May 2017
This newsletter is a listing of the latest changes in export control regulations through May 31, 2017. 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
BIS Updates Information Regarding Encryption On Its Website
May 18, 2017: The Bureau of Industry and Security (BIS) updated and enhanced the encryption page of its website. This page provides many resources about encryption, including descriptions of the controls and applicable exceptions; a quick reference guide about Category 5, Part 2 of the Commerce Control List (CCL, 15 CFR Part 774, Supp. No. 1); an outline and flowcharts describing the analysis to follow for determining if and how the EAR and Cat.5, Part 2 apply to a product incorporating cryptography; and links to the applicable regulations. This resource is at https://www.bis.doc.gov/index.php/encryption-and-export-administration-regulations-ear.
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BIS Adds 16 Entities To The Entity List
May 26, 2017 – 82 Fed. Reg. 24242: BIS amended the Export Administration Regulations (EAR, 15 CFR Parts 730-774) by adding 16 entities to the Entity List (EAR Part 744, Supp. No. 4) for reasons including activities contrary to U.S. national security and foreign policy interests; procuring items on behalf of an entity already on the Entity List; and involvement in the reexportation to Iran of U.S.-origin metal alloy powders with aerospace missile and nuclear applications. The 16 entities are:
Pakistan
(1) Creative Dynamics Engineering, a.k.a., the following one alias: —Creative Dynamics. Karachi, Sindh;
(2) FACO Trading, Karachi, Sindh;
(3) Imam Group, a.k.a., the following one alias: —Pana Communication Inc., Islamabad;
(4) Interscan, Karachi, Singh;
(5) KMA International Import and Export Co., Islamabad;
(6) Makkays Hi-Tech Systems, a.k.a., the following one alias: —Zaib Electronics. Islamabad;
(7) Micado, Karachi, Singh;
(8) MSN International, Wah Cantt;
(9) Oriental Engineers, Lahore;
(10) Premier International, a.k.a., the following one alias: —Align Impex, Lahore, Pakistan; and
(11) Sumico Technologies, Lahore, Islamabad, and Karachi.
Turkey
(1) Cenk Ozturk, Tuzla, Istanbul;
(2) ERA Metalurji San. Ve Tic. Ltd. Sti., Tuzla, Istanbul; and
(3) Mehmet Cingi, Tuzla, Istanbul.
United Arab Emirates
1) Euromoto Middle East FZE, Sharjah, UAE.
For these entities, there is a license requirement for all items subject to the EAR and a license review policy of presumption of denial, and no license exceptions will be available for exports, reexports, or transfers to them. In addition, the name of one entity in two countries – China and Hong Kong – was modified: The former Alpha Lam will now be Xianfa Lin, a.k.a. Alpha Lam.
Customs and Border Protection
CBP Publishes Information On Use of DDTC Licenses For Carnet Imports
May 12, 2017: Customs and Border Protection (CBP) published a notice describing how it will process Directorate of Defense Trade Controls (DDTC) licenses for carnet importations. Special processing is necessary because carnets are not yet automated – they are paper only. The notice, CSMS (Cargo Systems Messaging System) # 17-000274, is on the CBP website at https://apps.cbp.gov/csms/viewmssg.asp?Recid=22676&page=&srch_argv=17-000274&srchtype=all&btype=&sortby=&sby= .
Department of State
DDTC Name and Address Changes Posted To Website
May 10, 11, 12, 17, and 19, 2017: DDTC posted the following name and/or address changes on its website at http://www.pmddtc.state.gov/licensing/name_change.html:
- Change in Name from Abacus Innovations Australia Pty Limited to Leidos Australia Pty Limited due to merger of Lockheed Martin (LM) subsidiary Abacus Innovations with Leidos Holdings subsidiary Leidos Australia, as part of LM’s separation of its Information Systems & Global Solutions business through a Reverse Morris Trust transaction;
- Change in Name from Rolls-Royce CDS to Rolls-Royce plc due to organizational restructure (consolidation);
- Change in Name from HP Enterprise Services LLC to Enterprise Services LLC due to merger of Computer Sciences Corp. (CSC) with Enterprise Services segment of Hewlett Packard Enterprise;
- Change in Name from HP Enterprise Services Defence & Security to Enterprise Services Defence & Security UK Ltd. due to merger of Computer Sciences Corp. (CSC) with Enterprise Services segment of Hewlett Packard Enterprise;
- Change in Name from Hewlett Packard Enterprise Services UK Ltd to EntServ UK Limited due to merger of Computer Sciences Corp. (CSC) with Enterprise Services segment of Hewlett Packard Enterprise;
- Change in Address for Systematic Software Engineering Ltd;
- Change in Address for NorthStar Aviation USA LLC;
- Change in Name from Airbus DS Optronics GmbH of Germany to HENSOLDT Optronics GmbH due to sale of Airbus’ Electronics and Border Security division to KKR & Co. L.P.;
- Change in Name from Airbus DS Optronics (Pty) Ltd. to HENSOLDT Optronics (Pty) Ltd. due to sale of Airbus’ Electronics and Border Security division to KKR & Co. L.P.;
- Change in Name from Societe Anonyme to Societe par Actions simplifiee due to change in corporate structure to simplified joint-stock company;
- Change in Name from Arianespace SA to Arianespace SAS due to change in corporate structure to simplified joint-stock company; and
- Change in Name from Fuji Heavy Industries Ltd. to SUBARU Corporation due to corporate rebranding.
Each announcement includes a link to a notice specifying the effects of the change on pending and currently approved authorizations involving the listed entity.
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DDTC Updates List of Approved Australian Intermediate Consignees
May 12, 2017: DDTC posted an updated List of Approved Australian Intermediate Consignees on its website at http://pmddtc.state.gov/treaties/documents/AS_IC_List.pdf. This list is maintained pursuant to International Traffic in Arms Regulations (ITAR, 22 CFR Parts 120-130) Sec. 126.16(k)(1)(ii)(B).
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Department of State Notifies Congress That U.S. Will Renew Sanctions Relief For Iran
May 17, 2017: The Department of State notified Congress that the U.S. will renew the sanctions relief that was granted to Iran in the Joint Comprehensive Plan of Action (JCPOA), the nuclear agreement reached with Iran in 2015. The sanctions waiver, which is required to implement the JCPOA, must be renewed every 120 days.
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Department of State Identifies Countries Not Fully Cooperating With U.S. Antiterrorism Efforts
May 26, 2017 – 82 Fed. Reg. 24424: The Secretary of State determined that the following countries are not fully cooperating with U.S. antiterrorism efforts:
- Eritrea;
- Iran;
- North Korea;
- Syria; and
- Venezuela.
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DDTC Request Public Comments On Proposed Advisory Opinion Form DS-7786
May 26, 2017 – 82 Fed. Reg. 24425: DDTC invited public comments on a proposed Form DS-7786, Request for Advisory Opinion, which will be used to request advisory opinions on matters including whether DDTC would be likely to grant a license for a particular proposed export, an interpretation of regulatory requirements, and guidance pertaining to brokering. When deployed, the form will allow users to submit requests for advisory opinions using DDTC’s recently acquired electronic case management system. Proposed Form DS-7786 is on the DDTC website at http://www.pmddtc.state.gov/FR/2017/Proposed_Form.PDF or by email request to CanfieldDP@state.gov; proposed instructions are at http://www.pmddtc.state.gov/FR/2017/Proposed_Instructions.PDF; and a supporting statement is at http://www.pmddtc.state.gov/FR/2017/Supporting_Statement.PDF. Deadline for comments is June 26, 2017.
Department of the Treasury
OFAC Updates List Of Medical Supplies Authorized For Export/Reexport To Crimea
May 23, 2017 – 82 Fed. Reg. 23716: The Office of Foreign Assets Control (OFAC) published an updated list of items defined as medical supplies that are authorized for export or reexport to the Crimea region of Ukraine without an individual license under General License 4 of the Ukraine-Related Sanctions Regulation (31 CFR Part 589). The list includes additional items and corrects a typographical error in previous versions. The list was actually revised on Aug. 12, 2016, but was not published in the Federal Register at that time. The list is on the OFAC website at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/med_supplies_ukr.pdf,
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| 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
[No sanctions this month]
Fines and Penalties
April 28, 2017: Dmitrii Aleksandrovich Karpenko and Alexey Krutilin, both Russian nationals, were sentenced in U.S. District Court in Brooklyn, NY, to time served and agreed to immediate deportation to Russia based on their plea of guilty of conspiring to export microelectronics including devices used in radar and missile guidance systems to Russia without the required authorization from the Commerce Department. They allegedly used U.S.-based front companies to induce suppliers to sell controlled items to them, concealing their ultimate destinations. They were arrested Oct. 6, 2016. (See October 2016 Regulatory Update.)
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May 3, 2017: A grand jury in New Haven, CT, indicted Martin Gula, a/k/a MarkWelder, a citizen of the Slovak Republic, on two charges of violating the Arms Export Control Act (AECA, 22 USC 2778 et seq.) between May 2012 and June 2012 by attempting to arrange the export of night vision goggles and an aviator night vision system from the U.S. to the United Kingdom without the required license from the State Department. Gula was also charged with using a false U.S. passport as proof of U.S. residency and citizenship. Separately, a January 2014 indictment charging Gula with export related offenses is also pending in the Central District of California. Gula is currently being sought by law enforcement.
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May 11, 2017: Mark Komoroski of Nanticoke, PA, was arrested based on an indictment in Federal Court for the Middle District of Pennsylvania charging that he attempted to export two riflescopes to Russia without the required authorization. Komoroski was also indicted on charges of unlawfully possessing ammunition as a previously convicted felon.
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May 16, 2017: A grand jury in New Haven, CT, indicted Josef Zirnsak, a citizen of the Czech Republic, on two charges of violating the AECA between June 2011 and November 2011 by shipping an infrared dual beam aiming laser and a rifle scope from the U.S. to Germany without obtaining the required authorization from the State Department. Zirnsak is currently being sought by law enforcement.
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May 22, 2017: Gregory Allen Justice of Culver City, CA, pleaded guilty in Federal Court in Los Angeles to one count of attempting to violate the AECA and one count of attempting to commit economic espionage. Justice was an engineer who worked on military and commercial satellite programs for a cleared defense contractor. According to the plea agreement, he stole proprietary trade secrets from his employer and provided them to a person he believed was a Russian agent, but who was in fact an undercover FBI employee. The trade secrets were both proprietary and controlled under the ITAR. Justice has been in custody since his arrest in July 2016. His sentencing hearing is scheduled for September 18, 2017.
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May 23, 2017: Si Chen, a/k/a Cathy Chen of Pomona, CA, was arrested based on a 14-count indictment for violating the International Emergency Economic Powers Act (IEEPA, 50 USC Sec. 1701 et seq.), conspiracy, money laundering, making false statements on an immigration application, and using a forged passport. Chen allegedly purchased and smuggled to foreign countries EAR-controlled components used in military communications “jammers” and communications devices commonly used in space communications applications without obtaining the required authorization from the Department of Commerce. She allegedly removed the export-control warning stickers from the jammers prior to shipping and falsely valued items that were actually worth more than $100,000 at $500 on shipping paperwork.