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.
Nationwide Injunction Preventing The Transfer Of 3D Printed Gun Technical Data And Software To The EAR
March 6, 2020: The U.S. District Court for the Western District of Washington in Seattle, WA, issued a preliminary nationwide injunction preventing the transfer from the U.S. Munitions List (USML, 22 CFR Sec. 121.1) to the Commerce Control List (CCL, EAR Part 774, Supp. No. 1) of “technical data and software directly related to the production of firearms or firearm parts using a 3D-printer or similar equipment,” which would otherwise have occurred as part of the implementation by the State Department of the rule adopted Jan. 23, 2020 (85 Fed. Reg. 4136), effective March 9, 2020, that transferred jurisdiction over many firearms and related technologies controlled under USML Categories I, II, and III from the State Department to the Commerce Department (Case No. 2:20-cv-00111-RAJ). (See more information about this transfer of jurisdiction in January 2020 Regulatory Update and in Commerce Department and State Department sections below.)
Department of Commerce – Bureau of Industry and Security
BIS Published A Notice Regarding Licensing Of 3D Printed Gun Technical Data And Software Via The ITAR
March 6, 2020: The Bureau of Industry and Security (BIS) published a notice stating that requests for licenses for the technology and software covered by the injunction described above that would otherwise be directed to the Commerce Department under the January 23 regulation should instead be directed to the Department of State. This notice is on the BIS website at https://www.bis.doc.gov/index.php/documents/about-bis/2535-notice-of-court-order-march-6-2020/file.
BIS Extends Temporary General License Related To Huawei
March 12, 2020 -- 85 Fed. Reg. 14416: BIS extended through May 15, 2020, the temporary general license (TGL) codified at 15 CFR Part 744, Supplement No. 7, which authorizes certain exports to Huawei Technologies Co. Ltd. and 114 of its non-U.S. affiliates that are listed on the Entity List (15 CFR Part 744, Supp. No. 4). The TGL covers exports supporting certain activities that are necessary for the continued operations of existing networks and equipment as well as the support of existing mobile services, including cybersecurity research critical to maintaining the integrity and reliability of existing and fully operational networks and equipment. (See related action in next item.)
BIS Seeks Public Comment On Whether The Huawei Temporary General License Should Be Extended Beyond May 15, 2020
March 12, 2020 -- 85 Fed. Reg. 14428 and March 27, 2020 -- 85 Fed. Reg. 17300: BIS requested comments from the public to assist the U.S. Government in evaluating whether the Huawei TGL (see item above) should be extended beyond May 15 and whether any other changes should be made in the TGL, and to identify any alternative authorization or other regulatory provisions that might more effectively accomplish the goal of the TGL, which is to allow time for users to shift to non-Huawei sources of equipment, software, and technology. Deadline for comments is April 22, 2020.
BIS Adds 6 Individuals And 18 Corporations To The Entity List
March 16, 2020 – 85 Fed. Reg. 14794: BIS amended the EAR by adding 6 individuals and 18 corporations in China, Iran, Pakistan, Russia, and the United Arab Emirates (UAE) to the Entity List based on a determination that each of these persons had acted contrary to the national security or foreign policy interests of the U.S. by enabling or assisting Iran’s nuclear program, Pakistan’s unsafeguarded nuclear and missile programs, or Russian military modernization efforts. A license requirement with no available license exceptions will apply to exports, reexports, or in-country transfers to all these persons of all items subject to the EAR, and a license review policy of presumption of denial will apply to 20 of them. The 24 entities are:
- Jalal Rohollahnejad, and
- Wuhan IRCEN Technology;
- Aref Bali Lashak,
- Ali Mehdipour Omrani,
- Iran Air,
- Kamran Daneshjou,
- Mehdi Teranchi, and
- Sayyed Mohammad Mehdi Hadavi;
- Advance Multicom,
- Kepler Corporation,
- National Engineering Service Trading and Consultancy Co.,
- Samina Pvt. Ltd.,
- SANCO Pakistan,
- Skytech Global Pvt. Ltd,
- SNTS Tech.,
- Triton Educational Equipment & Consultancy Co., and
- United Engineering;
- Avilon Ltd.,
United Arab Emirates
- Focus Middle East,
- Pegasus General Trading FZC, including six aliases (Pegasus General Trading FZE, Pegasus General Trading Company, Pegasus General Trading LLC, Pegasus General, Pegasus Trading, and Pegasus),
- SANCO Middle East, FZC, including one alias (SANCO ME FZC),
- SANCO Middle East, LLC, including one alias (SANCO ME, LLC), and
- Wellmar Technology FZE.
The rule also revised the following 5 existing entries on the Entity List:
- Dart Aviation
- Dart Aviation
- Hia Soo Gan Benson
- Dart Aviation
Department of Commerce – Census Bureau
Census Announces Call Centers And Email Inboxes Will Remain Open, But Access To Physical Mail Will Be Limited
March 17, 2020: The U.S. Census Bureau announced that while many of its employees are operating remotely via telework, call centers and email inboxes will remain open, but access to physical mail will be limited. Therefore, Voluntary Self-Disclosures (VSDs) or data requests should be submitted electronically. Details are on the Census Bureau website at https://www.census.gov/foreign-trade/regulations/ftrletters/index.html.
Department of State
DDTC Name and Address Changes Posted To Website
March 10, 12, and 23, 2020: The Directorate of Defense Trade Controls (DDTC) posted the following name and/or address changes on its website at
- Nippon Avionics Co., Ltd. changed address;
- Change in Name from P3 Group Consulting Engineering S.L U. to Umlaut Consulting Engineering, S.L. due to corporate rebranding;
- Change in Name from P3 Group SARL to Umlaut SARL due to corporate rebranding;
- Prins Metallurgische Producten BV changed address;
- Change in Name from Panalpina Inc. to DSV Air & Sea Inc. due to DSV’s acquisition of Panalpina; and
- Change in Name from 99x AS to Visolit Norway AS due to 99x’s acquisition by the Visolit Group.
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 Advises Transition Of USML Categories I, II and III Will Proceed As Planned Except For 3D Printed Gun Technical Data And Software
March 9, 2020: DDTC posted a notice stating that the transition to the CCL of certain items in USML Categories I, II, and III will proceed as provided in the guidance it issued on January 23, 2020, with the exception of technical data and software directly related to the production of firearms and firearm parts using a 3-D printer or similar equipment, which will remain under control of the State Department pursuant to the preliminary injunction issued on March 6, 2020. (See January 2020 Regulatory Update and U.S. Courts and Commerce Department sections above). The DDTC notice is at https://www.pmddtc.state.gov/ddtc_public?id=ddtc_public_portal_news_and_events.
DDTC Posted Update On Status Of Operations During COVID-19 Environment
DDTC Announced That March 25, 2020 Was The Effective Date Of The Interim Final Encryption Rule
March 25, 2020: DDTC announced that March 25, 2020, was the effective date of the interim final “Encryption Rule,” which had been published on Dec. 26, 2019 (84 Fed. Reg. 70887) and includes significant amendments to the ITAR including a new definition of activities that are not exports, reexports, retransfers, or temporary imports. (See information in December 2019 and February 2020 Regulatory Updates.) This announcement is at https://www.pmddtc.state.gov/ddtc_public.
DDTC Published An FAQ About The New Encryption Rule
March 27, 2020: DDTC published a new FAQ about the use of the new “Encryption Rule” to provide “access information” – information that allows access to encrypted technical data in an unencrypted form -- to foreign persons. This FAQ is at https://www.pmddtc.state.gov/ddtc_public?id=ddtc_public_portal_faq_detail&sys_id=8b09babddbbf80d07ede365e7c96192f.
Department of the Treasury
OFAC Issued Two General Licenses Related To The Nicaragua Sanctions Regulations
March 5 and 25, 2020: The Office of Foreign Assets Control (OFAC) issued two General Licenses (GLs) under the Nicaragua Sanctions Regulations (NSR, 31 CFR Part 582) -- GL No. 1, “Official Business of the United States Government,” and GL No. 2, “Authorizing the Wind Down of Transactions Involving the Nicaraguan National Police” -- and an FAQ describing the coverage of GL 2. GL 1 is on the Treasury Department website at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/nicaragua_gl1.pdf; GL 2 is at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/nicaragua_gl2.pdf; and the FAQ is at https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_other.aspx#827. GL 1 was subsequently replaced by GL 1A, at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/nicaragua_gl1a.pdf , and GL 2 was replaced by GL 2A , at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/nicaragua_gl2a.pdf.
OFAC Issues Guidance On Ways To Ship Humanitarian Goods Or Assistance To the Iranian People During COVID-19 Outbreak
March 6, 2020: OFAC issued an FAQ describing several ways in which humanitarian goods or assistance can be provided to the Iranian people in response to the COVID-19 outbreak in Iran without violating U.S. sanctions. FAQ 828 is at https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_iran.aspx#828.
OFAC Removed The Terrorism Sanctions Regulations
March 10, 2020 -- 85 Fed. Reg. 13746: OFAC removed the Terrorism Sanctions Regulations (TSR, 31 CFR Part 595) from the Code of Federal Regulations (CFR) because the national emergency on which it was based was terminated by President Trump on Sep. 9, 2019.
OFAC Issued Three Amended Venezuela General Licenses
March 12, 2020: OFAC issued three amended Venezuela-related GLs: GL 15C "Authorizing Transactions Involving Certain Banks for Certain Entities," GL 16C "Authorizing Maintenance of U.S. Person Accounts and Noncommercial, Personal Remittances involving Certain Banks," and GL 36A “Authorizing Certain Activities Necessary to the Wind Down of Transactions Involving Rosneft Trading S.A. or TNK, Trading International S.A.” These GLs are on the Treasury Department website at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/venezuela_gl15c.pdf, https://www.treasury.gov/resource-center/sanctions/Programs/Documents/venezuela_gl16c.pdf, and https://www.treasury.gov/resource-center/sanctions/Programs/Documents/venezuela_gl36a.pdf, respectively. OFAC also issued two amended FAQs relating to GL 36A, at https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_other.aspx#817 and https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_other.aspx#818.
OFAC Issued Two Amended Ukraine General Licenses
March 20, 2020: OFAC issued two amended Ukraine-related GLs related to GAZ Group: GL 13N, "Authorizing Certain Transactions Necessary to Divest or Transfer Debt, Equity, or Other Holdings in GAZ Group," and GL 15H, "Authorizing Certain Activities Necessary to Maintenance or Wind Down of Operations or Existing Contracts with GAZ Group, and Certain Automotive Safety and Environmental Activities," both of which extend expiration dates to July 22, 2020. These GLs are at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/ukraine_gl13n.pdf and https://www.treasury.gov/resource-center/sanctions/Programs/Documents/ukraine_gl15h.pdf, respectively.
LATEST SANCTIONS FINES & PENALTIES
Department of Commerce
March 18, 2020 – 85 Fed. Reg. 15414: The export privileges of Nordic Maritime Pte. Ltd. (Nordic) and its Chairman and Majority Shareholder, Morten N. Minnhaug, both of Singapore, were denied for 15 years in a decision by the Department of Commerce Undersecretary for Industry and Security. In this decision, the Undersecretary also affirmed findings by an Administrative Law Judge that Nordic had knowingly illegally reexported EAR-controlled seismic survey equipment to Iran and had made false and misleading statements to BIS during its investigation, and that Minnhaug had aided and abetted Nordic in violating the EAR. However, the Undersecretary remanded determination of the appropriate civil monetary penalty, which the initial decision had set at $31,425,760, to the Administrative Law Judge for reconsideration.
March 20, 2020 – 85 Fed. Reg. 16054: BIS denied the export privileges of Zimo Sheng of Changshu, China, and Milwaukee, WI until March 16, 2030, based on his conviction of violating the Arms Export Control Act (AECA, 22 USC 2778) by attempting to export the complete upper assembly for a Glock 43 pistol to China. In the criminal case, Sheng was sentenced to 40 months in prison and a special assessment of $200.