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.
Dec. 30, 2019: The updated European Union (EU) dual-use export control list adopted by the European Commission Oct. 17, 2019 (see October 2019 Regulatory Update) entered into force. The new “Dual-Use Regulation” is in the EU Official Journal at https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:L:2019:338:FULL&from=EN
Department of Commerce – Bureau of Industry and Security
Dec. 6, 2019—84 Fed. Reg. 66840: The Bureau of Industry and Security (BIS) corrected the Federal Register citations in 3 items in its announcement of Nov. 13, 2019 (84 Fed. Reg. 61538; see November 2019 Regulatory Update), which added 22 entities to the Entity List (15 CFR Part 744, Supp. No. 4).
Department of Commerce – Census Bureau
Dec. 31, 2019: The Census Bureau updated Schedule B and the Harmonized Tariff Schedule (HTS) to accept the changes to the January 1, 2020 codes. AES and the ACE AESDirect program will continue to accept shipments with outdated codes during a grace period ending January 30, 2020. The 2020 Schedule B and HTS tables are on the Census Bureau website at http://www.census.gov/foreign- trade/aes/documentlibrary/#concordance; the current list of HTS codes that are not valid for AES is at http://www.census.gov/foreign-trade/aes/documentlibrary/concordance/hts-not-for-aes.html.
Department of Justice
Dec. 13, 2019: The Department of Justice (DOJ) National Security Division (NSD) released a revised and restated policy for business organizations regarding voluntary self-disclosures (VSDs) of potentially willful violations of the Arms Export Control Act (AECA, 22 U.S.C. § 2778), the Export Control Reform Act (ECRA, 50 U.S.C. § 4801 et seq.), and the International Emergency Economic Powers Act (IEEPA, 50
U.S.C. § 1705.) The VSD Policy – which applies only to VSDs made directly to DOJ, not to VSDs made to regulatory agencies – incentivizes VSDs by providing that absent aggravating circumstances, companies that make a VSD, fully cooperate with NSD, and timely and appropriately remediate, will receive a non- prosecution agreement and will not be assessed a fine. If aggravating circumstances are present but the other criteria are satisfied, NSD will recommend a fine that is at least 50 percent lower than would otherwise be available and will not require a monitor. The full policy, including definitions of “Voluntary Self- Disclosure,” “Full Cooperation,” and “Timely and Appropriate Remediation” and a description of “Potential Aggravating Factors,” is on the DOJ website at https://www.justice.gov/nsd/ces_vsd_policy_2019/download.
Department of State
Dec. 20, 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/ddtc_public?id=ddtc_kb_article_page&sys_id=bd72ca0adbf8d30044f9ff621f961981:
- Changes in names from Selex Galileo Inc. and Lasertel Inc. to Leonardo Electronics US Inc. due to corporate rebranding;
- Change in name from Bell Helicopter Textron Canada Limited to Bell Textron Canada Limited due to corporate rebranding; and
- Change in name from Bell Helicopter Canada International to Bell Canada International due to corporate rebranding.
Each announcement includes a link to a notice detailing the change and its effects on pending and currently approved authorizations involving the listed entity.
Dec. 23, 2019: DDTC announced that the new format for Commodity Jurisdiction Form DS-4076 is now available in the Defense Export Control and Compliance System (DECCS). Guidance on creating a DECCS account is on the DDTC web site at https://deccspmddtc.service-now.com/deccs?id=cj_home.
Dec. 26, 2019 – 84 Fed. Reg. 70887: DDTC amended the International Traffic in Arms Regulations (ITAR, 22 CFR Parts 120-130) to create a definition of “activities that are not exports, reexports, retransfers, or temporary imports” in a new ITAR Sec. 120.54. This rule covers activities including launching items into space, providing technical data to U.S. persons within the U.S. or within a single country abroad, and moving a defense article between the states, possessions, and territories of the United States and clarifies that the electronic transmission and storage of properly secured unclassified technical data via foreign communications infrastructure does not constitute an export. The rule also defines “access information” and revises the definition of “release.” In an effort to align the definitions in the ITAR and the Export Administration Regulations (EAR, 15 CFR Parts 730-774), this rule is structured similarly to EAR Sec.
734.18. This is an interim final rule effective on March 25, 2020; comments may be submitted until January 27, 2020.
Dec. 31, 2019 – 84 Fed. Reg. 72424: The State Department published a report detailing the Administration’s implementation of the Global Magnitsky Human Rights Accountability Act (Pub. L. 114– 328, Title XII, Subtitle F) in 2019, as of Dec. 10, 2019. The Federal Register announcement includes the full text of the report.
Department of the Treasury
Dec. 9, 11, 13, 17, 19, and 20: The Office of Foreign Assets Control (OFAC) issued new sanctions-related Frequently Asked Questions (FAQs), as follows:
- Dec. 9: 2 Venezuela-related FAQs regarding permissible legal actions relating to blocked property at https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_other.aspx#808;
- Dec. 11: 2 Iran-related FAQs regarding the designation of the Islamic Republic of Iran Shipping Lines (IRISL) and E-Sail Shipping Limited (“E-Sail”) under Executive Order (E.O.) 13382 at https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_iran.aspx#810;
- Dec. 13: 3 Counter-Terrorism-related FAQs regarding information or informational materials that are the property or subject to an interest in property of persons designated as Specially Designated Global Terrorists (SDGTs) at https://www.treasury.gov/resource- center/faqs/Sanctions/Pages/faq_other.aspx#812;
- Dec. 19: Amendments to 3 Iran-related FAQs regarding sanctions on COSCO Shipping Tanker (Dalian) Co. and COSCO Shipping Tanker (Dalian) Seaman & Ship Management Co. and types of activities considered “maintenance” (FAQs ## 804, 806, and 807) at https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_iran.aspx#804 (see below for related Iran-related General License No. K-1); and
- Dec. 20: one Ukraine-/Russia-related FAQ regarding wind-down exceptions relating to the construction of Nord Stream 2 or Turkstream at https://www.treasury.gov/resource- center/faqs/Sanctions/Pages/faq_other.aspx#815.
Dec. 9 and 18, 2019: OFAC issued Global Magnitsky General License (GL) # 1 and GL # 1A, both titled “Authorizing Certain Activities Necessary to the Wind Down of Transactions Involving Ventspils Attistibas Agentura, Biznesa Attistibas Asociacija, and Latvijas Tranzita Biznesa Asociacija,” at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/glomag_gl1.pdf and https://www.treasury.gov/resource-center/sanctions/Programs/Documents/glomag_gl1a.pdf, respectively.
Dec. 17, 2019: OFAC released its quarterly report on certain licensing activities under the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA) from October through December 2018 involving exports of agricultural commodities, medicine, and medical devices to Iran and Sudan. The report is on the Treasury Department website at https://www.treasury.gov/resource- center/sanctions/Documents/1quarter2019.pdf.
Dec. 19, 2019: OFAC issued Iran-related GL # K-1, “Authorizing Maintenance or Wind Down of Transactions Involving Cosco Shipping Tanker (Dalian) Co., Ltd.” This GL is on the Treasury Department website at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/iran_glk1.pdf.
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
Department of Commerce
Dec. 6, 2019 – 84 Fed. Reg. 66873: BIS renewed for an additional 180 days the Temporary Denial Order (TDO) against the following persons and, when acting for or on their behalf, any successors or assigns, agents, or employees:
- Mahan Airways, Tehran, Iran;
- Pejman Mahmood Kosarayanifard A/K/ A Kosarian Fard, Dubai, United Arab Emirates (UAE);
- Mahmoud Amini, Dubai, UAE;
- Kerman Aviation A/K/A Gie Kerman Aviation, Paris, France;
- Sirjanco Trading LLC, Dubai, UAE;
- Mahan Air General Trading LLC, Dubai, UAE;
- Mehdi Bahrami, Istanbul, Turkey;
- Al Naser Airlines A/K/A Al-Naser Airlines A/K/A Al Naser Wings Airline A/K/A Alnaser Airlines And Air Freight Ltd., Baghdad, Iraq, Dubai, UAE, and Amman, Jordan;
- Ali Abdullah Alhay A/K/A Ali Alhay A/K/A Ali Abdullah Ahmed Alhay, Baghdad, Iraq, and Qatif, Saudi Arabia;
- Bahar Safwa General Trading, Dubai, UAE;
- 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 Ras Al Khaimah Trade Zone, UAE; and
- Issam Shammout A/K/A Muhammad Isam Muhammad Anwar Nur Shammout A/K/A Issam Anwar, Damascus, Syria, Beirut, Lebanon, London, United Kingdom, and Istanbul, Turkey.
Dec. 10, 2019 – 84 Fed. Reg. 67427: BIS denied the export privileges of Oguzhan Aydin for 10 years based on his conviction of violating IEEPA by exporting, causing to be exported, and attempting to export and cause the export of a General Electric CF6-50c2 engine with the intention of directly or indirectly supplying it to Mahan Airways in Iran without the required U.S. Government authorization. In the criminal case, Aydin was sentenced to 9 months and 10 days in prison, 3 years of supervised release, and an assessment of $100.
Dec. 10, 2019 – 84 Fed. Reg. 67428: BIS denied the export privileges of Paul Stuart Brunt for 10 years based on his conviction of violating the AECA by knowingly and willfully exporting firearms designated as defense articles on the U.S. Munitions List (USML, 22 CFR Sec. 121.1) to Turkey and Iraq without the required licenses from the U.S. Department of State. In the criminal case, Brunt was sentenced to 3 years of probation, 200 hours of community service, a fine of $20,000, and a $300 assessment.
Fines and Penalties
Dec. 2, 2019: The U.S. District Court for the Southern District of Georgia unsealed a superseding indictment charging 2 Russian nationals, 2 Italian nationals, a U.S. citizen, and companies based in Russia, Italy, and the U.S. with violating and conspiring to violate the IEEPA and the ECRA and conspiring to commit wire fraud and money laundering in a plot to purchase in the U.S. a Vectra 40G power turbine designed and manufactured for integration with generators to enable direct drive of high-power gas compressors and ultimately to export it to Russia for use by a Russian government-controlled business on a Russian Arctic deep-water drilling platform, a destination prohibited by U.S. sanctions. The conspiracy included concealing the true end user of the Vectra from the U.S. manufacturer and the U.S. Government by submitting false documentation stating that the Vectra would be used by a U.S. company in and around Atlanta. Three of the defendants – Oleg Vladislavovich Nikitin of the Russia-based company, Gabriele Villone of an Italian intermediary company, and Dali Bagrou of the U.S.-based company – were arrested in Savannah, GA while attempting to complete the illegal transaction.
Dec. 3, 2019: Ghaddar Machinery Co., SAL, of Ghazieh, Sidon, Lebanon agreed to pay a civil penalty of
$368,000 (in scheduled payments over a 2-year period) to settle charges by BIS of 20 violations involving the reexportation from Lebanon to Syria of generator sets designated EAR99 and valued at approximately
$736,2326 without the required U.S. Government authorization. The generator sets were assembled in Lebanon and were subject to the EAR when reexported to Syria because they contained more than 10% of controlled U.S.-origin content.
Dec. 10, 2019: Sunarko Kuntjoro, a citizen of Indonesia, and three Indonesian-based companies, PT MS Aero Support (PTMS), PT Kandiyasa Energi Utama (PTKEU), and PT Antasena Kreasi (PTAK), were indicted in U.S. District Court in Washington, D.C. for conspiring to evade the requirements of the IEEPA, the Iranian Transactions and Sanctions Regulations (ITSR, 31 CFR Part 560), the EAR, the Global Terrorism Sanctions Regulations (GTSR, 31 CFR Part 594), and other laws. The purpose of the conspiracy was to transport goods owned by Mahan Air to the U.S. for repair and then to re-export them to Mahan in Iran and elsewhere without obtaining the required licenses from OFAC and BIS.
Dec. 16, 2019: Issam Shammout, of Jordan, and Ali Abdullah Alhay, of Saudi Arabia, were charged in an indictment in U.S. District Court in Washington, D.C. with 17 violations of laws including the IEEPA, the ITSR, and the EAR, in a conspiracy to purchase and deliver U.S.-origin aircraft and parts for ultimate use by Mahan Air of Iran. Shammout and Alhay are among the persons included in the TDO against Mahan and others that was extended by BIS on Dec. 6, 2019 (see above). The indictment included a criminal forfeiture allegation against 9 airplanes and $17,035,935 in funds for the benefit of Al Naser airlines, another person included in the Mahan TDO.
Dec. 18, 2019: U.S. Immigration and Customs Enforcement (ICE) Enforcement and Removal Operations (ERO) removed Sergio Leonardo Ruchtein to his home country of Argentina after Ruchtein was convicted in U.S. District Court in Philadelphia, PA of attempting to export a defense article without a license and sentenced to time served plus two years of supervised release. Ruchtein, who entered the U.S. on March 20, 2019, was arrested by ICE Homeland Security Investigations (HSI) on March 25 after he allegedly
50 LRF Thermal Rifle Scope online and attempted to
smuggle it back to Argentina. He was released into the custody of local authorities in Argentina.