20-0623 Tuesday “Daily Bugle”

20-0623 Tuesday “Daily Bugle”

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Tuesday, 23 June 2020

(No items of interest posted) 

  1. Items Scheduled for Future Federal Register Edition
  2. Commerce/BIS: (No new postings)
  3. State/DDTC: (No new postings)
  4. DHS/CBP: “Craft Beverage Modernization Act (CBMA) – Tips for Properly Filing Claims 2020”
  5. Treasury/OFAC Publishes Important Technical Notice for Users of the OFAC Website and Sanctions List Data Files
  1. EU Sanctions: “E3 Support Extension of UN Arms Embargo & IAEA Adopt Resolution”
  2. Export Compliance Daily: “BIS Military Exports Rule Will Lead to ‘Uncertainty’ for US Universities, AUECO Says”
  1. Husch Blackwell: “State and Treasury Departments Designate 39 Entities under ‘Caesar Act’ Syria Sanctions”
  2. Mayer Brown: “Asset Freeze Measures Fully Extend to Controlled Entities and Cover Services and Labor, Says the EC”
  3. Nicholas Turner: “Sanctions Top-5 for the Week Ending 19 June”
  1. ECS Presents Webinar: 7-8 Jul; “ITAR/EAR Boot Camp — Achieving Compliance”
  1. Bartlett’s Unfamiliar Quotations 
  2. Are Your Copies of Regulations Up to Date? Find the Latest Amendments Here. 
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(Source: Federal Register, 23 Jun 2020)
* Treasury/OFAC: NOTICES; Blocking or Unblocking of Persons and Properties [Pub. Date: 24 Jun 2020] (PDF) and (PDF)
* USTR: NOTICES; Product Exclusion and Amendments: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation [Pub. Date: 24 Jun 2020] (PDF)

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OGS_a22. Commerce/BIS: (No new postings)

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DHS/CBP: “Craft Beverage Modernization Act (CBMA) – Tips for Properly Filing Claims 2020”
DHS/CBP, 23 Jun 2020)
   U.S. Customs and Border Protection (CBP) will be hosting a webinar for the Trade community on Thursday, July 16, 2020 from 1:00 PM to 2:00 PM EST.  In this webinar, CBP will review tips on filing successful Craft Beverage Modernization and Tax Reform Act (CBMA) claims.   This webinar will focus on common questions regarding the transmission of complete and accurate CBMA claims.
   CBP has posted procedures and guidance on CBMA on CBP.gov at https://www.cbp.gov/trade/program-administration/entry-summary/cbma-2017
   If you have questions you would like CBP to address during this webinar, please submit to the CBMA mailbox at cbma@cbp.dhs.gov, with “CBMA Webinar July 2020” in the subject line.
  To join the webinar, please use the link below:
CBMA: How to Properly File Claims
  Listed Event
Date and Time:
Thursday, July 16, 2020 1:00 pm 
Eastern Daylight Time (New York, GMT-04:00)
1 hour 30 minutes
Webinar will help explain how to properly submit your claim to allow for them to be processed and approved successfully.
Event Number:
199 481 1329
Event Password:
CBMA (2262 from phones)
Audio Conference:
To receive a call back, provide your phone number when you join the event, or call the number below and enter the access code.
US Toll +1-415-527-5035
Show all global call-in numbers
Access code: 199 481 1329

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Treasury/OFAC, 22 Jun 2020)

The Office of Foreign Assets Control has published this technical notice for users of its website and sanctions list data files.

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EU Sanctions, 21 Jun 2020) [Excerpts]
   The foreign ministers of the E3 (the UK, France and Germany) have announced that they do not support the lifting of the UN conventional arms embargo against Iran, which is due to expire in October 2020, because it “would have major implications for regional security and stability”. The US drafted a resolution in April 2020 proposing the extension of the arms embargo, under which the UN Security Council must approve any exports of conventional arms to Iran on a case-by-case basis. However, as also suggested by the US, the E3 would not support a snapback of UN sanctions, because this would be contrary to their commitments under the JCPOA, (see post).
   The UN International Atomic Energy Agency also adopted a resolution (19 June 2020) submitted by the E3 calling on Iran to cooperate with the IAEA and its safeguarding obligations. Iran continues to deny the IAEA access to 2 previously undeclared locations, and refuses to clarify questions relating to possible undeclared nuclear material and activities. See press release.
   E3 has expressed concern over Iran’s violation of its nuclear commitments, specifically, the continued enrichment of uranium above the 3.67% JCPOA limit, stockpiling of low-enriched uranium by 8 times the allowed amount, further development of advanced nuclear centrifuges, and enrichment activities at Fordow, which raise “grave proliferation concerns”. The E3 have called on Iran to resume compliance, and have reaffirmed their commitment to the JCPOA.
   The E3 also said they will continue to “contribute to the Arak Modernisation Project and support EU-led civil nuclear cooperation projects”, and regrets the US’ termination of the waiver authorising these projects. The US has said that such activities must be ceased by 27 July 2020 to avoid risking exposure to sanctions (see post).

Export Compliance Daily, 22 Jun 2020) [Excerpts]
   U.S. universities may be forced to turn down research activities — including COVID-19 research — due to the Bureau of Industry and Security’s increased restrictions on shipments to military end-users the Association of University Export Control Officers said in comments to the agency. The restrictions are so broad that they could severely restrict academic activities that benefit the U.S. despite those activities having “no military or defense application,” the AUECO said.


* Principal Author: Grant Leach, 1-402-964-5143, Husch Blackwell LLP
   New U.S. sanctions on Syria took effect on June 17, 2020 as a result of the “Caesar Syria Civilian Protection Act of 2019” (“Caesar Act“) that was signed into law on December 20, 2019 as part of the National Defense Authorization Act for Fiscal Year 2020. The Caesar Act is named after a Syrian photographer who documented abuses in the Assad regime’s prisons.
   Pursuant to the Caesar Act and Executive Order 13894, the U.S. State and Treasury Departments announced 39 new additions to the Specially Designated Nationals and Blocked Persons List (the “SDN List”) maintained by the Treasury Department’s Office of Foreign Assets Control (“OFAC”).  The Treasury and State Departments also promised that more SDN List designations will follow. The 39 designated entities include regime officials, members of the ruling Assad family, the Fourth Division of the Syrian Arab Army, and an Iran-sponsored militia.  The new designations also include 20 private companies.
   While most of the designated entities are holding companies based in Syria, several are based outside of Syria in Lebanon, Canada, and Austria.  Although the U.S. has consistently imposed blocking sanctions to generally prohibit U.S. persons from transacting with Syria, the Caesar Act now imposes additional secondary sanctions which apply to foreign companies or individuals who “facilitate the Assad regime’s acquisition of goods, services, or technologies” that support regime military activities as well as Syria’s oil and gas industries. The Caesar Act also mandates sanctions on those profiting from reconstruction activities in government-controlled areas of Syria, according to the U.S. Department of State’s fact sheet on the matter.

Mayer Brown,
22 Jun 2020)

   On June 19, 2020, the European Commission issued an opinion that shed light on the scope of application of asset freeze measures (“Opinion”) [FN/1] The Opinion provides welcome clarifications on the application of asset freeze measures to non-sanctioned entities controlled by sanctioned persons. It also confirms that the concept of “economic resources” can cover services and labor.
   On its face, the Opinion has been issued in relation to Council Regulation (EU) No 269/2014, which provides for restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine. It is, however, equally relevant for all asset freeze measures imposed by the European Union (“EU”), regardless of the applicable sanctions regime.
(1) Applicability of asset freeze measures to non-sanctioned entities that are controlled by sanctioned individuals or entities
   Asset freeze measures are typical sanctions tools, which target specifically listed individuals and entities (“Designated Person”). As a result of these measures, all funds and economic resources belonging to, owned, held or controlled by a Designated Person must be frozen, and no funds or economic resources shall be made available to or for the benefit of a Designated Person.
   Through FAQs and best practices, both the European Commission and the Council of the European Union clarified that asset freeze measures may also, at least in part, extend to non-designated entities that are “owned” or “controlled” by a Designated Person. [FN/2] Both institutions took the view that making available funds or economic resources to a non-designated entity that is owned or controlled by a Designated Person would amount to making such funds or economic resources indirectly available to the Designated Person. This would consequently be prohibited under EU sanctions laws unless it can be reasonably determined, on a case-by-case basis using a risk-based approach, that the funds or economic resources concerned will not be used by or be for the benefit of the Designated Person. [FN/3]
   There remained, however, considerable uncertainties with regard to whether asset freeze measures as a whole, and in particular the requirement to actually freeze funds and economic resources, extended to the funds and economic resources of non-designated entities that are owned or controlled by a Designated Person. For instance, the Council’s Best Practices hinted that this would not be the case (emphasis added) [FN/4]
   In principle, the freezing should not affect funds and economic resources which are neither owned by or belonging to, nor held or controlled by designated persons and entities. Thus, for example, the funds and economic resources of the non-designated employer of a designated person are not covered, unless they are controlled or held by that person. In the same vein, the funds and economic resources of a non-designated entity having separate legal personality from a designated person or entity are not covered, unless they are controlled or held by the designated person or entity. However, even so, funds and economic resources jointly owned by a designated person or entity and a non-designated one are in practice covered in their entirety.
Member states-which are responsible for the enforcement of EU sanctions, including asset freeze measures-adopted diverging positions in that regard. For instance, in the United Kingdom, the Office of Financial Sanctions Implementation (“OFSI”) had already taken the view that asset freeze measures extend in full to non-designated entities that are owned or controlled by a Designated Person [FN/5]
   [A]n asset freeze and some financial services restrictions will also apply to entities that are owned or controlled, directly or indirectly, by a designated person. Those entities may not be designated in their own right, so their name may not appear on the consolidated list. However, those entities are similarly subject to financial sanctions.
   By contrast, the French Treasury considered that asset freeze measures do not extend in full to non-designated entities simply because of their shareholding or control structure [FN/6]
   Unless otherwise provided, the fact that a legal person affected by a freezing order owns/controls a subsidiary does not automatically lead to the implementation of the freezing measure with regard to the subsidiary.
   The Opinion clarifies that funds and economic resources of non-designated entities controlled by a Designated Person must be frozen unless it is demonstrated that the relevant assets are in fact not controlled by the Designated Person (e.g., because safeguards are put in place to prevent the Designated Person from accessing them).
   The position expressed in the Opinion is therefore analogous to the one adopted vis-à-vis restrictions on the making available of funds and economic resources: there is a presumption of prohibition unless it is established that the Designated Person cannot be indirectly concerned or positively affected by the transaction.
   As a result, making payments to or receiving payments from a non-designated entity that is owned or controlled by a Designated Person is prohibited, unless it is:
  • Authorized by national competent authorities pursuant to one of the derogations set forth in the applicable Regulations; or
  • Established, based on the particular facts of the case, that the specific bank account is not controlled by the Designated Person or that the payment will not be used by or be for the benefit of the Designated Person.
   Under most EU sanctions regimes, EU banks would remain entitled to credit frozen accounts provided that any such additions are also frozen and that the competent authorities have been informed of such crediting.
   While the Opinion already brings much welcome clarifications as to the scope of the EU’s asset freeze measures, two additional points must be considered:
  • Although the Opinion focuses on non-designated entities “controlled” by a Designated Person, it should be equally valid for non-designated entities “owned” by a Designated Person; and
  • The factual background of the Opinion discusses a situation where an individual, who is a Designated Person, has a management role in a non-designated entity. This indicates that non-sanctioned entities managed by sanctioned individuals may become subject to sanctions if, as a result of their management position, the Designated Person is able to exercise control over the relevant entity.
   The clarifications made by the Opinion reinforce the requirement-under EU sanctions laws-to conduct thorough and comprehensive checks on the shareholding and control structure of counterparties so as to ensure no dealing is conducted with an asset freeze target.
   To assist with these due diligence procedures, the Opinion calls on businesses and member states to cooperate. On the one hand, EU economic operators are reminded of their obligation to immediately inform the European Commission, directly or through their national competent authorities, of any indications that their clients or counterparts that are non-designated may be owned or controlled by a Designated Person. On the other hand, to facilitate the due diligence efforts of EU economic operators, national competent authorities are asked to publish their conclusions on the relationship of control between Designated Persons and controlled entities, including where they have determined that assets of a given entity are not controlled by a Designated Person.
(2) The provision of services or labor to sanctioned persons may breach asset freeze measures
   Economic resources are typically defined as “assets of every kind, whether tangible or intangible, movable or immovable, which are not funds but may be used to obtain funds, goods or services.” The provision of such economic resources to Designated Persons and entities owned or controlled by Designated Persons would typically run afoul of the EU’s asset freeze measures.
Whether the definition of “economic resources” could include “services” or “labor” has been the subject of much debate. For instance, in guidelines approved by the UN Al-Qaida Sanctions Committee on February 24, 2015, it was considered that “internet hosting or related services” would constitute “economic resources.” [FN/7] By contrast, OFSI recently took the view that it is not prohibited to provide services to Designated Persons (except financial services to those designated under Terrorist Asset Freezing etc. Act 2010), although a license would be required to receive payment for services. [FN/8]
   The Opinion confirms labor and services can be considered as economic resources insofar as such labor and services can be used, directly or indirectly, by a Designated Person to obtain funds, goods or services.
   In other words, asset freeze measures will not apply to any and all provision of services or labor. Providing services to or working for a Designated Person or for an entity that is owned or controlled by a Designated Person would be prohibited only insofar as it enables the latter to obtain funds, goods or services.
   This position is not new, as it was already included, in relation to telecommunications services, in drafts of the Council’s Best Practices but was eventually dropped from the final document. It is nonetheless the first time that an EU institution expressly confirms that labor and services can potentially be covered by asset freeze measures.
   Importantly, however, the circumstances in which services or labor would indeed entitle a Designated Person to obtain funds, goods or services remain largely unclear and subject to interpretation. In practical terms, economic operators subject to EU sanctions will need to carefully consider whether and to what extent their portfolio of services could enable an asset freeze target to obtain funds, goods or services.
(3) While non-binding, the Opinion will have far-reaching implications for economic operators subject to EU sanctions laws
   The Opinion provides welcome clarifications on the scope of application of the EU’s asset freeze measures. While it is not binding, it reflects the common understanding by the member states and the European Commission and aims to promote uniform implementation. The Opinion will therefore likely be followed by the member states’ authorities in charge of enforcing asset freeze measures.
   In light of this Opinion, economic operators subject to EU sanctions laws should stand ready to reinforce, where needed, their due diligence and compliance processes. Mayer Brown stands ready to assist in this regard.

Medium, 22 Jun 2020)

* Author: 
Nicholas Turner
, Esq., 852-5998-7559, 
Steptoe & Johnson HK 
  Here are five things that happened this week in the world of economic sanctions that I think you should know about:
   (1) Donald Trump
signed the Uyghur Human Rights Policy Act of 2020
into law. The Act, which was first introduced in early 2019, calls for asset freezes and visa bans against persons, including PRC officials, responsible for a litany of human rights abuses against minorities in the Xinjiang Uyghur Autonomous Region (XUAR). (Read the presidential signing statement here.)
   (2) OFAC
named 14 individuals and 15 entities as SDNs pursuant to the
Caesar Syria Civilian Protection Act of 2019
(the Caesar Act) and Executive Order 13894 for supporting luxury redevelopment projects in Syria and undermining peace efforts.
The targets
include Asma al-Assad, wife of Syrian President Bashar Al-Assad (who can forget her
February 2011 profile in Vogue?). (Side note:
Executive Order 13894
was adopted in response to Turkey’s military incursion into northeast Syria in October 2019.)
   (3) The US Office of Foreign Assets Control (OFAC)
named six individuals in Nigeria as Specially Designated Nationals
(SDNs) pursuant to Executive Order 13694, as amended, for perpetrating online business and romance frauds.
According to the Treasury Department news release, the targets pilfered more than USD 6 million from victims in the United States.
   (4) OFAC
named two companies in Mexico as SDNs
pursuant to Executive Order 13850 for orchestrating the sale of Venezuelan-origin crude oil to buyers in Asia following the designation of two Rosneft subsidiaries earlier this year. OFAC also
designated three individuals, six entities, and two vessels in Mexico, the United States, Singapore, the United Kingdom, and Greece, for taking part in the scheme.
   (5) Singapore
charged former commodities trader Tan Wee Beng and an accomplice
with falsifying invoices to conceal North Korea-related transactions.
As previously reported, in October 2019, Tan
was indicted by the US Department of Justice
added to the FBI’s Most Wanted List, and
added to the SDN List for processing North Korea-related transactions through the US financial system.
   Maybe it’s me, but the six email bandits sanctioned last week aren’t exactly what I picture when I think of a “significant threat to the national security, foreign policy, or economic health or financial stability of the United States” as described in Executive Order 13694. (If that’s the case, my spam box is full of potential SDNs.) Besides, this seems to be more of a law enforcement issue, rather than an OFAC one. Coincidentally, Mike Pompeo had a call on the same day with Nigerian Foreign Minister Geoffrey Onyeama, ostensibly about other things.

In case you missed it: the text of the proposed Hong Kong Autonomy Act finally made its way to Congress.gov. The language matches a bootleg draft that had been floating around for a while. Observations: the Act does not call for asset freezes like last year’s Hong Kong Human Rights and Democracy Act, nor does it call for correspondent banking sanctions against foreign financial institutions. Instead, the Act spells out a menu of sanctions to be imposed in two phases, with conditions for lifting them. (There’s a lot more that can be said – drop me a line if you want to receive my separate Hong Kong-related updates.)


*When: 7-8
*Where: Your Computer
*Sponsor: Export Compliance Solutions & Consulting

*Presenter: Suzanne Palmer, Mal Zerden
*Register here or by calling 1-866-238-4018 or email liz@exportcompliancesolutions.com

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EN_a112. Bartlett’s Unfamiliar Quotations

(Source: Editor)

Irvin S. Cobb (Irvin Shrewsbury Cobb; 23 June 1876 – 11 Mar 1944; was an American author, humorist, editor and columnist from Paducah, Kentucky. He wrote for the New York World, Joseph Pulitzer’s newspaper, as the highest paid staff reporter in the United States.)

  – “Middle age: when you begin to exchange your emotions for symptoms.”
Edward VIII
 (Edward Albert Christian George Andrew Patrick, later Prince Edward, Duke of Windsor; 23 Jun 1894 – 28 May 1972; was King of the United Kingdom and the Dominions of the British Empire, and Emperor of India, from 20 January 1936 until his abdication on 11 December of that year.)
  – “The thing that impresses me most about America is the way parents obey their children.”

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The official versions of the following regulations are published annually in the U.S. Code of Federal Regulations (C.F.R.), but are updated as amended in the Federal Register.  The latest amendments are listed below.
Latest Update 
: 19 CFR, Ch. 1, Pts. 0-199.


5 Apr 2019: 84 FR 13499:

Civil Monetary Penalty Adjustments for Inflation. 
DOC FOREIGN TRADE REGULATIONS (FTR): 15 CFR Part 30.   24 Apr 2018: 83 FR 17749: Foreign Trade Regulations (FTR): Clarification on the Collection and Confidentiality of Kimberley Process Certificates.  

: DoD 5220.22-M. Implemented by Dep’t of Defense. 

18 May 2016: Change 2: Implement an insider threat program; reporting requirements for Cleared Defense Contractors; alignment with Federal standards for classified information systems; incorporated and cancelled Supp. 1 to the NISPOM (Summary here.)  
DOE ASSISTANCE TO FOREIGN ATOMIC ENERGY ACTIVITIES: 10 CFR Part 810.    23 Feb 2015: 80 FR 9359: comprehensive updating of regulations, updates the activities and technologies subject to specific authorization and DOE reporting requirements. 

15 Nov 2017, 82 FR 52823: miscellaneous corrections include correcting references, an address and a misspelling.

DOJ ATF ARMS IMPORT REGULATIONS: 27 CFR Part 447-Importation of Arms, Ammunition, and Implements of War. 
14 Mar 2019: 84 FR 9239: Bump-Stock-Type Devices.

6 May 2020: 85 FR 26847: Notice (not an amendment) temporarily reducing the registration fee schedule in ITAR 122.3 until April 30, 2021. 
DOT FOREIGN ASSETS CONTROL REGULATIONS (OFAC FACR): 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders

5 Jun 2020:
85 FR 84510:

Syria Sanctions Regulations. 


1 Jan 2019: 19 USC 1202 Annex.
  – HTS codes for AES are available here.
  – HTS codes that are not valid for AES are available here.

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