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.
EU Revises Its Common Rules Governing Exports Of Military Technology And Equipment
Sep. 16, 2019: The Council of the European Union (EU) revised its Common Position defining the Common Rules Governing Control of Exports of Military Technology and Equipment to take account of developments at both the international and European Union levels, including the entry into force of the Arms Trade Treaty on Dec. 24, 2014. The EU Council also adopted a User’s Guide to the interpretation and implementation of the Common Position for use primarily by export licensing officials. The Council Decision adopting the revised Common Position is on the EU website at https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.L_.2019.239.01.0016.01.ENG&toc=OJ:L:2019:239:TOC; the 159-page User’s Guide is at https://www.consilium.europa.eu/media/40659/st12189-en19.pdf .
United Kingdom (U.K.)
The UK Posted Guidance For “Exporting Controlled Goods After Brexit”
Aug. 19, 2019: The U.K. Government’s Export Control Joint Unit (ECJU) posted “Exporting Controlled Goods After Brexit,” describing what will change for exporters of controlled goods if the UK leaves the EU with no deal. This guide, which the ECJU will update if the Brexit situation changes, can be found at https://www.gov.uk/guidance/exporting-controlled-goods-after-eu-exit.
The UK Posted Guidance For “Export Military or Dual Use Goods, Services or Technology: Special Rules”
Aug. 30, 2019: The ECJU posted a guide, “Export Military or Dual Use Goods, Services or Technology: Special Rules,” at https://www.gov.uk/guidance/export-military-or-dual-use-goods-services-or-technology-special-rules. The guide describes export control requirements throughout the full export process from determining what exports require a license through the licensing process and the responsibilities of the license-holder. It includes special topics such as brokering and identifies resources for each topic. The guide notes that the requirements for exports to the EU will change when the UK leaves the EU on 31 October.
The UK Posted Guidance For “Export Controls: Dual-Use Items, Software and Technology, Goods for Torture and Radioactive Sources”
Sep. 24, 2019: The ECJU posted a specialized guide, “Export Controls: Dual-Use Items, Software and Technology, Goods for Torture and Radioactive Sources,” on its website at https://www.gov.uk/guidance/export-controls-dual-use-items-software-and-technology-goods-for-torture-and-radioactive-sources?utm_source=c6f33883-2258-4b1e-8dd2-094480b282a0&utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate. The guide notes that these regulations will change when the U.K. leaves the EU on 31 October.
Department of Commerce – Bureau of Industry and Security
BIS Published Huawei Entity List and Temporary General License Frequently Asked Questions
Sep. 19, 2019: BIS published 18 “Huawei Entity List and Temporary General License Frequently Asked Questions (FAQs),” on Sep. 18, 2019. Separately, BIS also published 8 additional “Huawei Temporary General License Extension Frequently Asked Questions (FAQs)” about the Temporary General License (TGL) of Aug. 19, 2019, which extended until Nov. 18, 2019 the term of an earlier TGL which authorized specified transactions involving Huawei entities listed on the Entity List (EAR Part 744, Supp. No. 7) (see August 2019 Regulatory Update). The Huawei Entity List and TGL FAQs are on the BIS website at https://www.bis.doc.gov/index.php/documents/pdfs/2447-huawei-entity-listing-faqs/file; the TGL FAQs are at https://www.bis.doc.gov/index.php/documents/pdfs/2446-huawei-entity-list-temporary-general-license-extension-faqs/file.
Department of State
DDTC Name and Address Changes Posted To Website
Aug. 30 and Sep. 10, 18, 19, 23, and 26, 2019: The Directorate of Defense Trade Controls (DDTC) posted the following name and/or address changes on its website at
- Change in address for Rolls-Royce plc;
- Changes in name of the following Rheinmetall MAN Military Vehicles GmbH entities due to change in focus of Rheinmetall MAN Military Vehicles GmbH from tactical and logistic vehicles to tactical vehicles only:
- Change in name from Rheinmetall MAN Military Vehicles GmbH to Rheinmetall Military Vehicles GmbH;
- Change in name from Rheinmetall Military Vehicles Nederland B.V. to Rheinmetall Defence Nederland B.V.; and
- Establishment of new entity, Rheinmetall MAN Military Vehicles GmbH, to focus on logistics vehicles;
- Change in name from EIS Holdings GmbH to QinetiQ GmbH due to acquisition of EIS by QinetiQ;
- Change in name from Page Europa S.R.L. to General Dynamics Mission Systems – Italy s.r.l. due to corporate rebranding;
- Change in address for General Dynamics Corporation;
- Changes in name for the following Rheinmetall Defence entities due to corporate rebranding:
- Change in name from Rheinmetall Active Protection GmbH to Rheinmetall Protection Systems GmbH and change in address;
- Change in name from Rheinmetall Chempro GmbH to Branch Active Protection;
- Change in name from Rheinmetall Ballistic Protection GmbH to Branch Active Protection and change in address; and
- Change in name from IBD Deisenroth Engineering GmbH to Rheinmetall Protection Systems GmbH, Branch Development; and
- Change in name from Sofradir SAS and ULIS SAS to Lynred SAS due to merger of Sofradir and ULIS.
Each announcement includes a link to a notice detailing the change and its effects on pending and currently approved authorizations involving the listed entity.
Department of the Treasury
OFAC Issues Nicaragua Sanctions Regulations
Sep. 4, 2019 – 84 Fed. Reg. 46440: The Office of Foreign Assets Control (OFAC) issued the Nicaragua Sanctions Regulations (NSR, 31 CFR Part 582) to implement Executive Order 13851 of Nov. 27, 2018, “Blocking Property of Certain Persons Contributing to the Situation in Nicaragua.” The announcement states that these regulations are issued in abbreviated form in order to provide immediate guidance to the public. OFAC intends to publish more comprehensive regulations at a later time.
OFAC Updates / Publishes FAQs regarding bunkering of non-Iranian and Iranian vessels carrying goods to or from Iran
Sep. 5, 2019: OFAC updated an existing FAQ and published two new FAQs regarding bunkering of non-Iranian and Iranian vessels carrying goods to or from Iran. Updated FAQ 296 and new FAQs 691 and 692 are on the Treasury Department website at https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_iran.aspx#296.
OFAC Publishes FAQs On The Cuban Assets Control Regulations
Sep. 6, 2019: OFAC published a large compendium of FAQs on the Cuban Assets Control Regulations (CACR, 31 CFR Part 515), with many of the questions updated (see the following item). These FAQs are on the Treasury Department website at https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_other.aspx#cuba.
OFAC Issues Amendments To The Cuban Assets Control Regulations
Sep. 9, 2019 – 84 Fed. Reg. 47121: OFAC issued amendments to the CACR revising 1) certain authorizations in Sec. 515.570 for remittances to Cuba and 2) the “U-turn” general license in Sec. 515.584(d) authorizing banking institutions subject to US. jurisdiction to process certain kinds of financial transactions.
OFAC Published Venezuela-related General License (GL) 34
Sep. 9, 2019: OFAC published Venezuela-related General License (GL) 34, authorizing transactions and activities involving specified categories of individuals who meet the definition of the "Government of Venezuela" that would otherwise be prohibited by Executive Order (E.O.) 13884, “Blocking Property of the Government of Venezuela.” In conjunction with this action, OFAC also amended FAQ 680. GL 34 is on the Treasury Department website at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/venezuela_gl34.pdf; amended FAQ 680 is at https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_other.aspx#680.
LATEST SANCTIONS FINES & PENALTIES
Department of Commerce
Sep. 4, 2019 – 84 Fed. Reg. 47241: BIS denied the export privileges of Sammy Smith of Patchogue, NY, for 7 years, based on his conviction of violating the Arms Export Control Act (AECA, 22 USC 2778 et seq.) by attempting to export firearms listed on the U.S. Munitions List (USML, 22 CFR Sec. 121.1), to Turkey, without the required license from the State Department. In the criminal case Smith was sentenced to two months in prison, 6 months of supervised release, and an assessment of $100.
Fines and Penalties
Aug. 29, 2019: Behzad Pourghannad, a citizen and resident of Iran, pleaded guilty in Federal District Court in New York, NY, to conspiracy to violate the International Emergency Economic Powers Act (IEEPA, 50 USC Sec. 1701-1707) by exporting several tons of carbon fiber -- a substance having many uses, including in missiles, aerospace engineering, and gas centrifuges that enrich uranium -- from the U.S. to Iran without the required license from the Treasury Department. In 2009, Pourghannad and a co-defendant, Ali Reza Shokri, arranged the export of a large quantity of carbon fiber to be exported from the U.S. to Iran via “Country-1.” However, this shipment was interdicted by authorities in Country-1. In 2013, Pourghannad and Shokri allegedly arranged the shipment of more than 5 tons of carbon fiber to Iran through Tbilisi, Georgia, with the carbon fiber labels replaced by shipping labels referencing “acrylic” to evade U.S. export controls. Shokri and a third co-defendant, Farzin Faridmanesh, remain at large. Pourghannad was arrested in Germany and extradited to the U.S. by the German government.
Aug. 29, 2019: Resit Tavan, a citizen of Turkey, was sentenced in Federal District Court in Milwaukee, WI, to imprisonment for 27 months, based on his conviction of conspiracy to violate the IEEPA by exporting specialized marine equipment from the U.S. to Iran without the required authorization. On April 2, 2019, Tavan pleaded guilty to conspiring to use his Turkish-based company to acquire U.S.-produced equipment including high powered outboard engines, marine power generators, and power boat propulsion equipment known as surface drives on behalf of an Iran-based shipbuilding cooperative that used the equipment to support the construction and development of a prototype high-speed missile attack boat for the Iranian military. A co-defendant, Fulya Kalafatoglu Oguzturk, also a citizen of Turkey, remains at large.
Sep. 4, 2019: Roger Sobrado, of Marlton, NJ, was sentenced in Federal District Court in Camden, NJ, to 36 months in prison, 3 years of supervised release, and restitution of $8,043,977 based on his conviction of one count each of income tax evasion, conspiracy to commit wire fraud, and conspiracy to violate the AECA. The AECA violation involved Sobrado’s admission that he had applied to the Department of Defense (DOD) for access to export controlled drawings and technical data on behalf of a company owned by a family member who was a non-citizen in the U.S. illegally, and that the family member had accessed or downloaded hundreds of sensitive drawings that required special access. The other charges arose from sales to the DOD by two companies owned by Sobrado of parts that failed to conform to contract requirements that specified that they were critical application items for military equipment including fighter jets and helicopters; that they would be exactly as described in the contract; and that they would be provided by authorized manufacturers.
Sep. 12, 2019: BIS published a Warning Letter sent to Ekman & Co. Inc. of Miami, FL, alleging violations of the Export Administration Regulations (EAR, 15 CFR Parts 730-774) involving failure to report to the Department of Commerce the receipt of three requests to take an action which would have the effect of furthering or supporting a restrictive trade practice or unsanctioned foreign boycott. The three boycott requests all sought a declaration that the carrying vessel was allowed to enter the ports of Libya. In sending the Warning Letter, BIS closed the investigation without a penalty.
Sep. 19, 2019: L3Harris Technologies, Inc., of Melbourne, FL, agreed to pay a $13 million civil penalty and take measures including the appointment of a special compliance officer to resolve charges by DDTC of 131 violations of the AECA and the International Traffic in Arms Regulations (ITAR, 22 CFR Parts 120-130) involving unauthorized exports of defense articles including technical data in the form of software; provision of a false Part 130 statement on a Technical Assistance Agreement; violation of export license provisos; violation of terms or conditions of multiple licenses and agreements; and various violations caused by systemic administrative issues. $6.5 million of the penalty will be suspended if the funds are used for approved remedial compliance measures. DDTC declined to administratively debar L3Harris as it had acknowledged the seriousness of the violations, cooperated with the Department's review, expressed regret for these activities, and taken steps to improve its compliance programs as well as agreeing to pay the cash penalty.
Sep. 24, 2019: Negar Ghodskani, an Iranian citizen based in Tehran, was sentenced in Federal District Court in Minneapolis, MN, to 27 months in prison based on her Aug. 9, 2019 plea of guilty of conspiracy to facilitate the illegal export of controlled technology from the U.S.to Iran. Ghodskani assisted in establishing and operating Green Wave Telecommunication, Sdn Bhn, a Malaysian company located in Kuala Lumpur, which operated as a front company for Fanavar Moj Khavar, a Specially Designated National (SDN) company based in Tehran. Ghodskani and her co-conspirators then negotiated the purchase of controlled communications technology for Fanavar Moj, falsely representing that Green Wave in Kuala Lumpur was its final destination. (See additional information in August 2019 Regulatory Update.)