This newsletter is a listing of the latest changes in export control regulations through July 31, 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
United Kingdom
UK Strategic Export Controls Annual Report 2020
July 27, 2021: The Export Control Joint Unit (ECJU) of the U.K. Department for International Trade published the UK Strategic Export Controls Annual Report 2020. The report, which includes a brief section on EU Exit and U.K. Legislation and other policy discussions as well as export licensing data and performance statistics, is at https://www.gov.uk/government/publications/uk-strategic-export-controls-annual-report-2020 .
U.S. Government Agencies
U.S. Government Updates the Xinjiang Supply Chain Business Advisory
July 13, 2021: Six U.S. Government agencies released an updated “Xinjiang Supply Chain Business Advisory” detailing for U.S. industry the risks and considerations for U.S. business and individuals with exposure to entities engaged in forced labor and other human rights abuses linked to Xinjiang, China. The updated advisory describes the various activities that pose opportunities for violations of U.S. laws including export controls that are inherent in participating in the supply chain to the Xinjiang Uyghur Autonomous Region and other areas of China where the Chinese government engages in abuse of Uyghurs and other ethnic groups. The Advisory focuses on topics including four primary risks of possible export control violations:
(1) Assisting in the development of surveillance tools for the Peoples Republic of China (“PRC”) government;
(2) Sourcing labor or goods from Xinjiang, or from entities outside of China that source labor from Xinjiang;
(3) Supplying U.S.-origin commodities, software, and technology to entities engaged in such surveillance and forced labor practices; and
(4) Aiding in the construction and operation of internment facilities used to detain Uyghurs and members of other Muslim minority groups, and/or in construction or operation of possibly related manufacturing facilities.
The Advisory is on the State Department website at https://www.state.gov/wp-content/uploads/2021/07/Xinjiang-Business-Advisory-13July2021-1.pdf ; the participating agencies are the Departments of Labor, State, Treasury, Commerce, and Homeland Security and the Office of the U.S. Trade Representative.
Department of Commerce – Bureau of Industry and Security
BIS Adds Four Entities In Burma To The Entity List
July 6, 2021 – 86 Fed. Reg. 35389: The Bureau of Industry and Security (BIS) amended the Export Administration Regulations (EAR, 15 CFR Parts 730-774) by adding 4 entities in Burma 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 a 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 4 entities are:
- King Royal Technologies Co.,, Ltd.;
- Myanmar Wanbao Mining Copper, Ltd.;
- Myanmar Yang Tse Copper, Ltd.; and
- Wanbao Mining, Ltd.
In the same rule, BIS also corrected the address of one already-listed entity, Myanmar Economic Corporation.
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BIS Adds 34 Entities To The Entity List
July 12, 2021 – 86 Fed. Reg. 36496: BIS amended the EAR by adding 34 entities to the Entity List under 43 entries. U.S. companies are prohibited from exporting or transferring any item subject to the EAR to any listed entity without an export license, and no license exceptions are available. The entities are:
Additions to Entity List:
- Canada
Karim Daadaa; and Modern Agropharmaceuticals & Trade Establishment
- China, People’s Republic of
Armyfly;
Beijing E-science Co., Ltd.;
Beijing Geling Shentong Information Technology Co., Ltd.;
Beijing Hileed Solutions Co., Ltd.;
Beijing Sinonet Science & Technology Co., Ltd.;
Chengdu Xiwu Security System Alliance Co., Ltd.;
China Academy of Electronics and Information Technology;
Hangzhou Hualan Microelectronics Co., Ltd.;
Info Rank Technologies;
Kindroid;
Kyland Technology Co., Ltd.;
Leon Technology Co., Ltd.;
Shenzhen Cobber Information Technology Co., Ltd.;
Shenzhen Hua’antai Intelligent Technology Co., Ltd.;
Suzhou Keda Technology Co., Ltd.;
Tongfang R.I.A. Co., Ltd.;
Urumqi Tianyao Weiye Information Technology Service Co., Ltd.;
Wingel Zhang;
Wuhan Raycus Fiber Laser Technologies Co., Ltd.;
Xinjiang Beidou Tongchuang Information Technology Co., Ltd.;
Xinjiang Lianhai Chuangzhi Information Technology Co., Ltd.;
Xinjiang Sailing Information Technology Co., Ltd.; and
Xinjiang Tangli Technology Co., Ltd.
- Iran
Payam Nabavi; and Sina Biomedical Chemistry Company
- Lebanon
Karim Daadaa; and Modern Agropharmaceuticals & Trade Establishment
- Netherlands
Suzhou Keda Technology Co., Ltd.
- Pakistan
Suzhou Keda Technology Co., Ltd.
- Russia
Andrey Leonidovich Kuznetsov;
Dmitry Alexandrovich Kravchenko
Margarita Vasilyevna Kuznetsova;
OOO Teson;
OOO Trade-Component; and Radiant Group of Companies
- Singapore
Suzhou Keda Technology Co., Ltd
- South Korea
Suzhou Keda Technology Co., Ltd.
- Taiwan
Hangzhou Hualan Microelectronics Co., Ltd.
- Turkey
Suzhou Keda Technology Co., Ltd.
- United Arab Emirates
TEM International FZC
- United Kingdom
China Academy of Electronics and Information Technology
Removal from Entity List:
- Germany:
Maintenance Services International (MSI) GmbH
Revision of Entry in Entity List:
- China
Remove Guangqi Science Co., Ltd. as an alias for Kuang-Chi Group
Removal from Unverified List (Supp. No 6 to EAR Part 744)]:
- United Arab Emirates:
TEM International FZC
Addition to Military End User List (Supp. No. 7 to EAR Part 744):
- Russia:
JSC Kazan Helicopter Plant Repair Service
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BIS Adds Six Entities In Russia To The Entity List
July 7, 2019 – 86 Fed. Reg. 37901: BIS added six entities in Russia to the Entity List based on the determination that that they had acted contrary to U.S. national security or foreign policy interests. A license with a review policy of presumption of denial will be required for exports, reexports, and transfers (in-country) to these entities of all items subject to the EAR, and no license exceptions will be available. The six added entries are:
- Aktsionernoe Obshchestvo AST;
- Aktsionernoe Obshchestvo Pasit;
- Aktsionernoe Obshchestvo Pozitiv Teknolodzhiz;
- Federal State Autonomous Institution Military Innovative Technopolis Era;
- Federal State Autonomous Scientific Establishment Scientific Research Institute Specialized Security Computing Devices and Automation; and
- Obshchestvo S Ogranichennoi Otvetstvennostyu NEOBIT
The action also corrected the Entity List entry for the Federal Security Service (FSB) by changing the License Requirement column to recognize Office of Foreign Assets Control (OFAC) General License 1B and amending the effective date from February 2, 2017, to the current effective date of March 2, 2021.
Department of State
DDTC Name And Address Changes Posted To Website
July 2 12, 14, 16, 22, and 30, 2021: The Directorate of Defense Trade Controls (DDTC) posted the following name and/or address changes on its website at https://www.pmddtc.state.gov/ddtc_public?id=ddtc_kb_article_page&sys_id=bd72ca0adbf8d30044f9ff621f961981:
- Change in Address for Castalia Systems, LLC;
- Change in Name from SCISYS Group PLC to CGI IT UK Limited due to acquisition of SCYSYS by CGI;
- Change in Address for Tecnilogica Ecosistemas, S.A.;
- Change in Address for Wescam Inc.;
- Change in Name from FLIR Systems Inc. to Teledyne FLIR, LLC due to acquisition of FLIR by Teledyne;
- Change in Name of FLIR entities due to acquisition of FLIR by Teledyne as follows:
- FLIR Detection, Inc. to Teledyne FLIR Detection, Inc. (Incorp. in DE);
- FLIR EOC, LLC to Teledyne FLIR EOC, LLC (Incorp. in CA);
- FLIR Government Systems, Inc. to Teledyne FLIR Government Systems, Inc. (Incorp. in DE);
- FLIR Surveillance, Inc. to Teledyne FLIR Surveillance, Inc. (Incorp. in DE); and
- FLIR Unmanned Ground Systems, Inc. to Teledyne FLIR Unmanned Ground Systems, Inc. (Incorp. in DE)
- Change in Name from Saudi Prerogative Company to Vision 30 Systems for Military Equipment.
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 Its Golden Sentry Report And Blue Lantern Report
July 6, 2021: DDTC posted on its website and provided to Congress two End Use Monitoring (EUM) reports: 1) the Golden Sentry Report – End Use Monitoring of Defense Articles and Services – Government-to-Government Services; and 2) the Blue Lantern Report – End Use Monitoring of Defense Articles. The Golden Sentry Report, on the DDTC website at https://www.pmddtc.state.gov/sys_attachment.do?sysparm_referring_url=tear_off&view=true&sys_id=5c52d53f1b01b8502b6ca932f54bcbd0, covers actions taken in FY 2020 by the Department of Defense to comply with EUM requirements of the Foreign Assistance Act (FAA) of 1961 or the Arms Export Control Act (AECA, 22 USC 2778 et seq.), Sec. 40A, for defense articles and defense services transferred through the Foreign Military Sales (FMS) program. The Blue Lantern Report, on the DDTC website at https://www.pmddtc.state.gov/sys_attachment.do?sysparm_referring_url=tear_off&view=true&sys_id=1852993f1b01b8502b6ca932f54bcb66, covers actions taken in FY 2020 by the Department of State to monitor the end-use of defense articles, technical data, defense services, and brokering activities exported through commercial channels and subject to Department of State licenses or other approvals under AECA Sec. 38.
Department of the Treasury
OFAC issues Venezuela-related General License (GL) 40 Regarding Liquefied Petroleum Gas
July 12, 2021: OFAC issued Venezuela-related General License (GL) 40, “Authorizing Certain Transactions Involving the Exportation or Reexportation of Liquefied Petroleum Gas to Venezuela,” and related new Frequently Asked Questions (FAQs) 914 and 915. GL 40 is limited to certain transactions related to the exportation or reexportation of liquefied petroleum gas to Venezuela, involving the Government of Venezuela or Petróleos de Venezuela, S.A. (PdVSA). GL 40 is valid until July 8, 2022.
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OFAC Publishes Ukraine-Related General License (GL) 15J
July 28, 2021 – 86 Fed. Reg. 40310: OFAC published Ukraine-related GL 15J, which authorizes certain transactions and activities otherwise prohibited by the Ukraine-Related Sanctions Regulations, 31 CFR part 589 (URSR), that are ordinarily incident and necessary to the manufacture and sale of existing and new models of vehicles, components, and spare parts, including automobiles, light commercial vehicles, trucks, buses, engines/powertrains, produced by GAZ Group, or any entity in which GAZ Group owns, directly or indirectly, a 50 percent or greater interest. GL 15J, which was originally issued on OFAC’s website on Dec. 23, 2020, expires on Jan. 26, 2022. In the same announcement, OFAC published earlier versions of GL 15, which were previously issued on the OFAC website and subsequently expired. Note: In a similar action on July 28, 2021 (86 Fed. Reg. 40316), OFAC published Ukraine-related GL 13P, covering certain financial transactions relating to GAZ Group, and earlier, since-expired versions of GL 13. GL 13P will expire Jan. 26, 2022.
| LATEST SANCTIONS FINES & PENALTIES |
This section of our newsletter provides information on the latest sanctions, fines and penalties for export violations or matters of non-compliance with the ITAR or EAR issued by the US government enforcement agencies. It is provided as a service to exporters and associates of FD Associates to remind them of the importance of extreme due diligence in all international trade and export compliance matters, particularly those involving exports subject to the ITAR or the EAR. Don't let this happen to you or your company! Call us with questions or concerns at 703-847-5801 or email info@fdassociates.net.
Fines and Penalties
July 19, 2021: Ge Songtao of Nanjing, China was sentenced to 3 years and 6 months in federal prison and ordered to forfeit $114,834.27 for conspiring to submit false export information through the Automated Export System (AES) and to export maritime raiding craft and engines to China fraudulently. Ge, the chairman of Shanghai Breeze Technology Co. Ltd. of Shanghai, China, wanted to find a source of supply for U.S.-manufactured combat rubber raiding craft equipped with multi-fuel engines that are used by the U.S. military and can be operated after being launched from a submerged submarine or dropped into the ocean by an aircraft. No comparable engine is manufactured in China. A U.S.-based employee of Ge’s identified a supplier and having been told that a U.S. manufacturer would be more likely to be willing to sell to a customer in Hong Kong than to a customer in mainland China, told the supplier that the purchaser was an entity called United Vision Limited in Hong Kong, thereby causing false information to be entered into the AES. Ge arranged for payment through a Hong Kong entity. However, the plot failed, and Ge and his co-defendant employees were arrested before the raiding craft and engines were exported.
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July 19, 2021: BIS announced an administrative settlement with Alfa Laval US (AL-US) of Richmond, VA and Alfa Laval Middle East Ltd. (AL-ME) of Dubai, United Arab Emirates (UAE) whereby AL-US operations, Alfa Laval Tank, Inc. located in Exton, PA (AL-Tank) and AL-ME will pay a civil penalty of $215,000 to resolve allegations that Alfa operations in the U.S. exported two Alfa Laval Gamajet 10 automated tank cleaning machines used to clean underground storage tanks, valued at approximately $18,585 and designated under the EAR as EAR99, falsely listing a UAE company as the ultimate consignee although they had been informed of the U.S. embargo on Iran and they knew and had reason to know that the items were destined for Iran and would ultimately be shipped there.
The apparent violations were committed between May 2015 and March 2016 when AL Tank, which manufactures and sells storage tank cleaning equipment, referred a known Iranian business opportunity to its foreign affiliate in Dubai, UAE. The foreign affiliate then orchestrated a scheme to export goods from the United States to Iran and did so by using AL Tank to export its Gamajet brand cleaning units to Iran via the “UAE end user”.
The unlicensed shipment was discovered when BIS conducted a post-shipment verification at AL’s distributor in the UAE. Settlement of related charges by OFAC was a condition of this settlement with BIS. (See next item.)
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July 19, 2021: OFAC announced that AL-ME had agreed to pay $415,695 to settle its potential civil liability for apparent violations of the Iranian Transactions and Sanctions Regulations (ITSR, 31 CFR Part 560) committed when AL-ME conspired with Dubai- and Iran-based companies to have exported Gamajet storage tank cleaning units from the U.S. to Iran, thereby causing its US.-based affiliate to falsely list a UAE-based company as the end-user on its export documentation.
Separately, OFAC also announced a $16,875 settlement with AL-US to cover AL-US’ potential liability for apparent violations committed by AL-Tank when it referred an Iranian business opportunity to its foreign affiliate in Dubai, and the affiliate then orchestrated a scheme for an illegal export to Iran.
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July 22, 2021: Arash Yousefi Jam, an Iranian national living in Ontario, Canada, pleaded guilty to charges of conspiring to export U.S. goods to Iran in violation of the International Emergency Economic Powers Act (IEEPA, 50 USC Sec. 1701-1707) and the ITSR. The conspiracy included actual shipments of at least nine electrical discharge boards, one CPU board, two servo motors and two railroad crankshafts to Iran via the UAE. Jam and co-conspirators allegedly also hid the ultimate destination of the shipments by ensuring that payment for the goods came from banks outside Iran.
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July 23, 2021: Yi-Chi Shih, an electrical engineer of Hollywood Hills, CA, was sentenced in U.S. District Court in Los Angeles, CA to 63 months in federal prison and ordered to pay $362,698 in restitution to the Internal Revenue Service and a $300,000 fine based on his conviction of conspiracy to violate the IEEPA, the EAR, and several other federal laws. The conspiracy involved a complex scheme to illegally obtain broadband, high-powered semiconductor chips known as monolithic microwave integrated circuits (MMICs) and export them to AVIC 607, a state-owned entity in China. To accomplish this, he defrauded a U.S. company that manufactured MMICs out of the confidential and proprietary business information that was part of its MMIC manufacturing services, gaining access to the victim company’s web portal through an associate who posed as a domestic customer seeking to obtain custom-designed MMICs that would be used solely in the United States. Shih financed the manufacturing of the MMICs by the victim U.S. company by funneling funds provided by Chinese entities through a U.S. company that he controlled. Shih was convicted in July 2019 after a seven-week jury trial. (See July 2019 Regulatory Update.) An associate, Kiet Mai, pleaded guilty in December 2018 to one felony count of smuggling and was sentenced to 18 months’ probation and a $5,000 fine.