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.
Presidential Executive Order
Trump blocks the Supreme Leader of Iran
June 26, 2019 – 84 Fed. Reg. 30573: President Trump issued Executive Order (EO) 13876, “Imposing Sanctions with Respect to Iran” (signed June 24, 2019), blocking the U.S. property and imposing other sanctions on the Supreme Leader of Iran, the Supreme Leader’s Office, and other persons determined by the U.S. Secretary of the Treasury, in consultation with the Secretary of State, to meet specified conditions. EO 13876 also authorizes the Secretary of the Treasury to impose sanctions – including restrictions on the opening or maintenance of certain U.S. accounts -- on foreign financial institutions that are determined to have knowingly conducted or facilitated any significant financial transactions on behalf of any sanctioned person. EO 13876 states that it was issued in response to Iranian actions taken to destabilize the Middle East, promote international terrorism, and advance Iran’s ballistic missile program, as well as its actions in and over international waters, including targeting U.S. military assets and civilian vessels.
Department of Commerce – Bureau of Industry and Security
BIS Amends The EAR
June 5, 2019 – 84 Fed. Reg. 25986: The Bureau of Industry and Security (BIS) amended the Export Administration Regulations (EAR, 15 CFR Parts 730-774) by amending Subsections (a)(2)(i), (a)(2)(ii), (d)(6), and (d), Note 1 of License Exception Aircraft, Vessels and Spacecraft (AVS, EAR Sec. 740.15) to remove the eligibility of passenger and recreational vessels and most non-commercial aircraft when they are destined for Cuba. In the same action, BIS also amended EAR Part 746.2(b) to provide that license applications for the export, or reexport, to Cuba, of items that are not eligible for License Exception AVS will be considered on a case-by-case basis and will be subject to a general policy of denial unless the export or reexport is consistent with U.S. foreign policy or national security interests.
BIS Posts Cuba Frequently Asked Questions
June 5, 2019: BIS posted a 20-page compendium of Cuba Frequently Asked Questions (FAQs), effective and updated June 5, 2019, on its website at https://www.bis.doc.gov/index.php/documents/pdfs/1568-bis-cuba-consolidated-faqs-3/file.
BIS Reminds Exporters Of The Annual Reporting Requirement Of Offset Agreements Exceeding $5 Million
June 6, 2019 – 84 Fed. Reg. 26399: BIS issued a notice reminding exporters of the annual reporting requirement of offsets agreements exceeding $5 million in value, related to sales to foreign countries or foreign firms, of all items controlled under the International Traffic in Arms Regulations (ITAR, 22 CFR Parts 120-130) and items controlled on the Commerce Control List (CCL, EAR Part 774, Supp. No. 1) with an Export Control Classification Number (ECCN) having the number “6” as its third character. Affected U.S. firms were required to submit the required information covering calendar year 2018, to BIS, by June 15, 2019.
BIS Adds 5 Entities To The Entity List
June 24, 2019 – 84 Fed. Reg. 29371: BIS amended the EAR by adding 5 entities 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 and no available license exceptions will now apply to exports, reexports, or in-country transfers to these persons of all items subject to the EAR. The 5 entities, all under the destination China, are:
In addition, BIS modified the following entity in China to add one alias and 4 locations:
BIS Removes 8 Chinese Persons From The Unverified List
June 27, 2019 – 84 Fed. Reg. 30593: BIS amended the EAR by removing the following 8 persons in China from the Unverified List (UVL, EAR Part 744, Supp. No. 6) on the basis that BIS had been able to verify their bona fides because of an end-use check:
(1) Beijing Bayi Space LCD Materials Technology Co., Ltd, Beijing;
(2) Hubei Flying Optical, No 1, Qianjiang;
(3) Sunder Tools (Changxing) Technology, Zhejiang Province;
(4) Wuhan Yifi Laser Equipment Co., Hubei, Wuhan;
(5) Wuxi Hengling Technology Co. Ltd., Jiangsu Province, Wuxi City;
(6) Xiamen Sanan Optoelectronics, Ximing, Xiamen;
(7) Zhejiang Xizi Aviation, Zhejiang; and
(8) Zolix Instruments Co., Beijing.
The rule also corrected the name of one person in China that remains on the UVL:
(1) Beijing Institute of Nanoenergy and Technology corrected to Beijing Institute of Nanoenergy and Nanosystems.
Department of State
DDTC Name and Address Changes Posted To Website
June 4, 11, 14, and 24, 2019: The Directorate of Defense Trade Controls (DDTC) posted the following name and/or address changes on its website at https://pmddtc.state.gov/ddtc_public?id=ddtc_kb_article_page&sys_id=bd72ca0adbf8d30044f9ff621f961981:
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 Statutorily Debars 23 Persons
June 6, 2019 – 84 Fed. Reg. 26500: DDTC imposed statutory debarment on the following persons based on their convictions for violating, or conspiracy to violate, the Arms Export Control Act (AECA, 22 USC 2778 et seq.):
(1) Acosta-Moctezuma, Rogelio;
(2) Arredondo, Arnoldo Antonio;
(3) Barbieri, Frederik;
(4) Campos-Flores, Jose Jesus;
(5) De La Rosa, Juan Jesus;
(6) Inzunza, Shirley Trinity;
(7) Lerma, Luis Manuel;
(8) Luque, Barbara Jo;
(9) Morgovsky, Irina;
(10) Morgovsky, Naum;
(11) Nedoviz, Volodymyr;
(12) Padilla-Cruz, Ledis Omar (a.k.a. Omar Padilla);
(13) Roberts, John Parker;
(14) Rezvanov, Eldar:
(15) Sydykov, Tengiz T.;
(16) Vazquez, Eduard Roel;
(17) Verma, Bharat;
(18) Verma, Urvashi;
(19) Vibgyor Optical Systems, Inc.;
(20) Vlachos, Alexis;
(21) Wilson, Cory (a.k.a. Jason Cory Wilson);
(22) Yassine, Fadi; and
(23) Zannoni, Giovanni.
These persons are prohibited from participating directly, or indirectly, in any activities that are regulated by the ITAR for 3 years following their conviction, and, beyond that date, until they request and receive reinstatement from the State Department. During debarment, the Department may grant transaction exceptions on a case-by-case basis. The Federal Register announcement includes a detailed description of the rules applicable to statutory debarment.
Department of the Treasury
OFAC Amends The Cuban Assets Control Regulations
June 5, 2019 – 84 Fed. Reg. 25992: The Office of Foreign Assets Control (OFAC) amended the Cuban Assets Control Regulations (CACR, 31 CFR Part 515), Sec. 515.565, to remove an authorization for group people-to-people educational travel to Cuba. A grandfather clause authorizes certain group travel if one travel-related transaction (e.g., purchasing a flight) had been completed prior to June 5, 2019.
OFAC Posts Frequently Asked Questions Related To Cuba
June 4, 2019: OFAC posted a collection of 117 Frequently Asked Questions Related to Cuba, updated June 4 and including coverage of the CACR amendment of June 5, 2019 (see item above), on its website at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/cuba_faqs_new.pdf (36 pages).
June 6, 2019: OFAC issued Venezuela-related General Licenses (GLs) 7B, 8A, and 13A and an FAQ, all regarding petroleum-related transactions. An announcement including links to these actions is on the OFAC website at https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20190606.aspx. (See June 26 item below for subsequent action on GL13A.)
OFAC Increases Maximum Civil Monetary Penalties
June 14, 2019 – 84 Fed. Reg. 27714: OFAC issued its required annual adjustment in maximum civil monetary penalties (CMPs). The 2019 maximum CMPs, based on an adjustment multiplier of 1.02522, are:
Trading With the Enemy Act (50 U.S.C. 4301-4341) (TWEA)…………………………$ 89,170
International Emergency Economic Powers Act (50 U.S.C. 1701-1706) (IEEPA)……...$ 302,584
Antiterrorism and Effective Death Penalty Act of 1996 (18 U.S.C. 2339B) (AEDPA)…$ 79,874
Foreign Narcotics Kingpin Designation Act (21 U.S.C 1901-1908, at 1906) (FNKDA)..$1,503,470
OFAC Amends Its Reporting, Procedures and Penalties Regulations
June 21, 2019 – 84 Fed. Reg. 29055: OFAC issued an interim final rule amending its Reporting, Procedures and Penalties Regulations (RPPR, 31 CFR Part 501). Included in this rule is a restatement of OFAC’s general procedures for licensing (Subpart E, Procedures, Sec. 501.801), which notes that OFAC views information submitted in furtherance of an application for a specific license as “required information” for purposes of Exemption 4 of the Freedom of Information Act (FOIA, 5 USC Part 552), which covers trade secrets or commercial or financial information that is confidential or privileged.
OFAC Issues General License 13B For Venezuela
June 26, 2019: OFAC issued Venezuela related General License 13B, amending GL 13A (see June 6 item above) and extending its expiration date to Oct. 25, 2019. The revised text of GL 13B is on the OFAC website at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/venezuela_gl13b.pdf .
OFAC Issues General License 13L
June 26, 2019: OFAC issued GL 13L, “Authorizing Certain Transactions Necessary to Divest or Transfer Debt, Equity, or Other Holdings in GAZ Group,” and GL 15F, “Authorizing Certain Activities Necessary to Maintenance or Wind Down of Operations or Existing Contracts with GAZ Group, or Certain Automotive Safety Activities,” replacing GL 13K and GL 15E, both issued March 6, 2019, and extending their expiration date to Nov. 8, 2019. GL 13L is on the OFAC website at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/ukraine_gl13l.pdf; GL 15F, which includes an additional authorization regarding certain auto-safety activities, is at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/ukraine_gl15f.pdf .
OFAC Amends The North Korea Sanctions Regulations
June 28, 2019 – 84 Fed. Reg. 30868: OFAC amended the North Korea Sanctions Regulations (NKSR, 31 CFR part 510) to conform references in the NKSR to accurately reflect text that has been amended on the OFAC website after the NKSR were fully restated in March 2018 (March 5, 2018 – 83 Fed. Reg. 9182, see March 2018 Regulatory Update) and to make other changes largely relating to secondary financial sanctions and entries on the Specially Designated National and Blocked Persons (SDN) List and the Correspondent Account or Payable Through Account Sanctions (CAPTA) List.
Department of Commerce
June 12, 2019 – 84 Fed. Reg. 27233: BIS renewed for an additional 6 months the Temporary Denial Order (TDO) against Mahan Airways; Pejman Mahmood Kosarayanifard, a/k/a Kosarian Fard; Mahmoud Amini; Kerman Aviation, a/k/a GIE Kerman Aviation; Sirjanco Trading LLC; Mahan Air General Trading LLC; Mehdi Bahrami; Al Naser Airlines, a/k/a Al-Naser Airlines, a/k/a Alnaser Airlines and Air Freight Ltd.; Ali Abdullah Alhay, a/k/a Ali Alhay, a/k/a Ali Abdullah Ahmed Alhay; Bahar Safwa General Trading; Sky Blue Bird Group, a/k/a Sky Blue Bird Aviation, a/k/a Sky Blue Bird Ltd., a/k/a Sky Blue Bird FZC; and Issam Shammout, a/k/a Muhammad Isam Muhammad Anwar Nur Shammout, a/k/a Issam Anwar.
Fines and Penalties
June 4, 2019: The U.S. Department of Justice (DOJ) announced the unsealing of two indictments charging Peyman Amiri Larijani, a citizen of Iran and former resident of Istanbul, and the airline of which Larijani was the Operations Manager, Kral Havacilik IC VE DIS Ticaret Sirketi (Kral), with violations involving efforts to export U.S.-origin aviation items to Iranian customers. A 34-count indictment returned on April 22, 2015, charges Larijani and Kral with conspiracy to acquire U.S.-origin aircraft parts and goods to supply to entities and end-users, in Iran, conceal from United States companies and the U.S. government that the U.S.-origin goods were destined for Iranian aviation business end users, make financial profit for defendants and other conspirators, and evade the regulations, prohibitions, and licensing requirements of the IEEPA, the Iranian Transactions and Sanctions Regulations (ITSR, 31 CFR Part 560), and the EAR. Larijani and his co-conspirators allegedly caused these parts to be exported from the United States to Istanbul, Turkey, before shipping them to airlines, in Iran, including Mahan Air, which had been designated a Specially Designated National (SDN) for providing support to Iran’s Islamic Revolutionary Guard Corp-Qods Force and was also on the Commerce Department Denied Parties List.
A separate 4-count indictment returned on Oct. 6, 2016, charges Mahan Air, Kral, Larijani, and four additional individuals with conspiracy to export U.S.-origin commercial aircraft engines to Iran and provide services to Mahan Air, a SDN, and to defraud the U.S., the U.S. Department of the Treasury, and the U.S. Department of Commerce with unlawful exports and attempted exports to an embargoed country, provision of services to an SDN, willful violation of denial order, and conspiracy to commit money laundering for purchasing a U.S.-origin aircraft engine to supply to Mahan Air, in Iran, without obtaining an export license. (See the following item for an additional indictment of Larijani.)
June 11, 2019: Joyce Eliabachus, a/k/a Joyce Marie Gundran Managan, of Morristown, NJ, pleaded guilty in U.S. District Court for the District of New Jersey of one count of conspiracy to violate IEEPA for her role in an international procurement network that smuggled over $2 million worth of aircraft parts to Iran. Also, on that date in the same court, a complaint was unsealed charging Peyman Amiri Larijani (see item above) with conspiracy to violate the ITSR, conspiracy to commit money laundering, and conspiracy to smuggle goods from the U.S. Eliabachus and Larijani were allegedly part of a network that unlawfully facilitated at least 49 shipments containing 23,554 U.S.-origin aircraft parts to customers in Iran including Mahan Air without the required U.S. export licenses. Eliabachus allegedly used her company to complete the purchase and acquisition of the aircraft components from various U.S. distributors, repackage them, and ship them to companies in the United Arab Emirates (UAE) and Turkey, where Larijani and other conspirators allegedly directed them to Iran. As part of her role, Eliabachus allegedly falsified the true destinations and end users of the components and falsified their true value to avoid filing export control forms.
June 14, 2019: Haoyang Yu, a/k/a/Jack Yu, a/k/a Harry Yu, a/k/a Jack Tricon, of Lexington, MA, was arrested and charged with trade secrets violations, along with his company, Tricon MMIC LLC, based on allegations that he had stolen proprietary information from his former employer, Analog Devices, Inc. (ADI), a semiconductor company headquartered in Norwood, MA, and sold and illegally exported monolithic microwave integrated circuits (MMICs) that incorporated trade secrets stolen from ADI. While still employed at ADI, Yu created Tricon MMIC LLC, which claimed to specialize in wide band MMIC amplifiers for customers in defense and aerospace test and instrumentation, and satellite communications. Tricon then produced and sold items incorporating ADI’s trade secrets that contained specifications identical or substantially similar to ADI parts, identifying them as replacement parts for ADI products. Yu allegedly illegally exported some of these items to Spain, concealing his name and the export control classification of the parts on the shipping documents.
June 19, 2019: Oleg Tishchenko, a citizen of Russia, was sentenced in federal court in Salt Lake City, UT, to one year and one day in prison, given credit for time served, and ordered to be deported immediately to Russia after pleading guilty to smuggling F-16 technical manuals to Moscow. Tishchenko had been extradited to the U.S. from Georgia, where he had traveled for a visit, and at the time of his plea had served more than one year in prison awaiting trial. Tishchenko, a developer for a Russian video game maker, posted in an online forum that he needed help in purchasing F-16 A/B Air Defense Fighter manuals on eBay and having them forwarded to him in Russia, as the owner would not sell the manuals to foreign bidders. After receiving the manuals from a U.S. seller, Tishchenko allegedly auctioned them on DVDs to individuals in Cyprus, Japan, Netherlands, Australia, Germany, and Taiwan.
June 26, 2019: John James Peterson and Brunella Zuppone were arrested and charged in federal court in Miami, FL, with conspiring and attempting to violate the AECA and ITAR by exporting thousands of ITAR-controlled parts and components of AR-15 assault rifles to an Argentine weapons trafficking organization without the required authorization from the State Department. The charges arose from the cooperative efforts of agents of U.S. Homeland Security Investigations and Argentine law enforcement officials who executed search warrants in Florida and Argentina that resulted in the seizure of the equivalent of 52 AR-15 assault rifles: 189 long arms, 156 handguns, one mortar round, one hand grenade, over 30,000 rounds of assorted caliber ammunition, five vehicles, and $110,000 in cash. Twenty-five persons were arrested in Argentina by the Argentine National Gendarmeria on the day of the arrest of Peterson and Zuppone in the U.S.
June 27, 2019: Ara Dolarian, a U.S. citizen residing in Sofia, Bulgaria, pleaded guilty in federal court for the Eastern District of California, of conspiracy to violate the AECA by brokering the sale of military-grade arms and munitions without the required license from the U.S. Department of State. Dolarian, the owner and president of Dolarian Capital Inc. (DCI), an arms brokering company operating in Fresno, CA, Washington, DC, and Sofia, Bulgaria, allegedly executed sales contracts with a French arms brokering company acting on behalf of Nigeria for the purchase and transfer of high-explosive bombs, rockets, military-grade firearms, and aircraft-mounted cannons worth more than $8.5 million and accepted approximately $8.3 million before the brokering applications he had submitted to the State Department had been adjudicated.
June 27, 2019: Alex Yun Cheong Yue of South El Monte, CA, was indicted on charges of conspiring, attempting, and actually exporting U.S.-origin cesium atomic clocks controlled under the Commerce Control List (CCL, EAR Part 774, Supp. No. 1) for national security and anti-terrorism reasons to Hong Kong without the required export licenses from the Department of Commerce. Using a fictitious company, Yue allegedly purchased the clocks by falsely representing to the U.S. seller that they would be used solely in the U.S.; however, he actually reshipped them to a co-conspirator in Hong Kong without applying for the required license. Subsequently, when he allegedly attempted to purchase an additional cesium atomic clock, the U.S. seller required him to provide an end-user statement, and he falsely declared that he did not intend to export the cesium atomic clocks. However, when the U.S. seller insisted on a site visit to the California location where the clocks would be utilized, Yue abruptly canceled the order and requested a refund. Three days after he received the refund, he transferred the refunded money to the bank account of his Hong Kong customer.