March 2021 Updates

This newsletter is a listing of the latest changes in export control regulations through March 31, 2021.  The newsletter is provided as a complimentary service to assist exporters with their ITAR and EAR export compliance responsibilities. It provides a summary of recent changes to export control regulations or other regulatory matters of interest that may impact your company’s international trade and export compliance functions. Call us at 703-847-5801 or email info@fdassociates.net with questions or comments.

See also our “Latest Sanctions Fines & Penalties” section below for an update on companies and

persons denied export privileges by the United States Government.

 

REGULATORY UPDATES  

European Union

EU To Establish A Union Regime For Export Controls Of Dual-Use Items

March 25, 2021:  The European Parliament agreed to adopt a regulation establishing a Union regime for the control of exports, transfer, brokering, technical assistance and transit of dual-use items.  This rule, which still requires agreement by the European Council, is on the European Parliament website  at https://www.europarl.europa.eu/doceo/document/TA-9-2021-0101_EN.pdf ; a press release describing it is at https://www.europarl.europa.eu/news/en/press-room/20210322IPR00534/parliament-agrees-to-new-eu-export-rules-on-dual-use-items?xtor=AD-78-[Social_share_buttons]-[linkedin]-[en]-[news]-[pressroom]-[control-of-exports-transfer-brokering-technical-assistance.

United Kingdom

The United Kingdom Export Control Joint Unit (ECJU) Published Updated Guidance On Transferring Military And Dual Use Technology

 

March 24, 2021:  The United Kingdom Export Control Joint Unit (ECJU) published updated detailed guidance on the scope of U.K. regulations on transferring controlled military or dual-use technology and the definitions of terms used in those regulations. This information can be accessed at https://www.gov.uk/government/publications/exporting-military-or-dual-use-technology-definitions.

U.S. – Miscellaneous 

DOS/ISN, OFAC and BIS Jointly Issued A North Korea Ballistic Missile Advisory

March 11, 2021:  The U.S. State Department of State Bureau of International Security and Nonproliferation (ISN), the Treasury Department Office of Foreign Assets Control (OFAC), and the Commerce Department Bureau of Industry and Security (BIS) jointly issued a North Korea Ballistic Missile Advisory identifying key North Korean ballistic missile procurement entities, describing their deceptive procurement techniques, and listing key materials and equipment used in the ballistic missile program.  The Advisory is intended to aid persons that produce or trade in these products or provide related services in establishing procedures and making informed decisions to avoid the risk of violating United Nations, U.S., and other sanctions and laws.  This 19-page Advisory is on the BIS website at https://www.bis.doc.gov/index.php/documents/policy-guidance/2625-2020-north-korea-ballistic-missile-advisory-005/file.

Department of Commerce – Bureau of Industry and Security

BIS Adds 14 Entities In Germany, Russia and Switzerland To The Entity List

March 4, 2021 — 86 Fed. Reg. 12529:  BIS amended the Export Administration Regulations (EAR, 15 CFR Parts 730-774) by adding 14 entities in Germany, Russia, and Switzerland to the Entity List (EAR Part 744, Supp. No. 4) based on a determination that each of these entities had acted contrary to the national security or foreign policy interests of the U.S. by engaging in proliferation activities in support of Russia’s weapons of mass destruction programs and chemical weapons activities.  The 14 entities are:

  • Germany
    Chimconnect Gmbh;
    Pharmcontract Gmbh; and
    Riol-Chemie
  • Russia
    27th Scientific Center of the Russian Ministry of Defense;
    Chimmed Group;
    Femteco;
    Interlab;
    LabInvest;
    OOO Analit Products;
    OOO Intertech Instruments;
    Pharmcontract GC; and
    Rau Farm
  • Switzerland

      Chimconnect AG

A license requirement with a policy of denial will now apply to exports, reexports, or in-country transfers to these persons of all items subject to the EAR, and no license exceptions will be available.     

The rule also corrected one existing Entity List entry for the destination of Germany for the entity “Huawei OpenLab Munich,” and five entries for China.

*******

BIS Amends The EAR To Apply More Restrictive Treatment To Myanmar (Burma)

March 8, 2021 – 86 Fed. Reg. 13173:  In response to the military coup that overthrew the elected government of Myanmar (Burma), BIS made the following amendments to the EAR to apply more restrictive treatment to exports and reexports to, and in-country transfers within, Myanmar:

  • Moved Burma from Country Group B to Country Group D:1 (EAR Part 740, Supplement No. 1), resulting in –
    • Removal or limitation of eligibility for the following License Exceptions:
  • Shipments of Limited Value (LVS) (EAR Sec. 740.3);
    • Shipments to Group B Countries (GBS) (Sec. 740.4);
    • Technology and Software under Restriction (TSR) (Sec. 740.6);
    • Temporary Imports, Exports, Reexports, and Transfers (in-country) (TMP) (Sec. 740.9);
    • Servicing and Replacement Parts and Equipment (RPL) (Sec. 740.10);
    • Aircraft, Vessels, and Spacecraft (AVS) (Sec.740.15);
    • Additional Permissive Reexports (APR) (Sec. 740.16(j)); and
    • Encryption Commodities, Software and Technology (ENC) (Sec. 740.17);
  • Restrictions on the export, reexport, and transfer (in-country) of certain microprocessors and associated “software” and “technology” to “military end uses” and “military end users” in Myanmar;
  • Restrictions on certain exports and reexports to vessels and aircraft located in ports in Myanmar or owned, operated or controlled by Myanmar or a Myanmar national; and
  • Imposition of licensing requirements for reexports of foreign-produced direct products of certain U.S.-origin technology and software to Myanmar (General Prohibition Three, EAR Sec. 736.2(b)(3)).
  • Changes in licensing policy to policies associated with Sec. 744.21 for military end use and end user controls, and with Sec. 742.4(b)(7) for NS-controlled items.

*******

BIS Added Four Entities To The Entity List

March 8, 2021 – 86 Fed. Reg. 13179:  BIS amended the EAR by adding four entities in Myanmar to the Entity List to support U.S. Government efforts to promote a return to democracy in Myanmar and prevent Myanmar’s military and security services from obtaining items subject to the EAR.  The four Myanmar  entities are:

  • Ministry of Defence;
  • Ministry of Home Affairs;
  • Myanmar Economic Corporation; and
  • Myanmar Economic Holdings Limited.

*******

BIS Revises Incorrect Instruction Related To “Military-Intelligence End User” or “Military-Intelligence End Use”

March 17, 2021 – 86 Fed. Reg. 14534:  BIS revised an incorrect instruction in the January 15, 2021, rule (86 Fed. Reg. 4865) that created a new license requirement for transactions involving a “military-intelligence end user” (MIEU) or “military-intelligence end use” in certain countries (see January 2021 Regulatory Update). BIS updated an instruction error, which directed the revision of paragraph (a)(3) of § 744.3 of the EAR, rather than only the introductory text of that paragraph, upon its effective date, the January 15 rule would have resulted in the inadvertent deletion of § 744.3(a)(3)(i) and (ii) of the EAR, which describe the license requirements that apply when an exporter, reexporter, or transferor cannot determine the range capabilities of a rocket system or unmanned aerial vehicle (UAV) in certain countries of missile technology concern (Country Group D:4) (see Supplement No. 1 to part 740 of the EAR), or whether such rocket system or UAV will be used in connection with the delivery of certain weapons of mass destruction. Following the incorrect instruction would have resulted in the inadvertent deletion of § 744.3(a)(3)(i) and (ii) restricting certain rocket systems and unmanned aerial vehicles.

*******

BIS Imposes Sanctions On Russia

March 18, 2021 – 86 Fed. Reg. 14689:   BIS issued a Notification of Implementation of sanctions imposed on Russia by the State Department pursuant to a determination under the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 (CBW Act) that Russia had used chemical or biological weapons in violation of international law or lethal chemical or biological weapons against its own nationals.  (See State Department March 2 announcement in State Department section below.)  The sanctions imposed by BIS under this State Department determination include a prohibition, subject to a partial waiver, on the export to Russia of national security-controlled goods and technology subject to the EAR.  Accordingly, BIS will now review license applications for exports and reexports to Russia of items controlled for national security (NS) reasons under a presumption of denial and will suspend License Exceptions (LEs) Servicing and Replacement Parts and Equipment (RPL), Technology and Software Unrestricted (TSU), and Additional Permissive Reexports (APR) for NS items destined for Russia.

 

However, a partial waiver will continue to permit the use of the following LEs for such exports and reexports:  Temporary Imports, Exports, Reexports, and Transfers (TMP); Governments, International Organizations, International Inspections under the Chemical Weapons Convention and the International Space Station (GOV); Baggage (BAG); Aircraft, Vessels and Spacecraft (AVS), and Encryption Commodities, Software, and Technology (ENC).  Also, license applications for the export and reexport to Russia of the following NS-controlled items will be reviewed under the licensing policy in effect prior to these sanctions:  items necessary for the safety of flight of civil fixed-wing passenger aviation; deemed exports and reexports to Russian nationals; items destined for wholly-owned U.S. subsidiaries and other foreign subsidiaries of U.S. companies that are located in Russia; items in support of government space cooperation; and (until Sep. 1, 2021 only) items in support of commercial space launch activities.

*******

BIS Publishes Interim Final Rulemaking, Which Allows The Secretary Of Commerce To Prohibit Certain Information And Communications Technology And Services Supply Chain (ICTS) Transactions

March 29, 2021 – 86 Fed. Reg. 16312:  On Jan. 19, 2021 BIS published an interim final rulemaking, effective March 22, 2021 (86 Fed. Reg. 4909 – see January 2021 Regulatory Update), which allowed the Secretary of Commerce to prohibit certain Information and Communications Technology and Services Supply Chain (ICTS) transactions to address national security threats and committed BIS to implement a pre-approval licensing process or similar program that would reduce uncertainty for entities seeking to engage in ICTS transactions. 

The March 29, 2021 announcement is an Advance Notice of Proposed Rulemaking (ANPRM) seeking comments on such a pre-clearance process.  The announcement includes several detailed questions for which responses would be of particular interest.  Deadline for comments is April 28, 2021.

*******

BIS Amends The Commerce Control List And Related EAR Provisions To Conform With Changes In The Wassenaar Arrangement

March 29, 2021 – 86 Fed. Reg. 16482:  BIS amended the Commerce Control List (CCL, EAR Part 774, Supp. No. 1) and related EAR provisions to conform with changes in the Wassenaar Arrangement (WA) dual-use control list that had been agreed upon at the WA 2019 Plenary meeting.  The changes include elimination of reporting requirements in some encryption items to reduce the regulatory burden for exporters; changes in various provisions related to CCL Category 5 – Part 2 (Information Security) including LE Encryption Commodities, Software, and Technology (ENC); and changes in the following 22 Export Control Classification Numbers (ECCNs):  0A502, 0A503, 0A606, 1A002, 1A005, 1A006, 1A613, 1B002, 1C001, 1C002, 1C006, 1C010, 2A001, 3B001, 3E002, 5A002, 6A004, 6A005, 6A008, 9A011, 9D515, 9E003.  Contact us if your company works in these effected ECCNs to learn more details.

Department of State

Editor’s Notes: 

In response to a client inquiry, we learned that the State Department Directorate of Defense Trade Controls (DDTC) accepts digital signatures from U.S.-registered applicants on transmittal letters for Agreements.  However, DDTC does not currently accept a digital signature as valid to sign an approved Technical Assistance Agreement or Manufacturing License Agreement. DDTC will accept a PDF copy of a pen-and-ink signature as an acceptable signature for an Agreement.

Annual Sales Reports for 2020 – It’s time to uploaded the Annual Sales reports for your Manufacturing License Agreements and Warehouse Distribution Agreements to DDTC/DECCS.

*******

DDTC Name And Address Changes Posted To Website

March 4, 22, and 29, 2021:  DDTC posted the following name and/or address changes on its website at    

https://www.pmddtc.state.gov/ddtc_public?id=ddtc_kb_article_page&sys_id=bd72ca0adbf8d30044f9ff621f961981:

  • Change in Name from Wajax Industrial Components Limited Partnership to Delom Services Inc., due to corporate rebranding;
  • Change in Name from CMI Defence S.A. to John Cockerill Defense S.A. due to corporate rebranding;
  • Change in Name from Geodis USA, Inc., to Geodis USA, LLC, due to corporate restructure;
  • Change in Name from Rolls-Royce plc to ITP Aero UK Limited due to transfer of business unit (Hucknall, UK, manufacturing plant and personnel) to ITP Aero;
  • Change in Name from Andoya Test Center AS to Andoya Space Defence AS due to corporate rebranding of Andoya Space subsidiary;
  • Changes in Name of the following foreign entities resulting in formation of the HTM Technologies Group:
  • PM Aerotec B.V. to HTM Aerotec B.V.;
  • PM Precision B.V. to HTM Precision B.V.; and
  • PM PSM B.V. to HTM PSM B.V.;
  • Change in Name of the following Maxar Technologies Inc. subsidiaries due to corporate rebranding:
  • Space Systems/Loral, LLC to Maxar Space LLC;
  • SSL Robotics LLC to Maxar Space Robotics LLC;
  • DigitalGlobe, Inc. to Maxar Intelligence Inc.;
  • DigitalGlobe International Inc. to Maxar International Inc.;
  • Radiant Missions Solutions Inc. to Maxar Mission Solutions Inc.;
  • Radiant Analytic Solutions Inc. & Radiant Geospatial Solutions LLC to Maxar Mission Solutions Inc.;
  • DigitalGlobe International Great Britain Limited to Maxar International Great Britain Limited;
  • DigitalGlobe International India Private Limited to Maxar International India Private Limited;
  • DigitalGlobe Australia Pty. Ltd. to Maxar Australia Pty. Ltd;
  • DigitalGlobe International Asia Pacific Pte. Ltd. to Maxar International Asia Pacific PTE. Ltd.;
  • GeoEye Middle East Ltd. to Maxar Middle East Ltd.; and
  • DigitalGlobe International Canada Inc. to Maxar International Canada Inc.
  •  

Each announcement includes a link to a notice detailing the change and its effects on pending and currently approved authorizations involving the listed entity.

*******

The State Department Posts A Fact Sheet, “U.S. Sanctions And Other Measures Imposed On Russia In Response To Russia’s Use Of Chemical Weapons”

March 2, 2021:  The State Department posted a Fact Sheet, “U.S. Sanctions and Other Measures Imposed on Russia in Response to Russia’s Use of Chemical Weapons,” on its website at https://www.state.gov/u-s-sanctions-and-other-measures-imposed-on-russia-in-response-to-russias-use-of-chemical-weapons/ 

announcing that the Secretary of State had “determined that the Government of the Russian Federation has used a chemical weapon against its own nationals, in violation of the Chemical Weapons Convention,” and that as a result, specific sanctions (subject to specified full or partial waivers) would be imposed after a 15-day Congressional notification period.  The sanctions, which will require implementation by the appropriate government agency actions, include termination of the following with respect to Russia:

  • Assistance under the Foreign Assistance Act of 1961, except for urgent humanitarian assistance and food or other agricultural commodities;
  • Sales of defense articles or defense services under the Arms Export Control Act (AECA, 22 USC 2778 et seq.) and licenses for the export of any item on the U.S. Munitions List (USML, 22 CFR Sec. 121.1), except in support of government space cooperation and, for only 6 months, commercial space cooperation;
  • Foreign military financing under the AECA;
  • S. Government credit or other financial assistance; and
  • Exports of goods or technology on the National Security Control List established under 50 App. Sec. 2404(c)(1).

Currently applicable waivers that will remain available, with license applications reviewed on a case-by-case basis include:

  • Foreign assistance – waived in all respects;
  • Certain waivers currently available for existing sanctions, including –
    • As noted earlier, export license exceptions TMP, GOV, BAG, AVS, or ENC;
    • As noted earlier, exports to ensure the safe operation of commercial passenger aviation;
    • Exports to wholly-owned subsidiaries of U.S. and other foreign companies in Russia;
    • Deemed export licenses for Russian nationals working in the U.S.; and
    • Exports in support of government space cooperation.

However, some currently applicable waivers will no longer be available, including:

  • As noted earlier, EAR export license exceptions RPL, TSU, and APR;
  • Exports and reexports of EAR NS items to commercial end-users in Russia for civil end-uses; and
  • After a 6-month transition period, exports of USML and NS items in support of commercial space flight activities in Russia.

In the same Fact Sheet, DDTC also announced new designations by the State Department and the Treasury Department under the Countering America’s Adversaries Through Sanctions Act (CAATSA) Sec. 231 List of Specified Persons; Section 1(a)(ii) of E.O. 13382 (“Blocking Property of Weapons of Mass Destruction Proliferators and Their Supporters”); and E.O. 13661 (“Blocking Property of Additional Persons Contributing to the Situation in Ukraine”).

*******

DDTC Updates Its Website Content Related To The Canadian Exemption

March 15, 2021:  DDTC announced that it had refreshed its website content related to Canada, including updated information about the Canadian exemption, key Canadian partners, Canada’s Controlled Goods

Program, a Canadian exemption user guide, and FAQs.  The updated content is on the DDTC website in the “Country Policies” section under “Canadian exemption,” or https://www.pmddtc.state.gov/ddtc_public?id=ddtc_kb_article_page&sys_id=31002473dbb8d300d0a370131f9619b0.

*******

DDTC Adds Russia As A Sanctioned Destination

March 18, 2021 – 86 Fed. Reg. 14802:   Consistent with the March 2, 2021 announcement of the determination by the Secretary of State that Russia had violated international law by its use of chemical weapons (see item above), the Department of State added Russia to the list in Sec. 126.1 of the International Traffic in Arms Regulations (ITAR, 22 CFR Parts 120-130) of countries that are subject to a policy of denial of exports of defense articles and defense services.  Specifically, ITAR Sec. 126.1(d)(2) was amended to subject Russia to a policy of denial for exports of defense articles and defense services with the exception of case-by case review of exports to Russia in support of government space cooperation and – for six months only – exports related to commercial space launches.

*******

The State Department Issues A Notice Implementing Sanctions Against Russia

March 18, 2021 – 86 Fed. Reg. 14804:  The State Department issued a Notice of Sanctions implementing the sanctions against Russia described in its March 2 notice (see item above).  The sanctions are based on the authority of the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 (22 U.S.C. Sec. 5604 and 5605), with waivers essential to U.S. national security.   The sanctions, all specific to Russia and all “to be implemented by the responsible departments and agencies of the U.S. Government,” include:

  • Foreign Assistance under the Foreign Assistance Act of 1961, except urgent humanitarian assistance and food or other agricultural commodities or products, with application waived because essential to U.S. national security interests;
  • Arms Sales: Sales under the AECA of defense articles, defense services, or design and construction services, and export licenses of any item on the USML, with waivers relating to certain space activities;
  • Arms Sales Financing: All foreign military financing under the AECA;
  • Denial of U.S. Government Credit or Other Financial Assistance:  Any credit or other financial assistance by any U.S. Government instrumentality, including the U.S. Export-Import Bank;
  • Exports of National Security-Sensitive Goods and Technology on control list established under 50 USC 4813(a)(1), with specified full or partial waivers and license requirements for exports and reexports involving –
    • EAR License Exceptions GOV, ENC, BAG, TMP, and AVS;
    • Safety of Flight: Goods or technology pursuant to new licenses necessary for the safety of flight of civil fixed-wing passenger aviation;
    • Deemed Exports/Reexports:  Deemed exports to Russian nationals;
    • Wholly-Owned U.S. and Other Foreign Subsidiaries in Russia;
    • Government Space Cooperation;
    • Commercial Space Launches (only until Sep. 21, 2021);
    • Goods or technology pursuant to new licenses for commercial end-users civil end-uses; and
    • Goods or technology pursuant to new licenses for Russian state-owned or state-funded enterprises.

Department of the Treasury

OFAC Issues Cyber-Related General License 1B Regarding Russia

March 2, 2021:  The Treasury Department Office of Foreign Assets Control (OFAC) issued Cyber-related General License 1B “Authorizing Certain Transactions with the Federal Security Service” (https://home.treasury.gov/system/files/126/cyber_gl1b.pdf) authorizing a narrow range of transactions and activities involving the Russian Federal Security Service acting in its administrative and law enforcement capacities. The GL was issued to ensure that U.S. persons engaging in certain business activities in Russia that are not otherwise prohibited are not unduly impacted.  OFAC also amended and issued three related FAQs on its website at https://home.treasury.gov/policy-issues/financial-sanctions/faqs/501, https://home.treasury.gov/policy-issues/financial-sanctions/faqs /502, and https://home.treasury.gov/policy-issues/financial-sanctions/faqs /503.

*******

OFAC Adjusts Civil Monetary Penalties

March 17, 2021 – 86 Fed. Reg. 14534:  OFAC issued a final rule adjusting civil monetary penalties (CMPs) for violations of the statutes it administers for inflation pursuant to the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, effective March 17, 2021.  The current and new maximum penalties are:

 

Statute

Existing Maximum

CMP Amount

Maximum CMP

Amount Effective

March 17

Trading With the Enemy Act

$90,743

$91,816

International Emergency Economic Powers Act

$307,922

$311,562

Antiterrorism and Effective Death Penalty Act of 1996

$81,283

$82,244

Foreign Narcotics Kingpin Designation Act

$1,529,991

$1,548,075

Clean Diamond Trade Act

$13,910

$14,074

 

The rule also includes updated CMPs for violations of recordkeeping requirements.

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

March 11, 2021 – 86 Fed. Reg. 13876:  BIS denied the export privileges of Alexander Brazhnikov, Jr., of Mountainside, NJ, for 15 years based on his participation in a multi-year conspiracy to export U.S.-origin electronic components to Russia without the required export licenses, including exports to a Russian entity whose public website states that it is a world-class nuclear weapons center.  The conspiracy included the use of front companies and falsification of shipping documents to understate the value of the items to evade the requirement of filing Electronic Export Information with the U.S. Government.  Brazhnikov pleaded guilty in federal court for the District of New Jersey to charges of smuggling and conspiracy to commit money laundering and was sentenced to 70 months in prison, a $75,000 criminal fine, a $56 million forfeiture, forfeiture of his two houses valued at approximately $500,000 each, and a $200 special assessment.

*******

March 30, 2021 – 86 Fed. Reg. 16578:  BIS denied the export privileges of Alonso Gonzalez-Granados for 5 years based on his March 8, 2019, conviction in U.S. District Court for the Western District of Texas of violating 18 U.S.C. 554(a) by exporting and unlawfully sending from the U.S., and attempting to export and send from the U.S., 50 rifle magazines and two boxes of ammunition without the required State Department licenses.  In the criminal case, Gonzalez-Granados was sentenced to 10 months in prison with credit for time served and supervised release for two years.

*******

March 30, 2021 – 86 Fed. Reg. 16579:  BIS denied the export privileges of Mark Hammond based on his conviction in U.S. District Court in Arizona of violating Sec. 38 of the AECA by knowingly and willfully exporting and causing to be exported from the U.S. to Mexico 5 AK-47 Draco Mini Pistols and 5 30-round firearms magazines designated as defense articles on the USML without the required State Department licenses.  In the criminal case, Hammond was sentenced to 27 months in prison, two years of supervised release, and a $100 assessment.  He was also placed on the U.S. Department of State debarred list.

*******

March 30, 2021 – 86 Fed. Reg. 16580:  BIS denied the export privileges of Claudia Guerra for 10 years based on her conviction in U.S. District Court for the Southern District of Texas of violating Sec. 38 of the

AECA by knowingly and willfully attempting to export to Mexico 18 boxes of 1,020 rounds of 7.62 x 39-mm caliber ammunition which were designated as defense articles on the USML, without the required U.S. Department of State licenses. In the criminal case, Guerra was sentenced to 48 months in prison, three years of supervised release, and a $100 assessment.

*******

March 30, 2021 – 86 Fed. Reg. 16583:  BIS denied the export privileges of Jean Baptiste Kingery for 7 years based on his conviction in U.S. District Court in Arizona of violating Sec. 38 of the AECA by knowingly and willfully attempting to export from the U.S. to Mexico, MK-II, M-67, M-61 Grenade Shells, M213, M228 Detonating Fuse, Winchester .45 Caliber 230 FMJ ammunition, and Speer Lawman .380 Caliber ammunition which were designated as defense articles on the USML without the required U.S. Department of State licenses. In the criminal case, Kingery was sentenced to 60 months in prison, three years of supervised release, and a $100 assessment. He was also placed on the U.S. Department of State debarred list.

*******

March 30, 2021 – 86 Fed. Reg. 16584:  BIS denied the export privileges of Luis Felipe Varela for 5 years based on his conviction in U.S. District Court for the Western District of Texas of violating 18 U.S.C. § 554(a) by fraudulently and knowingly attempting to export two FN M249S, 5.56 caliber rifles from the U.S. to Mexico, designated as defense articles on the USML, without the required U.S. Department of State licenses.  In the criminal case, Varela was sentenced to 6 months in prison, three years of supervised release, and a $100 special assessment.

Fines and Penalties

March 5, 2021:  MSI Aircraft Maintenance Services International GmbH & Co., of Ruesselsheim, Germany agreed to pay $51,921 and accept a three-year denial of export privileges (suspended and waived if MSI pays the fine, cooperates with BIS and OFAC during the three-year period, and does not commit any further violations of the  Export Control Reform Act (ECRA, 50 U.S.C. § 4801 et seq.)), to settle charges by BIS that it conspired with a German company and Mahan Airways to procure U.S.-origin aircraft parts and components that were subject to the EAR and export or reexport them to Iran via transshipment through Germany.

*******

March 5, 2021:  In a case involving illegal exports of cesium atomic clocks to Hong Kong without authorization, Alex Yun Cheong Yue of South El Monte, CA was sentenced in U.S. District Court in Boston, MA to time served (one day) and 3 years of supervised release (a year of which must be served in home confinement) during which he will be prohibited from engaging in import or export transactions, based on his plea of guilty to one count of conspiracy to commit export violations, two counts of unlawful exports and attempted exports of U.S. goods to Hong Kong, and one count of smuggling.  Yue purchased the atomic clocks by falsely representing to the U.S. seller that they would be used solely in California for cordless phone research and redevelopment; however, he reshipped them from California to Hong Kong without obtaining the required export licenses from BIS, with paperwork that falsely described them and undervalued their worth.

*******

March 10, 2021:  Comtech XiCom Technology, Inc., of Santa Clara, CA agreed to pay an administrative penalty of $122,000 to settle allegations by BIS that on three occasions between 2015 and 2017, Comtech had violated the EAR when it exported Traveling Wave Tubes (TWT) controlled for National Security reasons to Russia, the United Arab Emirates, and Brazil without the required export licenses.  According to BIS, in each of these cases Comtech XiCom had correctly identified the appropriate ECCN for the TWTs, but its internal compliance officials had mistakenly determined that the exports did not require licenses.

*******

March 15, 2021:  UniControl, Inc., of Cleveland, OH, a manufacturer of process controls, airflow pressure switches, and other instrumentation, agreed to remit $216,464 to settle potential civil liability for apparent violations of the Iranian Transactions and Sanctions Regulations (ITSR, 31 CFR Part 560) for 19 shipments of its goods from the U.S. to two European companies with reason to know that the two companies intended to transfer the goods to Iran, and two shipments with actual knowledge that they would be reexported to Iran.  The OFAC announcement of this case, at https://home.treasury.gov/system/files/126/20210315_uc.pdf, includes useful descriptions of warning signs  of intended illegal reexports and steps exporters can take to avoid such violations.

*******

March 26, 2021:  OFAC announced that Norddgas, S.r.l., an Italian company that produces and sells components for gas boiler systems and applications, had agreed to remit $950,000 to settle its potential civil liability for apparent violations of the ITSR.  OFAC reported that Nordgas knowingly reexported 27 shipments of air pressure switches procured from a U.S. company intended for as many as 10 customers in Iran, obfuscating the reexportation and Iranian customers from the U.S. company and causing the U.S. company to indirectly export its goods to Iran. In view of Nordgas’s cooperation with OFAC, its agreement to implement enhanced compliance commitments, and other circumstances, $650,000 of the settlement amount will be suspended pending satisfactory completion of Nordgas’s compliance commitments.

*******

March 30, 2021:  Oleg Vladislavovich Nikitin, general director of KS Engineering (KSE)a St. Petersburg, Russia-based energy company, and KSE pled guilty in U.S. District Court for the Southern District of Georgia to conspiracy to evade the International Emergency Economic Powers Act (IEEPA, 50 USC Sec. 1701-1707) and the Export Control Reform Act of 2018 (ECRA) and to defraud the United States in an effort to purchase a power turbine from a U.S.-based manufacturer for intended use on a Russian Arctic deepwater drilling platform without first obtaining the required license. Nikitin admitted that he and another KSE employee conspired with Gabrielle Villone and his Italian-based company to obtain the turbine from a U.S.-based manufacturer and have it shipped overseas, concealing the true end user from the U.S. manufacturer and the U.S. Government by submitting false documentation that stated it would be used by a U.S. company in Georgia.  Nikitin, Villone, and a third conspirator, Dali Bagrou, were arrested in Savannah, GA while attempting to complete the illegal transaction.  Villone was sentenced in June 2020 to 28 months in prison after pleading guilty to the conspiracy, and Bagrou remains in custody pending further legal action.

 

Leave a Comment

Your email address will not be published. Required fields are marked *