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.
March 5 and 6, 2018: The Export Control Joint Unit (ECJU) of the U.K. Department for International Trade made a small number of changes to Schedule 2 of the consolidated control list of Strategic Military and Dual-Use Items That Require Export Authorization (https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/685044/controllist20180305.pdf) and removed one definition, reflecting amendments made by the European Union in the EU Common Military List. Details are in Notices to Exporters on the ECJU website at https://www.gov.uk/government/publications/notice-to-exporters-201804-export-control-order-2008-amended-and-4-ogels/notice-to-exporters-201804-export-control-order-2008-amended-and-4-four-ogels and https://www.gov.uk/government/publications/notice-to-exporters-201805-consolidated-list-updated/notice-to-exporters-201805-consolidated-list-updated.
Department of Commerce – Bureau of Industry and Security
March 22, 2018 – 83 Fed. Reg. 12475: The Bureau of Industry and Security (BIS) amended the Entity List (15 CFR Part 744, Supp. No. 4) by adding 7 persons in Pakistan, one person in Singapore, and 15 persons in South Sudan; removing one person in Ecuador and one person in the United Arab Emirates (UAE); and correcting the license requirement for 12 persons in Russia.
The following persons were added to the Entity List:
(1) Akhtar & Munir, Punjab;
(2) Engineering and Commercial Services (ECS), Islamabad;
(3) Marine Systems Pvt. Ltd., Islamabad;
(4) Mushko Electronics Pvt. Ltd., Karachi and Lahore;
(5) Pervaiz Commercial Trading Co. (PCTC), Lahore;
(6) Proficient Engineers, Lahore; and
(7) Solutions Engineering Pvt. Ltd., a.k.a., the following two aliases: —Solutronix Engineering Pvt. Ltd. and —Solutronix Pvt. Ltd., Lahore, Islamabad, and Rawalpindi.
(1) Mushko Logistics Pte. Ltd., Singapore.
(1) Ascom Sudd Operating Company, a.k.a., the following one alias: —ASOC.;
(2) Dar Petroleum Operating Company, a.k.a., the following one alias: —DPOC.;
(3) DietsmannNile, Juba;
(4) Greater Pioneer Operating Co. Ltd, a.k.a., the following one alias: —GPOC.;
(5) Juba Petrotech Technical Services Ltd;
(6) Nile Delta Petroleum Company, Juba;
(7) Nile Drilling and Services Company, Juba;
(8) Nile Petroleum Corporation, a.k.a., the following one alias: —Nilepet, Juba;
(9) Nyakek and Sons, Juba;
(10) Oranto Petroleum, Juba;
(11) Safinat Group;
(12) SIPET Engineering and Consultancy Services, a.k.a., the following one alias: —SPECS., Juba;
(13) South Sudan Ministry of Mining, Juba;
(14) South Sudan Ministry of Petroleum, Juba; and
(15) Sudd Petroleum Operating Co., a.k.a., the following one alias: —SPOC., Tharjath, Unity State.
For all these entities, BIS imposed a license requirement for all items subject to the Export Administration Regulations (EAR, 15 CFR Parts 730-774) with a license review policy of presumption of denial, and no license exceptions will be available for exports, reexports, or in-country transfers to them. The license requirements apply to any transaction in which items subject to the EAR are to be exported, reexported, or transferred (in-country), to any of the listed entities or in which such an entity acts as purchaser, intermediate consignee, ultimate consignee, or end-user.
The following persons were removed from the Entity List:
(1) Corporacion Nacional de Telecommunicaciones (CNT), Quito.
United Arab Emirates:
(1) Talaat Mehmood, Sharjah Airport International Free (SAIF) Zone, Sharjah.
For the following persons, which were added to the Entity List February 16, 2018 (see February 2018 Regulatory Update), the license requirement was amended to cover all items subject to the EAR only when used in projects specified in the Russian Industry Section Sanctions (§746.5 of the EAR), for example oil drilling applications:
(1) Kaliningradnefteprodukt OOO, a.k.a., the following three aliases: —Kaliningradnefteprodukt LLC, —Limited Liability Company Kaliningradnefteproduct, and —LLC Kaliningradnefteproduct, Kaliningrad;
(2) Kinef OOO, a.k.a., the following three aliases: —Kinef, LLC, —Limited Liability Company Production Association Kirishinefteorgsintez, and —LLC Kinef, Kirishi, Leningradskaya Oblast;
(3) Kirishiavtoservis OOO, a.k.a., the following two aliases: —Limited Liability Company Kirishiavtoservis and —LLC Kirishiavtoservis, St. Petersburg;
(4) Lengiproneftekhim OOO, a.k.a., the following three aliases: —Institut Po Proektirovaniyu Predpriyaty Neftepererabatyvayuschey I Neftekhimicheskoy Promyshlennosti, Limited Liability Company, —Limited Liability Company Oil Refining and Petrochemical Facilities Design Institute, and —LLC Lengiproneftekhim, St. Petersburg;
(5) Media-Invest OOO, a.k.a., the following two aliases: —Limited Liability Company MediaInvest and —LLC Media-Invest, Moscow;
(6) Novgorodnefteprodukt OOO, a.k.a., the following three aliases: —Limited Liability Company Novgorodnefteproduct, —LLC Novgorodnefteproduct, and —Novgorodnefteprodukt LLC, Veliky Novgorod, Novgorodskaya Oblast;
(7) Pskovnefteprodukt OOO, a.k.a., the following two aliases: —Limited Liability Company Marketing Association Pskovnefteproduct and —LLC Pskovnefteproduct, Pskov;
(8) SNGB AO, a.k.a., the following three aliases: —Closed Joint Stock Company Surgutneftegasbank (ZAO SNGB), —Joint Stock Company Surgutneftegasbank, and —JSC BANK SNGB, Surgut;
(9) SO Tvernefteprodukt OOO, a.k.a., the following two aliases: —Limited Liability Company Marketing Association Tvernefteproduct and —LLC MA Tvernefteproduct, Tver;
(10) Sovkhoz Chervishevski PAO, a.k.a., the following three aliases: —OJSC Sovkhoz Chervishevsky, —Open Joint Stock Company Sovkhoz Chervishevsky, and —Sovkhoz Chervishevsky, JSC, Tyumensky Rayon, Tyumensky Oblast;
(11) Strakhovove Obshchestvo Surgutneftegaz OOO, a.k.a., the following three aliases: —Insurance Company Surgutneftegas, LLC, —Limited Liability Company Insurance Company Surgutneftegas, and —LLC Insurance Company Surgutneftegas, Surgut; and
(12) Surgutmebel OOO, a.k.a., the following four aliases: —Limited Liability Company Syrgutmebel, —LLC Surgutmebel, —LLC Syrgutmebel, and —Surgutmebel, LLC, Yugra, Khanty-Mansiysky Autonomous Okrug.
Department of Commerce – Census Bureau
March 8, 2018: The Census Bureau reported that all recent additions to the Harmonized Tariff Schedule (HTS) can now be used in the Automated Export System (AES) and the ACE AESDirect program. The full 2018 Schedule B and HTS tables are available for downloading at http://www.census.gov/foreign-trade/aes/documentlibrary/?eml=gd&utm_medium=email&utm_source=govdelivery#concordance">http://www.census.gov/foreign-trade/aes/documentlibrary/#concordance. The current list of HTS codes that are not valid for AES is available at http://www.census.gov/foreign-trade/aes/documentlibrary/concordance/hts-not-for-aes.html?eml=gd&utm_medium=email&utm_source=govdelivery">http://www.census.gov/foreign-trade/aes/documentlibrary/concordance/hts-not-for-aes.html.
Department of State
March 15, 2018: The Directorate of Defense Trade Controls (DDTC) posted a notice of the following reorganization and name and address changes on its website at http://www.pmddtc.state.gov/licensing/name_change.html:
- GKN plc corporate reorganization involving the combination of the management of the Cowes, Filton, and Western Approach sites of GKN Aerospace Services Ltd. in the United Kingdom (“GKN Aero UK”) and Fokker Technologies Holding B.V. (“Fokker”), as well as Fokker’s subsidiaries, without merging or dissolving these entities, and change in the registered address of GKN Aero UK (but not the address of GKN Aero UK sites).
As a result of this internal reorganization –
- Change in the registered address for GKN Aero UK from Ferry Road, East Cowes, Isle of Wight PO32 6RA, UK, to Ipsley House, Ipsley Church Lane, Redditch, Worchestershire B98 0TL, UK;
- GKN Aero UK must be added as a signatory to the various ITAR Part 124 agreements in which Fokker Holding or its operating subsidiaries in The Netherlands are a party so that personnel from GKN Aero UK can interact with U.S. signatories and have access to data under those agreements;
- Fokker and its operating subsidiary, Fokker Aerostructures B.V., must be added as signatories or sublicensees to the various ITAR Part 124 agreements in which GKN Aero UK is a party or sublicensee;
- All currently approved agreements will require an amendment to be executed to reflect this internal corporate reorganization. The agreement holder will be responsible for amending its agreement. The executed amendment will be treated as a minor amendment per 22 CFR 124.1(d) and must be submitted as such;
- New DSP-83s must be executed, as applicable;
- Pending agreement applications that require amending must be brought to the attention of the assigned Agreements Officer by the agreement holder. The necessary changes will be made prior to issuance when the Agreements Officer has been notified; and
- A copy of this website notice must be maintained by the license holder and presented with the relevant license to U.S. Customs and Border Protection at time of shipment.
This internal corporate reorganization does not affect any current or pending ITAR DSP licenses or reexport authorizations.
March 26, 2018: DDTC posted the following name changes on its website at http://www.pmddtc.state.gov/licensing/name_change.html:
- Change in Name from Andøya Rakettskytefelt AS to Andøya Space Center AS (ASC) due to corporate rebranding;
- Change in Name from Discovery Air Defence Services Inc. to Top Aces Inc. due to Discovery Air acquisition of Top Aces; and
- Change in Name of Bell Helicopter entities to Bell Textron as follows:
Former Entity Name New Legal Entity Name
Bell Helicopter Textron Inc. Bell Textron Inc.
Bell Helicopter Services Inc. Bell Textron Services Inc.
Bell Helicopter Miami Inc. Bell Textron Miami Inc.
Bell Helicopter Rhode Island Inc. Bell Textron Rhode Island Inc.
Bell Helicopter Korea Inc. Bell Textron Korea Inc.
Bell Technical Services Inc. Bell Textron Technical Services Inc.
Bell Helicopter Textron Canada Limited Bell Textron Canada Limited
Bell Helicopter Canada International Inc. Bell Textron Canada International Inc.
Bell Helicopter Co., Ltd. Bell Textron Co., Ltd.
Bell Helicopter LLC Bell Textron LLC
Bell Helicopter Asia (Pte) Ltd. Bell Textron Asia (Pte) Ltd.
Bell Helicopter Supply Center, B.V. Bell Textron Supply Center, B.V.
Bell Helicopter Prague, a.s. Bell Textron Prague, a.s.
Bell Helicopter India Operations, a division Bell Textron India Operations, a division
of TIPL of TIPL
Bell Helicopter Services. – Tainan Branch Bell Textron Services Inc. – Tainan Branch
Bell Helicopter Services Inc. – Abu Dhabi Bell Textron Services Inc. – Abu Dhabi Branch
Bell Helicopter Services Inc. – Dubai Branch Bell Textron Services Inc. – Dubai Branch
Bell Helicopter Services Inc. – Italy Branch Bell Textron Services Inc. – Italy Branch
Bell Helicopter Services Inc. – Colombia Bell Textron Services Inc. – Colombia Branch
Bell Helicopter Services Inc. – Turkey Liaison Bell Textron Services Inc. – Turkey Liaison
Bell Helicopter Textron Canada Limited – Bell Textron Canada Limited – Korea Branch
Bell Helicopter Canada International Inc. – Bell Textron Canada International Inc. – Korea Korea Branch Branch
Bell Helicopter Asia (Pte) Ltd. – Thailand Rep. Bell Textron Asia (Pte) Ltd. – Thailand Rep.
Each announcement includes a link to a notice specifying the effects of the change on pending and currently approved authorizations involving the listed entity.
Department of the Treasury
March 5, 2018 – 83 Fed. Reg. 9182: The Office of Foreign Assets Control (OFAC) reissued the North Korea Sanctions Regulations (NKSR, 31 CFR Part 510) in their entirety to implement 3 recent executive orders, reference recent legislation (the North Korea Sanctions and Policy Enhancement Act of 2016 and the Countering America’s Adversaries Through Sanctions Act of 2017 [CAATSA]), incorporate several general licenses that had previously appeared only on OFAC’s website, add several new general licenses, and add and expand provisions to make the regulations more comprehensive and provide better guidance to the public. As before, property or interests in property of the Government of North Korea and the Workers’ Party of Korea is blocked, and all U.S. persons wherever located, all persons within the U.S., and all U.S.-incorporated entities and their foreign branches, are prohibited from engaging in transactions with these entities without authorization from OFAC unless a general license applies.
OFAC also published extensive new FAQs about the new regulation and its effect, including information about general licenses. FAQs 458-465 and 525-558 are on the Treasury Department website at https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_other.aspx#nk.
March 15, 2018: OFAC issued General License 1A, Authorizing Certain Transactions with the Russian Federal Security Service, making a technical change in the general license that authorizes certain transactions with the Russian Federal Security Service (FSB, a.k.a. Federalnaya Sluzhba Bezopasnosti) that are necessary and ordinarily incident to requesting, receiving, utilizing, paying for, or dealing in certain licenses and authorizations for the importation, distribution, or use of certain information technology products in the Russian Federation. General License 1A is on the Treasury Department website at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/cyber_gl1a.pdf; related FAQs are at https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_other.aspx#501.
March 19, 2018 – 83 Fed. Reg. 11876: OFAC issued a final rule making inflation adjustments in its maximum civil monetary penalties (CMPs) for several statutes: violations of the Foreign Narcotics Kingpin Designation Act and Regulations, have a CMP increase from $1,437,153 to $1,466,485; for the Trading with the Enemy Act, the increase is from $85,236 to $86,976; and for the majority of other OFAC sanctions programs and the International Emergency Economic Powers Act (IEEPA, 50 USC Sec. 1701 -1707), the increase is from $289,238 to $295,141.
March 20, 2018: OFAC issued a press release reaffirming its commitment to supporting the Iranian people and fostering internet freedom. The release provides a useful summary of regulatory provisions, general licenses, published guidance, and licensing policies supporting this commitment. The release is on the Treasury Department website at https://home.treasury.gov/news/press-releases/sm0322.
March 22, 2018 – 83 Fed. Reg. 12513: OFAC invited public comments on the effectiveness of its licensing procedures for exportation of agricultural commodities, medicine, and medical devices to Sudan and Iran during the time period October 1, 2014 to September 30, 2016. The information is needed for a required biennial report to Congress on the operation of these procedures. Comments are due by April 23, 2018.
LATEST SANCTIONS FINES & PENALTIES
Department of Commerce
March 5, 2018 – 83 Fed. Reg. 9259: BIS denied the export privileges of Trilogy International Associates, Inc., of Altaville, CA, and Trilogy’s President and General Manager, William Michael Johnson, Angels Camp, CA, for 10 years based on their convictions involving the unauthorized export to Russia of an explosives detector and 115 analog-to-digital converters with a total value of approximately $76,035. The explosives detector and converters were controlled under Export Control Classification Numbers (ECCNs) 1A004 and 3A001, respectively. In the criminal cases, Trilogy was convicted of 3 charges of engaging in prohibited conduct and fined $100,000, and Johnson was convicted of 3 charges of causing, aiding, and/or abetting the prohibited conduct and fined $100,000.
March 20, 2018 – 83 Fed. Reg. 12563: BIS denied the export privileges of Volodymyr Nedoviz of Hudson County Correctional Facility, Kearny, NJ, for 10 years based on his conviction of violating the Arms Export Control Act (AECA, 22 USC Sec. 2778) by exporting and attempting to export to Ukraine night vision and thermal imaging equipment controlled under the U.S. Munitions List (USML, 22 CFR Sec. 121.1) without the required authorization from the State Department. In the criminal case Nedoviz was sentenced to time served, 2 years of supervised release, a criminal forfeiture of $2,500, and a special assessment of $100.
Fines and Penalties
March 5, 2018: Muhammad Ismail of Meriden, CT and his son Kamran Khan of Hamden, CT, nationals of Pakistan with lawful permanent U.S. resident status, pleaded guilty to money laundering in federal court in Bridgeport, CT, based on their participation in a scheme in which goods controlled under the EAR were exported to 3 Pakistani government agencies that were listed on the Entity List. Ismail and Khan did not apply for export licenses, although they were aware that such authorization was required, and they completed end-user certifications assuring the U.S. manufacturers that the items would not be exported. In an earlier, related case, another son of Muhammad Ismail, Imran Khan, pleaded guilty, in June 2017, to violating IEEPA by exporting an EAR-controlled item to an entity in Pakistan that was listed on the Entity List. (See June 2017 Regulatory Update.)
March 14, 2018: Reza Olangian, a dual Iranian-American citizen, was sentenced in federal court, in New York City, to serve 25 years in federal prison and 5 years of supervised release after being found guilty, in November 2016, of conspiring and attempting to export surface-to-air missiles and military aircraft parts to the Government of Iran. From a base in Teheran, Olangian worked to arrange the purchase of “IGLA-S” surface-to-air missiles and various components for the Government of Iran, negotiating with a confidential source (CS) who purported to be a weapons and aircraft broker, but was actually working for the U.S. Drug Enforcement Administration. In covertly recorded meetings, conversations, and emails to the CS, Olanian described his plans for procuring the SAMs, aircraft parts, and other types of weapons and smuggling them to Iran. In October 2012, he traveled to Tallinn, Estonia in connection with the SAMs deal and an additional aircraft deal that he was hoping to arrange in Russia. He was arrested in Tallinn at the request of the U.S. and extradited to the U.S. in 2013. (See October 2013 Regulatory Update.)
March 16, 2018: Federal prosecutors in Washington, DC, released a criminal information charging Evgeny Viktorovich Spiridonov of Moscow, Russia, a citizen of Russia, with violating U.S export controls by failing to file or submitting false or misleading export information. Spiridonov was arrested at Los Angeles International Airport after attending a gun show in Las Vegas when he attempted to board a flight for Moscow with an unreported restricted tactical rifle scope valued at $2,400 in his checked luggage. U.S. investigators learned of the sale from the dealer, staged a controlled delivery of the scope to Spiridonov’s Las Vegas hotel, used surveillance video to record Spiridonov accepting the shipment at the front desk, and then followed him as he ate breakfast, travelled to Los Angeles, and checked his luggage containing the scope.
March 20, 2018: Vladimir Nevidomy of Hallandale Beach, FL, plead guilty to exporting USML-listed military-grade night vision and thermal vision devices and ammunition primers to Russia without the required license from the Department of State. After receiving requests from Russian customers by email, Nevidomy obtained at least 3 ATN MARS 4x4 night-vision rifle scopes and an ODIN 61BW thermal multi-purpose monocular from U.S. vendors, falsely claiming that the items were not for export. He then exported them by either concealing them in household goods shipments sent to Russia through a freight forwarding company or using a private Russian postal service that operated in South Florida.
March 20, 2018: Alireza Jalali of Iran, a part-time employee of a Malaysian company located in Kuala Lumpur, Malaysia, was sentenced in federal court in Minneapolis, MN, to 15 months in prison based on his plea of guilty of conspiring to defraud the U.S. by participating in a scheme whereby his Malaysian employer unlawfully acquired export-controlled technology from the U.S. for Fanavar Moj Khavar (Fana Moj), an Iran-based company specializing in broadcast communications and microwave communications, that was designated by the U.S. Treasury Department as a Specially Designated National. To advance the conspiracy, Jalali and his co-conspirators concealed the ultimate Iranian destination and end users through false statements, unlawful financial transactions, and other means, including, having the U.S. goods delivered to Malaysia, and then repackaging and unlawfully reexporting them to Iran.
March 22, 2018: Konstantin Chekhovskoi of St. Petersburg, Russia, was sentenced in federal court in Chicago, IL, to 18 months in federal prison and a fine of $100,000 based on his plea of guilty of one count of attempting to fraudulently and knowingly export more than $100,000 in firearm parts, ammunition and accessories, including parts designed for assault rifles. Chekhovskoi was arrested by U.S. Homeland Security Investigations (HSI) special agents at Chicago’s O’Hare International Airport on April 26, 2017, as he attempted to board a flight for Stockholm, Sweden. His 11 checked bags included firearm parts, ammunition and accessories, including bullets, rifle magazines, triggers, stocks, muzzle brakes and scopes, many of which were designed for assault rifles such as AK-47s and M4s. Chekhovskoi lacked the required license for the export-controlled items.
March 23, 2017: Ross Roggio of Stroudsburg, PA, and Roggio Consulting Company, LLC, a firm with which he was associated, were indicted for conspiracy to violate the AECA and the IEEPA and the the implementing regulations (the ITAR and the EAR) by illegally exporting firearm parts, firearm manufacturing tools including items used to manufacture M4 rifles, and defense services from the United States to Iraq without the required authorizations from the Departments of State and Commerce. The charges also included wire fraud and money laundering. Roggio and his firm allegedly purchased the parts and manufacturing tools in the U.S. and illegally exported them to Iraq, where they were utilized and incorporated in the manufacture and assembly of complete firearms in a firearms manufacturing plant constructed and operated in part by Ross Roggio. The defense services they allegedly provided include the furnishing of assistance to foreign persons in the manufacture of firearms.