February 2021
This newsletter is a listing of the latest changes in export control regulations through February 28, 2021. The newsletter is provided as a complimentary service to assist exporters with their ITAR and EAR export compliance responsibilities. It provides a summary of recent changes to export control regulations or other regulatory matters of interest that may impact your company’s international trade and export compliance functions. Call us at 703-847-5801 or email info@fdassociates.net with questions or comments.
See also our “Latest Sanctions Fines & Penalties” section below for an update on companies and persons denied export privileges by the United States Government.
REGULATORY UPDATES
The President
President Biden Issues Executive Order 14014, “Blocking Property With Respect to the Situation in Burma.”
Feb. 12, 2021 – 86 Fed. Reg. 9429: President Biden issued Executive Order 14014, “Blocking Property With Respect to the Situation in Burma,” authorizing sanctions on a wide range of persons and government entities found to be involved in the February 1, 2021, coup in which the military overthrew the democratically elected civilian government of Burma (Myanmar) and undermined the country’s democratic transition and rule of law.
Department of Commerce – Bureau of Industry and Security
BIS Limits Exports And Reexports Of Sensitive Goods To Burma’s Military And Security Services
Feb. 18, 2021 – 85 Fed. Reg. 10011: In response to the military coup in Burma (Myanmar), the Bureau of Industry and Security (BIS) took action to limit exports and reexports of sensitive goods to Burma’s military and security services. Specifically, BIS –
- announced that it will apply a presumption of denial for items subject to the Export Administration Regulations (EAR, 15 CFR Parts 730-774) requiring a license for export, reexport, or in-country transfers when destined to Burma’s Ministry of Defense, Ministry of Home Affairs, armed forces, and security services, and
- suspended the use of the following License Exceptions (LEs) that would otherwise be available to Burma as a result of its current placement in Country Group B:
o Shipments to Country Group B Countries (GBS, EAR Sec. 740.4);
o Technology and Software under Restriction (TSR, EAR Sec. 740.6);
o Shipments of Limited Value (LVS, EAR Sec. 740.3); and
o Computers (APP, EAR Sec. 740.7).
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BIS Posted Two Sets Of FAQs Regarding Changes In The Treatment Of Exports To Hong Kong
Feb. 19, 2021: BIS posted two sets of Frequently Asked Questions (FAQs) regarding changes in the treatment of exports to Hong Kong under the Export Administration Regulations (EAR, 15 CFR Parts 730-774) in light of the shift in Hong Kong’s status under the EAR from being treated as a separate destination to being treated as a part of China. A set of five FAQs clarifying the effects of this change is on the BIS website at https://www.bis.doc.gov/index.php/documents/pdfs/2719-new-china-hong-kong-faqs/file, and a three-page collection of “Revised China/Hong Kong Recordkeeping Frequently Asked Questions (FAQs)” is at https://www.bis.doc.gov/index.php/documents/pdfs/2720-china-hong-kong-recordkeeping-faqs/file.
Government Accountability Office
GAO Report On The Humanitarian Impact Of U.S. Sanctions On Venezuela
Feb. 4, 2021: The U.S. Government Accountability Office released a report on the humanitarian impact of U.S. sanctions on Venezuela titled, “Venezuela: Additional Tracking Could Aid Treasury’s Efforts to Mitigate Any Adverse Impacts U.S. Sanctions Might Have on Humanitarian Assistance” (GAO-21-239, https://www.gao.gov/assets/720/712232.pdf). The report examined how the Venezuelan economy performed before and after sanctions were imposed in 2015, the steps U.S. agencies have taken to identify and mitigate the sanctions’ potential negative humanitarian consequences, and the impact of the sanctions on the U.S. oil industry. As the title of the report indicates, the report was unable to draw broad conclusions, as the agencies involved have not collected adequate data.
Department of State
DDTC Name And Address Changes Posted To Website
Feb. 4, 11, and 16, 2021: The Directorate of Defense Trade Controls (DDTC) posted the following name and/or address changes on its website at
- Change in Name of Hydroid Inc. to HII Unmanned Systems due to acquisition of Hydroid, Inc. by Huntington Ingalls Industries;
- Change in Name of Aeroflex Wichita Inc. to Viavi Solutions LLC due to corporate reorganization;
- Change in Name from Fuji Xerox Service Link Co., Ltd. to FUJIFILM Service Link due to corporate rebranding;
- Change in Name from Bell Helicopter Co., Ltd. to Bell Textron Co., Ltd. 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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DOD Adjusts The Civil Penalty For Violations Of The ITAR
Feb. 2, 2021 – 86 Fed. Reg. 7804: The State Department made its annual inflationary adjustment of civil monetary penalties (CMPs), based on guidance from the Office of Management and Budget. The maximum CMP for violations of the International Traffic in Arms Regulations (ITAR, 22 CFR Parts 120-130) was increased from $1,183,736 to $1,197,728. The new amount will apply only to penalties assessed on or after Feb. 2, 2021, regardless of the date on which the violation occurred.
Department of the Treasury
OFAC Issues Venezuela-related General License (GL) 30A, “Authorizing Certain Transactions Necessary to Port and Airport Operations.”
Feb. 2, 2021: The Office of Foreign Assets Control (OFAC) issued Venezuela-related General License (GL) 30A, “Authorizing Certain Transactions Necessary to Port and Airport Operations.” GL 30A authorized payments to Instituto Nacional de los Espacios Acuaticos (INEA), Venezuela's major port operator. OFAC’s designation of INEA as a Specially Designated National (SDN) on Jan. 19, 2021, had triggered concerns about humanitarian and other imports into the country. GL 30A is on the Treasury Department website at https://home.treasury.gov/system/files/126/venezuela_gl30a.pdf.
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OFAC Revokes Restrictions On Ansarallah As A Foreign Terrorist Organization And A Specially Designated Global Terrorist
Feb. 16, 2021: In an announcement about actions regarding Yemen (https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions/20210216), OFAC referenced the revocation by the Department of State of the designations of Ansarallah as a Foreign Terrorist Organization and a Specially Designated Global Terrorist (see Feb. 16, 2021, State Department action in Sanctions section below) and noted that U.S. persons no longer require authorization from OFAC to engage in transactions or activities with Ansarallah, provided such activities do not involve blocked persons or otherwise prohibited activities. Accordingly, OFAC revoked the following Counter Terrorism-related general licenses: GL 9, “Official Business of the United States Government,” GL 10, “Official Activities of Certain International Organizations,” GL 11, “Certain Transactions in Support of Nongovernmental Organizations’ Activities in Yemen,” and GL 12, “Transactions Related to the Exportation or Reexportation of Agricultural Commodities, Medicine, Medical Devices, Replacement Parts, and Components or Software Updates” (all of which OFAC had issued Jan.19, 2021) and GL 13, “Authorizing Transactions Involving Ansarallah,” which it had issued Jan. 25, 2121. OFAC also removed FAQs 875, 876, and 877 from its website.
| 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
Feb. 1, 2021 – 86 Fed. Reg. 7693: BIS denied the export privileges of Issam Hamade of Beirut, Lebanon, for 10 years based on his April 27, 2020 conviction in U.S. District Court for the District of Minnesota of violating 18 U.S.C. 371 by conspiring to export parts and technology, including inclusion in unmanned aerial vehicles from the United States to Lebanon, specifically to Hizballah, without obtaining the required export licenses under the EAR or the ITAR. In the criminal case, Hamade was sentenced to time served and a $100 special assessment.
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Feb. 1, 2021 – 86 Fed. Reg. 7695: BIS denied the export privileges of Irma Lizette Trevizo of Federal Correction Institution Victorville Medium II, Adelanto, CA, for 10 years based on her April 30, 2019, conviction in the U.S. District Court for the Western District of Texas of violating 18 U.S.C. 371 by knowingly and willfully conspiring to smuggle firearms and ammunition from the U.S. to Mexico. In the criminal case, Trevizo was sentenced to 24 months in prison, supervised release for two years, and a $100 special assessment.
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Feb. 24, 2021 – 85 Fed. Reg. 11223: BIS denied the export privileges of Fahad Saleem Kharbey of Federal Medical Center, Lexington, KY for 7 years based on his May 31, 2019 conviction in U.S. District Court for the Middle District of Florida of violating 18 U.S.C. 554(a) (Smuggling goods from the U.S.) by fraudulently and knowingly exporting firearms and magazines, designated as defense articles on the U. S. Munitions List (USML, 22 CFR Sec. 121.1), from the U.S. to Dubai, United Arab Emirates (UAE), without having first obtained a license or other approval from the U.S. Department of State. In the criminal case, Kharbey was sentenced to 36 months in prison, supervised release for three years, a $200 special assessment, and restitution of $755,281.13.
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Feb. 24, 2021 – 85 Fed. Reg. 11224: BIS denied the export privileges of Siddharth Bhatt, of Chicago, IL and Mumbai, India, for 10 years based on his Sep. 16, 2020, conviction in U.S. District Court for the District of Columbia of violating the International Emergency Economic Powers Act (IEEPA, 50 USC Sec. 1701 -1707) by willfully exporting, attempting to export, and causing to be exported a U.S.-origin thermal imaging camera from the U.S. to the UAE without having first obtained the required license from the U.S. Department of Commerce. Bhatt was sentenced to probation for a term of 48 months, a $100 assessment, and a fine of $2,500.
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Feb. 24, 2021 – 86 Fed. Reg. 11225: BIS denied the export privileges of Jesse Rodriguez of Brownsville, TX for 5 years based on his Jan. 16, 2019, conviction in U.S. District Court for the Southern District of Texas of violating 18 U.S.C. 554(a). Specifically, Rodriguez was convicted of fraudulently and knowingly facilitating the transportation, concealment, and sale of merchandise, including .223 and 7.62 caliber ammunition, which were defense articles as defined under the USML, in violation of 18 U.S.C. 554. In the criminal case, Rodriguez was sentenced to 30 months in prison, supervised release for one year, and a $100 special assessment.
Department of State
Feb. 16, 2021 – 86 Fed. Reg. 9568: In a single-sentence notification in the Federal Register, Secretary of State Anthony Blinken revoked the designation of Ansarallah – the formal name of the political and religious armed rebel group in Yemen better known as Houthi – as a Foreign Terrorist Organization, changing a long-standing U.S. policy on the conflict in Yemen. Immediately following this action, Blinken revoked the designations of Ansarallah and three other persons as Specially Designated Global Terrorists.
Fines and Penalties
Jan. 13, 2021: Mediterranean Shipping Company (USA) Inc. of Chicago, IL, agreed to pay a civil penalty of $81,000 and complete an internal audit of its antiboycott compliance program to settle charges by BIS of eight violations of 15 CFR Sec. 760.2(d) (Furnishing Information About Business Relationships With Boycotted Countries or Blacklisted Persons) and two violations of 15 CFR Sec. 760.5 (Failing to Report the Receipt of a Request To Engage in a Restrictive Trade Practice of Foreign Boycott Against a Country Friendly to the U.S.) The charges involved trade with Libya and Oman.
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Feb. 1, 2021: Princeton University of Princeton, NJ agreed to pay a civil penalty of $54,000, complete one external audit and one internal audit of its export compliance program, and, if the audits identify actual or potential violations, provide BIS with a detailed plan of corrective actions, and complete two reports describing enhancements to its compliance with the EAR to settle charges by BIS that on 37 occasions it had exported various strains and recombinants of animal pathogens classified under Export Control Classification Numbers (ECCNs) 1C351, 1C352, or 1C353 to various foreign research institutions without the BIS licenses required by EAR Sec. 742.2. The illegally exported items had a total value of approximately $27,000. The university voluntarily self-disclosed the potential violations and cooperated with the investigation.