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 Eliminates Short Supply Export License Requirement, Removing Restriction on Export of Crude Oil
May 12, 2016 – 81 Fed. Reg. 29483: The Bureau of Industry and Security (BIS) amended the Export Administration Regulations (EAR, 15 CFR Parts 730-774) to eliminate the short supply export license requirement and other requirements formerly applied to exports of crude oil to all destinations. This amendment implemented a provision of the Consolidated Appropriations Act of 2016, which prohibited the federal government from restricting exports of crude oil. (See December 2015 Regulatory Update.) Consistent with exceptions in the Act, exports of crude oil to embargoed or sanctioned countries or persons will continue to require specific authorization from BIS.
BIS Publishes Further Guidance on License Requirements for Transactions Involving Cuba
May 23, 2016: BIS posted a clarification of license requirements for exports from the U.S. to Cuba and re-exports of U.S.-origin items from third countries to Cuba. Since such exports are controlled under both the EAR and the Treasury Department Cuban Assets Control Regulations (CACR, 31 CFR Part 515), they may require separate authorizations under both rules. However, a general license issued by the Treasury Department Office of Foreign Assets Control (OFAC) authorizes all transactions incident to many such exports if they are authorized by BIS. BIS guidance describing BIS and OFAC license requirements under various circumstances may be found on the BIS website at
Department of Justice
DOJ Issues Letter Pertaining to the Verification of Employee Citizenship When Required for Export Compliance Reasons
May 6, 2016: The U.S. Justice Department Civil Rights Division released a technical assistance letter providing guidance regarding an employer’s obligations to comply with the anti-discrimination provision of the Immigration and Nationality Act (INA), 8 U.S.C. § 1324b, when verifying employees’ citizenship status under U.S. export control laws. This letter is available on the Justice Department website at https://www.justice.gov/crt/file/837281/download .
Department of State
DDTC Name Changes for May 2016
May 2, 16, 19, and 25, 2016: 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:
- CoorsTek Engineering Metals ULC to ADJ Industries Inc. - Name Change;
- Rohde & Schwarz Nederland B.V. to Rohde & Schwarz Benelux B.V. - Name Change;
- BAE Systems Australia Defence Pty Limited to BAE Systems Australia Limited - Name Change;
- Elasto Proxy Inc. - Address Change;
- Halberg Design Inc. to PCM Innovation Montreal Inc. Name Change due to acquisition by PCM Innovation – Name Change; and
- RLC (UK) Limited and Langford Lodge Engineering Limited to RLC (UK) Limited - Name 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 Updates the List of Approved Intermediary Consignees Under the US-Australia Defense Trade Cooperation Treaty
May 2, 2016: DDTC posted an updated list of approved Australian intermediary consignees under the U.S.–Australia Defense Trade Cooperation Treaty on its website at http://www.pmddtc.state.gov/treaties/documents/AU_IntConsginee-05.02.2016.pdf.
DDTC Advises that Export License Applications Involving Sri Lanka Will Be Reviewed on a Case-by-Case Basis, as Congress Removed Restrictions on Export Licenses for Sri Lanka
May 4, 2016: DDTC announced on its website that effective immediately, DDTC will review applications for licenses to export or temporarily import defense articles and defense services to/from Sri Lanka on a case-by-case basis because licensing restrictions relating to Sri Lanka that the U.S. Congress had included in previous appropriations acts were not included in the Consolidated Appropriations Act for 2016.
DDTC Advises that Export License Applications Involving Cote d’Ivoire Will Be Reviewed on a Case-by-Case Basis, as UN Sanctions on Cote d’Ivoire Have Been Lifted
May 5, 2016: DDTC announced on its website that effective immediately, DDTC will review applications for licenses to export or temporarily import defense articles and defense services to/from Cote d’Ivoire on a case-by-case basis because the United Nations Security Council (UNSC) terminated its sanctions against Cote d’Ivoire. These sanctions had included restrictions on exports to Cote d’Ivoire of arms and related materiel.
DDTC Will RWA All Applications for Export Approval Requiring a DSP-83 if the Applicant Does Not Include the Latest Version of the DSP-83 Form
May 6, 2016: DDTC gave notice on its website that effective immediately, it will only recognize DSP-83 Nontransfer and Use Certificates that are the current version of the form, with an expiration date of May 31, 2018 on both the top right and bottom left of the form. The notice includes transition provisions covering license applications pending or received before May 14, 2016, pending licenses older than the expiration date of the old version of the DSP-83, and new applications for which the applicant will provide the current DSP-83 prior to DDTC approval of the case. (See article on FD Associates website for additional details related to this matter, http://fdassociates.net/consultant-corner)
DDTC Lifts Embargo on Exports of Lethal Defense Articles to Vietnam; Applications to Be Reviewed on Case-by-Case Basis
May 23, 2016: DDTC announced on its website the termination, effective immediately, of the Department of State’s policy prohibiting the sale or transfer of lethal defense articles to Vietnam, including restrictions on exports to and imports from Vietnam of arms and related materiel. Applications for licenses to export or temporarily import lethal defense articles and related defense services to/from Vietnam will now be reviewed on a case-by-case basis.
DDTC Advises that Export License Applications Involving Liberia Will Be Reviewed on a Case-by-Case Basis, as UN Sanctions on Liberia Have Been Lifted
May 27, 2016: DDTC announced on its website that effective immediately, DDTC will review applications for licenses to export or temporarily import defense articles and defense services to/from Liberia on a case-by-case basis because the UNSC sanctions regime against Liberia had been terminated.
Department of the Treasury
OFAC Publishes Federal Register Notice With Revision to Burmese Sanctions Regulations
May 18, 2016 – 81 Fed. Reg. 31169: Together with other actions intended to facilitate trade with Burma, OFAC amended the Burmese Sanctions Regulations (BSR, 31 CFR Part 537) to add a general license to authorize certain transactions related to maintenance of U.S. persons residing in Burma (i.e., the payment of living expenses and acquisition of goods or services for personal use). The BSR amendment also makes permanent a limited-term general license that authorizes transactions that are ordinarily incident to exports to/from Burma (other than financial transactions), except to the extent that such transactions involve an individual or company that is designated or otherwise blocked by OFAC’s sanctions. In addition, this authorization was expanded by the addition of a general license permitting certain transactions incident to the movement of goods within Burma, e.g., transporting goods from a warehouse in Burma for further distribution to retail outlets in Burma.
LATEST SANCTIONS FINES & PENALTIES
Department of Commerce
May 10, 2016 – 81 Fed. Reg. 28822: BIS denied the export privileges of Ali Khanaman Mohammadi of Irvine, CA for 10 years based on his conviction in 2015 of violating the International Emergency Economic Powers Act (IEEPA, 50 USC Secs. 1701-1707) by conspiring to export a Series 446 Rate Integrating gyroscope to Iran without the required authorization. In the criminal case Mohammadi was sentenced to 5 years of probation, a special assessment of $100, and a criminal fine of $2,000.
Department of State
May 9, 2016 – 81 Fed. Reg. 28113: DDTC modified the statutory debarment of Rocky Mountain Instrument Co. (RMI) and announced that it will approve exceptions from the debarment permitting persons other than RMI to request authorizations for transactions that are subject to the Arms Export Control Act (AECA, 22 USC Sec. 2778) under four specified circumstances. Guidance for exporters and manufacturers wanting to engage in transactions involving RMI or defense articles manufactured by RMI is posted on the DDTC website at http://pmddtc.state.gov/compliance/poa/pdf/RMI_Web_Guidance.pdf, and an Oversight Agreement between RMI and DDTC is posted at http://pmddtc.state.gov/compliance/poa/pdf/RMI_agreement.pdf. RMI was debarred in September 2010 (Sep. 8, 2010 – 75 Fed. Reg. 54692) based on its criminal conviction involving exports of prisms and optical technical data for military applications to Turkey, South Korea, PRC, and Russia without obtaining the required licenses from the Department of State.
Fines and Penalties
May 17, 2016: Asim Fareed of North Brunswick, NJ entered an agreement with the U.S. Attorney’s Office in Scranton, PA to plead guilty to conspiracy to provide false statements in connection with the illegal export of goods to Iran. According to the Criminal Information charging him, Fareed agreed to ship items to customers in Iran through third countries by preparing invoices which listed false information about the identity and geographic location of the purchasers of the goods. The agreement provided that the items would be shipped from the U.S. to the United Arab Emirates (UAE) and thereafter transshipped to Iran. No actual shipments were, in fact, delivered to Iran.
May 19, 2016: William Ali, a Fijian national resident in New Zealand, was arraigned in Federal District Court in Seattle, WA on charges of conspiring to violate the AECA by conspiring to export sensitive defense parts including specialized accelerometers that are used in missile and spacecraft navigation systems to China without the required authorization. According to the indictment, Ali attempted to obtain the accelerometers from an individual he thought was a commercial seller, but was in fact an agent of ICE’s Homeland Security Investigations after first attempting to obtain them from two other companies. Ali flew from New Zealand to Seattle to pick up the parts and was arrested upon his arrival.
May 23, 2016: Ali Reza Parsa, a Canadian-Iranian dual citizen resident in Canada, was sentenced in Federal Court for the Southern District of New York to 3 years in prison for conspiracy to violate IEEPA and the Iranian Transactions and Sanctions Regulations (ITSR, 31 CFR Part 561). Parsa used his Canadian company to place orders with U.S. suppliers for high-technology electronic components for transshipment to clients of a company he controlled in Iran. The parts were shipped to him in Canada or a freight forwarder in the UAE and then transshipped to the clients of the Iranian firm. Parsa provided false destination and end-user information to conceal the true destinations from the U.S. suppliers. While incarcerated prior to sentencing, he continued to conduct business for his Canadian and Iranian companies. He directed a relative to delete email evidence of these transactions and emphasized the need to maintain secrecy about them.
May 24, 2016: Unisol International of Miami, FL agreed to pay a $250,000 civil penalty ($150,000 payable in installments and $100,000 suspended for two years and then waived if Unisol commits no further violations during that time) to settle 5 charges of violating the EAR by acting with knowledge of a violation. Unisol allegedly sold and/or transferred thermal imaging cameras controlled under Export Control Classification Number (ECCN) 6A003.b.4 to be exported from the U.S. to Ecuador, Venezuela, and Mexico without the required authorizations. Unisol knew that the items required a license from BIS because a U.S. company had informed it in writing of the ECCN and the export license requirement.
May 26, 2014: Ahmad Feras Diri of London, United Kingdom, pleaded guilty in Federal District Court in Scranton, PA to conspiracy to violate IEEPA and other laws by illegally exporting laboratory equipment, including items used to detect chemical warfare agents, from the U.S. to Syria without the required authorization. Diri was arrested in London in March 2013 and was extradited to the U.S. on Nov. 15, 2015. Diri was part of a larger conspiracy that transshipped controlled items to Syria via Jordan, the UAE, and the United Kingdom. (See more information in April 2014 Regulatory Update.) The conspirators prepared false invoices that undervalued and mislabeled the goods being purchased and listed false information as to the identity and geographic location of the purchasers of the goods.