This newsletter is a listing of the latest changes in export control regulations through May 31, 2023. 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 Continues National Emergencies With Respect To Sudan
May 4, 2023: President Biden issued Executive Order 14098 that expanded the scope of the national emergency declared in Executive Order 13067 of November 3, 1997 (Blocking Sudanese Government Property and Prohibiting Transactions With Sudan), and expanded by Executive Order 13400 of April 26, 2006 (Blocking Property of Persons in Connection With the Conflict in Sudan’s Darfur Region), finding that the situation in Sudan, including the military’s seizure of power in October 2021 and the outbreak of inter-service fighting in April 2023, constitutes an unusual and extraordinary threat to the national security and foreign policy of the United States. The Executive Order imposed sanctions on certain persons destabilizing Sudan and undermining the goal of a democratic transition.
https://ofac.treasury.gov/media/931716/download?inline and https://ofac.treasury.gov/recent-actions/20230504
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President Biden Continues National Emergencies With Respect To The Central African Republic
May 11, 2023: 88 Fed. Reg. 30637: On May 12, 2014, by Executive Order 13667, the President declared a national emergency pursuant to the International Emergency Economic Powers Act (50 U.S.C. 1701–1706) to deal with the unusual and extraordinary threat to the national security and foreign policy of the United States constituted by the situation in and in relation to the Central African Republic, which has been marked by a breakdown of law and order; intersectarian tension; the pervasive, often forced recruitment and use of child soldiers; and widespread violence and atrocities, including those committed by Kremlin-linked and Yevgeniy Prigozhin-affiliated entities such as the Wagner Group, and which threatens the peace, security, or stability of the Central African Republic and neighboring states.
The situation in and in relation to the Central African Republic continues to pose an unusual and extraordinary threat to the national security and foreign policy of the United States. For this reason, the national emergency declared in Executive Order 13667 on May 12, 2014, to deal with that threat must continue in effect beyond May 12, 2023. Therefore, in accordance with section 202(d) of the National Emergencies Act (50 U.S.C. 1622(d)), President Biden continued for one year the national emergency declared with respect to the Central African Republic.
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President Biden Continues National Emergencies With Respect To The Unrestricted Acquisition And Use Of Certain Information And Communications Technology And Services Transactions
May 11, 2023: 88 Fed. Reg. 30635: On May 15, 2019, by Executive Order 13873, the President declared a national emergency pursuant to the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.) to deal with the unusual and extraordinary threat to the national security, foreign policy, and economy of the United States constituted by the unrestricted acquisition and use of certain information and communications technology and services transactions.
The unrestricted acquisition or use in the United States of information and communications technology or services designed, developed, manufactured, or supplied by persons owned by, controlled by, or subject to the jurisdiction or direction of foreign adversaries augments the ability of these foreign adversaries to create and exploit vulnerabilities in information and communications technology or services, with potentially catastrophic effects. This threat continues to pose an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States. For this reason, the national emergency declared on May 15, 2019, must continue in effect beyond May 15, 2023. Therefore, in accordance with section 202(d) of the National Emergencies Act (50 U.S.C. 1622(d)), President Biden continued for one year the national emergency declared in Executive Order 13873 with respect to securing the information and communications technology and services supply chain.
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President Biden Continues National Emergencies With Respect To Yemen
May 15, 2023: 88 Fed. Reg. 31141: In accordance with section 202(d) of the National Emergencies Act (50 U.S.C. 1622(d)), President Biden has continued for one year the national emergency declared in Executive Order 13611 of May 16, 2012, with respect to Yemen.
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President Biden Continued The National Emergency With Respect To The Stabilization Of Iraq
May 17, 2023: 88 Fed. Reg. 31601: President Biden Continued The National Emergency With Respect to the Stabilization of Iraq for one (1) year.
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Department of State, Directorate of Defense Trade Controls (DDTC)
DDTC Name And Address Changes Posted To Website
May 3 through 31, 2023: The Directorate of Defense Trade Controls (DDTC) posted the following name and/or address changes on its website at
- Change in Name from Hawker Pacific (Malaysia) SDN. BHD. to Jet Aviation (Malaysia) MRO SDN. BHD. due to company reorganization;
- Change in Address from Sabena Technics ATP, formerly at 350, avenue Jean René Guillibert Gautier de la Lauzière, ZAC de Pichaury II, Parc du Golf Bâtiment 7, 13290 Aix-enProvence, France to Sabena technics ATP at Hangar Boussiron, Route de la Plage, 13700 Marignane, France;
- Change in Address from Leonardo Electronics US Inc., 2345 Crystal Drive, Suite 901, Arlington, Virginia 22202, U.S. to 1650 Tysons Boulevard, Suite 700, McLean, Virginia, 22102;
- Change in Name from Meta Mission Data Ltd to Metrea Mission Data Ltd. due to corporate reorganization;
- Changes in Names and Ownership for Raytheon Anschutz GmbH due to acquisition by DMB Dr. Dieter Murmann Beteiligungsgesellschaft mbH:
| Old Name | New Name |
| Raytheon Anschuetz GmbH Portsmouth Office Raytheon Technologies | Anschuetz UK Ltd. |
| Raytheon Anschütz GmbH | Anschuetz GmbH |
| Raytheon Anschuetz do Brasil Sistemas Marítimos Ltda. | Anschuetz do Brasil Sistemas Maritimos Ltda. |
| Raytheon Anschuetz Singapore Pte. Ltd. | Anschuetz Singapore Pte Ltd. |
- Changes in Names and Ownership for Cobham Aviation Services Australia’s Special Mission business due to acquisition by Leidos:
| Old Name | New Name |
| Cobham Aviation Services Pty Ltd | Leidos Airborne Solutions Australia Pty Ltd |
| Cobham SAR Services Pty Ltd | Leidos SAR Services Pty Ltd |
| Cobham NAS Pty Ltd | Leidos NAS Pty Ltd |
- Change in Name and Ownership from Apsys Risk Engineering GmbH to Airbus Protect GmbH due to merger;
- Change in Name of Leonardo DRS, Inc.’s Israeli subsidiary company, from RADA Electronic Industries Ltd to DRS RADA Technologies Ltd. due to corporate rebranding;
- Change in Name and Address from General Electric do Brasil Ltda. formerly at Av. Magalhaes de Castro, 4800 Continental Tower, Sao Paulo, Brazil to GE Celma LTDA at Rua Alice Herve 356, Bingen, Petropolis, RJ 25669-900 Brazil due to corporate rebranding;
- Change in Name from Thales Programas De Electrónica Y Comunicaciones SAU to Thales España Sistemas SAU due to corporate rebranding; and
- Change in Name from SPX Corporation to SPX Technologies, Inc. due to corporate rebranding.
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The Directorate Of Defense Trade Controls Posted Five Additional FAQs Regarding The Use Of USML Category XXI In The Automated Export System
May 3, 2023: Directorate of Defense Trade Controls (DDTC) posted five additional Frequently Asked Questions regarding the use of USML Category XXI in the Automated Export System (AES).
- When can I use USML Category XXI to export my commodity?
- Can I use a USML Category XXI determination number that has been assigned to a different commodity?
- If an item is not described in any USML category, may I then self-classify it as USML Category XXI on the license?
- Who do I contact if the Automated Export System (AES) is not accepting my DDTC Determination Number for USML Category XXI?
- Who has the authority to determine that an item or service is included in USML Category XXI?
See the information below regarding the U.S. Census Bureau’s Notice of Proposed Rulemaking (NPRM) for the collection of a new data element – USML Category XXI.
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The Directorate Of Defense Trade Controls (DDTC) Released An Update To The “Guidance For USPAB Authorization Requests”
May 23, 2023: The Directorate of Defense Trade Controls (DDTC) has released an update to the “Guidance for USPAB Authorization Requests” document. The update (v. 1.1) includes several clarifications, with the most significant being the following:
- Support documents are to be submitted in PDF format;
- Clarification on how to identify USML defense service categories and related USML commodity categories in the submission letter;
- Updated guidance on preparing the DS-6004 (Part 4 of the guidance document), particularly the sections on commodity information (blocks 5-6) and blocks 8-10; and
- Reiterates that applicants are to address periods of U.S. residency even if they have never lived in the U.S.
- Reorganizes the instructions in Section II.A to highlight that defense services are to be listed in BOLD and that the scope of defense services is limited to the specific defense articles identified in the submission.
Additionally, the USPAB submission letter template and the sample ITAR §126.13 certification letter for USPAB requests have been added as appendices to the guidance document. They will no longer be found separately on the DDTC website.
https://www.pmddtc.state.gov/sys_attachment.do?sys_id=f72d111c1b43a550d1f1ea02f54bcbdc
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The Department Of State Certified To Congress Certain Countries Are Not Cooperating Fully With United States Antiterrorism Efforts
May 23, 2023: 88 Fed. Reg. 33184: Pursuant to section 40A of the Arms Export Control Act (22 U.S.C. 2781), and Executive Order 13637, as amended, Secretary of State Antony Blinken has determined and certified to the Congress that the following countries are not cooperating fully with United States antiterrorism efforts: Cuba, Democratic People’s Republic of Korea (DPRK, or North Korea), Iran, Syria, and Venezuela.
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The Directorate Of Defense Trade Controls Released New FAQs Regarding The Open General License Pilot Program
May 26, 2023: The Directorate of Defense Trade Controls (DDTC) has released new frequently asked questions (FAQs) regarding the Open General License (OGL) Pilot Program. In addition, DDTC has released updated versions of previously published OGL FAQs and related factsheets.
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U.S. Department of Defense
DSCA Notifies Congress Of Potential FMS Sale To Latvia
May 2, 2023: The U.S. Department of Defense’s Defense Security Cooperation Agency (DCSA) has notified Congress that the Government of Latvia has requested to buy a Naval Strike Missile Coastal Defense System (NSM CDS), including tactical, telemetered, and training missiles; containers; mobile operational platforms; integration equipment; ordnance handling equipment (OHE); training equipment and aids; technical publications and data; training; spares; U.S. Government and contractor technical and product support or assistance; and other related elements of logistical and program support. The estimated total cost is $110 million. The principal contractor is to be determined. There are no known offset agreements proposed in connection with this potential sale.
https://www.dsca.mil/press-media/major-arms-sales/latvia-naval-strike-missile-coastal-defense-system
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DSCA Notifies Congress Of Potential FMS Sale To The Czech Republic
May 3, 2023: The U.S. Department of Defense’s Defense Security Cooperation Agency (DCSA) has notified Congress that the Government of the Czech Republic has requested to buy equipment and services to refurbish six (6) AH-1Z and two (2) UH-1Y Excess Defense Article (EDA) helicopters. This equipment and services will include twenty-two (22) T-700 GE 401C engines (16 installed, six spares); fourteen (14) Honeywell Embedded Global Positioning System Inertial Navigation Systems (EGIs) w/Precise Positioning Service (PPS) (8 installed, 6 spares); four (4) M240 machine guns; and twenty-four (24) ARC-210 COMSEC radios. Also included is communication equipment; electronic warfare systems; support equipment; spare engine containers; flight training devices; Composite Maintenance trainer; spare and repair parts; tools and test equipment; U.S. Government and contractor engineering, technical, and logistics support services; and other related elements of logistics and program support. The estimated total value is $650 million. The principal contractors will be Bell Helicopter, Textron, Fort Worth, TX, and General Electric Company, Lynn, MA. There are no known offset agreements proposed in connection with this potential sale.
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DSCA Notifies Congress Of Potential FMS Sale To Australia
May 4, 2023: The U.S. Department of Defense’s Defense Security Cooperation Agency (DCSA) has notified Congress that the Government of Australia has requested to buy Surveillance Towed Array Sensor System Expeditionary (SURTASS-E) mission systems for Vessels of Opportunity (VOO); a shore processing mission system, a spare SURTASS passive acoustic array; containers; communications parts and support equipment (Classified and Unclassified); software (Classified and Unclassified); publications (Classified and Unclassified); training; U.S. Government and contractor engineering support; and other related elements of logistics and program support. The estimated total cost is $207 million. The principal contractors will be Lockheed Martin-Syracuse, Syracuse, NY, and Lockheed Martin-Manassas, Manassas, VA. There are no known offset agreements proposed in connection with this potential sale.
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DSCA Notifies Congress Of Potential FMS Sale To Poland
May 9, 2023: The U.S. Department of Defense’s Defense Security Cooperation Agency (DCSA) has notified Congress that the Government of Poland has requested to buy thirty-four (34) AN/AAQ-33 Sniper Advanced Targeting Pods (ATP) with Shipping Containers. Also included are system support and support equipment; spare parts, consumables, accessories, and repair and return support; integration and test equipment and support; unclassified software delivery and support; unclassified Computer Program Identification Number (CPIN) systems; unclassified publications and technical documentation; personnel training and training equipment; U.S. Government and contractor engineering, technical and logistics support services; and other related elements of logistical and program support. The estimated total cost is $124.7 million.
https://www.dsca.mil/press-media/major-arms-sales/poland-sniper-advanced-targeting-pods
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DSCA Notifies Congress Of Potential FMS Sale To Slovakia
May 11, 2023: The U.S. Department of Defense’s Defense Security Cooperation Agency (DCSA) has notified Congress that the Government of Slovakia has requested to buy one hundred ninety-two (192) M1278A1/A2 Heavy Gun Carriers Joint Light Tactical Vehicles (JLTVs) as well as M153 Common Remote Weapons Stations (CROWS) with Display and Control Panels (DCP); M2 Quick Change Barrels (QCB) .50 caliber machine guns; MK19 40mm grenade launchers; M2A1 machine guns; M4A1 Joint Chemical Agent Detectors; AN/VAS-5B(V)2 Driver’s Vision Enhancers (DVE); JLTV kits; special tools to support the JLTV; JLTV spare parts; M205 gun mounts; basic issue items for CROWS; CROWS DCP retrofit kits; AN/VRC-104 radio kits; 16 port network switch kits; Silent Watch energy storage kits; DVE installation kits; M4A1 detector kits; M1114 turret rings and hatches; Maintenance Support Devices (MSD) with wireless at-platform test sets; Driver’s Vision Enhancer (DVE) sensor modules; display control modules; bracket assembly; electronics components assembly; CROWS appended trainers; CROWS diagnostic kits; CROWS maintenance tool sets; M2 Small Arms Tool Kits; Small Arms MK19 Tool Kits; M2 spare parts; MK93 weapon mounts; Toughbook laptops with interactive electronic technical manuals (IETM) and cables; JLTV contractor spare parts support; CROW Systems spare parts support; Maintenance Support Items (MSI) in support of MK19; MK19 Mod III spare parts support; CROWS spare parts; CROWS Basic Issue Items (BII) boresight kit components; Total Package Fielding; Field Service Representative support; U.S. government technical assistance; training; technical publications/manuals; and other related elements of logistics and program support. The estimated cost is $250 million.
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DSCA Notifies Congress Of Potential FMS Sale To Germany
May 11, 2023: The U.S. Department of Defense’s Defense Security Cooperation Agency (DCSA) has notified Congress that the Government of Germany has requested to buy sixty (60) CH-47F Block II Cargo Helicopters with customer-unique modifications; one hundred forty (140) T-55-GA-714A engines (120 installed, 20 spares); seventy-two (72) AN/AAR-57 Common Missile Warning Systems (CMWS) (60 installed, 12 spares); and two hundred eighty-four (284) AN/ARC-231A Communications Security (COMSEC) radios (240 installed, 44 spares). Also included are AN/AVR-2B Laser Detecting Sets; AN/APR-39C(V)1 Radar Detecting Sets; AN/ARC-220 High Frequency (HF) radios with electronic counter-countermeasures (ECCM); military Precise Positioning Service (PPS) (to include SAASM or M-Code); Digital Advanced Flight Control Systems (DAFCS); AN/APX-123A Identification Friend or Foe (IFF) transponder; AN/ARN-147 very high frequency (VHS) omnidirectional range and instrument landing system (VOR/ILS); AN/ARN-153 Tactical Air Navigation Systems (TACAN); air data computers; AN/APN-209 radar altimeter systems; AN/PYQ-10 simple key loaders; KIV-77 Mode 4/5 IFF Applique; KY-100M narrowband/wideband terminal COMSEC devices; AN/AVS-6 Night Vision Devices (NVD); IDM-401 Improved Data Modem; air-to-air refueling probes; M134 gun mounts; Infrared Suppression System (IRSS); Engine Air Particle Separator (EAPS); Ballistic Protection System (BPS) with Cockpit; cabin sides; Midas Underfloor COOLS; Extended Range Fuel System (ERFS) 800 gal and 500 gal; Forward Area Refueling Equipment (FARE); Tie Down Materiel/Helicopter Under-Slung Load Equipment (HUSLE) for internal and external loads; rotorbrake; rescue hoists; Fast Rope Insertion/Extraction System (FRIES); Electro Optical Infrared Sensors (EO/IR); crash resistant pilot and troop seats; skis; life rafts; litter straps and fittings; mission equipment (e.g., jungle penetrator; litter basket; Jacob’s ladder; Airborne Tactical Extraction Platform (AirTEP); special tools and test equipment; ground support equipment; airframe and engine spare parts; technical data; publications; Maintenance Work Orders/Engineering Change Proposals (MWO/ECPs); Repair and Return (R&R); technical assistance; airworthiness assistance; transportation of aircraft; training; flight training and maintenance trainers; and other related elements of logistics and program support. The total estimated cost is $8.5 billion. The principal contractor will be Boeing Helicopter Company, Philadelphia, PA. There are no known offset agreements proposed in connection with this potential sale.
https://www.dsca.mil/press-media/major-arms-sales/germany-ch-47f-chinook-helicopters
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DSCA Notifies Congress Of Potential FMS Sale To Ukraine
May 24, 2023: The U.S. Department of Defense’s Defense Security Cooperation Agency (DSCA) has notified Congress that the Government of Ukraine has requested to buy the National Advanced Surface-to-Air Missile System (NASAMS), which includes: one (1) AN/MPQ-64F1 Sentinel Radar. Also included are a Fire Distribution Center (FDC); canister launchers, secure communications, GPS receivers, code loaders, and cable sets; tool kits; test equipment; support equipment; prime movers; generators; technical documentation; spare parts; U.S. Government and contractor technical support; and other related elements of logistics and program support. The total estimated cost is $285 million. The principal contractor will be Raytheon Missiles and Defense, Tucson, AZ. There are no known offset agreements proposed in connection with this potential sale.
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Department of Commerce
The U.S. Department of Commerce Revised NIST 800-17
May 2023: The U.S. Department of Commerce’s National Institute of Standards and Technology (NIST) has published on its website NIST 800-171 Rev. 3 – Protecting Controlled Unclassified Information in Nonfederal Systems and Organizations. This update to NIST SP 800-171 represents over one year of data collection, technical analyses, customer interaction, redesign, and development of the security requirements and supporting information for the protection of Controlled Unclassified Information (CUI). Many trade-offs have been made to ensure that the technical and non-technical requirements have been stated clearly and concisely while also recognizing the specific needs of both federal and nonfederal organizations. Significant changes NIST SP 800-171, Revision 3 include:
- Updates to the security requirements and families to reflect updates in NIST SP 800-53, Revision 5 and the NIST SP 800-53B moderate control baseline;
- Updated tailoring criteria;
- Increased specificity for security requirements to remove ambiguity, improve the effectiveness of implementation, and clarify the scope of assessments;
- Introduction of organization-defined parameters (ODP) in selected security requirements to increase flexibility and help organizations better manage risk; and
- A prototype CUI overlay.
https://nvlpubs.nist.gov/nistpubs/SpecialPublications/NIST.SP.800-171r3.ipd.pdf
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Department of Commerce – Bureau of Industry and Security (BIS)
The Department Of Commerce Is Strengthening Its Existing Sanctions Under The EAR Against Russia And Belarus
May 23, 2023: 88 Fed. Reg. 33422: In response to the Russian Federation’s (Russia’s) ongoing aggression against Ukraine, as substantially enabled by Belarus, the Department of Commerce is strengthening its existing sanctions under the Export Administration Regulations (EAR) against Russia and Belarus, including by expanding the scope of the EAR’s Russian and Belarusian Industry Sector Sanctions and by expanding the foreign direct product rule that currently applies to Russia and Belarus to apply to the temporarily occupied Crimea region of Ukraine as well. Additionally, this rule revised recent restrictions targeting Iran’s supply of Unmanned Aerial Vehicles to Russia. This rule also refined existing export controls on Russia and Belarus. The Department of Commerce is taking these actions to enhance the effectiveness of its controls on these countries and to better align them with those implemented by U.S. allies and partners.
The rule added the remaining HTS-6 Codes under three entire harmonized tariff system chapters (Chapters 84, 85, and 90; now over 2,000 total entries) to the industrial and commercial controls listed in Supplement No. 4 to Part 746 of the EAR so that every HTS-6 Code under these three chapters is now controlled. The items added in this rule include a variety of electronics, instruments, and advanced fibers for the reinforcement of composite materials, including carbon fibers. This comprehensive approach seeks to further cut off Russia’s access to any items of potential military application within these chapters and deny Russia additional resources it needs to continue waging war, while also simplifying the compliance decisions for persons trading in these items as all items in these chapters now require a license.
The rule also added certain additional chemicals to Supplement No. 6 to part 746 of the EAR, which consists of discrete chemicals, biologics, fentanyl, and its precursors, and related equipment designated EAR99 that may be useful for Russia’s industrial capability or may be diverted from Belarus to Russia for these activities of concern.
The rule expanded the list of foreign-produced items in Supplement No. 7 to part 746 of the EAR that require a license when destined to Russia, Belarus, and Iran to make the EAR’s controls stronger, more effective, and easier to understand and further limit Iran’s ability to support Russia’s military aggression against Ukraine by providing unmanned aerial vehicles or UAVs. This addition builds on the rule issued on February 24, 2023, that created Supplement No. 7, which identifies a number of priority items of concern and that is being used to advance counter-evasion efforts.
Expanding the destination scope of the Russia/Belarus Foreign-Direct Product (FDP) Rule, as well as other conforming changes. The rule applies the Russia/Belarus FDP Rule to the temporarily occupied Crimea region of Ukraine, thereby making it more difficult for items to be procured for Russia’s use in Crimea in support of its ongoing military aggression in Ukraine.
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U.S. Census Bureau
The U.S. Census Bureau Announced The Proposal For The Collection Of A New Data Element – USML Category XXI
May 3, 2023: The Department of Commerce, U.S. Census Bureau published a Notice of Proposed Rulemaking (NPRM). This NPRM announces the proposal for the collection of a new data element – USML Category XXI Determination Number – in the Automated Export System (AES) when USML Category XXI is selected under the DDTC United States Munitions List (USML) Category Code field.
This Department of State, Directorate of Defense Trade Controls (DDTC) proposed collection will help ensure that only commodities that have been determined to be controlled in USML Category XXI by the Director of DDTC’s Office of Defense Trade Controls Policy can be declared as such in AES. Technical details on the new data element and new response message are found below. The AESDirect web application was updated on May 9, 2023, to accept the proposed new data element and return the new response message.
https://www.govinfo.gov/content/pkg/FR-2023-05-03/pdf/2023-09322.pdf)
Editors note: see the article on page 4.
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The U.S. Census Bureau and DDTC Revert The AES Requirement of USML Category XXI And Response Message 5C2
May 9, 2023: the US Census Bureau, US Customs and Border Protection, and the Directorate of Defense Trade Control reverted the Automated Export System (AES) requirement of the Category XXI Determination Number data element when the USML Category XXI is entered. Additionally, the related Response Message 5C2 in the AES has been disabled. The original intent of the AES Broadcast on May 3, 2023, was to raise awareness to filers of USML Category XXI items of the Notice of Proposed Rulemaking (NPRM).
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AES Tips On How To Address The Most Frequent AES Response Messages
May 18, 2023: When a shipment is filed to the AES, a system response message is generated and indicates whether the shipment has been accepted or rejected. If the shipment is accepted, the AES filer receives an Internal Transaction Number (ITN) as confirmation. Though the shipment is accepted, the filer may still receive a Verify Message, Compliance Alert, Informational Message, or Warning Message along with their ITN. However, if the shipment is rejected, a Fatal Error notification is received and must be corrected to receive a valid ITN.
To help you take the appropriate action for the different AES Response Messages, here are some tips on how to address the most frequent messages that were generated in AES.
Response Code: 256
Narrative: USPPI Postal Code Not Valid for State
Severity: Fatal
Reason: The Postal Code and State Code reported in the USPPI Address do not match.
Resolution: The reported USPPI State Code must match the state associated with the Postal Code.
Verify the USPPI State Code and Postal Code combination, correct the shipment, and resubmit.
Response Code: 522
Narrative: Shipping Weight Exceeds Max Air Threshold
Severity: Fatal
Reason: The Mode of Transportation is reported as Air, and the Shipping Weight reported exceeds the maximum threshold allowed for an air shipment.
Resolution: The maximum Shipping Weight allowed for an air shipment is 150,000 kilograms (for other than fly-away aircraft).
Verify the Shipping Weight and Mode of Transportation, correct the shipment, and resubmit.
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Department of Treasury’s Office of Foreign Assets Control (OFAC)
The U.S. Department Of Treasury’s Office Of Foreign Assets Control (OFAC), The European External Action Service (EEAS), And The European Commission Directorate-General For Financial Stability, Financial Services And Capital Markets Union (DG FISMA) Exchanged Best Practices And Strengthened Working Relationships
May 16, 2023: The U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC), the European External Action Service (EEAS), and the European Commission Directorate-General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA) concluded a multi-day technical meeting in Brussels, exchanging best practices and strengthening working relationships. The purpose of the meeting was to share sanctions expertise to enhance and improve the capabilities of those at the forefront of sanctions design, implementation, and compliance. OFAC, EEAS, and DG FISMA identified ways to align the implementation of sanctions, promote compliance, strengthen enforcement, and address shared foreign policy challenges. The teams also explored methods to ensure that sanctions do not prevent humanitarian trade and assistance from reaching those in need and that persons in sanctioned jurisdictions preserve their internet freedom. The partners have been working together to provide coordinated information to the compliance community and will continue to update and maintain their sanctions-related lists and published guidance.
https://home.treasury.gov/news/press-releases/jy1485
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Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) and Commerce’s Bureau of Industry and Security (BIS)
FinCEN And BIS Issued A Joint Supplemental Alert Urging Continued Vigilance For Potential Russian Export Control Evasion
May 19, 2023: Treasury’s Financial Crimes Enforcement Network (FinCEN) and Commerce’s Bureau of Industry and Security (BIS) have issued a joint supplemental alert urging continued vigilance for potential Russian export control evasion. This supplemental alert builds on FinCEN and BIS’s first joint alert, issued in June 2022, and provides financial institutions additional information with respect to new BIS export control restrictions relating to Russia. The alert also reinforces ongoing U.S. government engagements and initiatives designed to further constrain and prevent Russia from accessing needed technology and goods to supply and replenish its military and defense industrial base. It details evasion typologies and identifies additional transactional and behavioral red flags to assist financial institutions.
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International Export Controls
Japan Tightens Export Controls On Manufacturing Equipment For Cutting-Edge Semiconductors
May 23, 2023: Japan’s trade ministry revised an ordinance to tighten export controls on manufacturing equipment for cutting-edge semiconductors. The revised ministry ordinance will take effect on July 23.
Japan’s tighter export controls will cover 23 items, including devices to remove impurities generated in the semiconductor manufacturing process and lithography equipment essential for semiconductor production. The newly added items also include manufacturing equipment for extreme ultraviolet lithography and etching equipment for stacking memory devices in three dimensions.
Under the Foreign Exchange and Foreign Trade Act, Japan regulates the export of weapons and other goods that can be converted to military applications. Such exports require prior approval from the Minister of Economy, Trade and Industry.
The 23 items to be added will require individual permissions unless they are destined for 42 countries and regions designated friendly. This makes exports to China and certain other countries much more selective.
The move comes after the United States, in October of 2022, tightened restrictions on exports to China of semiconductor manufacturing equipment and technologies that could be diverted for military use.
The United States then called on Japan, as well as the Netherlands, both home to major semiconductor manufacturing equipment makers, to take similar steps.
https://www.nippon.com/en/news/yjj2023052301027/japan%E2%80%99s-tighter-semiconductor-export-controls-to-take-effect-in-july.html and https://asia.nikkei.com/Business/Tech/Semiconductors/Japan-chip-export-curb-to-China-will-take-effect-in-July
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
The U.S. Department of State:
May 19, 2023: In coordination with the G7, Australia, and other partners, the United States imposed new sanctions on Russia for its illegal war in Ukraine. These actions implement new commitments made at the G7 Leaders’ Summit and demonstrate shared resolve to hold Russia accountable for its mounting atrocities in Ukraine. These sanctions also reinforce the commitment the United States and its partners have made to taking action against those who aid the Kremlin in Ukraine by circumventing our sanctions and export control measures.
As part of these actions, the Department of State imposed sanctions on or identifying as blocked property over 200 entities, individuals, vessels, and aircraft. These actions include designations of targets across Russia’s defense and related material, technology, and metals and mining sectors. These actions also include the designation of entities and individuals involved in expanding Russia’s future energy production and capacity. The Department of State will continue to target entities and individuals that have engaged in the systematic and unlawful deportation of Ukraine’s children and the theft and transportation of stolen grain from Ukraine.
These actions also include designations of an international network of entities engaged in the procurement of components for the Russia-based entity responsible for the manufacture of the Orlan drone, which Russian forces are currently employing in their illegal war against Ukraine, and the Russia-installed puppet authorities in parts of Ukraine’s territory.
The Department of State took these steps in coordination with further sanctions being imposed by the Department of the Treasury and additional export control measures announced by the Department of Commerce.
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Department of Commerce, Bureau of Industry and Security (BIS)
May 5, 2023: The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) has issued an order renewing the temporary denial of export privileges for an additional 180 days of Mahan Airways, Pejman Mahmood Kosarayanifard, Mahmoud Amini, Kerman Aviation, Sirjanco Trading LLC, Mahan Air General Trading LLC, Mehdi Bahrami, Al Naser Airlines, Ali Abdullah Alhay, Bahar Safwa General Trading, Sky Blue Bird Group, and Issarn Shammout.
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May 12, 2023: The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) has issued an Order renewing the temporary denial of export privileges of Rossiya Airlines of St. Petersburg, Russia, for an additional 180 days.
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May 16, 2023: The U.S. Commerce Department’s Bureau of Industry and Security (BIS) issued a Temporary Denial Order (TDO) suspending the export privileges of Florida company MIC P&I, LLC, Russian airline Smartavia, freight forwarder Intermodal Maldives, and Oleg Patsulya and Vasilii Besedin, two Russian nationals residing in Florida, for diverting civilian aircraft parts to Russia.
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May 19, 2023: 88 Fed. Reg. 32640: The Department of Commerce is amending the Export Administration Regulations (EAR) by adding seventy-one entities to the Entity List. These entities have been determined by the U.S. Government to be acting contrary to the national security or foreign policy interests of the United States and will be listed on the Entity List under the destinations of Armenia, Kyrgyzstan, and Russia.
Armenia:
- Medisar, LLC.
Kyrgyzstan:
- Ya, LLC.
Russia:
- Closed Joint Stock Company Special Design Bureau;
- Federal State Enterprise Kazan State Gunpowder Plant;
- Federal State Unitary Enterprise Central Scientific Research Institute of Chemistry and Mechanics;
- Federal State Unitary Enterprise Rostov-On-Don Research Institute of Radio Communications;
- Informtest Firm Limited Liability Company;
- Joint Stock Company 150 Aircraft Repair Plant;
- Joint Stock Company 810 Aircraft Repair Plant;
- Joint Stock Company Arzamas Instrument-Making Plant named after P.I. Plandin;
- Joint Stock Company Bryansk Automobile Plant;
- Joint Stock Company Central Research Institute Burevestnik;
- Joint Stock Company Central Research Institute of Automation and Hydraulics;
- Joint Stock Company Concern Avrora Scientific and Production Association;
- Joint Stock Company Concern Central Institute for Scientific Research Elektropribor;
- Joint Stock Company Concern Morinformsystem Agat;
- Joint Stock Company Concern Okeanpribor;
- Joint Stock Company Dux;
- Joint Stock Company Eastern Shipyard;
- Joint Stock Company ENICS;
- Joint Stock Company Information Satellite Systems Named After Academician M.F. Reshetnev;
- Joint Stock Company Izhevsk Electromechanical Plant Kupol;
- Joint Stock Company Kazan Optical-Mechanical Plant;
- Joint Stock Company Khabarovsk Shipbuilding Yard;
- Joint Stock Company Machine Building Company Vityaz;
- Joint Stock Company Management Company Radiostandard;
- Joint Stock Company Marine Instrument Engineering Corporation;
- Joint Stock Company Nevskoe Design Bureau;
- Joint Stock Company NII Gidrosvyazi Shtil;
- Joint Stock Company Nizhny Novgorod Plant of the 70th Anniversary of Victory;
- Joint Stock Company Northern Production Association Arktika;
- Joint Stock Company Perm Machine Building Plant;
- Joint Stock Company Precision Engineering Design Bureau named after A.E. Nudelman;
- Joint Stock Company Production Complex Akhtuba;
- Joint Stock Company Project Design Bureau RIO;
- Joint Stock Company Ratep;
- Joint Stock Company Scientific Production Association Impulse;
- Joint Stock Company Scientific Production Association Orion;
- Joint Stock Company Scientific Production Association Russian Basic Information Technologies;
- Joint Stock Company Scientific Production Association Volna Plant;
- Joint Stock Company Scientific Production Center of Automatics and Instrument Building Named After Academician N.A. Pilyugin;
- Joint Stock Company Scientific Production Concern Tekhmash;
- Joint Stock Company Scientific Research Engineering Institute;
- Joint Stock Company Scientific Research Institute of Computing Complexes Named After M.A. Kartsev;
- Joint Stock Company Scientific Technical Institute Radiosvyaz;
- Joint Stock Company Taganrog Plant Priboy;
- Joint Stock Company Tula Cartridge Works;
- Joint Stock Company Tula Machine-Building Plant;
- Joint Stock Company Ulan-Ude Aviation Plant;
- Joint Stock Company Ulyanovsk Cartridge Works;
- Joint Stock Company Ulyanovsk Mechanical Plant;
- Joint Stock Company Ural Automotive Plant;
- Joint Stock Company Ural Works of Civil Aviation;
- Joint Stock Company Vodtranspribor;
- Joint Stock Company Zavod Elecon;
- Joint Stock Company Zavolzhskiy Plant of Caterpillar Tractors;
- Joint Stock Company Zelenodolsk Plant Named After A.M. Gorky;
- Machine Building Group Limited Liability Company;
- Military Industrial Company Limited Liability Company;
- Open Joint Stock Company Degtyaryov Plant;
- Promtekhnologiya Limited Liability Company;
- Public Joint Stock Company Kurganmashzavod;
- Public Joint Stock Company Motovilikha Plants;
- Public Joint Stock Company Proletarsky Plant;
- Public Joint Stock Company Rostvertol;
- Public Joint Stock Company Scientific Production Association Strela;
- Scientific Production Association Izhevsk Unmanned Systems Limited Liability Company;
- Scientific Production Enterprise Prima Limited Liability Company;
- United Machine Building Group Limited Liability Company;
- Volgograd Machine Building Company Limited Liability Company; and
- VXI-Systems Limited Liability Company
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Department of the Treasury, Office of Foreign Assets Control (OFAC)
May 1, 2023: The Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued Venezuela General License 42, “Authorizing Certain Transactions Related to the Negotiation of Certain Settlement Agreements with the IV Venezuelan National Assembly and Certain Other Persons.” In addition, OFAC published three new Frequently Asked Questions (1123, 1124, 1125) and amended one Frequently Asked Question (808).
Venezuela General License 42: All transactions prohibited by the Venezuela Sanctions Regulations, 31 CFR part 591 (the VSR), that are ordinarily incident and necessary to the negotiation of settlement agreements with the IV Venezuelan National Assembly seated on January 5, 2016 (“IV National Assembly”), its Delegated Commission, any entity established by, or under the direction of, the IV National Assembly to exercise its mandate (“IV National Assembly Entity”), or any person appointed or designated by, or whose appointment or designation is retained by, an IV National Assembly Entity, relating to any debt of the Government of Venezuela, Petróleos de Venezuela, S.A. (PdVSA), or any entity in which PdVSA owns, directly or indirectly, a 50 percent or greater interest are authorized.
Note 1. The authorization referenced above of this general license includes the negotiation of settlement agreements with persons appointed or designated by, or whose appointment or designation is retained by, an IV National Assembly Entity to the board of directors (including any ad hoc boards of directors), or as an executive officer of a Government of Venezuela entity (including entities owned or controlled, directly or indirectly, by the Government of Venezuela).
This general license does not authorize:
(1) Any transaction involving the Venezuelan National Constituent Assembly convened by Nicolas Maduro or the National Assembly seated on January 5, 2021, including their respective members and staff; or
(2) Any transaction otherwise prohibited by the VSR, including transactions involving any person blocked pursuant to the VSR other than the blocked persons described above, unless separately authorized.
https://ofac.treasury.gov/media/931696/download?inline
Question 1123: In Crystallex Int’l Corp. v. Bolivarian Republic of Venezuela, 17-mc-00151 (D. Del.), the U.S. District Court for the District of Delaware has entered a Sale Procedures Order with respect to certain shares in PDV Holding (PDVH) to satisfy a U.S. district court judgment confirming an arbitral award against Venezuela. May persons participate in or comply with steps relating to a judicial sale of such shares?
Answer: OFAC will not take enforcement action against any individuals or entities for participating in, facilitating, or complying with the prefatory steps set out in the court’s Sale Procedures Order, or for engaging in transactions that are ordinarily incident and necessary to participating in, facilitating, or complying with such steps (such as serving as potential or actual credit counterparties). See also General License 42 and OFAC Frequently Asked Question (FAQ) 1125. As recognized by the judge in the Crystallex case, an additional license will be required before any sale is executed. As is standard for OFAC’s process before providing a license for the disposition of blocked property, the United States Government will engage in due diligence about the identity of a potential purchaser and will consider relevant details of the proposed transaction. Before a potential purchaser has been identified, it would be premature to issue any such license or express a definitive view on the issuance of a specific license in a future scenario. OFAC nevertheless intends to implement a favorable licensing policy toward such license applications in connection with the execution of a sale as contemplated in the Sale Procedures Order. As with all OFAC licenses and statements of licensing policy, this licensing policy would be without prejudice to reconsideration if U.S. foreign policy and national security interests materially change. In making these licensing determinations, OFAC is committed to fair and equivalent treatment of potential creditors.
This non-enforcement posture applies to OFAC sanctions only and does not relieve persons of obligations to comply with any other applicable regulatory requirements, reviews, or approvals that may be necessary to finalize any sale.
Question 1124: I am a party seeking to enforce bondholder rights to the shares of CITGO Holding serving as collateral for the Petróleos de Venezuela, S.A. (PdVSA) 2020 8.5 percent bond, pending the outcome of ongoing litigation. How can I preserve or enforce my bondholder rights consistent with the Venezuela Sanctions Regulations, 31 CFR part 591 (VSR)?
Answer: OFAC will not take enforcement action against any person for taking steps to preserve the ability to enforce bondholder rights to the CITGO shares serving as collateral for the PdVSA 2020 8.5 percent bond (see also OFAC Frequently Asked Question (FAQ) 1123; General License 42 and OFAC FAQ 1125). This non-enforcement policy governs OFAC sanctions only and does not relieve persons of obligations to comply with any other applicable regulatory requirements, reviews, or approvals that may be necessary to finalize any sale. As noted in FAQ 1125, parties that have negotiated a settlement agreement pursuant to General License 42 will still need to seek a specific license for entry into that agreement.
Question 1125: I am a creditor of the Government of Venezuela, Petróleos de Venezuela, S.A. (PdVSA), or a PdVSA subsidiary. Do I need an OFAC license to negotiate the settlement of claims related to assets of the Government of Venezuela or PdVSA?
Answer: Venezuela General License (GL) 42 generally authorizes transactions prohibited by the Venezuela Sanctions Regulations, 31 CFR part 591 (VSR), that are ordinarily incident and necessary to the negotiation of settlement agreements with the IV National Assembly, its Delegated Commission, an IV National Assembly Entity, or a person appointed or designated by, or whose appointment or designation is retained by, an IV National Assembly Entity relating to any debt of the Government of Venezuela, PdVSA, or any entity in which PdVSA owns, directly or indirectly, a 50 percent or greater interest (a “PdVSA Subsidiary”).
For the purposes of GL 42, the term “IV National Assembly” means the IV Venezuelan National Assembly seated on January 5, 2016; GL 42 does not authorize transactions involving the Venezuelan National Constituent Assembly convened by Nicolas Maduro or the National Assembly seated on January 5, 2021. The term “IV National Assembly Entity” includes any entity established by, or under the direction of, the IV National Assembly to exercise its mandate, including persons appointed or designated by, or whose appointment or designation is retained by, an IV National Assembly Entity to the board of directors (including any ad hoc boards of directors), or as an executive officer of a Government of Venezuela entity (including entities owned or controlled, directly or indirectly, by the Government of Venezuela). Settlement agreements relating to debt include settlement agreements relating to bonds, promissory notes, and other receivables of the Government of Venezuela, PdVSA, or a PdVSA Subsidiary.
GL 42 does not authorize the entry into settlement agreements, contingent or otherwise. Parties that have negotiated a settlement agreement pursuant to GL 42 will need to seek a specific license for entry into that agreement. OFAC intends to implement a favorable licensing policy for license applications in connection with the negotiation of a settlement agreement, but as with all OFAC licenses and statements of licensing policy, specific licenses will only be granted after due diligence as to the parties and transaction, and this licensing policy would be without prejudice to reconsideration if U.S. foreign policy and national security interests materially change and may be revoked or modified at any time. GL 42 also does not authorize any transactions, including negotiation of settlement agreements, with persons blocked pursuant to the VSR other than those blocked persons enumerated in GL 42, unless separately authorized.
Question 808: Do I need a specific license from OFAC to file a suit in U.S. court against a person designated or blocked pursuant to Venezuela-related sanctions? Does a U.S. court, or its personnel, need a specific license from OFAC to hear such a case?
Answer: No. A specific license from OFAC is not required to initiate or continue U.S. legal proceedings against a person designated or blocked pursuant to the Venezuela Sanctions Regulations, 31 CFR part 591 (VSR), or for a U.S. court, or its personnel, to hear such a case. Similarly, creditors may file for writs of attachment without the need for OFAC authorization for matters involving property blocked under the VSR.
However, a specific license from OFAC is required for the entry into a settlement agreement, or for the enforcement of any lien, judgment, or other order through execution, garnishment, or other judicial process purporting to transfer or otherwise alter or affect property or interests in property blocked pursuant to the VSR.
For additional information, see 31 CFR §§ 591.309, 591.310, 591.407, and 591.506.
With respect to the specific facts and circumstances in Crystallex Int’l Corp. v. Bolivarian Republic of Venezuela, 17-mc-00151, before the U.S. District Court for the District of Delaware, please see Frequently Asked Question (FAQ) 1123. For information on general licenses that may authorize certain settlement negotiations involving persons designated or blocked pursuant to the VSR, please see OFAC FAQs 1124 and 1125.
https://ofac.treasury.gov/recent-actions/20230501 and https://ofac.treasury.gov/faqs/added/2023-05-01 and https://ofac.treasury.gov/faqs/808
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May 2, 2023: The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), in a joint action with authorities in the Republic of Türkiye, designated two financial facilitators of Syria-based terrorist groups Hay’at Tahrir al-Sham (HTS) and Katibat al-Tawhid wal-Jihad (KTJ), both of which are sanctioned by the United States and the United Nations. This action continues the cooperation between the United States and Türkiye to counter the financing of terrorist groups that perpetuate violence and instability throughout the region. Concurrently, the Turkish Ministry of Treasury and Finance and the Turkish Ministry of Interior have implemented an asset freeze against these terrorist facilitators.
The following individuals have been added to OFAC’s SDN List:
- Alsheak, Omar of Turkey and Syria; and
- Sari, Kubilay of Turkey.
https://home.treasury.gov/news/press-releases/jy1456 and https://ofac.treasury.gov/recent-actions/20230502
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May 4, 2023: The Department of the Treasury’s Office of Foreign Assets Control (OFAC) amended one related Frequently Asked Question (836) related to President Biden’s Executive Order referenced above regarding Sudan.
Question 836: What sanctions are applicable to Sudan and the Government of Sudan?
Answer: The national emergency declared with respect to the Government of Sudan in Executive Order (E.O.) 13067 of November 3, 1997 — as expanded upon in scope by subsequent E.O.s — remains in effect. As detailed below, certain sanctions have been imposed, and others have been lifted pursuant to that national emergency in response to developments in Sudan.
The following sanctions authorities are in effect with respect to Sudan:
- E.O. 14098 of May 4, 2023, among other things, authorizes the imposition of sanctions on foreign persons to address the situation in Sudan following the military’s seizure of power in October 2021 and the outbreak of inter-service fighting in April 2023 and to support a transition to democracy and the civilian transitional government in Sudan.
- E.O. 13400 of April 26, 2006 imposes sanctions on individuals and entities in connection with the conflict in Darfur and, in part, implements sanctions with respect to that conflict adopted by the United Nations Security Council.
The following sanctions authorities are no longer in effect with respect to Sudan:
- Effective October 12, 2017, sections 1 and 2 of E.O. 13067 of November 3, 1997, and all of E.O. 13412 of October 13, 2006, were revoked, pursuant to E.O. 13761 of January 13, 2017, as amended by E.O. 13804 of July 11, 2017. To reflect this revocation of authorities, OFAC removed the Sudanese Sanctions Regulations, 31 CFR part 538 (SSR) from the Code of Federal Regulations (CFR) on June 29, 2018. U.S. persons are not broadly prohibited from engaging in transactions with respect to Sudan or the Government of Sudan that were previously prohibited solely by the SSR. In addition, following the revocation of sections 1 and 2 of E.O. 13067 and E.O. 13412, persons designated solely pursuant to the blocking authorities of E.O. 13067 or E.O. 13412 were removed from OFAC’s List of Specially Designated Nationals and Blocked Persons (SDN List).
- The determination regarding Sudan as a State Sponsor of Terrorism was rescinded on December 14, 2020. Accordingly, Sudan is no longer subject to prohibitions under the Terrorism List Governments Sanctions Regulations, 31 CFR part 596 (TLGSR), or section 906(a)(1) of the Trade Sanctions Reform and Export Enhancement Act of 2000 (22 U.S.C. 7205).
Note that the revocation of the aforementioned sanctions authorities does not affect past, present, or future OFAC enforcement investigations or actions associated with any apparent violations of the SSR that occurred prior to October 12, 2017 or of the TLGSR prior to December 14, 2020.
https://ofac.treasury.gov/faqs/836 and https://ofac.treasury.gov/recent-actions/20230504
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May 5, 2023: The Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued Russia-related General License 8G, “Authorizing Transactions Related to Energy”.
General License 8G: All transactions prohibited by Executive Order (E.O.) 14024 involving one or more of the following entities that are related to energy are authorized, through 12:01 a.m. Eastern daylight time, November 1, 2023:
(1) State Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank;
(2) Public Joint Stock Company Bank Financial Corporation Otkritie;
(3) Sovcombank Open Joint Stock Company;
(4) Public Joint Stock Company Sberbank of Russia;
(5) VTB Bank Public Joint Stock Company;
(6) Joint Stock Company Alfa-Bank;
(7) Public Joint Stock Company Rosbank;
(8) Bank Zenit Public Joint Stock Company;
(9) Bank Saint-Petersburg Public Joint Stock Company;
(10) Any entity in which one or more of the above persons own, directly or indirectly, individually or in the aggregate, a 50 percent or greater interest; or
(11) the Central Bank of the Russian Federation.
For the purposes of this general license, the term “related to energy” means the extraction, production, refinement, liquefaction, gasification, regasification, conversion, enrichment, fabrication, transport, or purchase of petroleum, including crude oil, lease condensates, unfinished oils, natural gas liquids, petroleum products, natural gas, or other products capable of producing energy, such as coal, wood, or agricultural products used to manufacture biofuels, or uranium in any form, as well as the development, production, generation, transmission, or exchange of power, through any means, including nuclear, thermal, and renewable energy sources.
https://ofac.treasury.gov/recent-actions/20230505 and https://ofac.treasury.gov/media/931721/download?inline
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May 9, 2023: The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Joaquin Guzman Lopez, a son of Joaquin “El Chapo” Guzman Loera and the fourth member of Los Chapitos—as well as three Sinaloa Cartel members and two Mexico-based entities pursuant to Executive Order (E.O.) 14059. Those sanctioned are part of a Sinaloa Cartel network overseen by Los Chapitos and responsible for a significant portion of the illicit fentanyl and other deadly drugs trafficked into the United States.
The following individuals have been added to OFAC’s SDN List:
- Guzman Lopez, Joaquin of Mexico;
- Ogazon Sedano, Mario Esteban of Mexico;
- Paez Lopez, Saul of Mexico; and
- Perez Uribe, Raymundo of Mexico.
The following entities have been added to OFAC’s SDN List:
- Sumilab, S.A. DE C.V., of Mexico; and
- Urbanizacion, Inmobiliaria Y Construccion De Obras, S.A. DE C.V., of Mexico.
https://home.treasury.gov/news/press-releases/jy1467 and https://ofac.treasury.gov/recent-actions/20230509
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May 16, 2023: The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated Mikhail Matveev (Matveev) for his role in launching cyberattacks against U.S. law enforcement, businesses, and critical infrastructure. Concurrently, the U.S. District Courts for the District of New Jersey and the District of Columbia unsealed indictments against Matveev. Additionally, the U.S. Department of State announced an award of up to $10 million for information that leads to the arrest and/or conviction of Matveev under its Transnational Organized Crime Rewards Program.
The following individual has been added to OFAC’s SDN List:
- Matveev, Mikhail Pavlovich of Russia.
https://home.treasury.gov/news/press-releases/jy1486 and https://ofac.treasury.gov/recent-actions/20230516
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May 17, 2023: The Department of the Treasury’s Office of Foreign Assets Control (OFAC) amended the South Sudan Sanctions Regulations and reissued them in their entirety.
https://ofac.treasury.gov/media/931756/download?inline and https://ofac.treasury.gov/recent-actions/20230517
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May 17, 2023: The Department of the Treasury’s Office of Foreign Assets Control (OFAC) settled with Murad, LLC for $3,334,286 and with a former senior executive of Murad, LLC for $175,000 related to apparent violations of the Iranian Transactions and Sanctions Regulation. Murad, LLC (the “Company”), a cosmetics company based in El Segundo, California, has agreed to pay $3,334,286 to settle its potential civil liability for an apparent violation of OFAC sanctions on Iran. This apparent violation resulted from the Company’s participation in a conspiracy to engage in the unauthorized export of goods and services from the United States to Iran over an approximately eight-year period. The conspiracy, which ended in 2018, resulted in at least 62 exports of Company products, as well as the export of services to Iran, totaling more than $11 million. OFAC determined that the Company voluntarily self-disclosed its violation following its acquisition by Unilever United States, Inc. (“Unilever US”) and that the Company’s apparent violation was egregious.
A former senior Company executive (“U.S. Person-1”) has separately agreed to pay $175,000 to settle their potential civil liability for three apparent violations of OFAC’s Iran sanctions arising from their role as a manager at the Company. These apparent violations occurred between June 2016 and September 2017. OFAC determined that U.S. Person-1’s apparent violations were not voluntarily self-disclosed and that their conduct was egregious.
https://ofac.treasury.gov/media/931761/download?inline
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May 19, 2023: The Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued Russia-related General License 13E, “Authorizing Certain Administrative Transactions Prohibited by Directive 4 under Executive Order 14024;” General License 66, “Authorizing the Wind Down of Transactions Involving Public Joint Stock Company Polyus;” General License 67, “Authorizing Certain Transactions Related to Debt or Equity of, or Derivative Contracts Involving, Public Joint Stock Company Polyus;” and General License 68, “Authorizing the Wind Down of Transactions Involving Certain Universities and Institutes.”
General License 13E: U.S. persons, or entities owned or controlled, directly or indirectly, by a U.S. person, are authorized to pay taxes, fees, or import duties, and purchase or receive permits, licenses, registrations, or certifications, to the extent such transactions are prohibited by Directive 4 under Executive Order 14024, Prohibitions Related to Transactions Involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation, provided such transactions are ordinarily incident and necessary to the day-to-day operations in the Russian Federation of such U.S. persons or entities, through 12:01 a.m. eastern daylight time, August 17, 2023.
https://ofac.treasury.gov/media/931786/download?inline
General License 66: All transactions prohibited by Executive Order (E.O.) 14024 that are ordinarily incident and necessary to the wind-down of any transaction involving Public Joint Stock Company Polyus, or any entity in which Public Joint Stock Company Polyus owns, directly or indirectly, a 50 percent or greater interest, are authorized through 12:01 a.m. eastern daylight time, August 17, 2023, provided that any payment to a blocked person must be made into a blocked account in accordance with the Russian Harmful Foreign Activities Sanctions Regulations, 31 CFR part 587 (RuHSR).
https://ofac.treasury.gov/media/931791/download?inline
General License 67: All transactions prohibited by Executive Order (E.O.) 14024 that are ordinarily incident and necessary to the divestment or transfer, or the facilitation of the divestment or transfer, of debt or equity of Public Joint Stock Company Polyus, or any entity in which Public Joint Stock Company Polyus owns, directly or indirectly, a 50 percent or greater interest, purchased prior to May 19, 2023 (“covered debt or equity”), to a non-U.S. person are authorized through 12:01 a.m. eastern daylight time, August 17, 2023.
All transactions prohibited by E.O. 14024 that are ordinarily incident and necessary to facilitating, clearing, and settling trades of covered debt or equity that were placed prior to 4:00 p.m. eastern daylight time, May 19, 2023, are authorized through 12:01 a.m. eastern daylight time, August 17, 2023.
All transactions prohibited by E.O. 14024 that are ordinarily incident and necessary to the wind-down of derivative contracts entered into prior to 4:00 p.m. Eastern daylight time, May 19, 2023, that (i) include a blocked person as a counterparty or (ii) are linked to covered debt or equity are authorized through 12:01 a.m. eastern daylight time, August 17, 2023, provided that any payments to a blocked person are made into a blocked account in accordance with the Russian Harmful Foreign Activities Sanctions Regulations, 31 CFR part 587 (RuHSR).
https://ofac.treasury.gov/media/931796/download?inline
General License 68: All transactions prohibited by Executive Order (E.O.) 14024 that are ordinarily incident and necessary to the wind-down of any transaction involving one or more of the following blocked persons are authorized through 12:01 a.m. Eastern daylight time, July 18, 2023, provided that any payment to a blocked person must be made into a blocked account in accordance with the Russian Harmful Foreign Activities Sanctions Regulations, 31 CFR part 587 (RuHSR):
(1) Federal State Budgetary Educational Institution of Higher Education Grozny State Oil Technical University Named After Academician M.D. Millionshchikov;
(2) Federal State Budget Educational Institution of Higher Education Saint Petersburg Mining University;
(3) Federal State Budgetary Educational Institution of Higher Education Sergo Ordzhonikidze Russian State University for Geological Prospecting;
(4) Federal State Budgetary Educational Institution of Higher Vocational Education Gubkin Russian State University of Oil and Gas;
(5) State Budgetary Educational Institution of Higher Education Almetyevsk State Oil Institute; or
(6) Any entity in which one or more of the above persons own, directly or indirectly, individually or in the aggregate, a 50 percent or greater interest.
https://ofac.treasury.gov/media/931801/download?inline
OFAC also issued Russia-related Directive 4 under Executive Order (E.O.) 14024, as amended, and updating Frequently Asked Questions (FAQs) 998-1002, 1004-1005, and 1118 to reflect the amendment. Russia-related Directive 4, as amended, imposes an additional reporting requirement on U.S. persons to identify assets of entities subject to Russia-related Directive 4, as amended, which U.S. persons may hold. U.S. persons must submit a report to OFACreport@treasury.gov on or before June 18, 2023, and annually thereafter, on property in their possession or control with an interest, direct or indirect of an entity subject to Russia-related Directive 4, as amended (see FAQ 998). Note that existing licenses or authorizations issued by OFAC pursuant to the prior version of Russia-related Directive 4 remain in effect.
Directive 4 under Executive Order (E.O.) 14024: Pursuant to sections 1(a)(iv), 1(d), and 8 of Executive Order 14024, “Blocking Property With Respect To Specified Harmful Foreign Activities of the Government of the Russian Federation” (the “Order”), the Director of the Office of Foreign Assets Control has determined, in consultation with the Department of State, that the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation are political subdivisions, agencies, or instrumentalities of the Government of the Russian Federation, and that the following activities by a United States person are prohibited, except to the extent provided by law, or unless licensed or otherwise authorized by the Office of Foreign Assets Control: any transaction involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation, including any transfer of assets to such entities or any foreign exchange transaction for or on behalf of such entities. All other activities with entities determined to be subject to the prohibitions of this Directive, or involving their property or interests in property, are permitted, provided that such activities are not otherwise prohibited by law, the Order, or any other sanctions program implemented by the Office of Foreign Assets Control.
Except to the extent otherwise provided by law or unless licensed or otherwise authorized by the Office of Foreign Assets Control, the following are also prohibited:
(1) any transaction that evades or avoids, has the purpose of evading or avoiding, causes a violation of, or attempts to violate any of the prohibitions of this Directive; and
(2) any conspiracy formed to violate any of the prohibitions of this Directive.
https://ofac.treasury.gov/media/918806/download?inline
Frequently Asked Questions:
Question 998: What are the requirements of Directive 4 under Executive Order (E.O.) 14024, “Prohibitions Related to Transactions Involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation,” as amended (Russia-related Sovereign Transactions Directive)?
Answer: The Russia-related Sovereign Transactions Directive prohibits U.S. persons from engaging in any transaction involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation (collectively, “Directive 4 entities”), including any transfer of assets to such entities or any foreign exchange transaction for or on behalf of such entities. Effective February 28, 2022, U.S. persons may not engage in any transactions involving these entities unless exempt or authorized by the Office of Foreign Assets Control (OFAC). This includes both direct and indirect transactions involving any Directive 4 entity. Prohibited transactions include trade or financial transactions and other dealings in which U.S. persons may not engage unless exempt or expressly authorized by OFAC.
The Russia-related Sovereign Transactions Directive also prohibits: (1) any transaction that evades or avoids, has the purpose of evading or avoiding, causes a violation of, or attempts to violate any of the prohibitions of the Russia-related Sovereign Transactions Directive; and (2) any conspiracy formed to violate any of the prohibitions of the Russia-related Sovereign Transactions Directive.
This action effectively immobilizes any assets of the Directive 4 entities that are held in the United States or by U.S. persons, wherever located, unless exempt or authorized by OFAC.
Effective February 28, 2022, U.S. financial institutions must reject transactions involving any Directive 4 entity, unless exempt or authorized by OFAC, and file a report within ten business days in accordance with 31 CFR § 501.604. OFAC issued general licenses that authorize certain limited transactions involving the Directive 4 entities (see FAQ 999).
On May 19, 2023, OFAC amended Directive 4 to require U.S. persons to submit a report to OFACreport@treasury.gov on or before June 18, 2023, and annually thereafter by June 30, regarding property in their possession or control in which any Directive 4 entity has an interest of any nature whatsoever, direct or indirect. This reporting requirement is intended to identify assets of Directive 4 entities held by U.S. persons as of May 31, 2023, and annually thereafter, and is separate from the above-noted requirement under 31 CFR 501.604 to file reports on rejected transactions involving any Directive 4 entity.
Entities determined to be subject to the Russia-related Sovereign Transactions Directive are listed on OFAC’s Non-SDN Menu-Based Sanctions (NS-MBS) List.
https://ofac.treasury.gov/faqs/998
Question 999: What authorizations exist for entities subject to Directive 4 under Executive Order (E.O.) 14024, “Prohibitions Related to Transactions Involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation,” as amended (Russia-related Sovereign Transactions Directive)?
Answer: OFAC issued Russia-related General License (GL) 8G to authorize certain energy-related transactions involving the Central Bank of the Russian Federation that would be prohibited by the Russia-related Sovereign Transactions Directive (see FAQs 976 and 977).
OFAC issued GL 13E to authorize U.S. persons to pay taxes, fees, or import duties and purchase or receive permits, licenses, registrations, or certifications, to the extent such transactions are prohibited by the Russia-related Sovereign Transactions Directive, provided such transactions are ordinarily incident and necessary to such persons’ day-to-day operations in the Russian Federation. For further information on the types of transactions authorized by GL 13E, see FAQ 1118.
OFAC also issued GL 14, authorizing certain transactions involving any Directive 4 entity where the Directive 4 entity’s sole function in the transaction is to act as an operator of a clearing and settlement system. GL 14 does not authorize any transfer of assets to or from any Directive 4 entity, or any transaction where a Directive 4 entity is either a counterparty or beneficiary to the transaction. In addition, GL 14 does not authorize any debit to an account on the books of a U.S. financial institution of any Directive 4 entity. See FAQ 1003.
Note that GL 8G, GL 13E, and GL 14 continue to authorize against the Russia-related Sovereign Transactions Directive.
https://ofac.treasury.gov/faqs/999
Question 1000: What sanctions are applicable to the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation?
Answer: The Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation are subject to several restrictions under the following directives:
- Effective February 28, 2022, Directive 4 under Executive Order (E.O.) 14024, “Prohibitions Related to Transactions Involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation,” as amended (Russia-related Sovereign Transactions Directive), prohibits U.S. persons from engaging in any transaction involving these entities, including any transfer of assets to such entities or any foreign exchange transaction for or on behalf of such entities. The Russia-related Sovereign Transactions Directive was amended on May 19, 2023, to include a reporting requirement. (see FAQ 998)
- Pursuant to Directive 1A under E.O. 14024, “Prohibitions Related to Certain Sovereign Debt of the Russian Federation” (Russia-related Sovereign Debt Directive), the following activities by a U.S. financial institution are prohibited:
- As of June 14, 2021, participation in the primary market for ruble or non-ruble denominated bonds issued after June 14, 2021, by the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation;
- As of June 14, 2021, lending ruble or non-ruble denominated funds to the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation; and
- As of March 1, 2022, participation in the secondary market for ruble or non-ruble denominated bonds issued after March 1, 2022, by the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation (see FAQ 888).
- Effective August 19, 2019, the Russia-Related Directive (the “CBW Act Directive”) prohibits U.S. banks from participating in the primary market for non-ruble denominated bonds issued by the Russian sovereign and also prohibits U.S. banks from lending non-ruble denominated funds to the Russian sovereign. The CBW Act Directive defines the term “Russian sovereign” as any ministry, agency, or sovereign fund of the Russian Federation, including the Central Bank of the Russian Federation, the National Wealth Fund, and the Ministry of Finance of the Russian Federation (see FAQs 675 and 676).
The Russia-related Sovereign Transactions Directive includes prohibitions more expansive than the Russia-related Sovereign Debt Directive and the CBW Act Directive; however, it is important to note that each directive operates independently of the others and may have different effective dates. Transactions involving these entities must comply with all three directives described above.
Furthermore, OFAC published a Determination Pursuant to Section 1(a)(i) of E.O. 14024 and a Determination Pursuant to Section 1(a)(ii) of E.O. 14071. OFAC published three associated FAQs and removed FAQs 964, 1037, and 1085, which were incorporated into new FAQs 1126-1128. These changes consolidate OFAC’s general guidance pertaining to Russia-related sector and service determinations. OFAC is also amending FAQs 1059 and 1061-1062.
In addition, OFAC issued one new FAQ related to a designated person (1129).
https://ofac.treasury.gov/faqs/1000
Question 1001: Does the 50 Percent Rule apply to Directive 4 under Executive Order (E.O.) 14024, “Prohibitions Related to Transactions Involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation,” as amended (Russia-related Sovereign Transactions Directive)?
Answer: No.
https://ofac.treasury.gov/faqs/1001
Question 1002: Can U.S. persons engage in indirect transactions with persons subject to Directive 4 under Executive Order (E.O.) 14024, “Prohibitions Related to Transactions Involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation,” as amended (Russia-related Sovereign Transactions Directive)?
Answer: No. The Russia-related Sovereign Transactions Directive prohibits U.S. persons from engaging in any transaction involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation, including any transfer of assets to such entities or any foreign exchange transaction for or on behalf of such entities. Effective February 28, 2022, U.S. persons may not engage in any transactions involving these entities unless exempt or authorized by the Office of Foreign Assets Control (OFAC), including debiting funds from restricted accounts. This includes both direct and indirect transactions. The Russia-related Sovereign Transactions Directive also prohibits: (1) any transaction that evades or avoids, has the purpose of evading or avoiding, causes a violation of, or attempts to violate any of the prohibitions of the Russia-related Sovereign Transactions Directive; and (2) any conspiracy formed to violate any of the prohibitions of the Russia-related Sovereign Transactions Directive.
In light of the current economic situation in Russia, U.S. persons should be on alert for nonroutine foreign exchange transactions that may indirectly involve entities subject to the Russia-related Sovereign Transactions Directive, including transactions that are inconsistent with activity over the 12 months prior to February 28, 2022. For example, the Central Bank of the Russian Federation may seek to use import or export companies to engage in foreign exchange transactions on its behalf and obfuscate its involvement. U.S. persons should also exercise caution in engaging in foreign exchange transactions on the Moscow Exchange, given the current heightened risk that the Central Bank of the Russian Federation could be a counterparty to such transactions.
https://ofac.treasury.gov/faqs/1002
Question 1004: Are U.S. persons required to block transactions involving entities subject to Directive 4 under Executive Order (E.O.) 14024, “Prohibitions Related to Transactions Involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation,” as amended (Russia-related Sovereign Transactions Directive)?
Answer: No. Although the prohibitions of the Russia-related Sovereign Transactions Directive effectively immobilize any assets of the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation (collectively, the “Directive 4 entities”) that are held in the United States or by U.S. persons, wherever located, the Russia-related Sovereign Transactions Directive does not impose blocking sanctions on the Directive 4 entities. Rather, U.S. persons must reject transactions involving the Directive 4 entities, unless exempt or authorized by OFAC.
https://ofac.treasury.gov/faqs/1004
Question 1005: Does Directive 4 under Executive Order (E.O.) 14024, “Prohibitions Related to Transactions Involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation,” as amended (Russia-related Sovereign Transactions Directive), prohibit trading in the secondary markets for Russian sovereign debt?
Answer: No, the Russia-related Sovereign Transactions Directive does not prohibit trading in the secondary markets for debt or equity of the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation (collectively, “Directive 4 entities”), provided that no Directive 4 entity is a counterparty to such a transaction. Please note, however, that Directive 1A under E.O. 14024, “Prohibitions Related to Certain Sovereign Debt of the Russian Federation” (Russia-related Sovereign Debt Directive), prohibits U.S. financial institutions from participation in the secondary market for ruble or non-ruble denominated bonds issued after March 1, 2022, by the Directive 4 entities. However, the “new investment” prohibitions of E.O.14066, E.O. 14068, and E.O. 14071 prohibit U.S. persons from purchasing debt and equity securities issued by an entity in the Russian Federation. Please see FAQ 1054.
https://ofac.treasury.gov/faqs/1005
Question 1118: As of December 2022, the Government of the Russian Federation may require a so-called “exit tax” payment prior to the divestment of assets located in the Russian Federation, potentially requiring transactions involving the Central Bank of the Russian Federation or the Ministry of Finance of the Russian Federation. Do U.S. sanctions prohibit the payment of this so-called “exit tax”? Does Russia-related General License (GL) 13E authorize transactions that involve the payment of this exit tax?
Answer: Directive 4 under Executive Order (E.O.) 14024, “Prohibitions Related to Transactions Involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation,” as amended (Russia-related Sovereign Transactions Directive), prohibits the following activities by U.S. persons: any transaction involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation, including any transfer of assets to such entities or any foreign exchange transaction for or on behalf of such entities (collectively, “Directive 4 entities”). As noted in FAQ 1002, this includes both direct and indirect transactions.
OFAC issued the Russia-related Sovereign Transactions Directive with the explicit aim of preventing the Government of the Russian Federation from leveraging these institutions and their holdings of international reserves in ways that would undermine the impact of U.S. sanctions. Information currently available to OFAC suggests so-called “exit taxes” imposed by the Government of the Russian Federation involve payments to Directive 4 entities. Consequently, U.S. persons whose divestment from the Russian Federation will involve the payment of such an exit tax require a specific license from OFAC prior to the payment of such tax, unless otherwise authorized by OFAC.
GL 13E authorizes U.S. persons or entities owned or controlled, directly or indirectly, by a U.S. person to pay taxes, fees, or import duties, and purchase or receive permits, licenses, registrations, or certifications involving Directive 4 entities that would otherwise be prohibited by the Russia-related Sovereign Transactions Directive, provided such transactions are ordinarily incident and necessary to such persons’ day-to-day operations in the Russian Federation. Payment of exit taxes is not considered ordinarily incident and necessary to day-to-day operations in the Russian Federation and, thus, is not authorized under GL 13E.
Therefore, U.S. persons whose divestment of assets in the Russian Federation will involve a payment of such an “exit tax” should seek a specific license from OFAC. Such persons may submit a request for a specific license with OFAC’s Licensing Division online at https://ofac.treasury.gov/ofac-license-application-page. License applications related to these payments should include information regarding the amount of the exit tax, the amount of ongoing taxes that would otherwise be paid to the Government of the Russian Federation should divestment not occur, the impact of a failure to pay the tax on the employees of the exiting company, the specific economic activity in Russia of the exiting company, and the impact on the Russian Federation of the divestment. OFAC will expedite its review of such requests, which will be evaluated on a case-by-case basis.
While OFAC is aware that the Commission established by the Russian Federation to review such divestments may include individuals from entities subject to the Russia-related Sovereign Transactions Directive or individuals listed on the Specially Designated Nationals and Blocked Persons List, U.S. persons do not need to seek authorization from OFAC for their Russian buyers to submit an application to the Commission regarding a divestment transaction.
https://ofac.treasury.gov/faqs/1118
Furthermore, OFAC is publishing a Determination Pursuant to Section 1(a)(i) of E.O. 14024 and a Determination Pursuant to Section 1(a)(ii) of E.O. 14071.
Determination Pursuant to Section 1(a)(i) of E.O. 14024: Section 1(a)(i) of Executive Order (E.O.) 14024 of April 15, 2021 (“Blocking Property With Respect To Specified Harmful Foreign Activities of the Government of the Russian Federation”) imposes economic sanctions on any person determined by the Secretary of the Treasury, in consultation with the Secretary of State, or the Secretary of State, in consultation with the Secretary of the Treasury, to operate or have operated in such sectors of the Russian Federation economy as may be determined by the Secretary of the Treasury, in consultation with the Secretary of State. To further address the unusual and extraordinary threat to the national security, foreign policy, and economy of the United States described in E.O. 14024, and in consultation with the Department of State and pursuant to 31 CFR § 587.802, I hereby determine that section 1(a)(i) of E.O. 14024 shall apply to the architecture, engineering, construction, manufacturing, and transportation sectors of the Russian Federation economy. Any person determined, pursuant to section 1(a)(i) of E.O. 14024, to operate or have operated in such sectors shall be subject to sanctions pursuant to section 1(a)(i).
https://ofac.treasury.gov/media/931771/download?inline
Determination Pursuant to Section 1(a)(ii) of E.O. 14071: Pursuant to sections 1(a)(ii), 1(b), and 5 of Executive Order (E.O.) 14071 of April 6, 2022 (“Prohibiting New Investment in and Certain Services to the Russian Federation in Response to Continued Russian Federation Aggression”) and 31 CFR § 587.802, and in consultation with the Department of State, I hereby determine that the prohibitions in section 1(a)(ii) of E.O. 14071 shall apply to the following categories of services: architecture and engineering. As a result, the following activities are prohibited, except to the extent provided by law, or unless licensed or otherwise authorized by the Office of Foreign Assets Control: the exportation, reexportation, sale, or supply, directly or indirectly, from the United States, or by a United States person, wherever located, of architecture services or engineering services to any person located in the Russian Federation.
This determination excludes the following:
(1) any service to an entity located in the Russian Federation that is owned or controlled, directly or indirectly, by a United States person; and
(2) any service in connection with the wind-down or divestiture of an entity located in the Russian Federation that is not owned or controlled, directly or indirectly, by a Russian person.
This determination shall take effect beginning at 12:01 a.m. Eastern daylight time on June 18, 2023.
https://ofac.treasury.gov/media/931776/download?inline
OFAC is publishing three associated FAQs and removing FAQs 964, 1037, and 1085, which were incorporated into new FAQs 1126-1128. These changes consolidate OFAC’s general guidance pertaining to Russia-related sector and service determinations.
OFAC is also amending FAQs 1059 and 1061-1062.
In addition, OFAC is issuing one new FAQ related to a designated person (1129).
Question 1129: Do blocking sanctions issued by the State Department on May 19, 2023, on Polimetall AO apply to its corporate parent and affiliates?
Answer: On May 19, 2023, the Department of State designated Russia-based Polimetall AO pursuant to Executive Order (E.O.) 14024. These blocking sanctions apply only to this entity and any entities in which it owns, directly or indirectly, a 50 percent or greater interest.
Neither the Department of State nor OFAC has designated this entity’s ultimate parent company, Jersey-based Polymetal International PLC, and based on information available to OFAC, Polymetal International PLC is not owned 50 percent or more by blocked persons or otherwise considered the blocked property of any blocked persons. U.S. persons, therefore, are not prohibited from dealing with Polymetal International PLC, its non-blocked subsidiaries, or non-blocked affiliates to the extent the proposed dealings do not involve any blocked person, any interest in property of a blocked person, or any other activities prohibited pursuant to any OFAC sanctions authorities.
https://ofac.treasury.gov/faqs/1129
OFAC implemented new commitments made at the G7 Leaders’ Summit to hold Russia accountable for its war. OFAC’s sanctions on 22 individuals and 104 entities, with touchpoints in more than 20 countries or jurisdictions, target those attempting to circumvent or evade sanctions and other economic measures against Russia, the channels Russia uses to acquire critical technology, its future energy extraction capabilities, and Russia’s financial services sector. Additionally, OFAC expanded sanctions authorities to target new sectors of Russia’s economy and sever Russia’s access to new categories of services. See the link below for details.
https://ofac.treasury.gov/recent-actions/20230519
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May 23, 2023: The Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned four entities and one individual involved in obfuscated revenue generation and malicious cyber activities that support the Democratic People’s Republic of Korea (DPRK) Government. The DPRK conducts malicious cyber activities and deploys information technology (IT) workers who fraudulently obtain employment to generate revenue, including in virtual currency, to support the Kim regime and its priorities, such as its unlawful weapons of mass destruction and ballistic missile programs.
The Department of the Treasury’s Office of Foreign Assets Control (OFAC) is issuing Venezuela-related General License 8L, “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.”
Venezuela-Related General License 8L: All transactions and activities prohibited by Executive Order (E.O.) 13850 of November 1, 2018, as amended by E.O. 13857 of January 25, 2019, or E.O. 13884 of August 5, 2019, each as incorporated into the Venezuela Sanctions Regulations, 31 CFR part 591 (the VSR), that are ordinarily incident and necessary to the limited maintenance of essential operations, contracts, or other agreements, that:
(i) are for the safety or the preservation of assets in Venezuela;
(ii) involve PdVSA or any entity in which PdVSA owns, directly or indirectly, a 50 percent or greater interest; and
(iii) were in effect prior to July 26, 2019, are authorized through 12:01 a.m. eastern standard time, November 19, 2023, for the following entities and their subsidiaries (collectively, the “Covered Entities”): • Halliburton;
- Schlumberger Limited;
- Baker Hughes Holdings LLC; and
- Weatherford International, Public Limited Company.
Transactions and activities necessary for the safety or the preservation of assets in Venezuela that are authorized by this general license include transactions and activities necessary to ensure the safety of personnel or the integrity of operations and assets in Venezuela; participation in shareholder and board of directors meetings; making payments on third-party invoices for transactions and activities authorized by this general license, or incurred prior to April 21, 2020, provided such activity was authorized at the time it occurred; payment of local taxes and purchase of utility services in Venezuela; and payment of salaries for employees and contractors in Venezuela.
All transactions and activities prohibited by E.O. 13850, as amended, or E.O. 13884, each as incorporated into the VSR, that are ordinarily incident and necessary to the wind-down of operations, contracts, or other agreements in Venezuela involving PdVSA or any entity in which PdVSA owns, directly or indirectly, a 50 percent or greater interest, and that were in effect prior to July 26, 2019, are authorized through 12:01 a.m. eastern standard time, November 19, 2023, for the Covered Entities.
https://ofac.treasury.gov/media/931811/download?inline
The following additions have been made to OFAC’s list of Specially Designated Nationals:
- Kim, Sang Man of Russia and North Korea.
The following entities have been added to OFAC’s SDN List:
- 110th Research Center of North Korea;
- Chinyong Information Technology Cooperation Company of North Korea;
- Pyongyang University Of Automation of North Korea; and
- Technical Reconnaissance Bureau of North Korea.
https://home.treasury.gov/news/press-releases/jy1498 and https://ofac.treasury.gov/recent-actions/20230523
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May 24, 2023: The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) targeted 26 individuals and entities connected with the terrorist group al-Shabaab, including 15 financial facilitators and operatives, four charcoal smugglers, and seven of their associated companies. This action targets key regional leaders, affiliates, and members of the terrorist group in Somalia who are involved in a wide range of activities in support of al-Shabaab, including financial facilitation, business activities, collection of funds on behalf of the terrorist group, the proliferation of Improvised Explosive Devices (IEDs), and illegal charcoal smuggling from Somalia, all of which have exacerbated local conflicts and suffering.
The following individual has been added to OFAC’s SDN List:
- Aadan, Hassan Yariisow of Somalia;
- Aadan, Siciid Abdullahi of Somalia;
- Abdi, Abdulwahab Noor of the United Arab Emirates and Ethiopia;
- Ayuto, Siyaat of Somalia;
- Barreh, Mariam of Somalia and the United Arab Emirates;
- Burhan, Macalin of Somalia;
- Cali, Maxamed, Wayanta of Somalia;
- Daoud, Suleiman Cabdi of Somalia;
- Dheere, Mumin of Somalia;
- Gabaane, Maxamed Dauud of Somalia;
- Guhaad, Cumar of Somalia;
- Hirey, Mohamed Abdullah of Somalia;
- Hussein, Ali Ahmed of Somalia;
- Ibrahim, Aadan Yusuf Saciid of Somalia;
- Jiss, Aadan, Daaru Salaam of Somalia;
- Kabadhe, Ahmed, Jubaland of Somalia;
- Malayle, Shiek Aadan Abuukar of Somalia;
- Mohamed, Mohamed Omar of Somalia;
- Musse, Bashir Khalif of Somalia, United Arab Emirates and Djibouti;
- Naaji, Ali Ahmed of Somalia;
- Roobow, Cabdi of Somalia;
- Siidow, Maxamed of Somalia;
- Xuuroow, Hasaan Abshir of Somalia; and
- Yare, Cali of Somalia.
The following entities have been added to OFAC’s SDN List:
- Al Nezam Al Asasy General Trading L.L.C. of the United Arab Emirates;
- Bushra Bachir Shipping And Logistics Services L.L.C. of the United Arab Emirates;
- Jamame Brothers Company of Somalia;
- Kismayo General Trading LLC of the United Arab Emirates;
- Red Sea Transit & Transport Service of Djibouti;
- Royal Shipping Agency of Djibouti; and
- Sitti General Trading LLC of the United Arab Emirates.
https://home.treasury.gov/news/press-releases/jy1499 and https://ofac.treasury.gov/recent-actions/20230524
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May 25, 2023: The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Ivan Aleksandrovich Maslov (Maslov), the head of Russian Private Military Company ‘Wagner’ (Wagner Group) paramilitary units and its principal administrator based in Mali. The Wagner Group and its leader, Yevgeniy Viktorovich Prigozhin, are sanctioned by multiple authorities, including for support of Russia’s war against Ukraine. The Wagner Group may be attempting to obscure its efforts to acquire military equipment for use in Ukraine, including by working through Mali and other countries where it has a foothold. The United States opposes efforts by any country to assist Russia through the Wagner Group.
OFAC added a Russia-related Designation to its Specially Designated Nationals list:
- Maslov, Ivan Aleksandrovich of Russia.
https://ofac.treasury.gov/recent-actions/20230525 and https://home.treasury.gov/news/press-releases/jy1502
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May 30, 2023: The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned 17 individuals and entities involved in the international proliferation of equipment used to produce illicit drugs. These targets are directly or indirectly involved in the sale of pill press machines, die molds, and other equipment used to impress counterfeit trade markings of legitimate pharmaceuticals onto illicitly produced pills, often laced with fentanyl, frequently destined for U.S. markets. These designations target seven entities and six individuals based in China and one entity and three individuals based in Mexico.
OFAC also designated two Syrian money service businesses that have secretly helped the Syrian regime under Bashar al-Assad and its Hizballah and Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) allies maintain access to the international financial system in violation of international sanctions. OFAC is also designating three brothers who own and operate Al-Fadel Exchange. These designations are pursuant to Executive Order (E.O.) 13582 of August 17, 2011, “Blocking Property of the Government of Syria and Prohibiting Certain Transactions With Respect to Syria,” and also the Caesar Syrian Civilian Protection Act of 2019 (“Caesar Act”), and underscore the serious threat posed by actors in the financial system who actively enable violent regimes to circumvent sanctions.
The following individuals have been added to OFAC’s SDN List:
- Balwi, Fadel Ma’ruf of Syria;
- Balwi, Muhammad Ma’ruf of Syria;
- Balwi, Mut’i Ma’ruf of Syria;
- Fei, Yiren of China;
- Guo, Chunyan of China;
- Guo, Ruiguang of China;
- Guo, Yunnian of China;
- Macias Trevizo, Ernesto Alonso of Mexico;
- Martinez Trevizo, Mario Ernesto of Mexico;
- Pan, Hao of China;
- Rodriguez Almeida, Cinthia Adriana of Mexico; and
- Zhao, Dongdong of China.
The following entities have been added to OFAC’s SDN List:
- Al-Adham Exchange Company of Syria;
- Al-Fadel Exchange And Money Transfer Company of Syria;
- Mexpacking Solutions of Mexico;
- Shenzhen Yason General Machinery CO., LTD. NANCHANG BRANCH of China;
- Tdpmolds of China;
- Yantai Mei Xun Trade CO., LTD. of China;
- Yantai Yixun International Trade CO., LTD. of China;
- Yason Electronics Technology CO., LIMITED of China;
- Yason General Machinery CO., LTD. of China; and
- Youli Technology Development CO., LTD. of China.
https://home.treasury.gov/news/press-releases/jy1507 and https://home.treasury.gov/news/press-releases/jy1508 and https://ofac.treasury.gov/recent-actions/20230530
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May 31, 2023: The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued Russia Related General License 69.
General License 69: All transactions prohibited by Executive Order (E.O.) 14024 that are ordinarily incident and necessary to the processing of interest or principal payments on debt securities issued by International Investment Bank (IIB) prior to April 12, 2023, are authorized through 12:01 a.m. eastern daylight time June 30, 2023, provided that such interest or principal payments are not made to persons located in the Russian Federation and that any payments to a blocked person, wherever located, are made into a blocked account in accordance with the Russian Harmful Foreign Activities Sanctions Regulations, 31 CFR part 587 (RuHSR).
Note: For the purposes of this general license, the term “person located in the Russian Federation” includes persons in the Russian Federation, individuals ordinarily resident in the Russian Federation, and entities incorporated or organized under the laws of the Russian Federation or any jurisdiction within the Russian Federation.
U.S. financial institutions are authorized to unblock interest or principal payments that were blocked on or after April 12, 2023, but before May 31, 2023, on debt securities issued by IIB prior to April 12, 2023, provided that the funds are unblocked solely to effect transactions authorized in this general license.
Note: U.S. financial institutions unblocking property pursuant to paragraph (b) of this general license are required to file an unblocking report pursuant to 31 CFR § 501.603.
https://ofac.treasury.gov/media/931816/download?inline
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Fines and Penalties
May 1, 2023: The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced a settlement with Poloniex, LLC (“Poloniex”). Poloniex agreed to remit $7,591,630 to settle its potential civil liability for 65,942 apparent violations of sanctions against Crimea, Cuba, Iran, Sudan, and Syria. Between January 2014 and November 2019, the Poloniex trading platform allowed customers apparently located in sanctioned jurisdictions to engage in online digital asset-related transactions—consisting of trades, deposits, and withdrawals—with a combined value of $15,335,349, despite having reason to know their location based on both Know Your Customer information and internet protocol address data. The settlement amount reflects OFAC’s determination that Poloniex’s apparent violations were not voluntarily self-disclosed and were not egregious.
https://ofac.treasury.gov/recent-actions/20230501_33 and https://ofac.treasury.gov/media/931701/download?inline
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May 2, 2023: Jesus Alberto Olivarez, a 32-year-old U.S. citizen, has pleaded guilty to smuggling goods from the United States. Olivarez admitted to attempting to export 5,680 rounds of assorted pistol ammunition to Mexico. Olivarez faces up to 10 years in prison and a possible $250,000 maximum fine.
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May 3, 2023: Godlove Nche Manchoe, age 44, of Bowie, Maryland, was sentenced to 46 months in federal prison, followed by two years of supervised release, for conspiracy and for illegally exporting firearms and ammunition from the United States to Nigeria without obtaining the required licenses from the U.S. State Department. According to trial testimony and court documents, the purpose of the conspiracy was to assist separatists fighting against the government of Cameroon. According to his plea agreement, from at least November 2017 until July 19, 2019, Manchoe and his co-conspirators agreed to export firearms, ammunition, and other military-type items in violation of the federal smuggling statute, the Arms Export Control Act and other export laws. Manchoe participated in meetings of the conspirators, both online and in person, including in the basement of co-conspirator Tamufor St. Michael’s residence, where the conspirators, including Manchoe, also reloaded ammunition, assembled firearms, and wrapped various items for overseas shipment. Manchoe also donated and forwarded funds received from other co-conspirators to St. Michael, to be used towards the purchase of ammunition and/or weapons in furtherance of the conspiracy.
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May 5, 2023: 88 Fed. Reg. 29080: The Department of Commerce, Bureau of Industry (BIS) denied the export privileges of Lizzette B. Jaimes for seven years until September 21, 2028. On September 21, 2021, Jaimes was convicted of violating 18 U.S.C. 554(a) for smuggling and attempting to smuggle various firearms from the United States to Mexico without the required licenses. As a result of her conviction, the Court sentenced Jaimes to 24 months of confinement, two years of supervised release, and a $200 special assessment.
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May 5, 2023: 88 Fed. Reg. 29081: The Department of Commerce, Bureau of Industry (BIS) denied the export privileges of Andres Morales for ten years until June 28, 2031. On June 28, 2021, Morales was convicted of violating 18 U.S.C. 554(a) for smuggling from the United States to Mexico approximately ten (10) to fifteen (15) Barrett .50 caliber rifles; and ten (10) or more AK-47 assault-style rifles. As a result of his conviction, the Court sentenced Morales to 84 months of confinement, three years of supervised release, and a $200 assessment.
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May 11, 2023: The Justice Department announced the seizure of 13 domains used by Specially Designated Nationals (SNDs), Specially Designated Global Terrorists (SDGTs), and their members associated with Lebanese Hezbollah.
According to court records, the United States obtained court authorization to seize five domains registered to the Public Interest Registry (PIR) – moqawama.org, almanarnews.org, manarnews.org, almanar-tv.org, and alshahid.org – and eight domains registered to Verisign Inc. – manartv.net, manarnews.net, almanar-tv.com, almanar-tv.net, alidaamouch.com, Ibrahim-alsayed.net, alemdad.net, and naimkassem.net.
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May 12, 2023: 88 Fed. Reg. 30721: The Department of Commerce, Bureau of Industry (BIS) denied the export privileges of Adriana Gabriela Guajardo-Cavazos for seven years until November 12, 2027. On November 12, 2020, Guajardo-Cavazos (“Guajardo-Cavazos”) was convicted of violating 18 U.S.C. 554(a) for smuggling and attempting to smuggle from the United States to Mexico, approximately one (1) .243 caliber rifle, one (1) .22 caliber rifle, one (1) 12 gauge shotgun, one (1) .223 caliber magazine, and one (1) .22 caliber magazine. As a result of her conviction, the Court sentenced Guajardo-Cavazos to 36 months of confinement, three years of supervised release, and a $100 assessment.
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May 12, 2023: 88 Fed. Reg. 30722: The Department of Commerce, Bureau of Industry (BIS) denied the export privileges of Colby Stephan Skolseg for five years until September 10, 2025. On September 10, 2020, Skolseg was convicted of violating 18 U.S.C. 554(a) knowingly and unlawfully attempting to export eight firearms from the United States to Canada. As a result of his conviction, the Court sentenced Skolseg to 12 months and one day in prison, one year of supervised release, and a $100 assessment.
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May 12, 2023: 88 Fed. Reg. 30720: The Department of Commerce, Bureau of Industry (BIS) denied the export privileges of Juan Antonio Cepeda for seven years until March 25, 2028. On March 25, 2021, Cepeda was convicted of violating 18 U.S.C. 554(a) for smuggling and attempting to smuggle from the United States to Mexico firearms, ammunition, and firearms magazines. As a result of his conviction, the Court sentenced Cepeda to 41 months of confinement, three years of supervised release, and a $100 assessment.
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May 12, 2023: 88 Fed. Reg. 30719: The Department of Commerce, Bureau of Industry (BIS) denied the export privileges of Juan Marvin Garcia for seven years until October 13, 2028. On October 13, 2021, Garcia was convicted of violating 18 U.S.C. 554(a) for smuggling from the United States to Mexico approximately 12,800 rounds of 7.62 x 39mm ammunition, 150 rounds of 38 Special ammunition, 60 rounds of .223 caliber ammunition, and one Stoeger Cougar 9 mm pistol without written approval from United States Department of Commerce. As a result of his conviction, the Court sentenced Garcia to 36 months of confinement, three years of supervised release, and a $100 assessment.
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May 12, 2023: 88 Fed. Reg. 30718: The Department of Commerce, Bureau of Industry (BIS) denied the export privileges of Virgil Griffith for ten years until April 12, 2032. On April 12, 2022, Griffith was convicted of two counts of violating the International Emergency Economic Powers Act (50 U.S.C 1701, et seq.) (“IEEPA”) for exporting services to North Korea without the required authorization from the Department of Treasury and evading and avoiding U.S. sanctions on North Korea. As a result of his conviction, the Court sentenced Griffith to 63 months of confinement, three years of supervised release, a $100 assessment, and a $100,000 criminal fine.
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May 16, 2023: The Justice Department announced criminal charges in five cases and four arrests from five different U.S. Attorney’s offices in connection with the recently launched multi-agency Disruptive Technology Strike Force. The Disruptive Technology Strike Force is co-led by the Departments of Justice and Commerce to counter efforts by hostile nation-states to illicitly acquire sensitive U.S. technology to advance their authoritarian regimes and facilitate human rights abuses. The Strike Force’s work has led to the unsealing of charges against multiple defendants in five cases accused of crimes including export violations, smuggling and theft of trade secrets.
Two of these cases involve the disruption of alleged procurement networks created to help the Russian military and intelligence services obtain sensitive technology in violation of U.S. laws. In the Eastern District of New York, a Greek national was arrested on May 9 for federal crimes in connection with allegedly acquiring more than ten different types of sensitive technologies on behalf of the Russian government and serving as a procurement agent for two Russian Specially Designated Nationals (SDNs) operating on behalf of Russia’s intelligence services. In the District of Arizona, two Russian nationals were arrested for their involvement in a procurement scheme to supply multiple Russian commercial airline companies – which were subject to bans from engaging in certain types of commercial transactions – with export-controlled parts and components, including braking technology.
Two of the other cases charge former software engineers with stealing software and hardware source code from U.S. tech companies in order to market it to Chinese competitors. In the Central District of California, a senior software engineer was arrested on May 5 for theft of trade secrets for allegedly stealing source code used in metrology software which is used in “smart” automotive manufacturing equipment. The defendant then allegedly marketed the stolen technology to multiple Chinese companies. In the Northern District of California, a citizen of the People’s Republic of China (PRC) and former Apple engineer is accused of allegedly stealing thousands of documents containing the source code for software and hardware pertaining to Apple’s autonomous vehicle technology. This defendant fled to China and is believed to be working for a PRC-based autonomous vehicle competitor.
The fifth and final case involves a Chinese procurement network established to provide Iran with materials used in weapons of mass destruction (WMDs) and ballistic missiles. In the Southern District of New York, a PRC national is charged with allegedly participating in a scheme to use his employer to conduct transactions with a U.S. financial institution for the benefit of a purported Iranian entity, as part of an effort to provide isostatic graphite, a material used in the production of WMDs, to Iran.
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May 16, 2023: The former president of a New York-based non-governmental entity (NGO) was sentenced to three years and six months in prison for paying bribes to elected officials of the Republic of the Marshall Islands (RMI) in exchange for passing certain legislation. According to court documents, beginning in or around 2016 and continuing until at least August 2020, Cary Yan, 51, conspired with others, including his assistant, Gina Zhou, in connection with a multi-year bribery scheme. Yan offered and paid tens of thousands of dollars in bribes to high-level RMI officials, including members of the RMI legislature, in exchange for supporting legislation creating a semi-autonomous region within the RMI called the Rongelap Atoll Special Administrative Region (RASAR) that would benefit the business interests of Yan and his associates. Yan carried out the bribery scheme using the New York-based NGO, including the physical use of its headquarters in Manhattan, to meet and communicate with RMI officials.
In December 2022, Yan and Zhou each pleaded guilty to one count of conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practice Act. On Feb. 16, Zhou was sentenced to two years and seven months in prison for her role in the scheme.
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May 16, 2023: A criminal complaint was unsealed in federal court in Brooklyn, charging Dr. Nikolaos “Nikos” Bogonikolos with wire fraud conspiracy and smuggling. Bogonikolos, a Greek national, was arrested in Paris, France, on May 9, 2023, and remains in custody pending the resolution of extradition proceedings.
As alleged, while ostensibly operating as a defense contractor for NATO and other ally countries, the defendant and his Aratos Group were double-dealing, helping to fuel Russia’s war effort and their development of next-generation weapons.
As alleged, Bogonikolos conspired with a network of companies orchestrated by the Russian intelligence services to fraudulently acquire and then smuggle U.S.-origin military and dual-use technologies to aid the Russian defense and security sectors. Bogonikolos procured sensitive equipment meeting NATO specifications designed for tactical battlefield conditions as well as components with applications in space-based and cryptographic communications, on behalf of his Russian intelligence handlers seeking to improve their country’s warfighting capabilities.
As alleged in the complaint, the defendant headed the Aratos Group (Aratos), a collection of defense and technology companies in the Netherlands and Greece, which are both member countries of the North Atlantic Treaty Organization (NATO). According to Aratos’ website, the companies’ areas of expertise included “Space Technologies,” “Homeland Security,” “Blockchain,” and “Counter-Drone Systems.”
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May 17, 2023: Tamufor Nchumuluh St. Michael, age 42, of Rosedale, Maryland, was sentenced to 30 months in federal prison, followed by two years of supervised release, for conspiracy and for violating the Arms Export Control Act by sending firearms, ammunition, and other military-type items from the United States to Nigeria without obtaining a license from the U.S. Department of State. The arms were intended to assist separatists fighting against the government of Cameroon.
According to his plea agreement, from at least November 2017 continuing until July 19, 2019, St. Michael and his co-defendants conspired with each other and with others to export firearms, ammunition, and other military-type items from the United States to Nigeria. Between March 2018 and July 2019, St. Michael and his co-conspirators purchased, both over the Internet and in person, large amounts of ammunition, ammunition reloading supplies, firearms, firearm parts, and other military-type items, which were sent to St. Michael’s residence. St. Michael purchased at least 24 different rifles online, which he picked up at a firearms retailer in Essex, Maryland. In each case, he certified an ATF Firearms Transaction Form certifying that he was the actual transferee or buyer of the firearm. St. Michael knew the certificates were false because the guns were purchased to export overseas.
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May 18, 2023: The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) has announced that Regal Beloit FZE (Dubai), a controlled-in-fact subsidiary of Regal Benoit America, Inc., has agreed to a civil penalty of $283,500 to settle charges that it committed 84 violations of EAR § 760.5 Failing to Report the Receipt of a Request to Engage in a Restricted Trade Practice or Foreign Boycott Against a Country Friendly to the United States. In a Proposed Charging Letter, BIS alleged that during the period February 2017 through September 2021, Regal Benoit FZE (Dubai) received on 84 occasions requests to take an action that would have the effect of furthering or supporting a restrictive trade practice of unsanctioned foreign boycott. By failing to report the receipt of these requests, BIS alleged that the company had committed 84 violations of EAR § 760.5.
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May 22, 2023: 88 Fed. Reg. 32727: The Department of Commerce, Bureau of Industry (BIS) denied the export privileges of Carlos Daniel Rodriguez for ten years until December 2, 2031. On December 2, 2021, Rodriguez was convicted of violating 18 U.S.C. 554(a) for smuggling from the United States to Mexico, approximately 15,000 rounds of 5.56-millimeter ammunition and approximately 193 thirty-round magazines designed for use in AR-type rifles. As a result of his conviction, the Court sentenced Rodriguez to 46 months of confinement, three years of supervised release, and a $100 assessment.
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May 22, 2023: 88 Fed. Reg. 32728: The Department of Commerce, Bureau of Industry (BIS) denied the export privileges of Manuel Alberto Munoz-Sandoval for five years until November 10, 2026. On November 10, 2021, Munoz-Sandoval was convicted of violating 18 U.S.C. 554(a) for smuggling from the United States to Mexico, semi-automatic firearms, to wit: an Iberia Hi-Point, model JCP, .40 caliber pistol; a Smith and Wesson, model SD9VE, 9 mm caliber pistol; a Taurus, model PT111 G2A, 9mm caliber pistol; and a Ruger, model LCP II, .380 caliber pistol. As a result of his conviction, the Court sentenced Munoz-Sandoval to 28 months of confinement with credit for time served, two years of supervised release, and a $100 assessment.
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May 22, 2023: A federal jury convicted Ross Roggio, 54, of Stroudsburg, Pennsylvania, for numerous crimes, including the torture of an Estonian citizen in 2015 in the Kurdistan region of Iraq, in connection with the operation of an illegal weapons manufacturing plant in Kurdistan.
According to court documents and evidence presented at trial, Roggio arranged for Kurdish soldiers to abduct and detain the victim at a Kurdish military compound where Roggio suffocated the victim with a belt, threatened to cut off one of his fingers, and directed Kurdish soldiers to repeatedly beat, tase, choke, and otherwise physically and mentally abuse the victim over a 39-day period. The victim was employed at a weapons factory that Roggio was developing in the Kurdistan region of Iraq that was intended to manufacture M4 automatic rifles and Glock 9mm pistols.
In connection with the weapons factory project, which included Roggio providing training to foreign persons in the operation, assembly, and manufacturing of the M4 automatic rifle, Roggio also illegally exported firearm parts that were controlled for export by the Departments of State and Commerce.
Roggio was convicted of torture, conspiracy to commit torture, conspiring to commit an offense against the United States, exporting weapons parts and services to Iraq without the approval of the Department of State, exporting weapons tools to Iraq without the approval of the Department of Commerce, smuggling goods, wire fraud, and money laundering. He is scheduled to be sentenced on Aug. 23 and faces a maximum sentence of life in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
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May 23, 2023: 88 Fed. Reg. 33086: The Department of Commerce, Bureau of Industry (BIS) denied the export privileges of Johnathon Martin Soria for ten years until July 12, 2031. On July 12, 2021, Soria was convicted of violating 18 U.S.C. 554(a) for smuggling or attempting to smuggle from the United States to Mexico firearms as defined in Category I of the United States Munitions List, without a license or written authorization. As a result of his conviction, the Court sentenced Soria to 50 months of confinement, with credit for time served, three years of supervised release, a $100 assessment, and a $1,000 criminal fine.
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May 23, 2023: 88 Fed. Reg. 33087: The Department of Commerce, Bureau of Industry (BIS) denied the export privileges of Reynoldo Lopez-Cota for ten years until May 7, 2031. On May 7, 2021, Lopez-Cota was convicted of violating 18 U.S.C. 371 and 18 U.S.C. 554(a) for conspiracy and smuggling 1,000 rounds of 7.62 caliber ammunition, 100 rounds of .223 drum magazine, and a one-speed loader from the United States to Mexico. As a result of his conviction, the Court sentenced Lopez-Cota to 24 months of confinement with credit for time served, 36 months of supervised release, and a $200 special assessment.
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May 23, 2023: 88 Fed. Reg. 33088: The Department of Commerce, Bureau of Industry (BIS) denied the export privileges of Leonel Apolinar Lopez for ten years until March 9, 2030. On March 9, 2020, Lopez was convicted of violating 18 U.S.C. 371 for conspiring to straw purchase and smuggle firearms to Mexico. As a result of his conviction, the Court sentenced Lopez to 12 months and one day of confinement, with credit for time served and 36 months of supervised release.
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May 23, 2023: 88 Fed. Reg. 33089: The Department of Commerce, Bureau of Industry (BIS) denied the export privileges of Luis Manuel Bray-Vazquez for ten years until August 24, 2031. On August 24, 2021, Bray-Vazquez was convicted of violating 18 U.S.C. 554(a) for smuggling and attempting to smuggle from the United States to Mexico, five 7.62x39mm caliber rifles, four 7.62x39mm caliber pistols, three 5.56 caliber rifles, one Barrett .50 caliber rifle, one .45 ACP caliber pistol, and one 9x19mm caliber pistol. As a result of his conviction, the Court sentenced BrayVazquez to 46 months of confinement, with credit for time served, 36 months of supervised release, and a $100 special assessment.
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May 23, 2023: 88 Fed. Reg. 33090: The Department of Commerce, Bureau of Industry (BIS) denied the export privileges of Luis Sanchez for six years until October 15, 2026. On October 15, 2020, Sanchez was convicted of violating 18 U.S.C. 371. Specifically, Sanchez was convicted of conspiring to export firearms using an alias from the United States to the Dominican Republic concealed in household items. As a result of his conviction, the Court sentenced Sanchez to 12 months and one day of confinement, three years of supervised release, and a $100 special assessment.
May 23, 2023: 88 Fed. Reg. 33091: The Department of Commerce, Bureau of Industry (BIS) denied the export privileges of Victor Ceballos Polanco for five years until November 6, 2025. On November 6, 2020, Polanco was convicted of violating 18 U.S.C. 371 for conspiring to export firearms using an alias from the United States to the Dominican Republic concealed in household items. As a result of his conviction, the Court sentenced Polanco to 3 years of probation, and a $100 special assessment.
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May 23, 2023: 88 Fed. Reg. 33092: The Department of Commerce, Bureau of Industry (BIS) denied the export privileges of Oscar Ignacio Lopez Soto for ten years until August 10, 2031. On August 10, 2021, Soto was convicted of violating 18 U.S.C. 371 for conspiring to straw purchase and smuggle firearms to Mexico. As a result of his conviction, the Court sentenced Soto to 12 months and one day of confinement, with credit for time served, 36 months of supervised release, and a $100 special assessment.
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May 23, 2023: 88 Fed. Reg. 33093: The Department of Commerce, Bureau of Industry (BIS) denied the export privileges of Mario Ismael Quijada, Jr. for ten years until January 13, 2030. On January 13, 2020, Quijada was convicted of violating 18 U.S.C. 371 for conspiring to straw purchase and smuggle firearms to Mexico. As a result of his conviction, the Court sentenced Quijada to 12 months and one day of confinement, with credit for time served and 36 months of supervised release.
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May 23, 2023: 88 Fed. Reg. 33093: The Department of Commerce, Bureau of Industry (BIS) denied the export privileges of Alex Yun Cheong Yue for ten years until March 3, 2031. On March 3, 2021, Yue was convicted of three counts of violating the International Emergency Economic Powers Act (50 U.S.C 1701, et seq.) (“IEEPA”) and 18 U.S.C. 554(a) for conspiring to export and knowingly and willfully exporting, attempting to export, and causing to be exported cesium atomic clocks from the United States to Hong Kong without first obtaining the required licenses from the Department and one count of violating 18 U.S.C. 554(a) for fraudulently and knowingly buying, selling, and facilitating the transportation, concealment, and sale of cesium atomic clocks to Hong Kong. As a result of his conviction, the Court sentenced Yue to time served, three years of supervised release, and a $400 court assessment. The Court also ordered the civil forfeiture of Yue’s interest in $5,690.67 to the United States.
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May 23, 2023: 88 Fed. Reg. 33094: The Department of Commerce, Bureau of Industry (BIS) denied the export privileges of David Alberto Duarte-Marquez for ten years until January 26, 2031. On January 26, 2021, Duarte-Marquez was convicted of violating 18 U.S.C. 554(a) for smuggling and attempting to smuggle from the United States to Mexico M203 40 mm grenade launcher barrels. As a result of his conviction, the Court sentenced Duarte-Marquez to 33 months of confinement with credit for time served, three years of supervised release: and a $100 special assessment.
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May 23, 2023: 88 Fed. Reg. 33095: The Department of Commerce, Bureau of Industry (BIS) denied the export privileges of Jacobo Javier Garza-Solis for ten years until October 16, 2030. On October 16, 2020, Garza-Solis was convicted of violating section 38 of the Arms Export Control Act (22 U.S.C 2778) (“AECA”) for knowingly and willfully exporting and causing to be exported and attempting to export and attempting to cause to be exported from the United States to Mexico, one Glock, .40 caliber, semiautomatic handgun charged with a magazine containing 13 rounds of ammunition and approximately 1,540 rounds of 7.62 x 39mm ammunition, which were designated as defense articles on the United States Munitions List, without first obtaining from the Department of State a license for such export or written authorization. As a result of his conviction, the Court sentenced Garza-Solis to 82 months in prison, three years of supervised release, and a $100 assessment.