This newsletter is a listing of the latest changes in export control regulations through September 30, 2021. The newsletter is provided as a complimentary service to assist exporters with their ITAR and EAR export compliance responsibilities. It provides a summary of recent changes to export control regulations or other regulatory matters of interest that may impact your company’s international trade and export compliance functions. Call us at 703-847-5801 or email info@fdassociates.net with questions or comments.
See also our “Latest Sanctions Fines & Penalties” section below for an update on companies and persons denied export privileges by the United States Government.
REGULATORY UPDATES
European Union
New European Union Export Control Regulation Enters Into Force
Sep. 9, 2021: The new European Union Export Control Regulation controlling trade in dual-use items (Regulation (EU) 2021/821 of May 20, 2021) entered into force, 90 days after it was officially published on June 11, 2021. (See information on the Regulation in November 2020 and May and June 2021 Regulatory Updates.)
Regulation (EU) 2021/821 of the European Parliament and of the Council of 20 May 2021 setting up a Union regime for the control of exports, brokering, technical assistance, transit, and transfer of dual-use items (recast) is in the EU Official Journal at https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:L:2021:206:FULL&from=EN). A European Commission memorandum on the implementation of the Regulation is at https://trade.ec.europa.eu/doclib/press/index.cfm?id=2296, and the EU Commission’s description of the EU dual-use export control system under the Regulation is at https://ec.europa.eu/trade/import-and-export-rules/export-from-eu/dual-use-controls/
United Kingdom
U.K. Advises The European Union Export Control Regulation Is Directly Applicable To Northern Ireland
Sep. 14, 2021: The Department for International Trade Export Control Joint Unit (ECJU) issued a notice that EU Regulation 2021/821 is directly applicable in Northern Ireland. As a result, any applications for the export of dual-use items submitted to ECJU from 9 September from Northern Ireland will need to comply with this regulation. Notice to Exporters 2021/12 is on the ECJU website at https://www.gov.uk/government/publications/notice-to-exporters-202112-new-dual-use-regulation-eu-2021821/nte-202112-new-dual-use-regulation-eu-2021821.
The President
President Biden Continues The Cuban Assets Control Regulations
Sep. 7, 2021: President Biden exercised his authority under Public Law 95-223 (50 USC Sec. 4305 note), Sec. 101(b) to continue the exercise of the authorities implemented under the Cuban Assets Control Regulations CACR, 31 CFR Part 515, for one year, until Sep. 14, 2022. This action was necessary because the authorities regarding Cuba under the Trading With the Enemy Act which had previously authorized the CACR expired on Sep. 14, 2021. Presidential Determination No. 2021-12 is at https://www.whitehouse.gov/briefing-room/presidential-actions/2021/09/07/memorandum-on-the-continuation-of-the-exercise-of-certain-authorities-under-the-trading-with-the-enemy-act/.
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U.S. Trade Officials Attend Inaugural Meeting Of The Trade And Technology Council
Sep. 29, 2021: U.S. Secretary of State Antony Blinken, Commerce Secretary Gina Raimondo, and U.S. Trade Representative Katherine Tai joined senior European officials in Pittsburgh, PA, at the inaugural meeting of the Trade and Technology Council, a new U.S.-European group launched by President Biden and the Presidents of the European Council and the European Commission, to establish common principles for the 21st-century economy. Regarding export controls, they determined shared principles and areas for cooperation, including assisting third countries in building capacity to support multilateral export control regimes, holding prior consultations on current and upcoming legislative and regulatory developments, and developing convergent control approaches on sensitive dual-use technologies.
Department of Commerce – Bureau of Industry and Security
BIS Posts FAQs On The Classification Of Integrated Circuits For Program Protection Plans
Sep. 21, 2021: The Bureau of Industry and Security (BIS) posted FAQs on the classification of integrated circuits used in connection with U.S. Government programs and the development of Program Protection Plans to prevent the release of controlled technology during the lifetime of an acquisition involving the production of integrated circuits. For Department of Defense acquisition programs relying on onshore foundries for integrated circuit production and which include approved Program Protection Plans, authorized program personnel may rely, as necessary, on existing industry technology control plans to assist in certifying that export of technical data does not occur during the production of integrated circuits. FAQs 1A, 1B, and 2 are on the BIS website at https://www.bis.doc.gov/index.php/documents/pdfs/2838-classification-of-items-subject-to-the-ear/file.
Department of State
DDTC Name And Address Changes Posted To Website
Sep. 3, 23, 24, 27, 2021: The Directorate of Defense Trade Controls (DDTC) posted the following name and/or address changes on its website at
- Change in Name from L3Harris Technologies, Inc. Combat Propulsion Systems Division (L3Harris CPSD) to RENK America, LLC due to the acquisition of L3Harris CPSD by Renk America;
- Change in Name from DigiNext LLC to CS Group – France due to merger of DigiNext into CS Group – France;
- Change in Name from Mission Systems Australia Pty Ltd to L3Harris Integrated Mission Systems Australia Pty Ltd due to corporate rebranding;
- Change in Address for Improbable LLC; and
- Change in Address for Hexadyne Corporation.
Each announcement includes a link to a notice detailing the change and its effects on pending and currently approved authorizations involving the listed entity.
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The State Department Imposed Sanctions On Russia Under The Chemical and Biological Weapons Control And Warfare Elimination Act Of 1991
Sep. 7, 2021 – 86 Fed. Reg. 50203, corrected Sep. 24 – 86 Fed. Reg. 53137: The State Department imposed sanctions on Russia under the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 (CBW Act, 22 U.S.C. 5604(a)) in addition to the sanctions it had imposed on March 18, 2021 (see March 2021 Regulatory Update), based on its determination that the Government of the Russian Federation had used chemical or biological weapons in violation of international law or lethal chemical or biological weapons against its own nationals. The new sanctions were based on the conclusion that Russia had not met conditions required under the law following the sanctions imposed in March.
The new sanctions prohibit exports to Russia of all other goods and technology (except food and other agricultural commodities and products), subject to significant waivers deemed essential to U.S. national security interests. The waivers include, among others, exports of goods or technology eligible under License Exceptions GOV, ENC, BAG, TMP, and AVS; new licenses issued on a case-by-case basis, consistent with the export licensing policy for Russia prior to the enactment of these sanctions for items controlled for AT, CC, FC, and RS reasons, goods or technology necessary for the safety of flight of civil fixed-wing passenger aviation, deemed exports and reexports, exports to wholly-owned U.S. and other foreign subsidiaries, and government space cooperation; and new licenses subject to a presumption of denial for items controlled for CB, MT, and NP reasons, licenses in support of commercial space launches, licenses for exports for commercial end uses, and exports to Russian state-owned or state-funded enterprises. Also, U.S. banks will be prohibited under most circumstances from making loans or providing credit to the Government of the Russian Federation, and most applications for permanent imports of Russian firearms or ammunition, as defined on the U.S. Munitions Import List (USMIL, 27 CFR 447.21, Categories I and III), will be denied in accordance with Section 38 of the Arms Export Control Act (AECA, 22 U.S.C. 2778) and Executive Order 13637.
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DDTC Extended Temporary Modification Of The ITAR Related To Cyprus
Sep. 30, 2021 – 86 Fed. Reg. 54044: DDTC extended through Sep. 30, 2022, the effective period of the temporary modification of the International Traffic in Arms Regulations (ITAR, 22 CFR Parts 120-130) that removed prohibitions on exports, reexports, retransfers, and temporary imports of non-lethal defense articles and defense services destined for or originating in the Republic of Cyprus. (See information about reasons for the ban and the authorization of a one-year Presidential waiver in September 2020 Regulatory Update.) During this period, applications for exports of non-lethal defense articles and non-lethal defense services to Cyprus will continue to be reviewed on a case-by-case basis, while applications for lethal defense articles and defense services will continue to be denied.
Department of the Treasury
OFAC Issues General Licenses Related to Humanitarian Exports To Ethiopia, Eritrea, And The Greater Horn Of Africa
Sep. 17, 2021: Concurrent with the issuance by President Biden of an Executive Order Imposing Sanctions on Certain Persons With Respect to the Humanitarian and Human Rights Crisis in Ethiopia (E.O. 14046 of Sep. 17, 2021, 86 Fed. Reg. 52389, Sep. 21, 2021), the Office of Foreign Assets Control issued Ethiopia General License Number 1, “Official Activities of Certain International Organizations and Other International Entities,” Ethiopia General License Number 2, “Certain Transactions in Support of Nongovernmental Organizations' Activities,” and Ethiopia General License Number 3, “Transactions Related to the Exportation or Reexportation of Agricultural Commodities, Medicine, Medical Devices, Replacement Parts and Components, or Software Updates,” all of which were targeted at supporting the U.S. commitment to support the people of Ethiopia, Eritrea, and the greater Horn of Africa region and ensuring that U.S. sanctions do not limit the ability of civilians in Ethiopia and the region to receive humanitarian support from the international community and to participate in certain transactions related to the exportation or reexportation of agricultural commodities, food, medicine, and medical items.
In addition, OFAC published several related frequently asked questions (FAQs 922, 923, 924, 925, 926, and 927). Details are in a White House Fact Sheet at https://www.whitehouse.gov/briefing-room/statements-releases/2021/09/17/fact-sheet-biden-harris-administration-actions-in-response-to-ongoing-crisis-in-northern-ethiopia/.
Also, the Fact Sheet stated that while imposing sanctions under E.O. 14046, the U.S. would take measures to mitigate unintended effects on the people of Ethiopia and the wider region, including seeking to ensure personal remittances to non-sanctioned persons, humanitarian assistance to at-risk populations, and longer-term assistance programs and commercial activities that address basic human needs in Ethiopia and the greater Horn of Africa region through legitimate and transparent channels.
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OFAC Issues Updated Advisory Regarding Malicious Cyber-Enabled Activities
Sep. 21, 2019: OFAC issued an updated advisory to highlight the sanctions risks associated with ransomware payments in connection with malicious cyber-enabled activities and the proactive steps companies can take to mitigate such risks, including actions that OFAC would consider to be “mitigating factors” in any related enforcement action. The advisory is on the Treasury Department website at https://home.treasury.gov/system/files/126/ofac_ransomware_advisory.pdf.
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OFAC Issues General Export Licenses Related To Afghanistan
Sep. 24, 2021: OFAC issued General License (GL) 14, “Authorizing Humanitarian Activities in Afghanistan,” and GL 15, “Transactions Related to the Exportation or Reexportation of Agricultural Commodities, Medicine, Medical Devices, Replacement Parts, and Components, or Software Updates in Afghanistan.” Both GL 14 and GL 15 authorize transactions involving the Taliban or the Haqqani Network, or any entity in which the Taliban or the Haqqani Network owns, directly or indirectly, individually or in the aggregate, a 50 percent or greater interest that would otherwise be prohibited by OFAC’s terrorism-related sanctions. GL 14, on the Treasury Department website at https://home.treasury.gov/system/files/126/ct_gl14.pdf, authorizes transactions by the U.S. Government, NGOs, and specified international organizations and entities and those acting on their behalf to provide humanitarian assistance or support basic human needs. GL 15, at https://home.treasury.gov/system/files/126/ct_gl15.pdf, authorizes all transactions that are ordinarily incident and necessary to the exportation or reexportation of agricultural commodities, medicine, medical devices, replacement parts and components for medical devices, or software updates for medical devices to Afghanistan, or to persons in third countries purchasing specifically for resale to Afghanistan.
OFAC also issued four FAQs related to GLs 14 and 15. FAQs 928, 929, 930, and 931 are at https://home.treasury.gov/policy-issues/financial-sanctions/faqs/928, https://home.treasury.gov/policy-issues/financial-sanctions/faqs/929, https://home.treasury.gov/policy-issues/financial-sanctions/faqs/930 and https://home.treasury.gov/policy-issues/financial-sanctions/faqs/931. A press release describing the Treasury Department’s aims regarding exports to Afghanistan is at https://home.treasury.gov/news/press-releases/jy0372.
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OFAC Issues FAQ Regarding Visiting Or Making Donations To The Imam Reza Hold Shrine In Iran
Sep. 30, 2021: OFAC issued a detailed FAQ discussing whether U.S. sanctions prohibit U.S. persons from visiting, or making donations to the Imam Reza Holy Shrine in Mashad, Iran. FAQ 932 is on the Treasury Department website at https://home.treasury.gov/policy-issues/financial-sanctions/faqs/932.
| LATEST SANCTIONS FINES & PENALTIES |
This section of our newsletter provides information on the latest sanctions, fines, and penalties for export violations or matters of non-compliance with the ITAR or EAR issued by the US government enforcement agencies. It is provided as a service to exporters and associates of FD Associates to remind them of the importance of extreme due diligence in all international trade and export compliance matters, particularly those involving exports subject to the ITAR or the EAR. Don't let this happen to you or your company! Call us with questions or concerns at 703-847-5801 or email info@fdassociates.net.
Sanctions
Department of Commerce
Sep. 7, 2021 – 86 Fed. Reg. 50021: BIS denied the export privileges of Luis Lopez of Donna, TX, until Dec. 17, 2029, based on his conviction in the U.S. District Court for the Southern District of Texas of violating 18 USC Sec. 554(a) by fraudulently and knowingly exporting and sending or attempting to export and send five AK-47 semi-automatic rifles from the U.S. to Mexico without the required authorization. In the criminal case, Lopez was sentenced to 37 months in prison, three years of supervised release, and a $100 assessment. BIS also revoked any BIS-issued licenses in which Lopez had an interest at the time of his conviction.
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Sep. 13, 2021 – 86 Fed. Reg. 50874: BIS denied the export privileges of Anastacio San Miguel-Padron of Big Spring Correctional Institution, Big Spring, TX, until Feb. 6, 2027, based on his conviction in the U.S. District Court for the Southern District of Texas of violating 18 USC Sec. 554 by fraudulently and knowingly exporting and sending or attempting to export or send from the U.S. to Mexico .38 super caliber ammunition, .40 caliber ammunition, 9mm caliber ammunition, and a 7.62 x 39 mm drum magazine. In the criminal case, Miguel-Padron was sentenced to 30 months in prison and a $100 assessment.
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Sep. 13, 2021 – 86 Fed. Reg. 50875: BIS denied the export privileges of Samy Jecrois of St. Petersburg, FL, until Feb. 1, 2024, based on his conviction in the U.S. District Court for the Southern District of Florida of violating 18 USC Sec. 554 by knowingly attempting to export and send a firearm from the U.S. to Haiti. In the criminal case, Jecrois was sentenced to 5 months in prison, two years of supervised release, and a $100 assessment.
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Sep. 13, 2021 – 86 Fed. Reg. 50875: BIS denied the export privileges of Akeem Shonari Awer of Big Spring Correctional Institution, Big Spring, TX, until Feb. 14, 2030, based on his conviction in the U.S. District Court for the Southern District of Florida of violating Sec. 38 of the AECA by knowingly and willfully attempting to export firearms and ammunition from the U.S. to Barbados without the required authorization from the State Department. In the criminal case, Awer was sentenced to 46 months in prison, two years of supervised release, and a $100 assessment.
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Sep. 14, 2021 -- 86 Fed. Reg. 51113: BIS denied the export privileges of Tengiz Sydykov of Arlington, VA, until Jan. 11, 2029, based on his conviction in U.S. District Court for the Eastern District of Virginia of violating Sec. 38 of the AECA by knowingly and willfully exporting and causing to be exported from the U.S. to Grozny, Chechnya, Russia, assembled firearms, fully assembled lower receivers, firearm slides, firearm barrels, firearm magazines, stocks, firearm frames, and additional functional firearms, designated as defense articles on the U.S. Munitions List (USML, 22 CFR Sec. 121.1), without the required authorizations from the State Department. In the criminal case, Sydykov was sentenced to 36 months in prison, three years of supervised release, and a $100 assessment.
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Sep. 14, 2021 – 86 Fed. Reg. 51114: BIS denied the export privileges of Rrok Martin Camaj of Federal Correctional Institution Morgantown, Morgantown, WV, until Feb. 28, 2030, based on his conviction in U.S. District Court for Eastern District of Michigan of violating Sec. 38 of the AECA by knowingly and willfully exporting and causing to be exported from the U.S. to Australia pistol frames/receivers, magazines, pistol kits, and other firearm parts which were defense articles on the USML without the required authorizations from the State Department. In the criminal case, Camaj was sentenced to 42 months in prison, three years of supervised release, and a $100 assessment.
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Sep. 14, 2021 – 86 Fed. Reg. 51115: BIS denied the export privileges of Eli Ramirez-Rios of Matamoros, Tamaulipas, MX, until Feb. 26, 2027, based on his conviction in the U.S. District Court for the Southern District of Texas of violating 18 USC Sec. 554(a) by knowingly exporting and sending or attempting to export and send from the U.S. to Mexico, a Palmetto State Armory Build the Wall L10, AR-10 rifle with an obliterated serial number. In the criminal case, Ramirez-Rios was sentenced to 28 months in prison and a $100 assessment.
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Sep. 14, 2021 – 86 Fed. Reg. 51116: BIS denied the export privileges of Katherine O’Neal, of Colorado Springs, CO, based on her conviction in U.S. District Court for Colorado of violating 18 USC Sec. 554 by fraudulently and knowingly exporting firearms from the U.S. to the Dominican Republic. In the criminal case, O’Neal was sentenced to 36 months in prison, three years of supervised release, and a $100 assessment.
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Sep. 14, 2021 – 86 Fed. Reg. 51117: BIS denied the export privileges of Andy Lloyd Huebschmann of Chilton, WI, until Dec. 13, 2029, based on his conviction in the U.S. District Court for the Eastern District of Wisconsin of violating AECA Sec. 38 by knowingly and willfully exporting and causing to be exported from the U.S. to Australia defense articles including a rifle kit with a Model GA 9mm lower receiver, upper receiver, barrel, trigger control group, bolt carrier, and pistol grip. In the criminal case, Huebschmann was sentenced to 24 months in prison, one year of supervised release, a criminal fine of $15,000, and a $100 assessment, and BIS also revoked any BIS-issued licenses in which he had an interest at the time of his conviction.
Fines and Penalties
Sep. 8, 2021: Shuren Qin of Wellesley, MA, a Chinese national, was sentenced in federal court in Boston to a two-year prison sentence, two years of supervised release, and a $20,000 fine after admitting that he had exported at least 60 hydrophones – devices used to monitor sound underwater – valued at more than $100,000 to Northwestern Polytechnical University (NWPU), a military research institute in Xi’an, China that works closely with the Chinese People’s Liberation Army (PLA) on the advancement of its military capabilities, without the required authorization from the Commerce Department. NWPU has been on the Entity List (15 CFR Part 744, Supp. No. 4) since 2001. Qin, a marine biologist, was aided in the illegal exports by LinkOcean Technologies, LTD, a company that he established and used to import into the PRC goods and technology with underwater and marine applications from the U.S., Canada, and Europe. According to prosecutors, Qin and LinkOcean purposely concealed from their U.S. supplier that the hydrophones were going to NWPU, causing false end-user information to be filed with the U.S. Government. Qin will face deportation proceedings upon completion of his sentence.
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Sep. 9, 2021: NewTek, Inc., a company headquartered in San Antonio, Texas that developed and supplied live production and 3D animation hardware and software systems, agreed to pay $189,483 to settle its potential civil liability for 52 apparent violations of the Iranian Transactions and Sanctions Regulations (ITSR, 31 CFR Part 560). The apparent violations occurred from 2013 through 2018, when NewTek exported goods, technology, and services from the United States to two third-country distributors that it knew or had reason to know were specifically intended for a reseller located in Iran. The Iranian reseller sold three of the exported products to Islamic Republic of Iran Broadcasting (IRIB), an entity that at that time was included on OFAC’s List of Specially Designated Nationals and Blocked Persons (the “SDN List”). At least three times NewTek provided support, software updates, reseller training, or other services in support of sales to customers located in Iran. Further, NewTek was a party to a distribution agreement that specifically excluded Iran from the sales territory.
According to OFAC, the base civil monetary penalty amount in this case, taking into consideration that NewTek voluntarily self-disclosed the apparent violations and that OFAC determined that the violations constituted a non-egregious case, was $291,512; however, the penalty was reduced to $189,483 in consideration of mitigating factors, including that NewTek had substantially cooperated with OFAC during the investigation and that it had taken extensive remedial actions. A detailed description of the case, including the factors that influenced the penalty, is on the Treasury Department website at https://home.treasury.gov/system/files/126/20210909_newtek.pdf.
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Sep. 14, 2021: U.S. citizens Marc Baier and Ryan Adams and former U.S. citizen Daniel Gericke, all former employees of the U.S. Intelligence Community (USIC) or the U.S. Military, agreed in a deferred prosecution agreement (DPA) with the U.S. Department of Justice (DOJ) to pay penalties of $750,000, $600,000, and $335,000, respectively, and to accept restrictions on their future employment and activities to resolve a DOJ investigation regarding violations of U.S. export control, computer fraud, and access device fraud laws. Baier, Adams, and Gericke (“the defendants”) worked as senior managers of a team known as Cyber Intelligence-Operations (CIO) at a company based in the United Arab Emirates (“UAE Co.”) that supported and carried out computer network exploitation (CNE) operations (i.e., “hacking”) for the benefit of the UAE Government, including supporting, directing, and supervising UAE Co. employees in creating sophisticated “zero-click” hacking and intelligence-gathering systems that the defendants knew were used to illegally obtain and use access credentials for online accounts issued by the U.S. and other companies, and gain access to computers and mobile phones around the world, including in the U.S. Subsequently, the CIO team expanded the breadth and sophistication of their CNE operations, including creating two additional “zero-click” systems that leveraged servers in the U.S. to obtain unauthorized access to tens of millions of smartphones and mobile devices. The defendants did all this work without a license from the U.S. State Department despite having been informed on several occasions that this work constituted a “defense service” under the ITAR.
Prior to their employment at UAE Co., the defendants had worked for a U.S. company that provided cyber services to a UAE Government agency in compliance with a DDTC-issued Technical Assistance Agreement that specifically required the parties to abide by U.S. export control laws, including not targeting U.S. persons and obtaining preapproval from the U.S. Government prior to releasing information regarding the cryptographic analysis. This company also provided periodic ITAR and TAA training, and prior to the defendants’ departure for UAE Co., it told them that the services they were providing constituted “defense services” under the ITAR which they could not provide to UAE Co. without obtaining a separate TAA.
The DPA signed by the defendants provided, in addition to the monetary penalties, that they would cooperate fully with the relevant DOJ and FBI components; relinquish any foreign or U..S. security clearances and accept a lifetime ban on future U.S. security clearances; accept future employment restrictions including a prohibition on employment that involves CNE activity or exporting defense articles or providing defense services under the ITAR; and restrictions on employment with certain UAE organizations.
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Sep. 14, 2021: Mehrdad Ansari, an Iranian citizen resident in the UAE and Germany, was sentenced to 63 months in prison followed by three years of supervised release based on his conviction of one count each of violating the ITSR, conspiracy to commit wire fraud, conspiracy to defraud the U.S. Department of the Treasury and two counts of aiding and abetting the making of false statements in connection with his attempts to transship to Iran testing equipment obtained from the U.S. by co-defendants Susan Yip, aka Susan Yeh, a citizen of Taiwan, and Mehrdad Foomanie, aka Frank Foomanie, a citizen of Iran, using Ansari’s companies in Dubai, UAE, Gulf Gate Sea Cargo LLC, and Global Merchant LLC.
Yip and Foomanie obtained or attempted to obtain from companies worldwide over 105,000 parts valued at approximately $2,630,800. They did not notify their U.S. sellers that these parts would be shipped to Iran, and neither they nor Ansari ever applied for the license from OFAC or the Department of Commerce that was required to ship any of these goods to Iran.
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Sep. 27, 2021: Cameron International Corporation of Houston, TX, a subsidiary of Schlumberger Limited, agreed to pay $1,423,766 to settle its potential liability for apparent violations of the Ukraine-Related Sanctions Regulations (URSR, 31 CFR Part 589) involving the approval by U.S.-person senior managers at Cameron of contracts for its subsidiary, Cameron Romania S.R.L., to supply oil production or exploration goods to Gazprom-Neft Shelf, a Russian energy firm, for use in an offshore project in the Russian Arctic, a prohibited destination. The contracts that were approved by the Cameron senior managers referenced the oil-related nature of the project and the fact that the Russian Arctic was the destination of the goods.
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Sep. 27, 2021: Schlumberger Rod Lift, Inc. (SRL, now d/b/a Lufkin Rod Lift, Inc.), of Frisco, TX, formerly a subsidiary of Schlumberger Lift Solutions LLC (SLS), which itself was a U.S. subsidiary of Schlumberger Limited (“Schlumberger”) of Curacao, Netherlands, agreed to pay $160,000 to settle its potential liability incurred on one occasion when three U.S.-person employees of SRL – two of whom were senior managers -- facilitated the sale and shipment of oilfield equipment from a Schlumberger subsidiary in Canada to a Schlumberger joint venture in China, for ultimate delivery to Sudan. The facilitation of the export to Sudan was at the time a violation of the since-repealed Sudanese Sanction Regulations (SSR, 31 CFR Part 538). The U.S.-person employees who approved the transaction knew that the equipment was destined for Sudan and that Sudan was a prohibited destination.
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Sep. 27, 2021: Virgil Griffith, a U.S. citizen resident in Singapore, pled guilty in federal court in New York City to conspiring to violate the International Emergency Economic Powers Act (IEEPA, 50 USC Sec. 1701 -1707) by providing services to the Democratic People’s Republic of Korea (DPRK or North Korea) including technical advice on using cryptocurrency and blockchain technology to evade sanctions. Griffith knew that the DPRK could use actions involving cryptocurrency to evade and avoid U.S. sanctions and to fund its nuclear weapons program and other illegal activities. In April 2019 Griffith traveled to the DPRK, despite the State Department’s denial of permission to travel to the DPR, where he delivered presentations at the Pyongyang Blockchain and Cryptocurrency Conference, knowing that this violated U.S. sanctions against the DPRK, and also provided instruction on how the DPRK could use blockchain and cryptocurrency technology to launder money, evade sanctions, and assist with nuclear weapons negotiations with the U.S. Griffith also attempted to broker introductions for the DPRK to other cryptocurrency and blockchain service providers. At no time did he obtain permission from OFAC to provide goods, services, or technology to the DPRK.
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Sep. 28, 2021: Medtronic Mediterranean SAL (Lebanon), a controlled-in-fact foreign affiliate of Medtronic, Inc., a domestic company, agreed to pay a civil penalty of $13,750 to resolve charges by the BIS Office of Antiboycott Compliance that it had committed 11 violations of EAR Sec. 760.5, Failing to Report the Receipt of a Request to Engage in a Restrictive Trade Practice or Foreign Boycott Against a Country Friendly to the U.S. If Medtronic Mediterranean does not pay this penalty within 30 days after the entry of the Order, BIS may deny all of its export privileges for one year.
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Sep. 28, 2021: Silicon Space Technology Corporation, d/b/a Vorago Technologies, Inc., of Austin, TX, agreed to pay an administrative penalty of $497,000 (of which $247,000 will be suspended until September 2023 and thereafter waived, if Vorago has paid the full $250,000 and committed no further violation) and accept a suspended denial of export privileges under the Export Administration Regulations (EAR, 15 CFR Parts 730-774) until September 2023 to settle allegations by BIS that it had conspired to export radiation-hardened 16 Mb SRAM silicon wafers controlled on the Commerce Control List (CCL, EAR Part 774, Supp. No. 1) under Export Control Classification Number (ECCN) 9A515.e.1 to Russia via a Bulgarian company without obtaining the required license from the Department of Commerce. The exported goods required an export license for export to Russia, but not for export to Bulgaria. [* Charging Letter and Settlement Agreement: https://efoia.bis.doc.gov/index.php/documents/export-violations/export-violations-2021/1333-e2686/file]
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Sep. 29, 2021: Oleg Vladislavovich Nikitin, of St. Petersburg, Russia, the general director of KS Engineering (KSE), a St. Petersburg-based energy company, was sentenced in U.S. Court for the Southern District of Georgia to 28 months in prison and a fine of $5,000 based on his plea of guilty of conspiracy to violate the IEEPA, the Export Control Reform Act (ECRA, 50 USC § 4801 et seq.), and the EAR. Nikitin, KSE, and an Italian company, GVA International Oil and Gas Services, all participated in this conspiracy, which involved obtaining a turbine in the U.S. and exporting it for ultimate use on a sanctioned Russian Arctic deepwater drilling platform. (See additional details about this project in August 2021 Regulatory Update.) In addition to the prison term and fine, Nikitin was also ordered to be subject to deportation upon completion of his prison term, and KSE and GVA were ordered to serve five years’ probation.