LATEST EXPORT CONTROLS AND COMPLIANCE UPDATE

April 2019

This newsletter is a listing of the latest changes in export control regulations through April 30, 2019. 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 This email address is being protected from spambots. You need JavaScript enabled to view it. 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

 

Department of Commerce – Bureau of Industry and Security

BIS ADDS 50 PERSONS TO THE UNVERIFIED LIST

April 11, 2019 – 84 Fed. Reg. 14608: The Bureau of Industry and Security (BIS) amended the Export Administration Regulations (EAR, 15 CFR Parts 730-774) by adding 37 persons located in China, six in Hong Kong, four in the United Arab Emirates (UAE), two in Malaysia, and one in Indonesia to the Unverified List (“UVL,” 15 CFR Part 775). All these persons were added to the UVL because BIS was unable to conduct an end-use check for reasons outside the control of the U.S. Government. This rule also adds one additional address for one person currently listed on the UVL, Ling Ao Electronic Technology Co. Ltd, a.k.a. Voyage Technology (HK) Co., Ltd., a.k.a. Xuan Qi Technology Co. Ltd., as BIS has determined that this person is receiving exports from the United States at an additional address. Further, this rule fixes minor typographical errors in two of the existing addresses for the same company.

The 50 additions to the UVL are as follows:

            China

  • Aisin Nantong Technical Center, Nantong Development Zone, Nantong
  • Anhui Institute of Metrology, Baohe Industrial Development District, Hefei
  • Beijing Bayi Space LCD Materials Technology Co., Ltd, Yanshan, Beijing
  • Beijing Institute of Nanoenergy and Technology, Beijing
  • Center for High Pressure Science and Technology Advanced Research, Pudong, Shanghai
  • Changchun Institute of Applied Chemistry, Chinese Academy of Sciences, Changchun City
  • Changchun National Extreme Precision Optics Co Ltd, Jilin Province, Changchun
  • Chengde Oscillator Electronic Technology Co., Hebei Province, Chengde City
  • Guangdong University of Technology, Guangzhou
  • Gucheng Xian Fengxin Titanium Alloy, Hebei Province, Hengshui City
  • Hefei Institutes of Physical Science, Chinese Academy of Sciences, Shushan District, Hefei City
  • Huaduan (Anhui) Machine Tool Manufacturer Co., Anhui Province, Suzhou
  • Hubei Flying Optical, Qianjiang
  • Luoyang Weimi Optics, Luoyang
  • Ningbo Zhongxian Optoelectronic Technology Co, Ltd., Ningbo, Zhejiang
  • Renmin University, Haidian District, Beijing
  • Shaanxi Hongyuan Aviation Forging, Shaanxi
  • Shanghai Institute of Applied Physics, Chinese Academy of Sciences, Pudong District, Shanghai
  • Shanghai Institute of Technical Physics, Chinese Academy of Sciences, Shanghai
  • Shanghai SKEQI Automation Engineering Co., Shanghai
  • Shi Jia Zhuang Suin Instruments, LuQuan District, Shijiazhuang
  • Sunder Tools (Changxing) Technology, Zhejiang Province
  • Termei Torch & Tip Company, Xinbei District, Changzhou, Jiangsu
  • Tongji University, Shanghai
  • TRI Microsystems, Longgang District, Shenzhen
  • Wuhan Yifi Laser Equipment Co., Hubei, Wuhan
  • Wuxi Beetech Inc., Nanhu, Wuxi
  • Wuxi Hengling Technology Co. Ltd., Jiangsu Province, Wuxi City
  • Xiamen Sanan Optoelectronics, Ximing, Xiamen
  • Xi'an Caijing Opto-Electronics, Science & Technology Co., Ltd, Shaanxi Province, Xi'an City
  • Xi'an Micromach Photon Manufacture Technology, New High Tech Park, Xi'an
  • Xi'an Jiaotong University, School of Electrical Engineering, Xi'an, Shaanxi
  • Yunnan Observatories, Chinese Academy of Sciences (CAS), Kunming, Yunnan
  • Zhejiang Xizi Aviation, Zhejiang
  • Zhongshan Thincloud Optics Co. Ltd., Sanjiao Town, Zhongshan
  • Zolix Instruments Co., Tongzhou District, Beijing

Hong Kong

  • Able Supply Chain Limited, New Territories and Sheung Wan
  • Boson Technology Co., Limited., Kwun Tong, Causeway Bay and Wan Chai
  • HK Hengyu Storage Logistics Limited, Kwun Tong
  • Ling Ao Electronic Technology Co. Ltd, a.k.a. Voyage Technology (HK) Co., Ltd., a.k.a. Xuan Qi Technology Co. Ltd, Kwun Tong, Wan Chai, and Kowloon (additional address)
  • Rising Logistics Company Limited, New Territories, Kwun Tong and Hong Kong Island
  • Swelatel Technology Limited, Wan Chai
  • Universe Market Limited, New Territories

United Arab Emirates

  • EBN AUF Trading, Ras Al Khaimah
  • Empire of East General Trading, Dubai
  • Kassem IT, Dubai
  • Pacific Ocean Star General Trading, aka Pacific Ocean Marine Services, Dubai

Malaysia

  • Infomaya Tech Sdn Bhd, Kuala Lumpur
  • Premier Kiosk Global Supply Co., aka PKGS, aka Global Kiosk, Kuala Lumpur

Indonesia

  • PetroChina International Jabung Ltd., Jakarta

The final rule can be found at: https://www.bis.doc.gov/index.php/documents/regulations-docs/federal-register-notices/federal-register-2019/2386-84-fr-14608/file

In the same announcement BIS also removed the following 10 persons from the UVL:

China

  • Jiujiang Jinxin Nonferrous Metals Co., Ltd., Xunyang District, Jiujiang City,
  • Liupanshui Normal University, Guizhou, and
  • Yantai Salvage Bureau, Yantai, Shandong;

Finland

  • Net Logistics JVM OY, a.k.a. Net Logistic JVM OY, Helsinki and Kotka;

Russia

  • Eltech Ltd., Saint Petersburg,
  • MT Systems, Saint Petersburg,
  • Romona Inc., Yuzhno-Sakhalinsk,
  • Sakhalin Energy Investment Company Ltd., Yuzhno-Sakhalinsk, and
  • SIC Dipaul, Saint Petersburg; and

United Arab Emirates

  • GenX Middle East FZE, a.k.a. GenX Systems LLC, Dubai.

     A new address was also added to the listing for the Hong Kong person Ling Ao Electronic Technology Co. Ltd, a.k.a. Voyage Technology (HK) Co., Ltd., a.k.a. Xuan Qi Technology Co. Ltd.  

Department of Commerce – Census Bureau

 

CENSUS PUBLISHES ADVICE ON HOW TO CHOOSE THE CORRECT PORT OF EXPORT FOR EEI/AES FILINGS

April 25, 2019: The Census Bureau published advice on how to choose the correct port of export when an attempt to file Electronic Export Information (EEI) in the Automated Export System (AES) results in rejection by the system based on the port of export. This advice is in the Census Bureau’s Global Reach Blog, https://www.census.gov/newsroom/blogs/global-reach.html.

Department of State

 

DDTC NAME AND ADDRESS CHANGES POSTED TO WEBSITE

March 29, 2019 and April 1, 8, and 11, 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 Continental DataGraphics Limited to Boeing Technical Services UK Limited due to acquisition of Continental Grapics by The Boeing Company;
  • Revised notice of change in name from AlliedSignal Aerospace Service Corporation to AlliedSignal Aerospace Service LLC due to corporate reorganization;
  • Changes in name from Turkey Prime Ministry to Presidency of the Republic of Turkey and from Turkey Ministry of Defense Undersecretariat for Defence Industries (SSM) to Presidency of Defence Industries of Turkey (SSB) due to changes in the system of government in Turkey;
  • Change in name from L3 Communications Electronic Systems Inc. to L3 Technologies MAS Inc. due to an internal reorganization;
  • Change in name from Babcock Land Limited to Babcock Integrated Technology Limited due to corporate reorganization;
  • Change in name from Assystem Germany GmbH to Expleo Germany GmbH due to corporate rebranding;
  • Change in address for BAE Systems (International) Limited;
  • Change in address for KMWE Precision BV; and
  • Change in name from DutchAero BV to KMWE Aero Engine BV due to acquisition of DutchAero by KMWE.

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

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DDTC AMENDS ITAR SECTION 126.4 LICENSE EXEMPTION, BY OR FOR, THE USG

April 19, 2019 – 84 Fed. Reg. 16398: The State Department amended Section 126.4 of the International Traffic in Arms Regulations (ITAR, 22 CFR Parts 120-130) to clarify when exports, reexports, retransfers, temporary imports, and performance of defense services (collectively, “transfers”) may be made by or for an agency of the U.S. Government without a license. Previously, the exemption in Sec. 126.4 had been limited to temporary exports and imports. Also, the scope of the exemption was expanded to allow transfers by third parties (i.e., contractors) acting for, or on behalf of, the U.S. Government within specific conditions and authorizations from the USG agency.   The amended provision includes documentation and other requirements for the use of this exemption.

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DDTC SEEKS PUBLIC COMMENT ON NEW FORM DS-77888

April 19, 2019 – 84 Fed. Reg. 16554: DDTC invited public comments on a planned new Form DS-7788, a single license form, which will replace the existing DTrade electronic application forms for the permanent export, temporary export, temporary import, or brokering of defense articles, defense services, and related technical data, i.e., it will consolidate Forms DSP-5, DSP-6, DSP-61, DSP-62, DSP-73, DSP-74, DSP-85, DS-4294, and DS-6004. Links to samples of the data fields proposed for Form DS-7788 are in an announcement on the DDTC home page, https://www.pmddtc.state.gov/. Deadline for comments is June 18, 2019.

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DOS UPDATES ITS CUBA RESTRICTED LIST

April 24, 2019 – 84 Fed. Reg. 17228: The U.S. Department of State updated its List of Restricted Entities and Subentities Associated with Cuba (Cuba Restricted List) to add five subentities. Direct financial transactions with these entities and subentities are generally prohibited pursuant to the Cuban Assets Control Regulations (CACR, 31 CFR Part 515).

License applications submitted to BIS pursuant to the Export Administration Regulations also incorporate a review of the Cuba Restricted List while under consideration. The Cuba Restricted List as of April 19, 2019, is on the DDTC website at https://www.state.gov/e/eb/tfs/spi/cuba/cubarestrictedlist/291329.htm.

Department of Homeland Security – Customs and Border Protection

 

DHS UPDATED AESTIR APPENDIX O DUE TO CHANGES TO ITAR SECTION 126.4 LICENSE EXEMPTION

April 29, 2019: On behalf of U.S. Customs and Border Protection, the Census Bureau reported that AESTIR Appendix O has been updated with new DDTC ITAR exemption codes to reflect the ITAR amendment revising the licensing exemption for transfers made by or for an agency of the U.S. Government. {See information in State Department section below.) The new exemption codes are:

  • 22 CFR 126.4 (a) Export, Re-export, Re-Transfer or Temporary Import of defense article, technical data, or defense service by agency of U.S. Government;
  • 22 CFR 126.4 (b) Export, Re-export, Re-Transfer or Temporary Import of defense article, technical data, or defense service on behalf of U.S. Government agency; and
  • 22 CFR 126.4 (c) Return of temporary, or permanent export of defense article, technical data, or defense service for end-use by U.S. Government agency in foreign country.

Department of the Treasury

 

TREASURY PUBLISHED A TECHNICAL NOTICE FOR USERS OF SANCTIONS LIST DATA FILES

April 16, 2019: The Office of Foreign Assets Control (OFAC) published a technical notice for users of its Sanctions List data files advising that corrected versions of the updated Data Specification for OFAC’s list-related flat files have been released. Given this change, OFAC will be adding 30 additional days (June 17) onto its implementation schedule for this change. At that time, OFAC will be expanding the “Program” field found in its legacy data files. Affected files include the following: SDN.DEL, SDN.PIP, SDN.FF, SDN.CSV, CONS_PRIM.DEL, CONS_PRIM.PIP, CONS_PRIM.FF, and CONS_PRIM.CSV. The notice is on the OFAC website at https://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/20190416.aspx.

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OFAC AMENDED CERTAIN GENERAL LICENSES

April 17, 2019: OFAC amended General License (GL) 3D - "Authorizing Transactions Related to, Provision of Financing for, and Other Dealings in Certain Bonds"; GL 4A - "Authorizing New Debt Transactions and Transactions involving Certain Banks Related to the Exportation or Reexportation of Agricultural Commodities, Medicine, Medical Devices or Replacement Parts and Components"; GL 9C - "Authorizing Transactions Related to Dealings in Certain Securities"; GL 15 - "Authorizing Transactions Involving Certain Banks Prohibited by Executive Order 13850 for Certain Entities"; and GL 16 - "Authorizing Maintenance of U.S. Person Accounts and Noncommercial, Personal Remittances involving Certain Banks”. It also issued two new GLs: GL 19 - "Authorizing Certain Activities Necessary to the Wind Down of Operations or Existing Contracts Involving Central Bank of Venezuela"; and GL 20 - "Authorizing Official Activities of Certain International Organizations Involving Central Bank of Venezuela.” Links to these GLs are on the Treasury Department website at https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20190417.aspx.

In a related FAQ, OFAC noted that these actions ensured that U.S. persons may continue to engage in and

facilitate non-commercial, personal remittances and the provision of humanitarian assistance to the people

of Venezuela and described GLs 4A, 16, and 20, including information about transactions involving

exporting or re-exporting items to Venezuela. FAQ 665 is on the OFAC website at

https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_other.aspx#665.

OFAC ISSUES SANCTIONS FOR FOREIGN INTERFERENCE IN U.S. ELECTION

April 29, 2019 – 84 Fed. Reg. 17950:   OFAC issued the Foreign Interference in U.S. Elections Sanctions Regulations, 31 CFR Part 579, to implement Executive Order 13848 of September 12, 2018 (‘‘Imposing Certain Sanctions in the Event of Foreign Interference in a United States Election’’). In issuing these regulations, OFAC stated that it intends to supplement them with a more comprehensive set of regulations, possibly including additional interpretive and definitional guidance and additional general licenses and statements of licensing policy.

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 This email address is being protected from spambots. You need JavaScript enabled to view it..

 

 

Sanctions

 

Department of Commerce

April 1, 2019 – 84 Fed. Reg. 12196: BIS denied the export privileges of Arnoldo Antonio Arredondo of Beaumont, TX, Federal Correctional Institution until Nov. 28, 2027, based on his conviction of violating Sec. 38 of the Arms Export Control Act (AECA, 22 USC 2778 et seq.) by conspiring to knowingly and willfully export and cause to be exported, from the U.S. to Mexico, .223 caliber rifles designated on the U.S. Munitions List (USML, 22 CFR Sec. 121.1) without the required licenses from the Department of State. In the criminal case Arredondo was sentenced to 46 months in prison, 3 years of supervised release, and an assessment of $100.

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April 1, 2019 – 84 Fed. Reg. 12197: BIS denied the export privileges of Mohan L. Nirala of Laurel, MD, until March 13, 2027, based on his conviction of violating Sec. 793(e) of the Espionage Act (18 USC 792-799) by unlawfully possessing and retaining a classified document and failing to deliver it to the U.S. Government employee entitled to receive it. In the criminal case, Nirala was sentenced to 12 months and one day in prison, 1 year of supervised release, and an assessment of $100.

Fines and Penalties

April 11, 2019: OFAC announced that Acteon Group Ltd. (Acteon), a subsea service provider in the oil and gas industry based in the United Kingdom, and Acteon’s subsidiary, 2H Offshore Engineering Ltd., agreed to pay $227,500 for violating U.S. prohibitions against doing business with Cuba, to settle charges of 7 violations of the Cuban Assets Control Regulations (CACR, 31 CFR part 515) by two Malaysian affiliates of 2H Offshore. The Malaysian affiliates allegedly performed engineering design analyses for oil well drilling projects in Cuban territorial waters and sent its engineers to Cuba to conduct workshops on these analyses.

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April 11, 2019: Separately, OFAC announced a settlement with KKR & Co. Inc. (KKR, a global investment firm based in New York City), Acteon, and Acteon’s subsidiaries, Seatronics Ltd., Seatronics, Inc., and Seatronics Ptd. Ltd. (collectively “Seatronics,” a geophysical services company based in the UK), whereby Acteon agreed to pay $213,866 for violating U.S. prohibitions against doing business with Cuba and Iran, to settle potential civil liability, for 13 apparent violations of the CACR, by Acteon and Seatronics, and 3 apparent violations of the Iranian Transactions and Sanctions Regulations (ITSR, 31 CFR Part 560), by KKR. The apparent violations of the CACR occurred when Seatronics rented or sold equipment for oil exploration projects in Cuban territorial waters and sent company engineers to service equipment on vessels operating in Cuban territorial waters. The apparent violations of the ITSR occurred when Seatronics’ Abu Dhabi, UAE branch rented or sold equipment to customers who apparently embarked the equipment on vessels that operated in Iranian territorial waters.

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April 23, 2019: Oben Cabalceta of Atco, NJ, the owner of two companies that supplied aircraft parts and other military equipment to the U.S. Department of Defense, pleaded guilty in federal court in Camden, NJ, to one count of conspiracy to violate the AECA and one count of wire fraud. The AECA violations occurred when Cabalceta, a citizen of Costa Rica, but not the U.S., caused other persons to submit fraudulent applications for access to export controlled drawings and technical data, and, on several occasions, when he himself accessed sensitive drawings that required DOS prior approval.