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.
Department of Commerce
BIS Publishes Final Rule Corrections/Clarifications to Spacecraft and Related Items Controlled on the EAR
July 13, 2015 – 80 Fed. Reg. 39950: The Bureau of Industry and Security (BIS) published a final rule correcting and clarifying the rule it issued May 13, 2014 (79 Fed. Reg. 27414) adding controls to the Export Administration Regulations (EAR, 15 CFR Parts 730-774) to cover spacecraft and related items that the President had determined no longer warranted control under U.S. Munitions List (USML, 22 CFR Part 122) Category XV (Spacecraft and Related Items). This new rule supplements an initial set of corrections and clarifications that BIS issued on November 12, 2014 (79 Fed. Reg. 67055 – see November 2014 Regulatory Update). The new corrections and clarifications affect EAR Sections 736.2(b) (General Prohibitions), 740.20 (License Exception STA), 744.21 (Restrictions on certain exports to China, Russia, and Venezuela), and Supplement No. 2 to Part 748 (Unique Application and Submission Requirements) and Export Control Classification Numbers (ECCNs) 3A611, 9A515, 9D001, 9D002, 9D515, 9E001, 9E002, and 9E515.
BIS Amends EAR to Remove Reference to Cuba as s State Sponsor of Terorrism and Removal of Cuba from Country Group E:1; De Minimis Control for Cuba Shifts From 10% to 25%
July 21, 2015 – 80 Fed. Reg. 43314: BIS implemented the Secretary of State’s removal of Cuba from the list of State Sponsors of Terrorism (SST) by amending the EAR to eliminate references to Cuba as a SST, including removing Cuba from Country Group E:1. As a result of these amendments, the de minimis U.S. content permitted in foreign-made products reexported to Cuba will be increased from 10% to 25% and access to license exceptions will be available for a few additional exports to Cuba under EAR Sec. 746.2(a). However, Cuba’s new non-SST status does not change the comprehensive trade embargo that imposes a license requirement on exports to Cuba of all items subject to the EAR unless authorized by a license exception.
Additions to and Subtractions from BIS Entity List
July 28, 2015 – 80 Fed. Reg. 44846: BIS added the following 10 persons to the Entity List (Supp. No. 4 to EAR Part 744):
- Beijing FJR Optoelectronic Technology Company Ltd, a.k.a. FJIR Optoelectronic Technology Company Ltd., Beijing Fu Jerry, and Fu Jirui, Beijing;
- Beijing Opto-Electronics Technology Company, a.k.a. BOET, Beijing;
- BOP Opto-Electronics Technology Company, a.k.a. Beijing BOP Electro-Optics, Beijing;
- China Electronic Technology Group Corporation No. 11 Research Institute, a.k.a.North China Research Institute of Electro-Optics (NCRIEO), China North Research Institute of Electro-Optics, and CETC 11th Research Institute (CETC 11th RI); Subordinate institution Beijing Laiyin Company Ltd, a.k.a. Beijing North China Lai Yin Opto-Electronics Technology Company; Subordinate Institution China Electronics Technology Corporation (CETC) Infrared Engineering and Technology Company, a.k.a. CETC Infrared or CETC IR, Beijing; China National Commercial New Tone Trading Company Ltd, Beijing;
- Fuyuan Huang, Beijing;
- Yin Zhao, Beijing; and
- Yiwu Tianying Optical Instrument Company, Yiwu City, Zhejiang.
- Korea Automation Industry (KAI), Incheon and Seoul; and
- Joseph Choi, aka Yo-so'p Ch'oe, Incheon and Seoul.
For all these persons there will be a license requirement for all items subject to the EAR and a license review policy of presumption of denial.
In the same announcement, BIS also removed the following 4 persons from the Entity List:
- Shanghai Hengtong Optics Technology Limited, a.k.a. Shanghai Hengtong Group and Shanghai Hengtong Optic-Electric Co., Ltd., Shanghai.
United Arab Emirates
- Zener Electrical & Electronics, Abu Dhabi;
- Zener Electronics Services, Dubai and Abu Dhabi; and
- Zener Navcom, Dubai and Abu Dhabi.
Department of State
DDTC Publishes Various Name Changes for Parties Involved With Defense Trade on Website
July 1, 7, 9, 10, 17, 20, 22, 23, and 30, 2015: The Directorate of Defense Trade Controls (DDTC) posted the following name and/or address changes on its website at http://www.pmddtc.state.gov/licensing/name_change.html:
- Honeywell ASCa to Honeywell Limited - Name Change due to corporate restructuring;
- NorthStar Aviation USA LLC - Address Change;
- Change in Name from MIRA Ltd. to HORIBA MIRA Ltd. due to acquisition of MIRA Ltd. by HORIBA Ltd.;
- Change in name from Wytwornia Sprzetu Komunikacyjnego "PZL-Rzeszow" S.A. to "Pratt & Whitney Rzeszow" S.A. due to corporate rebranding;
- Change in name from New Breed, Inc. to XPO Logistics-Supply Chain due to acquisition of New Breed, Inc. by XOP Logistics-Supply Chain;
- Raytheon Systems France - Address Change;
- Change in name from General Dynamics Canada Ltd. to General Dynamics Land Systems-Canada Corporation
- Change in name from Abu Dhabi Aircraft Technologies LLC (ADAT) to Etihad Airways Engineering due to acquisition of ADAT by Etihad Airways Engineering;
- Change in name from Samsung Thales Co., Ltd. to Hanwha Thales Co., Ltd. due to acquisition of Samsung Techwin Co. by Hanwha Techwin Co.;
- Shimzadzu Precision Instruments, Inc. - Address Change;
- Change in name from Exelis Inc. to Harris Corporation due to acquisition of Exelis Inc. by Harris Corporation;
- Change in name from Israel Military Industries Ltd. (IMI) to IMI Systems Ltd. (IMI Systems) due to privatization of IMI;
- Duygu Savunma Sanayi Sistemleri Petrol Insaat Denetim Turizm Saglik Seyahat Sanayi ve Ticaret Limited Sirketi Name/Address Change; and
- Change in name from Samsung Techwin Co., Ltd. to Hanwha Techwin Co., Ltd.due to acquisition of Samsung Techwin Co. by Hanwha Techwin Co.
Each announcement includes a link to a notice specifying the effects of the change on pending and currently approved authorizations involving the listed entity.
Reversal of DDTC Correction to USML XI(b)
July 2, 2015 – 80 Fed. Reg. 37974: DDTC temporarily modified paragraph (b) of USML Category XI (Military Electronics) to read as follows:
“(b) Electronic systems, equipment or software, not elsewhere enumerated in this sub-chapter, specially designed for intelligence purposes that collect, survey, monitor, or exploit, or analyze and produce information from, the electromagnetic spectrum (regardless of transmission medium), or for counteracting such activities.”
This temporary language modifies a revised version of Category XI(b) published by DDTC on July 1, 2014 (79 Fed. Reg. 37535 – See July 2014 Regulatory Update) and will be effective until December 29, 2015, while DDTC develops a long-term description of the scope of this control.
DDTC Publishes Comments on Proposed Rule to Reduce Licensing Burden on Exports to or on Behalf of the U.S. Government
July 8, 2015: DDTC posted the public comments received on the rule it proposed on May 22, 2015 (80 Fed. Reg. 29565 – See May 2015 Regulatory Update) to amend ITAR provisions covering several topics including exports to or on behalf of U.S. Government agencies and exports of items subject to the EAR together with items subject to the ITAR. The comments are on the DDTC website at http://pmddtc.state.gov/regulations_laws/documents/proposed_rules/BehalfofGovt_Comments.pdf.
DDTC Publishes Comments on Proposed Rule to Amend USML Category XII as Part of Export Control Reform
July 8, 2015: DDTC posted the public comments received on its July 15, 2015 proposal to amend ITAR Category XII (Fire Control, Range Finder, Optical and Guidance and Control Equipment) (80 Fed. Reg. 25821—See May 2015 Regulatory Update). The comments (1,744 pages) are on the DDTC website at http://www.pmddtc.state.gov/regulations_laws/documents/proposed_rules/CategoryXII_Comments.pdf.
Department of the Treasury
Treasury Publishes Quarterly List of Israel Boycotting Countries, List Unchanged
July 13, 2015 – 80 Fed. Reg. 39197: The Treasury Department published its quarterly list of countries that require or may require participation in, or cooperation with, an international boycott. The list remains unchanged since it was last published. It includes Iraq, Kuwait, Lebanon, Libya, Qatar, Saudi Arabia, Syria, the United Arab Emirates (UAE), and Yemen.
OFAC Provides Certain Limited Relief from Sanctions on Iran Due to Joint International Plan regarding Iran’s Nuclear Development Program
July 14, 2015: Following an announcement that the P5 + 1 had reached a Joint Comprehensive Plan of Action (JCPOA) to ensure that Iran’s nuclear program will be exclusively peaceful, the Office of Foreign Assets Control (OFAC) extended current sanctions relief through “Implementation Day,” the date on which the International Atomic Energy Agency (IAEA) verifies that Iran has implemented key nuclear-related measures described in the JCPOA. All other Iran-related sanctions will remain in effect until Implementation Day. Certain export licenses issued in connection with the safety of Iran’s civil aviation industry that have an expiration date on or before July 14, 2015, will also remain in effect until Implementation Day. OFAC will post guidance regarding sanctions relief after Implementation Day prior to that date. The OFAC announcement is on the Treasury Department website at http://www.treasury.gov/resource-center/sanctions/Programs/Pages/iran.aspx.
OFAC Publishes General Licenses for Ukraine that Aim to Assist the Ability of the Ukrainian People to Have Access to Communication Devices and Systems
July 29, 2015 – 80 Fed. Reg. 45276: OFAC published in the Federal Register several general licenses under Ukraine-related sanctions that had been published earlier on its website. These included General License No. 9, “Exportation of Certain Services and Software Incident to Internet-Based Communications Authorized.” (See May 2015 Regulatory Update for details regarding General License No. 9.)
OFAC Publishes FAQs Explaining How to Avoid Transactions Bound for Crimea When Purchasers and their Agents Provide Misleading Information on the Location of End Use and the End User
July 30, 2015. OFAC published a Crimea Sanctions Advisory providing examples of evasive practices that persons may take to obfuscate the fact that transactions involve destinations in Crimea (e.g., identifying Russia as the country in which a Crimean destination is located). The Advisory recommended that U.S. companies adopt appropriate controls to ensure compliance with the U.S. prohibition on virtually all transactions involving Crimea. The Advisory is on the Treasury Department website at http://www.treasury.gov/resource-center/sanctions/Programs/Documents/crimea_advisory.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 clients 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
Department of Commerce
July 28, 2015 – 80 Fed. Reg. 44930: BIS renewed for an additional 6 months the Temporary Denial Order (TDO) against the following persons:
- Mahan Airways, Tehran, Iran;
- Pejman Mahmood Kosarayanifard a/k/a Kosarian Fard, Dubai, UAE;
- Mahmoud Amini, Dubai, UAE;
- Kerman Aviation a/k/a GIE Kerman Aviation, Paris, France;
- Sirjanco Trading LLC, Dubai, UAE;
- Ali Eslamian, London NW87RY, United Kingdom;
- Mahan Air General Trading LLC, Dubai, UAE;
- Skyco (UK) Ltd., London, United Kingdom;
- Equipco (UK) Ltd., London, United Kingdom; and
- Mehdi Bahrami, Istanbul,Turkey.
BIS also extended this TDO to the following persons in order prevent evasion of the ban:
- 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.
Fines and Penalties
June 30, 2015: Edwin N. Makasiar II of Lombard, IL was sentenced in U.S. District Court in Chicago, IL to 5 years in federal prison following his plea of guilty of attempting to export firearms controlled under the USML to Philippines without the required authorization. Makasiar’s plea agreement specified illegal exports to Philippines of 32 firearms including handguns and rifles. Makasiar also admitted that he had falsely stated that two of the weapons had been stolen from him after he learned that they would be inspected by U.S. Customs and Border Protection.
July 6, 2015: OFAC assessed a penalty of $82,260 against Blue Robin, Inc. of Waltham, MA for violating Sec. 560.201 of the Iran Transactions and Sanctions Regulations (ITSR, 31 CFR Part 560) by importing web development services valued at $205,650 from PersiaBME, an Iranian company. Blue Robin provided a private Internet portal on which its computer engineers worked collaboratively with PersiaBME in 33 transactions over an 18-month period to develop Web-based systems and applications that were used to automate online business processes and operations for Blue Robin’s customers.
July 25, 2015: Envirotech Pump Systems, Inc. of St. Louis, MO agreed to pay a $500,000 civil payment (of which $350,000 will be suspended and waived after two years if Envirotech has committed no further EAR violations) to settle charges of 32 violations of EAR Sec. 764.2(a) by unauthorized exports to China, Russia, and other destinations of globe, gate, and butterfly valves controlled for reasons of chemical and biological weapons proliferation under ECCN 2B350. Envirotech also agreed to undergo two export compliance audits.
July 28, 2015: Falcon Instrumentation and Machinery FZE (formerly known as FIMCO), an Iranian corporation of Teheran, Iran, and Dubai, UAE, pleaded guilty in U.S. District Court in Harrisburg, PA to conspiracy to evade U.S. export licensing requirements. The conspiracy involved a U.S. company, Hetran, Inc., in an attempt to transship a horizontal lathe valued at more than $800,000 and weighing over 50,000 pounds and used in the production of high grade steel for the manufacture of automobile and aircraft parts from Pennsylvania to Iran via Dubai, falsely identifying a company in Dubai as the end user. (See April and December 2014 Regulatory Updates about the prosecution of Hetran in this conspiracy.) The plea agreement provides that the government will recommend a $250,000 criminal fine. Separately, in a civil settlement with BIS, Falcon agreed to a civil penalty of $837,500 and a 2-year denial order, with the denial order and $250,000 of the penalty suspended and waived after two years if Falcon has committed no further violations.