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.
March 26, 2015: The U.K. Department for Business Innovation & Skills Export Control Organisation (ECO) published updated versions of its export control lists, effective March 24, 2015. The updated U.K. Military List is at https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/417729/militarylist20150324.pdf. The updated combined list of strategic military and dual-use items that require export authorization is at https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/417722/controllist20150324.pdf.
Department of Commerce
March 2, 2015 – 80 Fed. Reg. 11315: The Bureau of Industry and Security (BIS) invited public comments about the Export Control Reform Initiative (ECRI) transfer of certain military aircraft, military gas turbine engines, and related items from the U.S. Munitions List (USML, 22 CFR Part 121) to the Commerce Control List (CCL, 15 CFR Part 774) that took place October 15, 2013. Specifically, BIS desires comments on the clarity, usability and any other matters related to new CCL Export Control Classification Numbers (ECCNs) 9A610, 9B610, 9C610, 9D610 and 9E610 (controlling military aircraft and related items) and 9A619, 9B619, 9C619, 9D619 and 9E619 (controlling military gas turbine engines and related items). Deadline for comments is May 1, 2015. (See below for related State Department request for comments.)
March 5, 2015 – 80 Fed. Reg. 11863: BIS amended the Export Administration Regulations (EAR, 15 CFR Parts 730-774, Supplement No. 7 to Part 748) to add two items to the list of items that may be exported, reexported, or transferred without an export license to eligible facilities of Validated End User Samsung China Semiconductor Co. Ltd. in the People’s Republic of China (PRC).
March 13, 2015 – 80 Fed. Reg. 13210: BIS amended Parts 742, 748, and 762 of the EAR to remove certain support document requirements for license applications. An International Import Certificate or Delivery Verification will no longer be required in connection with license applications, and the requirement to obtain a Statement by Ultimate Consignee and Purchaser will be required only for applications for exports, reexports, and in-country transfers of 600 Series Major Defense Equipment.
Department of State
March 12, 16, 20, 26, and 30, 2015: The Directorate of Defense Trade Controls (DDTC) posted the following name and/or address changes on its website at
- ITGlobe Incorporated address change;
- Jena Optronik GmbH address change;
- Calgon Carbon Corporation address change;
- Babcock Canada Incorporation address change;
- Energy Resources Conservation Board (ERCB) change in name to Alberta Energy Regulator (AER) along with an address change due to its acquisition by AER; and
- Pacific Scientific Energetic Materials Company (Arizona) LLC changing to Pacific Scientific Energetic Materials Company (California) LLC due to corporate reorganization.
Each announcement includes a link to a notice specifying the effects of the change on pending and currently approved authorizations involving the listed entity.
March 2, 2015 – 80 Fed. Reg. 11313: DDTC invited public comments on USML Categories VIII (Aircraft and Related Articles) and XIX (Gas Turbine Engines and Related Equipment) in effect since Export Control Reform took effect October 15, 2013. Specific topics for comment are emerging technologies that are not well described; items remaining in these categories that have entered into normal commercial use; defense articles for which commercial use is anticipated within 5 years; and drafting or other technical issues in the text of either category. Deadline for comments is May 1, 2015. (See related item in Commerce Department section above.)
March 25, 2015: DDTC announced that in support of the U.S. policy on the export of U.S.-origin military unmanned aerial systems (UAS), certain assurances of proper use from the foreign end users, signed by the foreign end user and the U.S. applicant, will now be required to be submitted with the standard DSP-83 Non Transfer and Use Certificate at the time of an initial application for a permanent export license. The notice on the DDTC website at http://www.pmddtc.state.gov/documents/UAS_NoticeRevised.pdf provides the specific form that the new addendum must take.
Department of the Treasury
March 31, 2015 -- 80 Fed. Reg. 17152: 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.
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
March 26, 2015 – 80 Fed. Reg. 15979 (amended March 30, 2015 – 80 Fed. Reg. 16632): BIS issued a 6-month Temporary Denial Order (TDO) against the following persons:
- Flider Electronics, LLC, a/k/a Flider Electronics, d/b/a Trident International Corporation, d/b/a Trident International, d/b/a Trident International Corporation, LLC (Trident), San Francisco, CA;
- Pavel Semenovich Flider, a/k/a Pavel Flider, a Russian national and naturalized U.S. citizen, of San Rafael, CA; and
- Gennadiy Semenovich Flider, a/k/a Gennadiy Flider, San Francisco, CA.
The TDO was based on allegations that Trident had engaged in known violations of the EAR and that it structured its transactions and shipment routes in a manner designed to camouflage the actual destinations, end uses, and/or end users of export-controlled goods.
Prior to the issuance of the TDO, Flider was indicted and arrested based on charges that he and co-defendant Trident illegally transshipped export-controlled programmable computer chips capable of operating in austere environments to Russia through Estonia and Finland and knowingly submitted false and misleading information on Shipper’s Export Declarations. In connection with these illegal exports, Flider allegedly received more than $60 million in bank transfers from many countries including the Czech Republic, Estonia, Latvia, Cyprus, and Hong Kong. The charges against Flider and Trident include smuggling of goods, conspiracy to commit international money laundering, and substantive money laundering.
Fines and Penalties
March 18, 2015: Hsien Tai Tsai, a former resident of Taiwan who was arrested in May 2013 in Tallinn, Estonia and later extradited to the U.S., was sentenced in Federal District Court in Chicago to serve 24 months in federal prison based on his guilty plea to conspiracy to interfere with and obstruct U.S. regulations that seek to disrupt the proliferation of weapons of mass destruction. Documents in the case indicate that Tsai was associated with companies in Taiwan that purchased machinery used to fabricate metals and other materials with a high degree of precision from U.S. and other sources and then exported the items to countries including North Korea. The judge who sentenced Tsai noted that the sentence reflected the “substantial assistance” that Tsai had provided and would continue to provide to the Government’s investigation of weapons of mass destruction proliferators. (See additional details of this case in May 2013 and October 2014 issues of the Regulatory Update.)
March 25, 2015: Schlumberger Oilfield Holdings Ltd. (Schlumberger OHL), a wholly owned subsidiary of Schlumberger Ltd., agreed to plead guilty to conspiracy to violate the International Emergency Economic Powers Act (IEEPA, 50 USC Sec. 1701 et seq.) by willfully facilitating illegal transactions and engaging in trade with Iran and Sudan and to pay a penalty of $232,708,356. In addition to the monetary penalty, Schlumberger OHL agreed to submit to a 3-year term of probation, to continue to cooperate with the government, and not to commit any further felonies. In addition, Schlumberger Ltd. agreed that during the 3-year probation it will –
- Maintain its cessation of all operations in Iran and Sudan;
- Report on its compliance with sanctions;
- Respond to requests by U.S. authorities for information related to its compliance with U.S. sanctions; and
- Hire an independent consultant to review its internal sanctions policies and procedures and its internal audits focused on sanctions compliance.
The offenses covered by this case were committed by Drilling & Measurements (D&M), a U.S.-based Schlumberger unit, which provided oilfield services to customers in Iran and Sudan through non-U.S. subsidiaries of Schlumberger OHL from 2004 through June 2010. Schlumberger OHL had policies and procedures to prevent D&M from violating U.S. sanctions, but failed to train D&M’s U.S. person employees adequately about these policies and procedures. As a result, D&M violated U.S. sanctions through its operations related to Iran and Sudan. Details of the conduct covered by the guilty plea are in a U.S. Department of Justice press release at http://www.justice.gov/opa/pr/schlumberger-oilfield-holdings-ltd-agrees-plead-guilty-and-pay-over-2327-million-violating-us.
March 27, 2015: A federal court in the Eastern District of New York sentenced brothers Rex Maralit, a former New York City Police Officer, and Wilfredo Maralit, a former U.S. Customs and Border Protection Officer assigned to Los Angeles International Airport, to 3 years in federal prison followed by 3 years of supervised release based on their pleas of guilty of violating the Arms Export Control Act (AECA, 22 USC 2778). From 2009 through 2013 the brothers exported various military-style firearms, including high-capacity magazines and other accessories, to the Philippines where they were sold to overseas customers. The brothers used their official status to obtain and ship the weapons without the required authorization from the U.S. Department of State.