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
“600 Series” Items Must Be Included in Offset Agreement Reports
March 1, 2016 – 81 Fed. Reg. 10472: The Bureau of Industry and Security (BIS) adopted without change its proposed rule from December 2015 to include the sale of EAR-controlled “600 series” items to the requirement to report offsets agreements exceeding $5,000,000 in value in connection with sales of defense articles and defense services to a foreign country or foreign firm. Certain items controlled under ECCNs 8X620.b are excluded from this reporting requirement. (See description of this proposal in December 2015 Regulatory Update.)
MTCR-related Amendments to the EAR
April 4, 2016 – 81 Fed. Reg. 19026: BIS amended the Export Administration Regulations (EAR, 15 CFR Parts 730-774) to reflect changes in the Missile Technology Control Regime (MTCR) Annex that were agreed to by MTCR member countries in meetings in April and October 2015. The rule revised Export Control Classification Numbers (ECCNs) 1B101, 1C111, 7A116, 9A102, 9A610, and 9B106; amended EAR Sec. 742.5 to change the licensing policy for MT-controlled items to include certain minimum software and technology; added a paragraph to EAR Sec. 750.7(c)(1) specifying which changes to a license are considered “non-material;” and made additional conforming changes.
BIS Publishes Comments Received in Response to Round 2 of Category XII ECR Revisions
April 6, 2016: BIS posted the public comments it received on its revised proposed changes to the Commerce Control List (CCL, EAR Part 774, Supplement No. 1) for proposed ECCNs 7A611, 7B611, 7D611, 7E611 and related ECCNs 6A002 and 6A003, corresponding to the changes proposed by the State Department Directorate of Defense Trade Controls (DDTC) in Category XII of the U.S. Munitions List (USML, 22 CFR Part 121). (See description of these proposals in February 2016 Regulatory Update, and see below for related State Department action.) A link to the comments is on the BIS website at http://efoia.bis.doc.gov/index.php/electronic-foia/index-of-documents[OG1] .
EAR-related Offset Agreement Report Deadline is June 15, 2016
April 8, 2016 – 81 Fed. Reg. 20618: BIS published a notice reminding the public that the deadline for filing the 2015 annual report on offsets agreements is June 15, 2016. (See item above for details about this requirement.)
DEPARTMENT OF STATE
DDTC Posts Company Name and Address Changes for April 2016 to Website
April 4, 8, 12, 14, 22, 25, 26, and 28, 2016: DDTC posted the following name and/or address changes on its website at http://www.pmddtc.state.gov/licensing/name_change.html[OG2] :
- Change in Name from LightSquared Corp. to Ligado Networks Corp. due to corporate rebranding after LightSquared Bankruptcy filing;
- Change in Name from New LightSquared LLC to Ligado Networks LLC due to corporate rebranding after New LightSquared Bankruptcy filing;
- Change in Name for LightSquared acquisition SkyTerra (Canada) Inc. to Ligado Networks (Canada) Inc. due to corporate rebranding after LightSquared Bankruptcy filing;
- Change in Name from Saab AB (publ.), Electronic Defence Systems to Saab AB (publ.), Surveillance due to corporate rebranding;
- Change in Name from Airbus India Operations Private Limited to Airbus Group India Private Limited due to corporate rebranding;
- Change in Name from Asahi Kasei Chemicals to Asahi Kasei Chemicals Corporation due to corporate rebranding;
- Kent Periscopes Limited Address Change;
- Change in Name for Mitsubishi Heavy Industries (MHI) subsidiary Ryoin Company, Ltd. to Diamond Office Service Co., Ltd. due to MHI and Fuji Xerox Co. Ltd. partnership;
- G & B Packing Company, Inc. Address Change; and
- Interglobal Forwarding Services, Inc. Address Change.
Each announcement includes a link to a notice specifying the effects of the change on pending and currently approved authorizations involving the listed entity.
DDTC Publishes Comments Received in Response to Round 2 of Category XII ECR Revisions
April 6, 2015: DDTC posted the public comments it received on its revised proposed changes in USML Category XII (Fire control, laser, imaging, and guidance and control equipment). (See description of these proposals in February 2016 Regulatory Update, and see above for related Commerce Department action.) The 176 pages of comments are on the DDTC website at www.pmddtc.state.gov/regulations_laws/documents/proposed_rules/CatXIIComments2ndProposed.pdf[OG3] .
DDTC Publishes Webinar on IT Modernization Efforts on DDTC Website
April 6, 2016: DDTC posted on its website the webinar it presented on March 25, 2016 on DDTC’s IT modernization. The webinar can be viewed at https://irmedip.adobeconnect.com/p6de821tdhs/[OG4] . The transcript of the webinar is at www.pmddtc.state.gov/licensing/documents/TransWeb-3.25.16.pdf[OG5] .
DEPARTMENT OF THE TREASURY
Treasury Publishes Quarterly List of Boycott Supporting Countries
April 8, 2016 – 81 Fed. Reg. 20720: 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 Publishes Additional FAQs Pertaining to Cuba Regulations
April 21, 2016: The Office of Foreign Assets Control (OFAC) added 8 FAQs to its Frequently Asked Questions Regarding Cuba. The Cuba FAQs are on the Treasury Department website at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/cuba_faqs_new.pdf[OG6] .
LATEST SANCTIONS FINES & PENALTIES
Department of Commerce
April 18, 2016 – 81 Fed. Reg. 22575: BIS denied the export privileges of Paweena Pechner and CheapShop4You LLC, both of Portsmouth, NH, until July 17, 2024, based on Pechner’s conviction of
violating the Arms Export Control Act (AECA, 22 USC Sec. 2778) by exporting firearms controlled under the USML to Thailand without the required authorization from DDTC. In the criminal case Pechner was sentenced to probation for 2 years, assessed a penalty of $600, and fined $3,000. CheapShop4You, a personal shopping company located at Pechner’s residence that Pechner used to process both legal and illegal exports, was added to the denial order as a related party.
April 18, 2016 – 81 Fed. Reg. 22576: BIS denied the export privileges of Alexandre Astakhov of Lewisburg, PA, until May 7, 2025, based on his conviction of violating the AECA by attempting to export, and aiding and abetting the attempted export of two L-3 CNVD-T thermal clip-on night vision devices controlled under the ITAR to Russia without the required authorization from DDTC. In the criminal case, Astakhov was sentenced to 39 months of imprisonment, 3 years of supervised release, 150 hours of community service, an assessment of $200, and a fine of $2,500.
Fines and Penalties
April 4, 2016: The U.S. Department of Justice announced that Lim Yong Nam, a/k/a Steven Lim, a citizen of Singapore, had been extradited from Indonesia to the U.S. to stand trial for his role in a conspiracy that allegedly involved illegal exports of thousands of radio frequency modules to Iran, claiming that their final destination was Singapore. Sixteen of the modules were allegedly found in unexploded improvised explosive devices (IEDs) that were used against coalition forces in Iraq. Nam was indicted on June 23, 2010, and had been detained in Indonesia since 2014 in connection with a U.S. request for extradition. He will stand trial in Washington, D.C.
April 13, 2016: David L. Maricola of Southbridge, MA, pleaded guilty in U.S. District Court in Worcester, MA to charges involving unauthorized shipments of hundreds of assault rifle and firearm components controlled under the USML to 22 countries including France, Finland, Indonesia, New Zealand, Thailand, Spain, Australia, and Germany. The illegal exports included parts for M16, M4, and AR-15 assault rifles, Glock pistols, and Uzi submachine guns.
April 13, 2016: Fuyi Sun, a/k/a “Frank,” a citizen of the People’s Republic of China (China), was arrested in New York, NY, after traveling to New York from China, allegedly to finalize a deal to procure high-grade carbon fiber having many aerospace and defense applications. The high-grade carbon fiber was to be exported without the required authorization to China for a user he identified as the Chinese military. The suppliers with whom Sun negotiated the purchase were actually Department of Homeland Security undercover agents. Sun was charged with attempting to violate and conspiring to violate the International Emergency Economic Powers Act (IEEPA, 50 USC Secs. 1701-1707).
April 14, 2016: Hannah Robert of North Brunswick, NJ, was sentenced in New Jersey federal district court to 57 months in prison based on her plea of guilty of conspiracy to violate the AECA by exporting military technical drawings of parts used in the torpedo systems for nuclear submarines, military attack helicopters, and F-15 fighter aircraft to India and the United Arab Emirates (UAE) without the required approval of the U.S. Department of State. Robert transmitted the military drawings by posting them to
the password-protected website of a Camden County, New Jersey, church where she was a volunteer web administrator.
April 21, 2016: Amin Yu of Orlando, FL, was indicted on charges including failure to file Electronic Export Information (EEI) arising from her alleged participation in a conspiracy to illegally export systems and components for marine submersible vehicles to China. The illegally exported items were intended for use by Chinese co-conspirators in the development of unmanned underwater vehicles, remotely operated vehicles, and autonomous underwater vehicles for Chinese state-owned entities. Yu allegedly failed to file required EEI and also filed false EEI in which she significantly undervalued the exported items and provided false end-user information. The indictment included notification that the U.S. intends to require Yu to forfeit approximately $2.7 million, the alleged traceable proceeds of the offenses.