LATEST EXPORT CONTROLS AND COMPLIANCE UPDATE
See also our “Latest Sanctions Fines & Penalties” section below for an update on companies and persons denied export privileges by the United States Government.
European Union Updates Its Dual-Use Export Control List
Sep. 26, 2017: The European Commission (EC) adopted the annual Delegated Regulation updating the European Union dual-use export control list to conform with decisions made in 2016 by the Wassenaar Arrangement, the Australia Group, the Missile Technology Regime, and the Nuclear Suppliers Group. The Regulation will be published and enter into force in 2 months, unless the European Union Council and the European Parliament raise objections during this period. A Comprehensive Change Note Summary is on the EC website at http://trade.ec.europa.eu/doclib/docs/2017/october/tradoc_156133.pdf. The full 2017 Commission Delegated Regulation, including an Explanatory Memorandum, is at http://trade.ec.europa.eu/doclib/docs/2017/october/tradoc_156132.pdf .
Department of Commerce – Bureau of Industry and Security
BIS Posts BIS Update Presentations
Oct. 4, 2017: The Bureau of Industry and Security (BIS) posted the presentations made by BIS personnel at the 2017 Export Control Policy Conference (“BIS Update”) held in Washington Oct. 3-5. The presentations are on the BIS website at https://www.bis.doc.gov/index.php/conference-update-2017/225-update-2017/1315-update-2017-presentations.
BIS Updates Validated End User - Lam Research Service Co., Ltd. Eligible Items and Facilities
Oct. 23, 2017 – 82 Fed. Reg. 48925: BIS amended the Export Administration Regulations (EAR, 15 CFR Parts 730-774) to revise the list of eligible items and Chinese facilities covered under the entry for Lam Research Service Co., Ltd. (“LAM”), in the Validated End User List (EAR Part 748, Supp. No. 7), including adding 6 Lam facilities.
Department of Commerce – Census Bureau
Census Updates Search Features of ACE / AESDirect
Oct. 3, 2017: The Census Bureau enhanced the search functionality of the ACE/AESDirect application by adding a filter feature allowing users to search for previously transmitted ACE/AESDirect Electronic Export Information using any of several search criteria. Full details are in the ACE/AESDirect User Guide, https://www.census.gov/foreign-trade/aes/aesdirect/AESDirect-User-Guide.pdf?eml=gd&utm_medium=email&utm_source=govdelivery .
Census Seeks Public Comments On Routed Transactions
Oct. 6, 2017 – 82 Fed. Reg. 46739: The Census Bureau invited public comments on the requirements in the Foreign Trade Regulations (FTR, 15 CFR Part 30) for routed transactions (transactions in which the foreign principal party in interest controls the movement of the goods out of the U.S.). Issues of particular interest to the Census Bureau include the definition of “routed export transaction” in FTR Sec. 30.1, clarification of the responsibilities of the parties to a routed transaction as detailed in FTR Sec. 30.3, and how the FTR could be revised to align with the EAR requirements for routed transactions. Comments will be accepted until Dec. 5, 2017.
Department of State
DDTC Name and Address Changes Posted To Website
Oct. 17, 19, 23, and 30, 2017: The Directorate of Defense Trade Controls (DDTC) posted the following name and/or address changes on its website at http://www.pmddtc.state.gov/licensing/name_change.html:
- Change in Name from L-3 Micreo to L3 Micreo Pty Limited due to corporate rebranding;
- Change in Name from Manroy Engineering Ltd. FNH UK Ltd. due to Manroy’s acquisition by FN Herstal;
- Change in Name from Moog Dublin Ltd. to Nammo Ireland Ltd. due to Nammo’s acquisition of Moog’s In-Space Propulsion businesses in UK and Ireland; and
- Change in Name from Norbert Dentressangle Overseas UK Limited to XPO Global Forwarding UK Limited due to XPO Global’s acquisition of Norbert Dentressangle.
Each announcement includes a link to a notice specifying the effects of the change on pending and currently approved authorizations involving the listed entity.
The Secretary of State Permits Revocation Of Certain Sudan Sanctions
Oct. 11, 2017 – 82 Fed. Reg. 47287: The Secretary of State published a notice certifying that the Government of Sudan had satisfied the criteria that an Executive Order (E.O. 13761, Jan. 13, 2017, amended by EO. 13804, July 11, 2017) specified would permit the revocation of certain economic sanctions on Sudan. The Secretary’s report detailing the positive actions taken by the Government of Sudan is on the State Department website at https://www.state.gov/p/af/rls/2017/274667.htm. The notice confirmed an announcement on Oct. 6, 2017 of the intention to revoke these sanctions. (See actions putting this notice into action in Treasury Department section below.)
The State Department Posts Guidance On Russia Sanctions
Oct. 27, 2017: The State Department posted Public Guidance regarding implementation of sanctions with respect to Russia’s defense and intelligence sectors that were mandated by the Countering America’s Adversaries Through Sanctions Act of 2017 (CAATSA or “the Act,” Pub. L. 115-44 -- see August 2017 Regulatory Update) and identified 39 entities in these sectors. The Guidance notes that sanctions under the Act will not become effective before January 29, 2018, that the sanctions will affect only persons that are determined to knowingly engage in a significant transaction with a listed person, and that inclusion on the list does not automatically involve inclusion on the Treasury Department’s List of Specially Designated Nationals and Blocked Persons (“SDN List”) or the Sectoral Sanctions Identification List. The Public Guidance, including interpretive Q&As, is on the State Department website at https://www.state.gov/t/isn/caatsa/275118.htm and the list of entities is at https://www.state.gov/t/isn/caatsa/275116.htm. (See related action in Treasury Department section below.)
Department of the Treasury
OFAC Publishes FAQs Regarding Sudan Sanctions
Oct. 6, 2017: The Office of Foreign Assets Control (OFAC) published 5 Frequently Asked Questions (FAQs) about the revocation, effective Oct. 12, 2017, of the prohibition on all transactions that were previously prohibited under the Sudanese Sanctions Regulations (SSR, 31 CFR Part 538). (See State Department announcement above.) In effect, this revocation made permanent the general license that OFAC issued Jan. 17, 2017. (See January 2017 Regulatory Update.) The FAQs clarified that the revocation applied only to sanctions under the SSR and did not affect Sudan’s status under other sanctions. Accordingly, the revocation does not apply to export control requirements under the EAR, which are maintained as a consequence of Sudan’s inclusion on the State Sponsors of Terrorism List (SST List) under the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA, 22 USC Sec. 7205). The FAQs also noted that the revocation of sanctions under the SSA will not affect past, present, or future enforcement actions regarding violations of the SSR that occurred prior to Oct. 12, 2017. The FAQs are on the Treasury Department website at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/20171006_sudan_faqs.pdf.
OFAC Publishes Guidance On General License A Under TSRA For Certain Exports To Sudan
Oct. 6, 2017: OFAC issued General License A under the TSRA authorizing all exports and reexports of agricultural commodities, medicine, or medical devices for sale or resale to the Government of Sudan or to any entity in Sudan, effective Oct. 12, 2017. The prohibitions covered under this General License were not covered by the revocation of SSR sanctions because they resulted from Sudan’s inclusion on the State Sponsors of Terrorism List (SST List) under TSRA and therefore were not affected by the revocation of prohibitions imposed under the SSR. A note in the General License cautioned that it did not ease restrictions under other applicable non-SSR provisions of law, including the EAR and the ITAR. General License A is on the Treasury Department website at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/tsra_gla.pdf.
OFAC Removes Certain Sudanese Nationals From The Specially Designated Nationals List
Oct. 26, 2017 – 82 Fed. Reg. 49698: OFAC recorded the removal from the Specially Designated Nationals List (SDN List) of 157 Sudanese individuals and entities, effective Oct. 12, 2017. OFAC explained that the Executive Order pursuant to which the SSR had been revoked (see State Department section above) had also revoked the provisions of earlier Executive Orders that had imposed the SDN designations.
OFAC Continues Existing Prohibitions And License Requirements For Deepwater, Arctic Offshore Or Shale Projects in Russia
Oct. 31, 2017: OFAC issued a Directive continuing existing prohibitions and license requirements on actions directly or indirectly supporting exploration or production for deepwater, Arctic offshore, or shale projects in Russia and prescribing broader prohibitions affecting actions initiated on or after January 29, 2018. Directive 4 (as amended on Oct. 31, 2017) under Executive Order 13662 is on the Treasury Department website at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/eo13662_directive4_20171031.pdf. Details and clarification of the prohibitions in this Directive are in FAQs on the Treasury Department website at https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_other.aspx#373 and https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_other.aspx#412.
LATEST SANCTIONS FINES & PENALTIES
Department of Commerce
Oct. 5, 2017 – 82 Fed. Reg. 46476: BIS denied the export privileges of Shantia Hassanshahi (a/k/a Shantia Hassan Shahi, a/k/a Shahi, a/k/a Shantia Haas, a/k/a Sean Haas) of Lompoc, CA, for 5 years, based on his conviction of violating the International Emergency Economic Powers Act (IEEPA, 50 USC 1701 et seq.) by willfully conspiring to export, to Iran, goods and technology from Canada, and related services from the U.S., without the required license from OFAC. In the criminal case, Hassanshahi was sentenced to 12 months in prison, one year of supervised release, 100 hours of community service, and a $100 assessment.
Oct. 5, 2017 – 82 Fed. Reg. 46478: BIS denied the export privileges of Shehzad John of Ashland, KY, for 10 years, based on his conviction of violating IEEPA by knowingly and willfully conspiring and attempting to export to Pakistan, a Bushnell Optical Scope, a Monstrum Laser Aimer, an AR 15 30mm red dot sight, and a NcStar red laser sight, without the required license from the Commerce Department. In the criminal case, John was sentenced to 71 months in prison, 3 years of supervised release, a fine of $10,000, and an assessment of $100.
Oct. 5, 2017 – 82 Fed. Reg. 46479: BIS denied the export privileges of Tayabi Fazal Hussain of Dubai, United Arab Emirates (UAE), for 10 years, based on his conviction of violating IEEPA by conspiring to export and causing the exportation, to Iran, of numerous types of goods including, optical and telescopic equipment and gas turbine mobile generators, without the required U.S. Government authorization. In the criminal case, Hussain was sentenced to 15 months in prison, with credit for time served, and a special assessment of $100.
Oct. 5, 2017 – 82 Fed. Reg. 46480: BIS denied the export privileges of Mark Henry (a/k/a Weida Zheng, a/k/a Scott Russel, a/k/a Bob Wilson, a/k/a Joanna Zhong) of Minersville, PA, and Related Person Dahua Electronics Corporation (a/k/a Bao An Corporation), of Flushing, NY, for 10 years, based on Henry’s conviction of violating the Arms Export Control Act (AECA, 22 USC Sec. 2778), by exporting ablative materials used as a protective coating for rocket nozzles, to Taiwan, without the required license from the State Department. In the criminal case, Henry was sentenced to 78 months in prison, 3 years of supervised release, and a $200 assessment.
Oct. 5, 2017 – 82 Fed. Reg. 46481: BIS denied the export privileges of Robert J. Shubert, Sr., of Coleman, FL, for 10 years, based on his conviction of violating the AECA by knowingly and willfully exporting Dual Sensor Night Vision Goggles, designated as defense articles on the U.S. Munitions List (USML, 22 CFR Sec. 121.1), to Japan, without the required license from the State Department. In the criminal case, Shubert was sentenced to 78 months in prison, 36 months of supervised release, a $15,000 fine, and a $300 assessment.
Oct. 5, 2017 – 82 Fed. Reg. 46482: BIS denied the export privileges of John Francis Stribling of Loretto, PA, for 5 years based on his conviction of knowingly and willfully exporting 2 pistols and 2 rifles designated as defense articles on the USML, to Indonesia, without the required licenses from the Department of State. In the criminal case, Stribling was sentenced to 2 years in prison, 3 years of supervised release, and a $100 assessment.
Oct. 20, 2017 – 82 Fed. Reg. 48792: BIS denied the export privileges of Adrian Manual Hernandez of Phoenix, AZ, for 5 years based on his conviction of violating the AECA by knowingly and willfully exporting, aiding and abetting the export of, and causing to be exported, to Mexico, one or more firearms designated on the USML without the required license from the State Department. In the criminal case, Hernandez was sentenced to 5 years of probation and a $100 assessment.
Oct. 20, 2017 – 82 Fed. Reg. 48793: BIS denied the export privileges of Jimmy Rojas (a/k/a Jim Rojas) of Miami, FL, for 10 years based on his conviction of violating the AECA by knowingly and willfully attempting to export, to Jordan, a 6015/PVS14 Series ITT Monocular Night Vision device and a Trijicon Advanced Combat Optical Gunsight (ACOG) Rifle Scope, both designated on the USML, without the required licenses from the Department of State. In the criminal case, Rojas was sentenced to 30 months in prison, 36 months of supervised release, and a $100 assessment, and was ordered to pay $372,505 in restitution to the U.S. Postal Service.
Oct. 20, 2017 – 82 Fed. Reg. 48794: BIS denied the export privileges of Martin Jan Leff of Bonita Springs, FL, for 10 years based on his conviction of violating the AECA by knowingly and willfully attempting to export and causing to be exported, to Hong Kong, 7 F-4 Phantom fighter jet wheel assemblies designated on the USML, without the required licenses from the Department of State. In the criminal case, Leff was sentenced to 3 years of probation, a criminal fine of $10,000, and a $100 assessment.
Oct. 20, 2017 – 82 Fed. Reg. 48795: BIS denied the export privileges of Marleen Rochin of Phoenix, AZ, for 5 years based on her conviction of violating the AECA by knowingly and willfully exporting, and aiding and abetting the export, to Mexico, of one or more firearms designated on the USML, without the required license from the Department of State. In the criminal case, Rochin was sentenced to 5 years of probation and a $100 assessment.
Oct. 20, 2017 – 82 Fed. Reg. 48796: BIS denied the export privileges of Rodrigo Chico-Rodriguez of Pecos, TX, for 10 years based on his conviction of violating the AECA by intentionally and knowingly conspiring, attempting and causing the export, to Mexico, of 2 rifles, a pistol, and 312 rounds of ammunition, without the required license from the Department of State. In the criminal case, Chico-Rodriguez was sentenced to 60 months in prison and a special assessment of $200.
Fines and Penalties
Sep. 25, 2017: Whirlpool Europe Srl (Italy) agreed to pay a civil penalty of $72,450, to settle charges by BIS, that it had committed 21 violations of the of Antiboycott Regulations (EAR Part 760) Secs. 760.2(a), 760.2(d), and 760.5 by knowingly agreeing to refuse to do business with another person at the request of a boycotting country, furnishing information on its business relationships with a boycotted country, and failing to report its receipt of boycott requests. The violations involved shipments to Lebanon, Yemen, and Qatar.
Sep. 25, 2017: Whirlpool Corporation, the parent of Whirlpool Europe Srl (Italy), agreed to pay a civil penalty of $9,000, to settle charges by BIS, that it had committed 3 violations of Sec. 760.2(d) of the Antiboycott Regulations by furnishing information about another person’s business relationships with another person who is known or believed to be restricted from having any business relationship with, or in, a boycotted country. The countries involved in these violations were Lebanon and Qatar.
Sep. 28, 2017: Ali Eslamanian of London, United Kingdom (UK), agreed to pay a civil penalty of $250,000 (of which $150,000 will be suspended for 4 years and then waived) and Eslamanian, Equipco (UK) Ltd., and Skyco Ltd., all of London, UK, agreed to accept a 4-year denial of export privileges (suspended for 4 years and thereafter waived if Eslamanian, Equipco, and Skyco have complied with all terms of the settlement agreement), to settle charges by BIS, that they had violated EAR Sec. 764.2(k) by acting contrary to the terms of a Temporary Denial Order (TDO). The alleged violation involved an effort to negotiate the purchase of a U.S.-origin International Aero Engine aircraft engine that was subject to the EAR, an action that violated the many-times-renewed TDO against Mahan Airways and several other respondents including Eslamanian.
Sep. 28, 2017: Oxyde Chemicals, Inc., of Houston, TX, agreed to pay a civil penalty of $59,600, to settle charges by BIS, of 17 violations of the Antiboycott Regulations involving failure to oppose a condition in letters of credit from customers in the UAE requiring compliance with the Israeli boycott; furnishing information about business relationships with boycotted countries or blacklisted persons in connection with transactions with Lebanon and the UAE; and failure to report boycott requests from customers in Bahrain, Lebanon, Libya, and the UAE.
Oct. 3, 2017: Ali Caby (a/k/a/ Alex Caby), Arash Caby (a/k/a/ Axel Caby), and Marjan Caby, all of Miami, FL, pleaded guilty to one count of an indictment charging them with conspiracy to defraud the U.S. and to export dual-use aviation parts and equipment to Syrian Arab Airlines (Syrian Air), an entity owned by the Government of Syria and designated as a Specially Designated National, without the required license from OFAC. According to court documents, Arash Caby was manager of AW-Tronics, a Miami export company, Ali Caby ran the Bulgaria office of AW-Tronics, and both men closely supervised and encouraged subordinate employees of AW-Tronics in the shipment of aircraft parts and equipment to Syrian Air. Marjan Caby, AW-Tronics’ export compliance officer and auditor, allegedly facilitated the illegal exports by submitting false electronic export information to federal agencies.
Oct. 5, 2017: BD White Birch Investment LLC (White Birch USA), of Greenwich, CT, agreed to pay a civil penalty of $372,465, to settle charges by OFAC, that it violated the SSR on 3 occasions when it facilitated the sale and shipment of Canadian-origin paper valued at $354,602 from Canada to Sudan. OFAC alleged that the active involvement of personnel within White Birch USA and its Canadian subsidiary in discussing, arranging, and executing these exports constituted a violation of the SSR.