Every Monday we post the highlights out of last week’s FCC Export/Import Daily Update (“The Daily Bugle”). Send out every business day to approximately 6,500 readers of changes to defense and high-tech trade laws and regulations, The Daily Bugle is a free daily newsletter from Full Circle Compliance, edited by James E. Bartlett III, Alexander P. Bosch, Vincent J.A. Goossen, and Alex Witt.
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Last week’s highlights of The Daily Bugle included in this edition are:
- Treasury/OFAC Amends 31 CFR Part 579 to Implement EO 13848 (“Imposing Certain Sanctions in the Event of Foreign Interference in a United States Election”); The Daily Bugle; Monday, 29 Apr 2019, Item #1;
- Justice: “Criminal Division Announces Publication of Guidance on Evaluating Corporate Compliance Programs”; The Daily Bugle; Thursday, 2 May 2019, Item #5;
- Treasury/OFAC Announces Settlement Agreement with MID-SHIP Group LLC; The Daily Bugle; Thursday, 2 May 2019, Item #6;
- Treasury/OFAC Publication: “A Framework for OFAC Compliance Commitments”; The Daily Bugle; Thursday, 2 May 2019, Item #7;
- EU Publishes Detailed Arrangements Concerning Firearms Directive; The Daily Bugle; Friday, 3 May 2019, Item #5;
1. Treasury/OFAC Amends 31 CFR Part 579 to Implement EO 13848 (“Imposing Certain Sanctions in the Event of Foreign Interference in a United States Election”)
(Source: Federal Register, 29 Apr 2019.) [Excerpts.]
84 FR 17950-17958: Foreign Interference in U.S. Elections Sanctions Regulations
* AGENCY: Office of Foreign Assets Control, Treasury.
* ACTION: Final rule.
* SUMMARY: The Department of the Treasury’s Office of Foreign Assets Control (OFAC) is adding regulations to implement Executive Order of September 12, 2018 (“Imposing Certain Sanctions in the Event of Foreign Interference in a United States Election”). OFAC intends to supplement these regulations with a more comprehensive set of regulations, which may include additional interpretive and definitional guidance, general licenses, and statements of licensing policy.
* DATES: Effective Date: April 29, 2019.
* FOR FURTHER INFORMATION CONTACT: OFAC: Assistant Director for Licensing, tel.: 202-622-2480; Assistant Director for Regulatory Affairs, tel.: 202-622-4855; Assistant Director for Sanctions Compliance & Evaluation, tel.: 202-622-2490; or the Department of the Treasury’s Office of the Chief Counsel (Foreign Assets Control), Office of the General Counsel, tel.: 202-622-2410.
* SUPPLEMENTARY INFORMATION: … On September 12, 2018, the President, invoking the authority of, inter alia, the International Emergency Economic Powers Act (50 U.S.C. 1701-1706) (IEEPA), issued Executive Order 13848 (83 FR 46843, September 14, 2018) (E.O. 13848).
In E.O. 13848, the President determined that the ability of persons located, in whole or in substantial part, outside the United States to interfere in or undermine public confidence in United States elections, including through the unauthorized accessing of election and campaign infrastructure or the covert distribution of propaganda and disinformation, constitutes an unusual and extraordinary threat to the national security and foreign policy of the United States. Accordingly, the President then declared a national emergency to deal with that threat.
OFAC is issuing the Foreign Interference in U.S. Elections Sanctions Regulations, 31 CFR part 579 (the “Regulations”), to implement E.O. 13848, pursuant to authorities delegated to the Secretary of the Treasury in E.O. 13848. A copy of E.O. 13848 appears in appendix A to this part.
The Regulations are being published in abbreviated form at this time for the purpose of providing immediate guidance to the public. OFAC intends to supplement this part 579 with a more comprehensive set of regulations, which may include additional interpretive and definitional guidance, general licenses, and statements of licensing policy. The appendix to the Regulations will be removed when OFAC supplements this part with a more comprehensive set of regulations. …
Andrea Gacki, Director, Office of Foreign Assets Control.
Approved: Sigal P. Mandelker, Under Secretary, Office of Terrorism and Financial Intelligence, Department of the Treasury.
2. Justice: “Criminal Division Announces Publication of Guidance on Evaluating Corporate Compliance Programs”
(Source: Justice, 30 Apr 2019.)
The Criminal Division announced today the release of a guidance document for white-collar prosecutors on the evaluation of corporate compliance programs. The document, entitled “The Evaluation of Corporate Compliance Programs,” updates a prior version issued by the Division’s Fraud Section in February 2017. It seeks to better harmonize the guidance with other Department guidance and standards while providing additional context to the multifactor analysis of a company’s compliance program.
“Effective compliance programs play a critical role in preventing misconduct, facilitating investigations, and informing fair resolutions,” Assistant Attorney General Brian A. Benczkowski said. “Today’s guidance document is part of our broader efforts in training, hiring, and enforcement to help promote corporate behaviors that benefit the American public and ensure that prosecutors evaluate the effectiveness of compliance in a rigorous and transparent manner.”
The guidance document sets forth topics that the Criminal Division has frequently found relevant in evaluating a corporate compliance program, organizing them around three overarching questions that prosecutors ask in evaluating compliance programs: First, is the program well-designed? Second, is the program effectively implemented? And, third, does the compliance program actually work in practice?
To that end, Part I of the document discusses various hallmarks of a well-designed compliance program relating to risk assessment, company policies and procedures, training and communications, confidential reporting structure and investigation process, third-party management, and mergers and acquisitions. Part II details features of effective implementation of a compliance program, including commitment by senior and middle management, autonomy and resources, and incentives and disciplinary measures. Finally, Part III discusses metrics of whether a compliance program is in fact operating effectively, exploring a program’s capacity for continuous improvement, periodic testing, and review, investigation of misconduct, and analysis and remediation of underlying misconduct.
The document was compiled with the input of components across the Division, including attorneys from the Office of the Assistant Attorney General, Fraud Section, and the Money Laundering and Asset Recovery Section. For the full guidance document, click here.
3. Treasury/OFAC Announces Settlement Agreement with MID-SHIP Group LLC
(Source: Treasury/OFAC, 2 May 2019.)
MID-SHIP, a company headquartered in Port Washington, New York, has agreed to settle its potential civil liability for five apparent violations of the Weapons of Mass Destruction Proliferators Sanctions Regulations, 31 C.F.R. part 544 (WMDPSR). Specifically, between on or about February 18, 2011 and on or about November 14, 2011, MID-SHIP processed five electronic funds transfers, totaling approximately $472,861, that pertained to payments associated with blocked vessels identified on OFAC’s List of Specially Designated Nationals and Blocked Persons. These transactions appear to have violated § 544.201 of the WMDPSR. OFAC determined that MID-SHIP did not voluntarily self-disclose the apparent violations, and the apparent violations constitute an egregious case.
For more information, please visit the following web notice.
New information on OFAC Civil Penalties and Informal Settlements is now available.
4. Treasury/OFAC Publication: “A Framework for OFAC Compliance Commitments”
(Source: Treasury/OFAC, 2 May 2019.) [Excerpts.]
Today OFAC has published A Framework for OFAC Compliance Commitmentsto provide organizations subject to U.S. jurisdiction, as well as foreign entities that conduct business in or with the United States or U.S. persons, or that use U.S.-origin goods or services, with a framework on the essential components of a sanctions compliance program. The document also outlines how OFAC may incorporate these components into its evaluation of apparent violations and resolution of investigations resulting in settlements. Finally, the document includes an appendix that offers a brief analysis of some of the root causes of apparent violations of U.S. economic and trade sanctions programs OFAC has identified during its investigative process. For a complete copy of the publication and more information on this action, please visit this page.
[Introductory portion of 8-page document:]
The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) administers and enforces U.S. economic and trade sanctions programs against targeted foreign governments, individuals, groups, and entities in accordance with national security and foreign policy goals and objectives.
OFAC strongly encourages organizations subject to U.S. jurisdiction, as well as foreign entities that conduct business in or with the United States, U.S. persons, or using U.S.-origin goods or services, to employ a risk-based approach to sanctions compliance by developing, implementing, and routinely updating a sanctions compliance program (SCP). While each risk-based SCP will vary depending on a variety of factors—including the company’s size and sophistication, products and services, customers and counterparties, and geographic locations—each program should be predicated on and incorporate at least five essential components of compliance: (1) management commitment; (2) risk assessment; (3) internal controls; (4) testing and auditing; and (5) training.
If after conducting an investigation and determining that a civil monetary penalty (“CMP”) is the appropriate administrative action in response to an apparent violation, the Office of Compliance and Enforcement (OCE) will determine which of the following or other elements should be incorporated into the subject person’s SCP as part of any accompanying settlement agreement, as appropriate. As in all enforcement cases, OFAC will evaluate a subject person’s SCP in a manner consistent with the Economic Sanctions Enforcement Guidelines (the “Guidelines”).
When applying the Guidelines to a given factual situation, OFAC will consider favorably subject persons that had effective SCPs at the time of an apparent violation. For example, under General Factor E (compliance program), OFAC may consider the existence, nature, and adequacy of an SCP, and when appropriate, may mitigate a CMP on that basis. Subject persons that have implemented effective SCPs that are predicated on the five essential components of compliance may also benefit from further mitigation of a CMP pursuant to General Factor F (remedial response) when the SCP results in remedial steps being taken.
Finally, OFAC may, in appropriate cases, consider the existence of an effective SCP at the time of an apparent violation as a factor in its analysis as to whether a case is deemed “egregious.”
This document is intended to provide organizations with a framework for the five essential components of a risk-based SCP, and contains an appendix outlining several of the root causes that have led to apparent violations of the sanctions programs that OFAC administers. OFAC recommends all organizations subject to U.S. jurisdiction review the settlements published by OFAC to reassess and enhance their respective SCPs, when and as appropriate. . . .
[The remainder of the document is available here.]
5. EU Publishes Detailed Arrangements Concerning Firearms Directive
(Source: Official Journal of the European Union, 3 May 2019.)
* Commission Delegated Regulation (EU) 2019/686of 16 January 2019 laying down the detailed arrangements under Council Directive 91/477/EEC for the systematic exchange, by electronic means, of information relating to the transfer of firearms within the Union