, re-exports, and in-country transfers to Huawei Technologies Co. Ltd., and its 114 non-U.S. affiliates that are included on the Entity List (15 CFR Part 744, Supp. No. 4) . This 90-day extension provides an opportunity for users of Huawei devices and telecommunication providers – particularly those in rural U.S. communities – to continue operating such existing networks and devices while hastening the transition to alternative suppliers. However, in this new announcement, BIS cautioned that the activities authorized in this TGL may be revised and possibly eliminated after the end of this extension, in which case they may require license applications. BIS is in the process of reviewing the public comments it received on this topic in response to the requests for comments it issued March 12 and 27, 2020. (See March 2020 Regulatory Update.)

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BIS Amends Foreign-Produced Direct Product Rule

May 19, 2020 – 85 Fed. Reg. 29849: BIS issued an interim final rule, effective May 15, 2020, amending the EAR (Export Administration Regulations, 15 CFR Parts 730-774) foreign-produced direct product rule (General Prohibition Three, EAR Sec. 736.2(b)(3)) to expand the universe of foreign-produced items that are subject to the EAR to include items such as semiconductor designs produced by Huawei and Huawei’s affiliates on the Entity List that are the direct product of certain Commerce Control List (CCL) software and technology and, in limited cases, items such as chipsets produced from design specifications of Huawei or its affiliates that are the direct product of certain CCL semiconductor manufacturing equipment located outside the U.S., when there is knowledge that such items are destined to a designated entity on the Entity List, and when certain other conditions are satisfied.

As described in a Commerce Department press release (https://www.commerce.gov/news/press-releases/2020/05/commerce-addresses-huaweis-efforts-undermine-entity-list-restricts, May 14, 2020):

“Specifically, this targeted rule change will make the following foreign-produced items subject to the Export Administration Regulations (EAR): (i)Items, such as semiconductor designs, when produced by Huawei and its affiliates on the Entity List (e.g., HiSilicon), that are the direct product of certain U.S. Commerce Control List (CCL) software and technology; and
“Items, such as chipsets, when produced from the design specifications of Huawei or an affiliate on the Entity List (e.g., HiSilicon), that are the direct product of certain CCL semiconductor manufacturing equipment located outside the United States. Such foreign-produced items will only require a license when there is knowledge that they are destined for reexport, export from abroad, or transfer (in-country) to Huawei or any of its affiliates on the Entity List.”

In order to prevent immediate adverse economic consequences to foreign foundries that utilize U.S. semiconductor manufacturing equipment, this rule will not apply to shipments of foreign-produced items based on Huawei design specifications whose production had started prior to May 15, 2020 that are reexported, exported from a foreign country, or transferred in-country before September 14, 2020. The deadline for comments on this rule is July 14, 2020.

Department of Commerce – Census Bureau

Census Bureau Updates “How to Find Your Schedule B Number Revisited”

May 19, 2020: The Census Bureau published an updated version of “How to Find Your Schedule B Number Revisited,” an updated description of the function of Schedule B numbers and step-by-step guide to finding the right number for the user’s export. This guide is on the Census Bureau website at https://www.census.gov/newsroom/blogs/global-reach/2020/05/how_to_find_yoursch.html.

General Accounting Office

GAO Released Report - “Export Controls: State And Commerce Should Improve Guidance And Outreach To Address University-Specific Compliance Issues”

May 12, 2020: The General Accounting Office (GAO) released a report titled “Export Controls: State and Commerce Should Improve Guidance and Outreach to Address University-Specific Compliance Issues,” focused on the risk of deemed exports to foreign students and scholars. Key findings of the report include that current guidance from the Departments of State and Commerce does not adequately address issues that are more common to universities, such as fundamental research; that the Department of Defense has not consistently interpreted the export control regulations; and that while most universities in the study had robust export compliance practices in place, there were gaps in practices involving risk assessments, training, internal audits, and export compliance manuals. The full 94-page report is on the GAO website at https://www.gao.gov/assets/710/706829.pdf.

Department of State

DDTC Name And Address Changes Posted To Website

May 4 and 18, 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 Arconic Inc. to Howmet Aerospace Inc. due to corporate restructuring and spin-off;
RUAG Switzerland Ltd changed names as follows due to reorganization:

o RUAG Switzerland Ltd (also known as RUAG Schweiz AG) changed to RUAG Ltd (also known as RUAG AG), and

o RUAG Switzerland Ltd. (also known as RUAG Schweiz AG) - Space and Aerostructures division is unaffected; and

Change in Name for Elbit Systems’ Israeli wholly owned direct subsidiary, Elbit Systems Land and C4I Ltd. (ESLC), to Elbit Systems C4I and Cyber Ltd., 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 Announced The Temporary Suspension Of Rules And/Or Deadlines During The SARS-COV2 (aka COVID-19) Public Health Emergency

May 1, 2020 – 85 Fed. Reg. 25287: DDTC announced the temporary suspension of several rules and/or deadlines during the SARS-COV2 public health emergency, as authorized by International Traffic in Arms Regulations (ITAR, 22 CFR Parts 120-130) Secs. 126.2 and 126.3. The suspensions include:

Effective Feb. 29, 2020, annual registrations under ITAR parts 122 and 129 as a manufacturer, exporter, and/or broker with expiration dates of Feb. 29, March 31 April 30, May 31, or June 30, 2020 are extended for two months from the original date of expiration;
Effective March 13, 2020, limitations on the duration of ITAR licenses and agreements contained in ITAR parts 120 through 130 that expire between March 13 and May 31, 2020 are suspended for six months after the original date of expiration, as long as there is no change in the scope or value of the authorization and no name /address changes are required;
Effective March 13, 2020, a contract employee who meets the requirements of ITAR Sec. 120.39(a)(2) may work at a remote work location excluding Russia or a country listed in ITAR Sec. 126.1 until July 31, 2020, unless that date is otherwise extended in writing; and
Effective March 13, 2020, a regular employee of a licensed entity who is working remotely in a country not currently authorized by a Technical Assistance Agreement (TAA), Manufacturing License Agreement (MLA), or exemption is authorized to send, receive, or access any technical data authorized for export, reexport, or retransfer to their employer via a TAA, MLA, or exemption so long as the regular employee is not located in Russia or an ITAR Sec.126.1 country until July 31, 2020, unless that date is otherwise extended in writing.

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DDTC Temporarily Reduced Registrations Fees Due To COVID-19 Public Health Emergency

May 6, 2020 – 85 Fed. Reg. 26847: In an action intended to help mitigate the economic impact of the COVID–19 public health emergency on the U.S. Defense Industrial Base and also warranted by the economic hardship caused by the pandemic, DDTC temporarily reduced registration fees referenced in ITAR Sec. 122.3 as follows:

Tier I (initial registration and those that file no licenses) and Tier II (those that file less than 10 licenses per year) registrants whose original expiration date is between May 30, 2020 and April 30, 2021: registration fee reduced to $500.
New applicants who submit their application between May 1, 2020 and April 30, 2021: registration fee reduced to $500.
All new registrants are in Tier I in their first year.
Tier I and Tier II entities after April 30, 2021: Fees revert to April 1, 2020 amounts.
Tier III registrants: No change from current fee structure.

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The Bureau of Political-Military Affairs Rescinded Its Policy Of Denial Concerning BAE Systems Saudi Arabia Limited

May 20, 2020 – 85 Fed. Reg. 30783: The Bureau of Political-Military Affairs gave notice that it has rescinded its policy of denial concerning BAE Systems Saudi Arabia Limited (BAES SAL), a subsidiary of BAE Systems plc, including BAES SAL’s divisions and business units and successor entities, based on a determination that the rescission is in the national security and foreign policy interests of the U.S. The policy of denial was announced on May 23, 2011 (76 Fed. Reg. 29814).

Department of the Treasury

OFAC Revoked Venezuela-Related General License (GL) 13E

May 12, 2020: The Office of Foreign Assets Control (OFAC) revoked and archived on its website Venezuela-related General License (GL) 13E, “Authorizing Certain Activities Involving Nynas AB,” as changes in Nynas’s ownership and control had ended the need to maintain Nynas as a blocked party under the Venezuela Sanctions Regulations (VSR, 31 CFR Part 591). Consistent with this action, OFAC also issued GL 3H ("Authorizing Transactions Related to, Provision of Financing for, and Other Dealings in Certain Bonds") and GL 9G ("Authorizing Transactions Related to Dealings in Certain Securities") to remove Nynas from the prior versions of both licenses. FAQs 661 and 662, further describing GLs 3H and 9G, are on the Treasury Department website at https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_other.aspx#661.

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OFAC Published An FAQ About the Wind-Down Period Regarding The Sanctions Waiver Covering All Remaining Nuclear Projects In Iran That Originated With The Joint Comprehensive Plan of Action

May 27, 2020: Following an announcement by the Secretary of State that the sanctions waiver covering all remaining nuclear projects in Iran that originated with the Joint Comprehensive Plan of Action (JCPOA) would end following a final 60-day wind-down period, OFAC published an FAQ about a wind-down period ending July 27, 2020 for activities associated with the waivers. Secretary Pompeo’s announcement is on the State Department website at https://www.state.gov/keeping-the-world-safe-from-irans-nuclear-program/; the OFAC FAQ is on the Treasury Department website at https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_iran.aspx#829.

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 State

May 20, 2020 – 85 Fed. Reg. 30783: 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) Asad-Ghanem, Rami Najm (aka Ghanem, Rami Najm);

(2) Boyko, Gennadiy;

(3) Browning, Scott Douglas;

(4) Brunt, Paul Stuart;

(5) Chehade, Walid;

(6) Dequarto, Dominick;

(7) Diab, Hicham;

(8) El Mir, Nafez;

(9) Heubschmann, Andy Lloyd;

(10) Joseph, Junior Joel;

(11) Peterson, John James;

(12) Prezas, Julian;

(13) Rodriguez, Chris;

(14) Ruchtein, Sergio;

(15) Saiag, Allexander (aka Saiag, Alexandre);

(16) Saidi, Abdul Majid;

(17) Shapovalov, Michael (aka Mikhail Shapovalov);

(18) Sheng, Zimo;

(19) Srivaranon, Apichart;

(20) Taylor, Maurice;

(21) Tishchenko, Oleg Mikhaylovich;

(22) Zamarron-Luna, Carlos Antonio; and

(23) Zuppone, Brunella.

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 description of the rules applicable to statutory debarment.

Fines and Penalties

May 6, 2020: Biomin America, Inc. of Overland Park, KS, an animal nutrition company, paid $257,862 to settle charges by OFAC that Biomin and its owned or controlled foreign entities had violated Sec. 515.201 of the Cuban Assets Control Regulations (CACR, 31 CFR Part 515) by making 30 sales of agricultural commodities produced outside the U.S. to Alfarma S.A. in Cuba without authorization from OFAC. OFAC noted that Biomin could potentially have avoided these violations by making these exports under an existing general license under CACR Sec. 515.533(a) or applying for a specific license from OFAC; however, it apparently failed to seek appropriate advice and did not have an OFAC compliance program. The sales in question had a transactional value of $17,391,950.

MAY 2020 EXPORT CONTROL REGULATION UPDATES Read More »

APRIL 2020 EXPORT CONTROL REGULATION UPDATES

April 2020

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

REGULATORY UPDATES

Canada

Canadian Government Amends The Canadian Export Control List

April 1, 2020: The Government of Canada published an Order amending the Canadian Export Control List to incorporate changes agreed by the Nuclear Suppliers Group and the Australia Group at meetings in June 2018 and the Missile Technology Control Regime and the Wassenaar Group at meetings in December 2018. The Order, which came into force on May 1, 2020, also includes additions, changes, and clarifications of other items on the Export Control List. Order SOR/2020-48 (P.C. 2020-140), is in the Canada Gazette, Part II, Vol. 154, No. 7, on the Internet at http://www.gazette.gc.ca/rp-pr/p2/2020/2020-04-01/pdf/g2-15407.pdf.

U.S. Department of Commerce – Bureau of Industry and Security

BIS Will Not Implement Or Enforce Portions Of The Transition Of USML Category I, II and III Items To The CCL Related To 3D Printed Guns

April 2, 2020 – 85 Fed. Reg. 18438: The Bureau of Industry and Security (BIS) formally notified the public that in accordance with a nationwide preliminary injunction issued in the U.S. District Court for the Western District of Washington on March 6, 2020 (see description of this injunction in March 2020 Regulatory Update), it will not implement or enforce the portion of a rule that transferred control over many firearms and related technologies controlled under U.S. Munitions List (USML, 22 CFR Sec. 121.1) Categories I, II, and III from the State Department to the Commerce Department (85 Fed. Reg. 3819, Jan. 23, 2020 – see description in January 2020 and March 2020 Regulatory Updates) “insofar as [the rule] alters the status quo restrictions on technical data and software directly related to the production of firearms or firearm parts using a 3D-printer or similar equipment.'' Accordingly, BIS stated, applications to export such items should continue to be directed to the U.S. Department of State. (See announcement to similar effect in State Department section below.)

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BIS Amends EAR To Expand Requirements On Exports To Military End Use Or Military End Users In China, Russia And Venezuela

April 28, 2020 – 85 Fed. Reg. 23459: BIS amended the Export Administration Regulations (EAR, 15 CFR Parts 730-774) to expand license requirements on exports of items intended for military end use or military end users in China, Russia, or Venezuela. Among the changes, this rule --

Broadens license requirements in EAR Sec. 744.21 to apply to military end users in China and expands the scope of items in the List of Items Subject to the Military End-Use License Requirement of §744.21 (Supplement No. 2 to Part 744);
Adopts a license review presumption of denial in Sec. 744.21(e);
Broadens the definition of “military end use” by expanding the definition of “use” to include any item that supports or contributes to the operation, installation, maintenance, repair, overhaul, refurbishing, “development,” or [emphasis added] “production” of military items;
Clarifies the controls on exports of “600 series” .y and 9x515.y Export Control Classification Numbers (ECCNs) to China, Russia, or Venezuela by relocating them from Sec. 744.21 to the License Requirements sections of each ECCN;
Designates regional stability (RS) as the reason for control of these items; and
Expands Automated Export System (AES) filing requirements for exports to China, Russia, and Venezuela.

This final rule will become effective June 29, 2020.

See FD Associates’ expanded article regarding this rule change.

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BIS Removes License Exception CIV From The EAR

April 28, 2020 – 85 Fed. Reg. 23470: BIS amended the EAR by removing EAR License Exception CIV (Civil End Users, EAR Sec. 740.5), from the EAR, which authorized exports of items on the CCL whose ECCNs identify them as “CIV-Yes” and that required a license to the ultimate destination for National Security reasons only to civil end-users in Country Group D:1. This final rule will become effective June 29, 2020.

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BIS Proposes Amendment To License Exception APR

April 28, 2020 – 85 Fed. Reg. 23496: BIS proposed to amend EAR License Exception APR (Additional Permissive Reexports, EAR Sec. 740.16) to prohibit its use for reexports of items controlled on the Commerce Control List (CCL, EAR Part 774, Supp. No. 1) for national security reasons to Country Group D:1 countries from Hong Kong and Country Group A:1 countries. This proposal is based on evidence that A:1 countries and Hong Kong may have different standards than the U.S. for approving such exports. Deadline for comments is June 29, 2020.

Department of Homeland Security – Federal Emergency Management Agency

FEMA Issues A Temporary Rule Prohibiting The Export Of Certain Personal Protective Equipment

April 10, 2020 – 85 Fed. Reg. 20195: The Federal Emergency Management Agency (FEMA) issued a temporary final rule prohibiting exports of 5 types of personal protective equipment (PPE) products needed to respond to the spread of COVID-19 without the explicit approval of FEMA. The 5 affected product types (more specifically defined in the regulation) are:

N95 Filtering Facepiece Respirators;
Other filtering facepiece respirators (e.g., those designated as N99, N100, R95, R99, R100, or P95, P99, P100);
Elastomeric, air-purifying respirators and appropriate particulate filters/cartridges;
PPE surgical masks; and
PPE gloves or surgical gloves.

Shipments of covered products will be detained to allow FEMA to determine whether to return them for domestic use, issue a rated order for them, or allow the export of part or all of the shipment. An exception in the rule applies to manufacturers whose history of foreign vs. domestic sales meets specified requirements. Violation of this rule can result in a fine of up to $10,000 and/or imprisonment for up to one year. Authorities cited for this temporary rule include the Defense Production Act of 1950, as amended, 3 Executive Orders, and a Presidential Memorandum of April 3, 2020. The rule is effective from April 7 until August 10, 2020. (See following entry regarding subsequent additional exemptions.)

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FEMA Issues Exemptions From Prohibition On The Export Of Personal Protective Equipment

April 21, 2020 – 85 Fed. Reg. 22021: FEMA issued a rule exempting the following exports from the April 10, 2020 rule controlling shipments of PPE:

Shipments to U.S. commonwealths and territories, including Guam, American Samoa, Puerto Rico, U.S. Virgin Islands, and the Commonwealth of the Northern Mariana Islands (including minor outlying islands);
Exports by non-profit or non-governmental organizations solely for donation to foreign charities or governments for free distribution (not sale) at their destination(s);
Intracompany transfers by U.S. companies from domestic facilities to company-owned or -affiliated foreign facilities;
Shipments exported solely for assembly in medical kits and diagnostic testing kits destined for U.S. sale and delivery;
Sealed, sterile medical kits and diagnostic testing kits where only a portion of the kit is made up of one or more covered materials that cannot be easily removed without damaging the kits;
Declared diplomatic shipments from foreign embassies and consulates to their home countries (may be shipped via intermediaries (logistics providers) but are shipped from and consigned to foreign governments);
Shipments to overseas U.S. military addresses, foreign service posts (e.g., diplomatic post offices), and embassies;
Shipments in transit through the U.S. with a foreign shipper and consignee, including shipments temporarily entered into a warehouse or temporarily admitted to a foreign-trade zone;
Shipments for which the final destination is Canada or Mexico; and
Shipments by or on behalf of the U.S. federal government, including its military.

Some of these exemptions require special documentation, and FEMA may waive any exemption at any time.

Nuclear Regulatory Commission

Nuclear Regulatory Commission Suspends General License For Exports of Byproduct Material To Pakistan

April 21, 2020 – 85 Fed. Reg. 22181: The Nuclear Regulatory Commission (NRC) suspended the general license authority for exports of byproduct material to Pakistan that would otherwise be provided under Sec. 82 of the Atomic Energy Act of 1954, as amended and 10 CFR Sec. 110.23. Such exports will now require a specific license in accordance with 10 CFR Sec. 110.31.

Department of State

DDTC Name and Address Changes Posted To Website

April 7 and 10, 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 Firth Rixon Forgings Limited to Forged Solution Group Limited due to acquisition of Firth Rixon Forgings by Arlington Capital Partners (ACP) to operate as part of Forged Solutions Group, ACP’s aerospace forging platform; and
Change in Name from United Technologies Corporation to Raytheon Technologies Corporation and change of address due to United Technologies Corporation merger with Raytheon Company. (Also, Raytheon Company became a wholly-owned subsidiary of Raytheon Technologies Corporation.)

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 And Updated FAQs

March 31 and April 3, 6, and 9, 2020: DDTC published numerous new and updated FAQs. Topics covered include use of technical data following the expiration of Technical Assistance Agreements (TAAs) and Manufacturing License Agreements (MLAs); user guides for the DECCS Registration Application; and provision of defense services prior to DDTC authorization. The public portal for DDTC FAQs is at https://www.pmddtc.state.gov/ddtc_public?id=ddtc_public_portal_faq_landing.

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DDTC To Comply With Injunction Related To USML Category I, II and III Changes Related To 3D Printed Guns

April 2, 2020 – 85 Fed. Reg. 18445: DDTC notified the public of the March 6, 2020 preliminary injunction prohibiting implementation of the rule passed on Jan. 23, 2020 (85 Fed. Reg. 3819) that transferred jurisdiction over certain items from USML Categories I, II, and III from the State Department to the Commerce Department “insofar as it alters the status quo restrictions on technical data and software directly related to the production of firearms or firearm parts using a 3D-printer or similar equipment.'' Accordingly, the announcement stated that such items will be treated as subject to control on the USML. (See announcement to similar effect in Commerce Department section above.)

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DDTC released its Section 655 Annual Military Assistance Report for FY 2019

April 23, 2020: DDTC released its Section 655 Annual Military Assistance Report for FY 2019, showing for every country and territory the category, quantity, authorized value, and shipped value of all defense articles and services authorized. The 2019 Section 655 report is on the DDTC website at https://www.pmddtc.state.gov/sys_attachment.do?sysparm_referring_url=tear_off&view=true&sys_id=3b39303bdb1414105c3070808c9619e6 (43 pages).

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DDTC Announces Changes To Several Requirements Due to COVID-19 Pandemic

April 23, 2020: In an effort to mitigate the impact of the Covid-19 pandemic, DDTC announced temporary changes to several of its requirements, including --

A two-month extension of registrations required by ITAR Parts 122 and 129 as a manufacturer, exporter, and/or broker expiring between Feb. 29 and June 30, 2020;*
An additional 30 days for responses to request-for-information letters related to voluntary and directed disclosures;
Consideration of extensions for the submission of full voluntary disclosures on a case-by-case basis;
A temporary modification in the limits on the duration of certain ITAR licenses, including a 6-month extension of expiration dates between March 13 and May 31, 2020 if there is no change in the scope, value, or addresses;*
Modification of the requirement that a regular employee (including a long-term contract worker) work at the company’s facilities and, for regular employees working remotely, authorization for certain exchanges of technical data with the employer, so long as the worker is not located in Russia or an ITAR Sec 126.1 country, terminating July 31, 2020;*
DDTC will send email scans of final action letters for General Correspondence requests submitted in writing, if email information has been provided;
DDTC will send the applicant email scans of unclassified final action letters for DSP-85s submitted in writing. (Original sealed copies of these letters will be sent to the Defense Counterintelligence and Security Agency (DSCA) through the mail.);
DDTC is re-issuing guidance for the expedited authorization of requests submitted in support of U.S. Operations (USOP) at DTCL SOP – USOPS Guidance;
Congressional Notifications of proposed direct commercial sales (DCS) and foreign military sales (FMS) will be submitted electronically; and
DDTC is accepting submissions of Foreign Military Sales (FMS) Part 130 reports by email.

*This measure became effective March 13, 2020.

See announcement on DDTC website at https://www.pmddtc.state.gov/ddtc_public and/or contact us for details about the scope of any of these changes that may affect you.

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Department of the Treasury

OFAC Issues Venezuela-related General License (GL) 13E

April 6, 2020: The Office of Foreign Assets Control (OFAC) issued Venezuela-related General License (GL) 13E, “Authorizing Certain Activities Involving Nynas AB.” GL 13E extends the expiration date of this GL to May 14, 2020 to afford additional time for a proposed corporate restructuring that could significantly change Nynas AB’s ownership and control. GL 13E is on the OFAC website at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/venezuela_gl13e.pdf.

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OFAC Raises Maximum Civil Penalties For Violations

April 9, 2020 – 85 Fed. Reg. 19884: OFAC raised the maximum civil penalties for violations of the laws and regulations it administers, due to inflation, as provided in the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended. The laws, prior amounts, and adjusted amounts include:

Law Prior Amount New Amount

International Emergency Economic Powers Act (IEEPA) $ 302,584* $ 307,922*

Trading with the Enemy Act (TWEA) $ 89,170 $ 90,743

Foreign Narcotics Kingpin Designation Act (FNKDA) $1,503,470 $1,529,991

* Or twice the amount of the underlying transaction, whichever is greater.

The new amounts took effect April 9, 2020.

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OFAC Issues List Of Boycott Countries

April 9, 2020 -- 85 Fed. Reg. 20028: The Treasury Department published its quarterly list of countries that require or may require participation in, or cooperation with, an international boycott. The list remains unchanged since it was last published. It includes Iraq, Kuwait, Lebanon, Libya, Qatar, Saudi Arabia, Syria, the United Arab Emirates (UAE), and Yemen.

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OFAC Amends The North Korea Sanctions Regulations

April 10, 2020 – 85 Fed. Reg. 20158: OFAC amended many provisions of the North Korea Sanctions Regulations (NKSR, 31 CFR part 510). The changes include incorporating blocking and correspondent account sanctions provisions; adding a new prohibition that is applicable to persons established or maintained outside the United States that are owned or controlled by a U.S. financial institution; adding exemptions relevant to newly added prohibitions; making technical and conforming edits to the definitions of ‘‘effective date,’’ ‘‘financial, material, or technological support,” and ‘‘North Korean person;’’ revising an interpretive provision about significant transactions; and amending the definition of luxury goods. These changes implement provisions in the North Korea Sanctions and Policy Enhancement Act of 2016, as amended by the Countering America's Adversaries Through Sanctions Act (CAATSA, 22 USC 9201 et seq.) and the National Defense Authorization Act for Fiscal Year 2020 (FY 2020 NDAA).

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OFAC Issued A Fact Sheet, “Provision of Humanitarian Assistance and Trade to Combat COVID-19”

April 16, 2020: OFAC issued a Fact Sheet, “Provision of Humanitarian Assistance and Trade to Combat COVID-19,” providing guidance on the most relevant exemptions, exceptions, and authorizations for humanitarian assistance and trade under the OFAC-administered Iran, Venezuela, North Korea, Syria, Cuba, and Ukraine/Russia-related sanctions programs. This country-by-country resource includes country-by-country program summaries; lists of FAQs; lists and summaries of applicable GLs, specific licensing policies, and exemptions; and citations to other useful resources. This 10-page Fact Sheet is on the OFAC website at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/covid19_factsheet_20200416.pdf.

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Contact OFAC If COVID-19 May Cause Delay In Meeting Deadlines

April 20, 2020: OFAC issued a release encouraging persons to contact OFAC as soon as practicable if they believe that the COVID-19 global pandemic might cause them to experience delays in meeting deadlines associated with regulatory requirements administered by OFAC. In the same release, OFAC also encourages persons to submit self-disclosures by email to OFACdisclosures@treasury.gov rather than through physical mail. The full release is on the OFAC website at https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20200420.aspx.

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OFAC Issues General License 8F Related To Venezuela

April 21, 2020: OFAC issued GL 8F, “Authorizing Transactions Involving Petróleos de Venezuela, S.A. (PdVSA) Necessary for the Limited Maintenance of Essential Operations in Venezuela or the Wind Down of Operations in Venezuela for Certain Entities," extending the authorization for certain limited activities until December 1, 2020. GL 8F is on the OFAC website at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/venezuela_gl8f.pdf.

APRIL 2020 EXPORT CONTROL REGULATION UPDATES Read More »

MARCH 2020 EXPORT CONTROL REGULATION UPDATES

March 2020

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

U.S. Courts

Nationwide Injunction Preventing The Transfer Of 3D Printed Gun Technical Data And Software To The EAR

March 6, 2020: The U.S. District Court for the Western District of Washington in Seattle, WA, issued a preliminary nationwide injunction preventing the transfer from the U.S. Munitions List (USML, 22 CFR Sec. 121.1) to the Commerce Control List (CCL, EAR Part 774, Supp. No. 1) of “technical data and software directly related to the production of firearms or firearm parts using a 3D-printer or similar equipment,” which would otherwise have occurred as part of the implementation by the State Department of the rule adopted Jan. 23, 2020 (85 Fed. Reg. 4136), effective March 9, 2020, that transferred jurisdiction over many firearms and related technologies controlled under USML Categories I, II, and III from the State Department to the Commerce Department (Case No. 2:20-cv-00111-RAJ). (See more information about this transfer of jurisdiction in January 2020 Regulatory Update and in Commerce Department and State Department sections below.)

Department of Commerce – Bureau of Industry and Security

BIS Published A Notice Regarding Licensing Of 3D Printed Gun Technical Data And Software Via The ITAR

March 6, 2020: The Bureau of Industry and Security (BIS) published a notice stating that requests for licenses for the technology and software covered by the injunction described above that would otherwise be directed to the Commerce Department under the January 23 regulation should instead be directed to the Department of State. This notice is on the BIS website at https://www.bis.doc.gov/index.php/documents/about-bis/2535-notice-of-court-order-march-6-2020/file.

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BIS Extends Temporary General License Related To Huawei

March 12, 2020 -- 85 Fed. Reg. 14416: BIS extended through May 15, 2020, the temporary general license (TGL) codified at 15 CFR Part 744, Supplement No. 7, which authorizes certain exports to Huawei Technologies Co. Ltd. and 114 of its non-U.S. affiliates that are listed on the Entity List (15 CFR Part 744, Supp. No. 4). The TGL covers exports supporting certain activities that are 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. (See related action in next item.)

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BIS Seeks Public Comment On Whether The Huawei Temporary General License Should Be Extended Beyond May 15, 2020

March 12, 2020 -- 85 Fed. Reg. 14428 and March 27, 2020 -- 85 Fed. Reg. 17300: BIS requested comments from the public to assist the U.S. Government in evaluating whether the Huawei TGL (see item above) should be extended beyond May 15 and whether any other changes should be made in the TGL, and to identify any alternative authorization or other regulatory provisions that might more effectively accomplish the goal of the TGL, which is to allow time for users to shift to non-Huawei sources of equipment, software, and technology. Deadline for comments is April 22, 2020.

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BIS Adds 6 Individuals And 18 Corporations To The Entity List

March 16, 2020 – 85 Fed. Reg. 14794: BIS amended the EAR by adding 6 individuals and 18 corporations in China, Iran, Pakistan, Russia, and the United Arab Emirates (UAE) to the Entity List based on a determination that each of these persons had acted contrary to the national security or foreign policy interests of the U.S. by enabling or assisting Iran’s nuclear program, Pakistan’s unsafeguarded nuclear and missile programs, or Russian military modernization efforts. A license requirement with no available license exceptions will apply to exports, reexports, or in-country transfers to all these persons of all items subject to the EAR, and a license review policy of presumption of denial will apply to 20 of them. The 24 entities are:

China

Jalal Rohollahnejad, and
Wuhan IRCEN Technology;

Iran

Aref Bali Lashak,
Ali Mehdipour Omrani,
Iran Air,
Kamran Daneshjou,
Mehdi Teranchi, and
Sayyed Mohammad Mehdi Hadavi;

Pakistan

Advance Multicom,
Kepler Corporation,
National Engineering Service Trading and Consultancy Co.,
Samina Pvt. Ltd.,
SANCO Pakistan,
Skytech Global Pvt. Ltd,
SNTS Tech.,
Triton Educational Equipment & Consultancy Co., and
United Engineering;

Russia

Avilon Ltd.,
Technomar;

United Arab Emirates

Focus Middle East,
Pegasus General Trading FZC, including six aliases (Pegasus General Trading FZE, Pegasus General Trading Company, Pegasus General Trading LLC, Pegasus General, Pegasus Trading, and Pegasus),
SANCO Middle East, FZC, including one alias (SANCO ME FZC),
SANCO Middle East, LLC, including one alias (SANCO ME, LLC), and
Wellmar Technology FZE.

The rule also revised the following 5 existing entries on the Entity List:

France

Dart Aviation

Iran

Dart Aviation

Lebanon

EDO–ELEMED

Singapore

Hia Soo Gan Benson

United Kingdom

Dart Aviation

Department of Commerce – Census Bureau

Census Announces Call Centers And Email Inboxes Will Remain Open, But Access To Physical Mail Will Be Limited

March 17, 2020: The U.S. Census Bureau announced that while many of its employees are operating remotely via telework, call centers and email inboxes will remain open, but access to physical mail will be limited. Therefore, Voluntary Self-Disclosures (VSDs) or data requests should be submitted electronically. Details are on the Census Bureau website at https://www.census.gov/foreign-trade/regulations/ftrletters/index.html.

Department of State

DDTC Name and Address Changes Posted To Website

March 10, 12, and 23, 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:

Nippon Avionics Co., Ltd. changed address;
Change in Name from P3 Group Consulting Engineering S.L U. to Umlaut Consulting Engineering, S.L. due to corporate rebranding;
Change in Name from P3 Group SARL to Umlaut SARL due to corporate rebranding;
Prins Metallurgische Producten BV changed address;
Change in Name from Panalpina Inc. to DSV Air & Sea Inc. due to DSV’s acquisition of Panalpina; and
Change in Name from 99x AS to Visolit Norway AS due to 99x’s acquisition by the Visolit Group.

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 Advises Transition Of USML Categories I, II and III Will Proceed As Planned Except For 3D Printed Gun Technical Data And Software

March 9, 2020: DDTC posted a notice stating that the transition to the CCL of certain items in USML Categories I, II, and III will proceed as provided in the guidance it issued on January 23, 2020, with the exception of technical data and software directly related to the production of firearms and firearm parts using a 3-D printer or similar equipment, which will remain under control of the State Department pursuant to the preliminary injunction issued on March 6, 2020. (See January 2020 Regulatory Update and U.S. Courts and Commerce Department sections above). The DDTC notice is at https://www.pmddtc.state.gov/ddtc_public?id=ddtc_public_portal_news_and_events.

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DDTC Posted Update On Status Of Operations During COVID-19 Environment

March 19, 2020: DDTC posted an update on its status of operations in view of staffing and other adjustments in the COVID-19 operational environment. Functions covered in the notice include licensing; enrollment, registration, Commodity Jurisdiction and General Correspondence requests; and submission of disclosures (DTCC-CaseStatus@state.gov) and/or related information. The notice is at https://www.pmddtc.state.gov/ddtc_public?id=ddtc_public_portal_news_and_events.

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DDTC Announced That March 25, 2020 Was The Effective Date Of The Interim Final Encryption Rule

March 25, 2020: DDTC announced that March 25, 2020, was the effective date of the interim final “Encryption Rule,” which had been published on Dec. 26, 2019 (84 Fed. Reg. 70887) and includes significant amendments to the ITAR including a new definition of activities that are not exports, reexports, retransfers, or temporary imports. (See information in December 2019 and February 2020 Regulatory Updates.) This announcement is at https://www.pmddtc.state.gov/ddtc_public.

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DDTC Published An FAQ About The New Encryption Rule

March 27, 2020: DDTC published a new FAQ about the use of the new “Encryption Rule” to provide “access information” – information that allows access to encrypted technical data in an unencrypted form -- to foreign persons. This FAQ is at https://www.pmddtc.state.gov/ddtc_public?id=ddtc_public_portal_faq_detail&sys_id=8b09babddbbf80d07ede365e7c96192f.

Department of the Treasury

OFAC Issued Two General Licenses Related To The Nicaragua Sanctions Regulations

March 5 and 25, 2020: The Office of Foreign Assets Control (OFAC) issued two General Licenses (GLs) under the Nicaragua Sanctions Regulations (NSR, 31 CFR Part 582) -- GL No. 1, “Official Business of the United States Government,” and GL No. 2, “Authorizing the Wind Down of Transactions Involving the Nicaraguan National Police” -- and an FAQ describing the coverage of GL 2. GL 1 is on the Treasury Department website at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/nicaragua_gl1.pdf; GL 2 is at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/nicaragua_gl2.pdf; and the FAQ is at https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_other.aspx#827. GL 1 was subsequently replaced by GL 1A, at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/nicaragua_gl1a.pdf , and GL 2 was replaced by GL 2A , at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/nicaragua_gl2a.pdf.

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OFAC Issues Guidance On Ways To Ship Humanitarian Goods Or Assistance To the Iranian People During COVID-19 Outbreak

March 6, 2020: OFAC issued an FAQ describing several ways in which humanitarian goods or assistance can be provided to the Iranian people in response to the COVID-19 outbreak in Iran without violating U.S. sanctions. FAQ 828 is at https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_iran.aspx#828.

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OFAC Removed The Terrorism Sanctions Regulations

March 10, 2020 -- 85 Fed. Reg. 13746: OFAC removed the Terrorism Sanctions Regulations (TSR, 31 CFR Part 595) from the Code of Federal Regulations (CFR) because the national emergency on which it was based was terminated by President Trump on Sep. 9, 2019.

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OFAC Issued Three Amended Venezuela General Licenses

March 12, 2020: OFAC issued three amended Venezuela-related GLs: GL 15C "Authorizing Transactions Involving Certain Banks for Certain Entities," GL 16C"Authorizing Maintenance of U.S. Person Accounts and Noncommercial, Personal Remittances involving Certain Banks," and GL 36A “Authorizing Certain Activities Necessary to the Wind Down of Transactions Involving Rosneft Trading S.A. or TNK, Trading International S.A.” These GLs are on the Treasury Department website at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/venezuela_gl15c.pdf, https://www.treasury.gov/resource-center/sanctions/Programs/Documents/venezuela_gl16c.pdf, and https://www.treasury.gov/resource-center/sanctions/Programs/Documents/venezuela_gl36a.pdf, respectively. OFAC also issued two amended FAQs relating to GL 36A, at https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_other.aspx#817 and https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_other.aspx#818.

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OFAC Issued Two Amended Ukraine General Licenses

March 20, 2020: OFAC issued two amended Ukraine-related GLs related to GAZ Group: GL 13N, "Authorizing Certain Transactions Necessary to Divest or Transfer Debt, Equity, or Other Holdings in GAZ Group," and GL 15H, "Authorizing Certain Activities Necessary to Maintenance or Wind Down of Operations or Existing Contracts with GAZ Group, and Certain Automotive Safety and Environmental Activities," both of which extend expiration dates to July 22, 2020. These GLs are at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/ukraine_gl13n.pdf and https://www.treasury.gov/resource-center/sanctions/Programs/Documents/ukraine_gl15h.pdf, respectively.

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

March 18, 2020 – 85 Fed. Reg. 15414: The export privileges of Nordic Maritime Pte. Ltd. (Nordic) and its Chairman and Majority Shareholder, Morten N. Minnhaug, both of Singapore, were denied for 15 years in a decision by the Department of Commerce Undersecretary for Industry and Security. In this decision, the Undersecretary also affirmed findings by an Administrative Law Judge that Nordic had knowingly illegally reexported EAR-controlled seismic survey equipment to Iran and had made false and misleading statements to BIS during its investigation, and that Minnhaug had aided and abetted Nordic in violating the EAR. However, the Undersecretary remanded determination of the appropriate civil monetary penalty, which the initial decision had set at $31,425,760, to the Administrative Law Judge for reconsideration.

March 20, 2020 – 85 Fed. Reg. 16054: BIS denied the export privileges of Zimo Sheng of Changshu, China, and Milwaukee, WI until March 16, 2030, based on his conviction of violating the Arms Export Control Act (AECA, 22 USC 2778) by attempting to export the complete upper assembly for a Glock 43 pistol to China. In the criminal case, Sheng was sentenced to 40 months in prison and a special assessment of $200.

MARCH 2020 EXPORT CONTROL REGULATION UPDATES Read More »

FEBRUARY 2020 EXPORT CONTROL REGULATION UPDATES

February 2020

This newsletter is a listing of the latest changes in export control regulations through February 29, 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

Department of Commerce – Bureau of Industry and Security

BIS Requests Public Comment On The Impact Of The Implementation Of The Chemical Weapons Convention (CWC) On Commercial Activities Involving “Schedule 1” Chemicals

Feb. 13, 2020 – 85 Fed. Reg. 8246: The Bureau of Industry and Security (BIS) invited public comments on the impact of the implementation of the Chemical Weapons Convention (CWC) on commercial activities involving “Schedule 1” chemicals (including “Schedule 1” chemicals produced as intermediates) during calendar year 2019. The information will assist BIS in preparing a required annual certification to Congress about whether this implementation harms the legitimate commercial activities and interests of chemical, biotechnology, and pharmaceutical firms. Public comments should include both a quantitative and a qualitative assessment of the impact of the CWC on these activities.

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BIS Extends Validity Of Temporary General License (TGL) Related To Huawei

Feb. 18, 2020 – 85 Fed. Reg. 8722: BIS extended through April 1, 2020, the validity of the Temporary General License (TGL) authorizing certain exports to Huawei Technologies Co. Ltd., and 114 of its non-U.S. affiliates (collectively “Huawei”), which was codified as Supplement No. 7 to EAR Part 744 on May 20, 2019, and subsequently extended in August and November 2019. (See additional information about this TGL in November 2019 Regulatory Update.)

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BIS Posts 18 Huawei Entity List and Temporary General License FAQs

Feb. 18, 2020: BIS posted 18 “Huawei Entity List and Temporary General License FAQs” on its website at https://www.bis.doc.gov/index.php/documents/pdfs/2447-huawei-entity-listing-faqs/file. In a separate document on the same date, BIS also posted 8 “Huawei Temporary General License Extension FAQs” at https://www.bis.doc.gov/index.php/documents/pdfs/2446-huawei-entity-list-temporary-general-license-extension-faqs/file.

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BIS Amends The EAR To Tighten Rules On Russia and Yemen

Feb. 24, 2020 – 85 Fed. Reg. 10274: BIS amended the Export Administration Regulations (EAR, 15 CFR Parts 730-774) to toughen the rules for exports to Russia and Yemen by changing their designations on the Country Group chart (Supplement No. 1 to EAR Part 740) and the Commerce Country Chart (Supplement No. 1 to EAR Part 738) and by changing licensing policies and tightening end-use controls.

Specifically, on the Country Group chart Russia was removed from Country Groups A:2 (Missile Technology Control Regime) and A:4 (Nuclear Suppliers Group), which provide relatively favorable treatment for exports of covered items, and added to Country Groups of concern D:2 (Nuclear) and D:4 (Missile Technology), which subject covered items to more stringent controls. Also, on the Commerce Country Chart Russia was added to Column NP1 (Nuclear Nonproliferation), resulting in increased controls.Also, Yemen was removed from Country Group B on the Country Group Chart and added to Country Group D:1 (National Security), resulting in the loss of availability of many license exceptions.

These changes have many implications regarding license requirements, changes in licensing policy, availability of exceptions, and others. Contact us about their effect on specific contemplated exports to Russia or Yemen.

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BIS Controls Coronavirus, SARS-CoV-2

In an undated notice, BIS announced that it will continue to classify the virus causing the current outbreak of coronavirus disease, SARS-CoV-2, and its specific genetic elements as EAR99, and that therefore, an export license is generally not required for the export of this virus to most destinations. However, BIS reminded exporters that the EAR nonetheless requires a license for the export of EAR99 items to certain end-users, end-uses, and destination countries. This notice is on the BIS website at https://www.bis.doc.gov/index.php/documents/pdfs/2532-severe-acute-respiratory-syndrome-coronavirus-2-sars-cov-2-faq/file.

Department of State

DDTC Name and Address Changes Posted To Website

Feb. 5, 7, 13, 18, 20, 25, and 27, 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:

As a result of corporate rebranding, P3 entities changed names as follows:

Former Name	New Name
	P3 Group AG	umlaut AG
	P3 Engineering Holding GmbH	umlaut Engineering Holding GmbH
	P3 Engineering GmbH (DE)	umlaut Engineering GmbH
	P3 GROUP SARL (FR)	umlaut SARL
	P3 CONS ENG Pvt. Ltd. (IN)	umlaut Pvt. Ltd.
	P3 Aviation GmbH	umlaut Consulting GmbH
	P3 Communications GmbH	umlaut Communications GmbH
	P3 North America Inc.	umlaut Inc.

Change in Name from GE Aviation Systems Limited (GEASL) to Hamble Aerostructures Limited (HAL) due to corporate rebranding;
Bristow Group, Inc. changed address;
Alion Science and Technology Corporation changed address;
Change in Name from DRS Power Technology, Inc. to DRS Naval Power Systems, Inc. due to corporate reorganization;
Change in Name from Nammo Talley Inc. to Nammo Defense Systems Inc. due to corporate reorganization;
Change in Name from DSCHULNIGG GmbH & Co KG to GTML GmbH due to corporate rebranding;
Change in Name from Intermes BV to Trescal Hengelo BV due to corporate reorganization; and
Change in Name from San Swiss Arms AG to Sig Sauer AG 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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DDTC Implements DECCS

Feb. 18, 2020: DDTC announced the commencement of operations of the Defense Export Control and Compliance System (DECCS), a single, cloud-based portal that will replace the DETRA, DTRADE, EFS, ELLIE, and MARY systems. Currently the Registration, Licensing, Advisory Opinions, and Commodity Jurisdiction applications are live in DECCS. This announcement, including a user sign-up link and a link to a DECCS Enrollment User Guide, are on the DDTC website at https://www.pmddtc.state.gov/deccs.

A link to FAQs about many aspects of DECCS is at https://www.pmddtc.state.gov/ddtc_public?id=ddtc_public_portal_faq_landing, and a DECCS Webinar for Corporate Administrators is at https://www.pmddtc.state.gov/sys_attachment.do?sysparm_referring_url=tear_off&view=true&sys_id=9f80f5d0db878c147ede365e7c9619c8.

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DDTC Adds Two New FAQs On Defense Services and U.S. Persons Abroad

Feb. 19, 2020: DDTC added two new FAQs to its collection of FAQs on Defense Services and U.S. Persons Abroad, both regarding voluntary disclosure aspects of requests for authorization for defense services that the applicant is already performing overseas. These FAQs are included in a compilation of 16 FAQs on Defense Services and U.S. Persons Abroad on the DDTC website at https://www.pmddtc.state.gov/sys_attachment.do?sysparm_referring_url=tear_off&view=true&sys_id=2e58f110db838c14529d368d7c96193a.

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DDTC Published A Summary Of Changes To International Traffic In Arms Regulations - Encryption Rule

Feb. 20, 2020: DDTC published a “Summary of Changes to International Traffic in Arms Regulations - Encryption Rule” clarifying the changes to the ITAR made on Dec. 26, 2019, with respect to activities that are not exports, reexports, retransfers, or temporary imports (84 Fed. Reg. 70887 – see December 2019 Regulatory Update). This 2 page document, which focuses on issues regarding encryption, is on the DDTC website at https://www.pmddtc.state.gov/sys_attachment.do?sysparm_referring_url=tear_off&view=true&sys_id=dd2ecd1adbcbc8105564ff1e0f9619f2.

Department of the Treasury

OFAC Issues Mali Sanctions

Feb. 7, 2020 – 85 Fed. Reg. 7223: The Office of Foreign Assets Control (OFAC) issued the Mali Sanctions Regulations, codified as 31 CFR Part 555, to implement Executive Order 13882 of July 26, 2019, “Blocking Property and Suspending Entry of Certain Persons Contributing to the Situation in Mali.”

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Treasury Publishes Lists Of Countries That Require Or May Require Participation In, Or Cooperation With, An International Boycott

Feb. 10, 2020 – 85 Fed. Reg. 7618: The Treasury Department published its quarterly list of countries that require or may require participation in, or cooperation with, an international boycott. The list remains unchanged since it was last published. It includes Iraq, Kuwait, Lebanon, Libya, Qatar, Saudi Arabia, Syria, the United Arab Emirates (UAE), and Yemen.

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OFAC Issues Venezuela-related General License (GL) 36

Feb. 18, 2020: OFAC issued Venezuela-related General License (GL) 36, “Authorizing Certain Activities Necessary to the Wind Down of Transactions Involving Rosneft Trading S.A.,” valid until May 20, 2020. At the same time, OFAC also published two FAQs regarding issues including the scope of the applicability of GL 36 to companies related to Rosneft. GL 36 is on the OFAC website at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/venezuela_gl36.pdf; FAQs 817 and 818 are at https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_other.aspx#817.

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Feb. 19, 2020: OFAC released its Second Quarter FY2019 Quarterly Report of Licensing Activities pursuant to Section 906(b) of the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA). The report covers OFAC’s activities regarding license applications for exports of agricultural commodities, medicine, and medical devices to Iran and Sudan. The report is on the OFAC website at https://www.treasury.gov/resource-center/sanctions/Documents/2quarter2019.pdf.

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OFAC Published Two FAQs Related To The Reporting, Procedures And Penalties Regulations

Feb. 20, 2020: OFAC published two FAQs related to the Reporting, Procedures and Penalties Regulations (RPPR, 31 CFR Part 501). The FAQs relate to updated instructions and new requirements for parties filing reports on blocked property, unblocked property, or rejected transactions that were included in a June 21, 2019, amendment to the RPPR (June 21, 2019 – 84 Fed. Reg. 29055). (See June 2019 Regulatory Update.) The new FAQs are on the OFAC website at https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_compliance.aspx#819.

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OFAC Issued General License 8 Authorizing Certain Humanitarian Trade Transactions Involving The Central Bank of Iran

Feb. 27, 2020: OFAC issued General License 8 “Authorizing Certain Humanitarian Trade Transactions Involving the Central Bank of Iran” under the Global Terrorism Sanctions Regulations (GTSR, 31 CFR Part 594) and the Iranian Transactions and Sanctions Regulations (ITSR, 31 CFR Part 560). GL 8 authorizes certain transactions with the Central Bank of Iran under limited, carefully specified circumstances. GL 8 is on the OFAC website at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/gtsr_gl8.pdf, and 6 related FAQs are at https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_iran.aspx#821.

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

Jan. 14, 2020: Kuwait Airways Corporation (New Jersey) (Kuwait Airways) agreed to pay a civil penalty of $700,000 (of which $100,000 shall be suspended) to settle charges by BIS of 14 violations of EAR Sec. 760.2(a) by refusing to do business with a national or resident of a boycotted country pursuant to an agreement with a request from or on behalf of a boycotting country. Specifically, the violations consisted of 14 occasions when Kuwait Airways refused to accept individuals who were holders of Israeli passports as passengers on a Kuwait Airways flight from Kennedy Airport in New York to London Heathrow Airport.

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Feb. 11, 2020: Nicholas Hovan of New York, NY; Zhenyu Wang, a/k/a “Bill Wang,” of Dallas, TX; Robert Thwaites of Dallas, TX; Nicholas James Fuchs of Dallas, TX; and Daniel Ray Lane of McKinney, TX were arrested and charged with conspiracy and violating the International Emergency Economic Powers Act (IEEPA, 50 USC Sec. 1701 -1707) based on allegations that they conspired to arrange for the purchase of oil from the Islamic Republic of Iran, in violation of the U.S. economic sanctions imposed on Iran, for sale to a refinery in China.

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Feb. 14, 2020: Wei Sun, a former engineer at Raytheon Missile Systems in Tucson, AZ, pleaded guilty to violating 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 carrying his company-owned laptop that included an ITAR-controlled user’s guide to a component of Raytheon’s Advanced Medium Range Air-to-Air Missile (ARAAM) as well as security software that itself was subject to the ITAR to China without the required export authorization.

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Feb. 18, 2020: Cho Yan Nathan Man, a Chinese national, was arraigned in federal court in Washington, DC on an indictment charging him with violating the AECA and the ITAR by attempting to export and/or causing the export of defense articles including enhanced night vision goggles and several types of lasers to Hong Kong without the required authorization. Man was also charged with money laundering in connection with these transactions. Man was arrested in Switzerland on June 13, 2019 and extradited to the U.S. on Feb. 14, 2020. The court ordered him to be detained pending trial.

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Feb. 24, 2020: Apichart Srivaranon, a national of Thailand, was removed to Thailand by U.S. Immigration and Customs Enforcement’s (ICE) Enforcement and Removal Operations. Srivaranon had been sentenced to 26 months in prison after pleading guilty in both Maryland and the District of Columbia to conspiring to violate the AECA and attempting to export firearms parts to Thailand. He purchased firearms parts including key components for AR-15 and M-16 military-style assault rifles on the Internet and had them sent to various co-conspirators in the U.S. who repackaged the parts, labeled and declared them on shipping documents falsely, and shipped them to Thailand via USPS and private shipping companies. He was arrested in Las Vegas, NV after flying from Thailand to attend a trade show unrelated to the charges in the case.

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Feb. 26, 2020: OFAC announced that Société Internationale de Télécommunications Aéronautiques SCRL (“SITA”) of Geneva, Switzerland, a service provider for the civilian air transportation industry, had agreed to pay $7,829,640 to settle its potential civil liability for 9,256 apparent violations of the GTSR. The violations involved the provision of services and software that were subject to U.S. jurisdiction that benefited SITA member airlines that had been designated as Global Terrorists.

FEBRUARY 2020 EXPORT CONTROL REGULATION UPDATES Read More »

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.

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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.

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