LATEST EXPORT CONTROLSAND COMPLIANCE UPDATE
This newsletter is a listing of the latest changes in export control regulations through September 30, 2020. The newsletter is providedas a complimentary service to assist exporters with their ITAR and EAR export compliance responsibilities. It provides a summary of recent changes to exportcontrol regulations or other regulatory matters of interest that may impact your company’s internationaltrade and export compliance functions. Call us at 703-847-5801 or email email@example.com withquestions 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.
The Department of State, OFAC and BIS Issued an Advisory on North Korea’s Ballistic Missile Procurement Activities
Sep. 1, 2020: The U.S. Department of State’s Bureau of International Security and Nonproliferation, the Department of the Treasury’s Office of Foreign Assets Control (OFAC), and the Department of Commerce’s Bureau of Industry and Security (BIS) jointly issued an advisory onNorth Korea’s ballistic missile procurement activities. The Advisory provides extensive information including key North Korean entities and deceptive techniques, key materials and equipment used in the missile program, and an overview of U.S. sanctions authorities and North Korea-related sanctions enforcement resources. This advisory was issued because industry is on the front line of detecting and thwarting North Korea’s procurement attempts. It is critical that private sector companies and individuals be aware of key items sought by the North Korean weapons programs, North Korean procurement tactics and techniques, the risks of involvement in North Korea’s ballistic missilerelated procurements, and the potential consequences they face if determined to be engaging in conduct that is subject to UN and/or U.S. sanctions authorities.This Advisory is on the Treasury Department website at
https://home.treasury.gov/system/files/126/20200901_nk_ballistic_missile_advisory.pdf (19 pp.).
Department of Commerce – Bureau of Industry and Security
BIS Amended the CCL and EAR Per The Wassenaar Plenary
Sep. 11, 2020 – 85 Fed. Reg. 56294: BIS amended the Commerce Control List (CCL, 15 CFR Part 774, Supp. No. 1) and corresponding parts of the Export Administration Regulations (EAR, 15 CFR Parts 730-774) to implement changes to the Wassenaar Arrangement List of Dual-Use Goods and Technologies and Munitions List (WA Lists) made at the December 2018 plenary meeting of the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies (WA). (New controls involving five emerging technologies essential to U.S. national security that were also agreed to at the December 2018 WA plenarywere implemented in changes in the CCL on May 23, 2019. See May 2019 Regulatory Update.) The new rule implements the following changes:
• Revisions to Export Control Classification Numbers (ECCNs)0A617, 1C001, 2A001, 2B003, 2B006, 3A001, 3A002, 3B001, 3E003, 5E001, 5A002, 5D002, 5E002, 5E992, 6A003, 6A005, 7A002, 7A003, 7A005, 7D003, 7D005, 8A001, 8A002, 8B001, 9A010, 9A610, 9B001, and 9E003;
• License exception revisions to ECCNs 1C004 (GBS); 8A001 (LVS, STA); 8D001 (TSR, STA); and 8E001 (TSR, STA);
• New ECCN 6B002 (masks and reticles for optical sensors specified in 6A002.a.1.b or 6A002.a.1.d);
• Conforming changes to ECCNs 0A606, 1A008, 3A991, 6A002, 6E001, 6E002, 8D001, and 8E001; and
• Revisions in some reporting requirements.
Please contact us for additional details if your commodities are regulated by one of the referenced ECCNs to learn the specific nature of the change.
BIS Added 47 Entities in Canada, China, Hong Kong, Iran (15 entries including 5 individuals), Malaysia, Oman, Pakistan, Thailand, Turkey, the United Arab Emirates (UAE), and the United Kingdom to the Entity List
Sep. 24, 2020 – 85 Fed. Reg. 59419: BIS amended the EAR by adding 47 entities in Canada, China, Hong Kong, Iran (15 entries including 5 individuals), Malaysia, Oman, Pakistan, Thailand, Turkey, the United Arab Emirates (UAE), and the United Kingdom to the Entity List (EAR Part 744, Supp. No. 4) based on a determination that each of these entities had acted contrary to the national security or foreign policy interests of the U.S. A license requirement with license review policy of presumption of denial will apply to 39 of the 47 entities, and no license exceptions will now apply to exports, reexports, or in-country transfers of all items subject to the EAR to 39 of these persons. The remaining 8 entities will be subject to the licensing policy described under EAR Sec. 744.2 (Restrictions on Certain Nuclear End-Uses). No license exceptions will be available for exports, reexports, or transfers (in-country) to any of these entities.
(The Entity List (Supplement No. 4 to part 744) identifies persons reasonably believed to be involved, or to pose a significant risk of being or becoming involved, in activities contrary to the national security or foreign policy interests of the United States. Editors’ Note: Use of the consolidated screening tool will ensure your company screening includes these added entities.)
Department of Commerce – Census Bureau
Census Seeks Comments Regarding The Impact on Removal of EEI Requirements for Exports to Puerto Rico and the U.S. Virgin Islands
Sep. 17, 2020—85 Fed. Reg. 58016: The Census Bureau Economic Management Division invited public comments on the possible impact on statistics, data users, businesses, and any others of removing the Electronic Export Information (EEI) filing requirement for shipments between the U.S. and Puerto Rico and the U.S. Virgin Islands, and to identify any other possible impacts. Removal of this requirement has been requested by the Government of Puerto Rico and members of the international trade community because it seems to treat Puerto Rico like a foreign country when in fact it is a U.S. territory and part of the U.S. customs area and because the filing requirement imposes a burden on interstate commerce and impedes economic development in Puerto Rico. However, removal of the requirement could impact the quality and availability of key federal statistics. Deadline for comments is Nov. 16, 2020.
Department of State
DDTC Name And Address Changes Posted To Website
Sep. 11, 14, and 30, 2020: The Directorate of Defense Trade Controls (DDTC) posted the following name and/or address changes on its website at
• Change in Name from Meggitt Training Systems Pty Ltd. to InVeris Training Solutions Pty Ltd. due to corporate rebranding;
• Change in Name from Meggitt Training Systems Ltd. to InVeris Training Solutions Limited. Due to corporate rebranding;
• Change in Name from Meggitt Training Systems, Inc. changed name to InVeris Training Solutions, Inc. due to corporate rebranding;
• Change in Name from Rheinmetall Military Vehicles GmbH to Rheinmetall Landsysteme GmbH due to an intracompany merger;
• Change in Name from Meggitt Training Systems Pte Ltd. to InVeris Training Solutions Pte. Ltd.due to corporate rebranding;
• Change in Name from Meggitt Training System Europe B.V. changed name to InVeris Training Solutions Europe B.V. due to corporate rebranding;
• Change in Name from Sonovision ITEP-Spain, S.A.U. to Sonovision Ingenieros España S.A.U. due to corporate rebranding and Change in Address;
• Change in Address for Ascent Vision Technologies, LLC;
• Change in Name from TELEFUNKEN Radio Communication Systems GmbH & Co. KG to Elbit Systems Deutschland GmbH & Co. KG due to corporate rebranding and consolidation by Elbit of its wholly owned subsidiary, TELEFUNKEN Radio Communication Systems; and
• Change in Name from Meggitt Training Systems (Quebec), Inc. to InVeris Training Solutions Canada Inc. due to corporate rebranding.
Each announcement includes a link to a notice detailing the change and its effects on pending and currently approved authorizations involving the listed entity.
DDTC Invited Public Comments on the Revision of Form DS-6004, Request to Change End-User, End-Use and/or Destination of Hardware
Sep. 2, 2020 – 85 Fed. Reg. 54613: DDTC invited public comments on the revision of Form DS-6004, Request to Change End-User, End-Use and/or Destination of Hardware. Comments will aid DDTC in evaluating its accuracy in estimating the time and cost burden for this collection, including the validity of the methodology and assumptions used; enhance the quality, utility, and clarity of the information to be collected; and minimize the reporting burden on those who are to respond, including the use of automated collection techniques or other forms of information technology. Deadline for comments is Nov. 2, 2020.
DDTC Temporarily Removed Restrictions on Exports, Reexports, Retransfers, and Temporary Imports of Non-lethal Defense Articles and Defense Services Destined for or Originating in Cyprus
Sep. 28, 2020 – 85 Fed. Reg. 60698: The Department of State amended International Traffic in Arms Regulations (ITAR, 22 CFR Parts 120-130) Sec. 126.1(r) to temporarily remove prohibitions on exports, reexports, retransfers, and temporary imports of non-lethal defense articles and defense services destined for or originating in Cyprus. Under the new rule, the U.S. Department of State will deny applications for licenses or other approvals for exports or imports of defense articles and defense services destined for or originating in Cyprus, except that a license or other approval may be issued, on a case-by-case basis, for the United Nations Forces in Cyprus (UNFICYP) or for civilian end-users.However, the policy of denial will not apply to exports, reexports, retransfers, and temporary imports of non-lethal defense articles and defense services destined for or originating in Cyprus if: (1) the request is made by or on behalf of the Government of the Republic of Cyprus; (2) the end-user of such defense articles or defense services is the Government of the Republic of Cyprus; and (3) there are no credible human rights concerns. This temporary rule is effective Oct. 1, 2020 through Sep. 30, 2021. An announcement and 5 FAQs about this rule are on the DDTC home page at https://www.pmddtc.state.gov/ddtc_public .
The Department Of State Published the Cuba Prohibited Accommodations List
Sep. 28, 2020 – 85 Fed. Reg. 60855: The State Department published the Cuba Prohibited Accommodations List (CPA List) identifying properties owned or controlled by the Cuban government, prohibited officials of the Cuban government, and other prohibited parties. TheCuban Assets Control Regulations (CACR, 31 CFR Part 515), as amended by the Treasury Department Office of Foreign Assets Control (OFAC) on Sep. 28, 2020 (see Treasury Department section below), prohibit persons subject to U.S. jurisdiction from lodging, paying for lodging, or making any reservation for a third party to lodge at any listed property when the terms of the general or specific license expressly exclude such a transaction. The CPA List is accessible on the State Department website at
The Department of State Published an Updated List of Entities and Subentities Associated With Cuba
Sep. 29, 2020 – 85 Fed. Reg. 61079: The State Department published an updated List of Entities and Subentities Associated With Cuba (Cuba Restricted List)with which direct financial transactions are generally prohibited under the CACR. The announcement noted that the Department of Commerce’s BISalso will generally deny applications to export or reexport items for use by entities or subentities on the Cuba Restricted List. The Cuba Restricted List and additional information concerning it are on the Department of State website athttps://www.state.gov/cuba-sanctions/cuba-restricted-list/.
DDTC Posted New FAQ Regarding the ITAR and the U.S. Patent and Trademark Office
Sep. 30, 2020: DDTC posted a new FAQ describing the circumstances under which the U.S. Patent and Trademark Office (USPTO) is, and is not, restricted from including ITAR-controlled technical data that is submitted by a patent applicant.The FAQ advises that information published by the USPTO as part of a patent application and available at any patent office is public domain information (see ITAR section 120.11(a)(5)). By definition, it is not technical data (see ITAR section 120.10(b)). Technical data submitted as part of a patent application and not published and available at any patent office is not information in the public domain and remains ITAR-controlled.Access this FAQ on the DDTC public portal at https://www.pmddtc.state.gov/ddtc_public?id=ddtc_public_portal_news_and_events .
Department of the Treasury
OFAC Issued an Interim Final Rule Regarding Amounts of Civil Monetary Penalties
Sep. 3, 2020 – 85 Fed. Reg. 54911: OFAC issued an interim final rule adjusting the amounts of civil monetary penalties (CMPs) for failure to comply with certain recordkeeping and reporting requirements that are included in the Trading with the Enemy Act (50 U.S.C. 4315) (TWEA) and the International Emergency Economic Powers Act (50 U.S.C. 1705) (IEEPA), among others. The new amounts account for a catch-up adjustment that would have become effective for these CMPs August 1, 2016, plus annual adjustments for 2017 through 2020. The new CMPs, which vary depending upon the offense, range from $1,189 to $59,522, up from $1,000 to $50,000.The new amounts are applicable only to CMPs assessed after October 5, 2020, whose associated violations occurred after November 2, 2015.Deadline for comments was Oct. 5, 2020.
The U.S. Treasury Department, Office of Investment Security Published a Final Rule RegardingCFIUS Prior Notification If The U.S. Business Produces, Designs, Tests, Manufactures, Fabricates Or Develops Critical Technologies That Require “U.S. Regulatory Authorization”
Sep. 15, 2020 – 85 Fed. Reg. 57124: The U.S. Treasury Department Office of Investment Securitypublished a final rule that gave U.S. export control requirements an entirely new role. As background, the 2018 Foreign Investment Risk Review Modernization Act (FIRRMA)created a requirement that required parties to submit to the Committee on Foreign Investment in the United States (CFIUS) a prior notification of investments by non-U.S. persons in any U.S. business that produces, designs, tests, manufactures, fabricates, or develops any critical technologies, with a description of the types of industries that constituted a critical technology. Under the new rule, however, the prior notificationrequirement depends upon the more concrete issue of whether the export, re-export, transfer (in-country) of the technology in question requires “U.S. regulatory authorization,” with “U.S. regulatory authorization” defined to mean a license issued by the State Department under the ITAR, a license from the Commerce Department under the EAR, or a license issued by the Department of Energy or the Nuclear Regulatory Commission under specified regulations. Extensive additional rules about the nature and extent of the proposed foreign ownership also apply to the determination of whether a particular transaction will trigger a mandatory prior declaration. Effective date of the new rule is Oct. 15, 2020.
OFAC Amended the Cuban Assets Control Regulations
Sep. 24, 2020 – 85 Fed. Reg. 60068: OFAC made extensive amendments to the Cuban Assets Control Regulations (CACR, 31 CFR Part 515) to implement the President’s policy to deny the Cuban regime sources of revenue. The changes:
• add a new prohibition at CACR Sec. 515.210 for persons subject to U.S. jurisdiction regarding lodging and related transactions at certain properties in Cuba identified on a new list maintained by the State Department (see State Department section above) and amend an interpretive provision and several general licenses to incorporate this new prohibition;
• amend four general licenses to restrict the importation into the United States of Cuban-origin alcohol and tobacco products;
• amend a general license to remove the authorization for persons subject to U.S. jurisdiction to attend or organize professional meetings or conferences in Cuba;
• remove a general license that authorizes persons subject to U.S. jurisdiction to participate in or organize certain public performances, clinics, workshops, other athletic or non-athletic competitions, and exhibitions and replace it with a specific licensing policy; and
• make numerous technical and conforming changes.
OFAC Posted 37 New and Updated Cuba Sanctions FAQs
Sep. 24, 2020: OFAC posted 37 new and updated Cuba Sanctions FAQs on its website at https://home.treasury.gov/policy-issues/financial-sanctions/faqs/topic/1541.
OFAC Published a New FAQ On Issues Involved in Dealing With an Official of the Government of the Hong Kong Special Administrative Region
Sep. 25, 2020: OFAC published a new FAQ on issues involved in dealing with an official of the Government of the Hong Kong Special Administrative Region (HKSAR) who is designated as a Specially Designated National (SDN). The designation of an official of the Government of the HKSAR does not itself block the HKSAR government or any government agency where the SDN is an official or otherwise exercises control. FAQ 840 is on the OFAC website at https://home.treasury.gov/policy-issues/financial-sanctions/faqs/840.
President / U.S. Department of Commerce
The President’s August 6, 2020 Executive Orders And U.S. Department of Commerce’s Restrictions Related to Stopping Transactions With WeChat and TikTok
On August 6, 2020, the President issued two Executive Orders related to stopping transactions with Chinese apps WeChat and TikTok. The Executive Orders gave the U.S. Department of Commerce the authority to implement restrictions on transactions with WeChat and TikTok. The Executive Orders gave the Department of Commerce 45 days to implement the restrictions, which was September 20, 2020. On September 18, 2020, the U.S. Department of Commerce issued rules for public inspection regarding its proposed restrictions on WeChat and TikTok. The restrictions on TikTok are on-hold pending its corporate parent’s, ByteDance, spin off of TikTok in the U.S. to a new company owned 20% by Oracle and 20% by Walmart. The restrictions on WeChat are on hold due to a preliminary injunction issued on Saturday, September 19, 2020, that prevents implementation of the WeChat restrictions announced by the U.S. Department of Commerce on September 18, 2020.
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 firstname.lastname@example.org.
Sep. 24, 2020 – 85 Fed. Reg. 60131:BIS denied the export privileges of Walid Chehade of Westlake, OH,for 7 yearsbased on his May 8, 2019 conviction in U.S. District Court for the Western District of Michigan of violating 18 US.C. 371 by knowingly and willfully conspiring to export from the U.S. to Lebanon guns and gun parts designated as defense articles on the U.S. Munitions List (USML, 22 CFR Sec. 121.1) without first obtaining the required licenses from the U.S. Department of State. In the court case,Chehade was sentenced to time served, one year of supervised release, a $5,000 fine, and a $100 special assessment.
Sep. 1, 2020: Colin Fisher, a citizen of the United Kingdom, pleaded guilty in Federal Court for the Northern District of Florida to violating IEEPA and attempted smuggling in an effort to export a Solar Mars 90 S turbine core engine and parts that could be used to provide needed energy to the oil fields of Iran from the U.S. to a conspirator in Iran who was linked to an Iranian energy company. Fisher was arrested when he arrived in Pensacola, FL, from the United Arab Emirates (UAE) to consummate the illegal transaction. The turbine was seized by U.S. federal authorities before its transatlantic journey.
Sep. 1, 2020: Carl Zeiss SBE LLC of Thornwood, NY, agreed to pay $55,000 to settle allegations by BISof 10 violations of the EAR involving exports of rifle scopeswith an estimated value of $889,170 that were controlled for Firearms Convention reasons under ECCN 0A987 to Canada without the required authorization from BIS.Carl Zeiss SBE LLC knew or had reason to know that a license was required for these exports because it had previously applied for and been granted a license from BIS for the same or similar exports that were also controlled under ECCN 0A987.
Sep. 16, 2020: Yang Yang of Jacksonville, FL, an employee of Shanghai Breeze Technology Co., Ltd., of Shanghai, China, pleaded guilty to conspiring to submit false export information through the Automated Export System (AES) and to fraudulently export maritime raiding craft and engines to China, and attempting to fraudulently export that equipment in violation of U.S. law. According to the plea agreement, at the direction of co-conspirators in China she attempted to order seven military-model combat rubber raiding craft equipped with multi-fuel enginesfrom a U.S. manufacturer, falselyidentifying the purchaser as an entity in Hong Kong. By misrepresenting the purchaser, Yang caused the entry of false information in the AES. On Aug. 13, 2020,Yang’s co-defendant, Zheng Yan, pleaded guiltyto conspiring to submit false export information and to fraudulently export the raiding craft and engines. Co-defendants Fan Yang and Ge Songtao are scheduled to go on trial Feb. 1, 2021.
Sep. 17, 2020: Comtech Telecommunications Corp. of Melville, NY, and its wholly-owned subsidiary, Comtech EF Data Corp, of Tempe, AZ, which sell advanced communications systems, software, and services, agreed to pay $894,111 to settle potential civil liability for four apparent violations of the Sudanese Sanctions Regulations (SSR, 31 CFR Part 538). The apparent violations involved indirect exports of warrantied satellite equipment and facilitation of services and training to a government-owned Sudanese entity. As part of the settlement, Comtech also committed to add three senior export compliance positions to its staff. In reporting this case, OFAC noted that companies engaging in high-risk international transactions should understand their obligations under OFAC regulations and recognize that they cannot shift those obligations onto their foreign customers or counterparties.
Sep. 24, 2020: Keysight Technologies, Inc. of Santa Rosa, CA, on behalf of its former Finnish subsidiary, Anite Finland Oy, a designer and seller of test and measurement instruments and related software products to the wireless industry, agreed to pay $473,157 to settle its potential civil liability for Anite’sviolation of Sec. 560.205 of theIranian Transactions and Sanctions Regulations (ITSR, 31 CFR Part 560)by re-exportinggoods that incorporated 10 percent or more of U.S.-export controlled content with knowledge that such goods were destined for end-users in Iran. The illegally exported goods were valued at $331,089. After Keysight acquired Anite and implemented its policy to restrict sales to Iran, Anite employees continued sales to Iran, obfuscating the sales from Keysight. Keysight and Anite subsequently implemented remedial measures to prevent future unauthorized sales.