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 Updates To The Unverified List
April 6, 2017 – 82 Fed. Reg. 16730: The Bureau of Industry and Security (BIS) amended the Export Administration Regulations (EAR, 15 CFR Parts 730-774) by adding 6 persons to the Unverified List (UVL, EAR Part 744, Supp. No. 6) and adding or revising the names and addresses of several persons. The following persons were added to the UVL:
Azerbaijan: Caspian Oil Montaj, Baku
China: ARI International, Ltd., Shenzhen;
Jiangsu HNHB Equipment Co., Ltd., Yixing City, Jiangsu Province; and
Shenzhen Winthought Tech., Shenzhen
Lebanon: Al Ghayth Trade and Transport, Beirut
United Arab Emirates: Blue Wing General Trading, Dubai
The following names were added to entries in Hong Kong:
Brilliance Technology Group added to Brilliance Technology Ltd.; and
Xuan Qi Technology Co., Ltd. added to Ling Ao Electronic Technology Co., Ltd.
BIS Publishes Amendments To The Entity List
April 18, 2017 – 82 Fed. Reg. 18217: BIS amended the Entity List (EAR Part 744, Supp. No. 4) by revising the entry for the Russian entity Federal Security Service (a.k.a. Federalnaya Sluzhba Bezopasnosti, or FSB)
to specify that the license requirements that are ordinarily applicable to exports of items subject to the EAR to a listed entity do not apply to exports to the FSB of items that are related to transactions authorized by General License No. 1 issued by the Treasury Department Office of Foreign Assets Control (OFAC). (See description of OFAC General License No. 1 in February 2017 Regulatory Update.) In effect, this amendment eliminates an unintended result of including FSB in the Entity List, which effectively prohibited the exportation of encryption-enabled products to Russia because Russian law requires approval by, or notification of, FSB for the importation of information technology products into Russia.
Department of State
DDTC Name and Address Changes Posted To Website
April 6, 12, 17, 18, 21, and 28, 2017: 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:
- Change in Name from Airbus DS GmbH and Airbus DS Geo GmbH to Airbus Defence and Space GmbH due to corporate reorganization;
- Change in Name from Alenia Aermacchi Inc. to Leonardo US Aircraft, Inc. due to corporate rebranding and merging of Leonardo subsidiary Alenia Aermacchi with its parent company, Leonardo;
- BAE Systems Marine Limited of the United Kingdom changes address;
- Change in Name from Airbus DS Electronics and Border Security GmbH to HENSOLDT Sensors GmbH due to Airbus’ divestment of its Defence Electronics unit to Kohlberg Kravis Roberts & Co. L.P. (KKR);
- Change in Name from Airbus DS S.A.S. and Intespace [sic] S.A. to Airbus Defence and Space S.A.S. due to corporate reorganization;
- Change in Name from L-3 Communications Corporation to L3 Technologies, Inc. due to corporate reorganization;
- Chagne in Name from L-3 Communications Avionics Systems, Inc. to L3 Aviation Products, Inc. due to corporate reorganization;
- Change in Name from L-3 Communications Avionics Systems, Inc. - Columbus Office to L3 Aviation Products, Inc. due to corporate reorganization;
- Change in Name from L-3 Communications Avionics Systems, Inc. - Phoenix Office to L3 Aviation Products, Inc. due to corporate reorganization;
- Change in Name from L-3 Communications Electron Technologies, Inc. to L3 Electron Devices, Inc. due to corporate reorganization;
- Change in Name from PacOrd, Inc., Norfolk Operations to L-3 Unidyne, Inc. due to corporate reorganization;
- Change in Name from PacOrd, Inc., San Diego Operations to L-3 Unidyne, Inc. due to corporate reorganization;
- Change in Name from PacOrd, Inc., Florida Operations to L-3 Unidyne, Inc. due to corporate reorganization;
- Mercury Systems (of the United States) changes address;
- Change in Name from Meta Archiefbewaarneming B.V. to OASIS Data & Document Management Netherlands B.V. and change of address due to acquisition of Meta B.V. by OASIS; and
- Change in Name of Beechcraft Defense Company, LLC to Textron Aviation Defense LLC due to acquisition of Beechcraft Holdings, parent of Beechcraft Defense, by Textron.
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 FAQs re CJs Added to Website
April 21, 2017: DDTC posted 24 FAQs describing the Commodity Jurisdiction (CJ) process at http://www.pmddtc.state.gov/commodity_jurisdiction/documents/CJ-FAQ-04-2017.pdf and 34 FAQs explaining how to complete the updated CJ Application Form (DS-4076) at <http://www.pmddtc.state.gov/dtas-online/documents/DS4076-Instructions-04-2017.pdf.
Department of the Treasury
OFAC Updates FAQs
April 20, 2017: OFAC posted 8 updated FAQs about Filing a Petition for Removal from an OFAC List on its website at https://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/petitions.aspx.
No Waviers for Drilling in Russia
April 21, 2017: Treasury Secretary Steven Mnuchin announced that the Treasury Department will not issue waivers to U.S. companies, including Exxon, authorizing drilling prohibited by current U.S. sanctions against Russia.
New OFAC License for Soho Mall Panama
April 27, 2017: OFAC published Kingpin Act General License 4G "Authorizing Certain Transactions involving the Panamanian Mall and Associated Complex, Soho Panama, S.A. (a.k.a. Soho Mall Panama)”
on its website at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/kingpin_gl4g.pdf . The activities authorized by General License 4G are detailed in a FAQ at https://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_other.aspx#472.
LATEST SANCTIONS FINES & PENALTIES
Department of Commerce
April 6, 2017 – 82 Fed. Reg. 16786: BIS denied for 10 years the export privileges of Sihai Cheng (a/k/a Alex Cheng, a/k/a Chun Hai Cheng), currently an inmate of Terminal Island Federal Correctional Institution (FCI), San Pedro, CA, based on his conviction of violating the International Emergency Economic Powers Act (IEEPA, 50 USC Sec. 1701 et seq.) by conspiring to export U.S.-origin pressure transducers to the Islamic Republic of Iran without the required authorization from OFAC. In the criminal case, Cheng was sentenced to 9 years in prison and an assessment of $600. (See details in January 2016 Regulatory Update.)
April 6, 2017 – 82 Fed. Reg. 16787: BIS denied for 10 years the export privileges of Juan Jose Estrada, currently an inmate of Big Spring FCI, Big Spring, TX, based on his conviction of violating the Arms Export Control Act (AECA, 22 USC Sec. 2778) by conspiring to export a Browning Model 1919, .30 caliber, semi-automatic rifle to Mexico without the required authorization from the Department of State. In the criminal case, Estrada was sentenced to 46 months in prison, one year of supervised release, and an assessment of $100.
April 6, 2017 – 82 Fed. Reg. 16788: BIS denied for 10 years the export privileges of Amin Al-Baroudi (a/k/a Abu Al-Jud), currently an inmate of Victorville Medium II FCI, Adelanto, CA, based on his conviction of conspiring to export goods from the U.S. to Syria in violation of U.S. sanctions on Syria without having first obtained the required authorization from the U.S. Department of Commerce. In the criminal case, Al-Baroudi was sentenced to 32 months in prison, 2 years of supervised release, and an assessment of $100. (See details in June 2016 Regulatory Update.)
April 6, 2017 – 82 Fed. Reg. 16789: BIS denied for 10 years the export privileges of Song Il Kim (a/k/a Kim Song Il), currently an inmate of Moshannon Valley FCI, Philipsburg, PA, based on his conviction of violating the AECA by attempting to export or causing to be exported to China PVS-7 and PVVS-14 Night Vision Optics and a THOR 320 Thermal Imaging Weapons Sight without the required authorization from the Department of State. In the criminal case, Kim was sentenced to 40 months in prison, 36 months of supervised release, and a $100 assessment. (See details in February 2016 Regulatory Update.)
April 10, 2017 – 82 Fed. Reg. 17187: BIS denied for 10 years the export privileges of Sam Rafic Ghanem of Springfield, VA, based on his conviction of violating the AECA by attempting to export and causing to be exported firearms parts and accessories to Lebanon without the required authorization from the Department of State. In the criminal case, Ghanem was sentenced to 18 months in prison, 3 years of supervised release, a criminal fine of $70,734, and a $200 assessment. (See details in May 2015 Regulatory Update.)
Fines and Penalties
April 13, 2017: Fadi Yassine, a citizen and resident of Lebanon, pleaded guilty in federal court in Cedar Rapids, IA to conspiring to violate the AECA by brokering guns and transporting them to Lebanon without the required authorization from the State Department. Yassine, who was arrested upon his arrival in New York on an international flight, allegedly purchased guns in Lebanon that had been shipped from the U.S. by Ali Al Herz and members of his family who were subsequently convicted of smuggling weapons from the U.S. to Lebanon. (See details in March 2016 and October 2016 Regulatory Updates.)
April 14, 2017: BIS issued an order accelerating the two remaining installment payments of a civil penalty levied against Streit USA Armoring, LLC after Streit defaulted on an installment payment that was due Nov. 27, 2016. (See details about the Streit compliance case in September 2015 Regulatory Update.) The order, posted on the BIS website at https://efoia.bis.doc.gov/index.php/documents/export-violations/export-violations-2015/1111-e2498/file, provides BIS’ rationale for accelerating the remaining payments while opting not to exercise the other available options of activating a portion of the fine that was suspended or activating a suspended denial order.
April 24, 2017: Fuyi Sun, a citizen of the People’s Republic of China, pled guilty in federal court in New York City to attempting to violate IEEPA by exporting extremely high-grade M60 carbon fiber to China without the required authorization. M60 carbon fiber has defense-related applications including aerospace technologies and drones and is controlled for nuclear non-proliferation and anti-terrorism reasons. Sun agreed to purchase the carbon fiber from what he believed was a distributor but was actually an undercover entity created and staffed by undercover special agents of U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI). He was arrested after he traveled to New York and paid the agents $23,000 in cash for the carbon fiber and an additional $2,000 as compensation for the risk he believed the seller was taking in making the illegal export.
April 28, 2017: Stephen Edward Smith of Tucson, AZ was sentenced in federal court in Phoenix, AZ to 102 months in federal prison and Peter Steve Plesinger of Sahuarita, AZ was sentenced to 87 months in federal prison based on their pleas of guilty to exporting munitions to Hong Kong without the required authorization, dealing firearms without a license, and money laundering. The illegal shipments were discovered when law enforcement authorities in Hong Kong intercepted a package containing 139 rounds of ammunition that had been shipped from Arizona by Plesinger. A search of the intended recipient’s Hong Kong residence resulted in the recovery of weapons and ammunition that Plesinger had shipped previously in packages with innocuous labels.
April 28, 2017: Naum Morgovsky and Irina Morgovsky, both of Hillsborough, CA were indicted in federal court in San Francisco, CA on charges of conspiracy to violate the AECA by exporting night vision rifle scope parts to Russia. The Morgovskys allegedly purchased the components, which included image intensifier tubes and lenses, through businesses they owned in the U.S. and shipped them to a night vision manufacturing company in Moscow partially owned by Naum Morgovsky without the required authorization from the State Department. The indictment further charges that in an effort to conceal these violations, Naum Morgovsky laundered the $200,000 they were paid for the components through a bank account in the name of a dead person.
April 28, 2017: Lim Yong Nam, a/k/a Steven Lim, a citizen of Singapore, was sentenced in federal court in Washington, DC to serve 40 months in federal prison based on his plea of guilty to a charge of conspiracy to defraud the U.S. by dishonest means in connection with a conspiracy that shipped 6,000 radio frequency modules with applications in remote detonation systems for improvised explosive devices (IEDs) to Iran. (See report of Lim’s guilty plea in December 2016 Regulatory Update.) Fourteen of the 6,000 modules were later recovered by Allied troops from IED remote detonation systems in Iraq. Lim and his co-conspirators represented to the U.S. supplier and on documents filed with the U.S. government that Singapore was the ultimate destination of the modules.