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.
Department of State
DDTC Name and Address Changes Posted To Website
Jan. 29 and 30, 2019: The Directorate of Defense Trade Controls (DDTC) posted the following name and/or address changes on its website at https://www.pmddtc.state.gov/?id=ddtc_kb_article_page&sys_id=bd72ca0adbf8d30044f9ff621f961981:
- Change in Name from Airbus Defence and Space Arabia Services Limited to Airbus Saudi Limited due to corporate rebranding;
- Change in Address for Telesat Canada;
- Thales Canada created a new wholly owned subsidiary named Thales Digital Solutions, Inc., due to corporate restructuring;
- Change in Address for Mitsubishi Corporation Machinery, Inc.;
- Change in Name from Knowledge International LLC to Emirates Advanced Investments Defence LLC due to Knowledge International’s acquisition by Emirates Advanced; and
- Change in Address for Raytheon Emirates Ltd.
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 Commerce
Encryption Reporting Requirements
Feb. 1, 2019: Encryption Reports Due on February 1, 2019 & August 1, 2019 Reports for encryption exports, including self-classification reports and License Exception ENC reports, are due to the Commerce Department's Bureau of Industry and Security (BIS) and the National Security Agency (NSA) by February 1, 2019 for the preceding six month period, July - December, 2018. August 1 is the date for the period of January – June, 2019.
Self-Classification Reports: Self-classification report for applicable encryption commodities, software and components, including ECCNs 5x002 and 5x992.c items classified in accordance with Section 740.17( b)(1) of the EAR.
License Exception ENC Reports: License Exception ENC Report for applicable encryption commodities, software and components, including items classified in accordance with Sections 740.17(b)(2) and 740.17(b)(3)(iii) of the EAR, exported or reexported.
Department of the Treasury
OFAC Issues Venezuela-Related General License
Jan. 8, 2019: The Office of Foreign Assets Control (OFAC) issued Venezuela-related General License (GL) 6 authorizing U.S. persons to engage in certain transactions related to winding down or maintaining business with Globovision Tele C.A. and Globovision Tele CA Corp. and their subsidiaries until Jan. 8, 2020. However, GL 6 specifies that it does not authorize any exportation of goods from the U.S. GL 6 is on the Treasury Department website at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/venezuela_gl6.pdf; an FAQ about it is at https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_other.aspx#648.
OFAC Issues Ukraine-Related General Licenses
Jan. 16, 2019: OFAC issued Ukraine-related GLs 13J, 14E, and 16E extending the extension dates of earlier GLs related to EN+ Group PLC, JSC EuroSibEnergo, and United Company RUSAL PLC to Jan. 28, 2019. However, see below for action of Jan. 27, 2019, superseding these GLs.
OFAC Terminates Ukraine-Related Sanctions Against EN+ Group PLC, JSC EuroSibEnergo, and United Company RUSAL PLC
Jan. 27, 2019: OFAC terminated the Ukraine-related sanctions against EN+ Group PLC, JSC EuroSibEnergo, and United Company RUSAL PLC by deleting them from the Specially Designated Nationals List (SDN List). This action was taken following a notification submitted by OFAC to Congress on Dec. 19, 2018. (See description of notice to Congress in December 2018 Regulatory Update.) The delisting occurred following the reduction of involvement in these companies by Oleg Deripaska, whose interests in them had led to their inclusion on the SDN List. Deripaska remains on the SDN List.
OFAC Designates designated Petroleos de Venezuela, S.A. (PDVSA), including its majority-owned subsidiaries As SDNs
Jan. 28, 2019: OFAC designated Petroleos de Venezuela, S.A. (PDVSA), including its majority-owned subsidiaries, on the SDN List, based on a determination by the Secretary of the Treasury in consultation with the Secretary of State that persons operating in Venezuela’s oil sector are subject to sanctions pursuant to Executive Order 13850 (Nov. 1, 2018). At the same time, OFAC issued 9 GLs – GLs 3A, 7, 8, 9, 10, 11, 12, 13, and 14 -- authorizing specified activities involving PDVSA. These GLs authorize, among others, certain transactions involving PDVSA entities in the U.S., PDV Holding, Inc. and CITGO Holding, Inc.; certain operations in Venezuela by Chevron Corporation, Halliburton, Schlumberger Limited, Baker Hughes, and Weatherford International (not including exportation or reexportation of diluents from the U.S. to Venezuela); purchases of refined petroleum products by U.S. persons in Venezuela for certain uses; certain activities by U.S.-person employees and contractors of non-U.S. entities located in countries other than the U.S. or Venezuela; wind-downs of certain transactions; certain activities involving Nynas AB, a Swedish subsidiary of PDVSA; and transactions for the conduct of official U.S. government business. A related Frequently Asked Question (FAQ) is on the Treasury Department website at https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_other.aspx#649.
OFAC Amends FAQs Regarding The Designation Of PDVSA On The SDN List
Jan. 31, 2019: OFAC published amended FAQs 595 and 648 and new FAQs 650-660 regarding the designation of PDVSA on the SDN List. Of particular relevance to exports, revised FAQ 648 discusses the definition of “maintenance” regarding activities authorized in GLs 6 and 11. Also, new FAQ 659 discusses the scope of exports authorized in certain wind-down activities until Feb. 27, 2019. FAQ 595 is on the Treasury Department website at https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_other.aspx#595; FAQ 648 is at https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_other.aspx#648; and FAQs 650-660 are at https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_other.aspx#650.
LATEST SANCTIONS FINES & PENALTIES
Fines and Penalties
Dec. 19, 2018: Asim Fareed of Boca Raton, FL, agreed to provide two annual reports to BIS showing all its export and reexport transactions involving items subject to the Export Administration Regulations (EAR, 15 CFR Parts 730-774) and to accept a 3-year suspension of its export privileges (suspended for 3 years and then waived if he has submitted the required reports and committed no further violations) to settle a charge by BIS of conspiracy to violate the EAR. The conspiracy involved the export of a Humboldt Bending Beam Rheometer and a Humboldt Pressure Aging Vessel, both subject to the EAR and designated EAR99, to Iran via the United Arab Emirates (UAE) without the required authorization.
Jan. 11, 2019: Rawnd Khaleel Aldalawi of Seattle, WA, a citizen of Iraq, was sentenced in U.S. District Court in Seattle to one year in prison and 3 years of supervised release on charges that he conspired to ship firearms to Iraq without the required authorization. Aldalawi and co-defendant Paul Stuart Brunt allegedly shipped 30 guns from the Port of Seattle through Turkey and on to Peshmerga military in Kurdistan, northern Iraq, hidden in the side panels and trunk cavities of 3 automobiles in February 2017 and an additional 47 firearms concealed in 2 vehicles in November 2017. The second shipment was discovered by Turkish authorities who traced it back to Aldalawi and Brunt. Brunt will be sentenced at a later date.
Jan. 16, 2019: Multiwire Laboratories, Ltd., of Ithaca, NY agreed to pay a civil penalty of $80,000 to settle charges by BIS of violating the EAR by twice exporting Real-Time Back Reflection Laue Camera Detectors and Accessories, valued at $177,157 and designated EAR99, to the University of Electronic Science and Technology of China (UESTC) in Chengdu, China, an entity listed on the Entity List (EAR Part 744, Supp. No. 4), without the required licenses from BIS. Multiwire exported the items initially in 2014 and again in 2015, after they had been returned to Multiwire for warranty service. BIS may deny Multiwire’s export privileges for one year if Multiwire fails to pay the penalty in full.
Jan. 16, 2019: Folasade Omowanile of Brooklyn, NY agreed to pay a civil penalty of $10,000 (of which $9,000 was suspended for 3 years and will be waived thereafter if he has not committed another violation) and a 3-year denial of export privileges (suspended for 3 years and thereafter waived if he has made timely payment and has not committed another violation) to settle charges by BIS that he violated the EAR by exporting handcuffs and legcuffs classified as Export Control Classification Number (ECCN) 0A982 under the EAR to Nigeria without the required license from BIS and without filing the required Electronic Export Information (EEI). Omowanile placed the items, whose value was approximately $12,343, inside 3 vehicles which were then placed in a container for export and only provided the forwarding agent with information on the 3 vehicles, without mentioning the handcuffs and legcuffs.
Jan. 28, 2019: Huawei Technologies Co. Ltd. (Huawei), a Chinese telecommunications equipment manufacturer; two Huawei subsidiaries, Huawei Device USA Inc. and Skycom Tech Co. Ltd. (Skycom); Huawei’s Chief Financial Officer Wanzhou Meng; and additional persons were indicted in Brooklyn, NY on 13 counts including wire fraud, bank fraud, conspiracy to obstruct justice, conspiracy to defraud the U.S., conspiracy to commit money laundering, and conspiracy to violate and substantive violations of the International Emergency Economic Powers Act (IEEPA, 50 USC Sec. 1701 -1707). The IEEPA charges revolve around misrepresentations by Huawei resulting in its global banking partners providing U.S.-dollar transactions related to Iran through the U.S. in violation of the Iranian Transactions and Sanctions Regulations (ITSR, 31 CFR Part 560). Huawei also allegedly violated the ITSR in the course of conducting its own business in Iran, partly through co-defendant Skycom, which Huawei falsely claimed was an unrelated entity. The indictment in this case is available on the Internet at https://www.justice.gov/usao-edny/press-release/file/1125036/download.