;

17-0111 Wednesday “The Daily Bugle”

17-0111 Wednesday “Daily Bugle”

Wednesday, 11 January 2017

TOP
The Daily Bugle is a free daily newsletter from Full Circle Compliance, containing changes to export/import regulations (ATF, Customs, NISPOM, EAR, FACR/OFAC, FTR/AES, HTSUS, and ITAR), plus news and events.  Subscribe 
here for free subscription.  Contact us
for advertising inquiries and rates.

  1. Commerce/BIS: Information Systems Technical Advisory Committee to Meet on 25 Jan in Wash DC 
  2. Commerce/BIS: Sensors and Instrumentation Technical Advisory Committee to Meet on 1 Feb in Wash DC 
  3. Commerce/ITA Establishes Advisory Council on Trade Enforcement and Compliance 
  4. NARA/ISOO Seeks Comments on Proposed Revision of the NISP Directive 
  5. State Posts 2017 Civil Monetary Penalties Inflationary Adjustment 
  1. Ex/Im Items Scheduled for Publication in Future Federal Register Editions 
  2. Commerce/BIS: Berty Tyloo of Morges, Switzerland, Denied Export Privileges for Three Years 
  3. DHS/CBP Postpones 14 Jan Deployment 
  4. State/DDTC Announces Offices Will Be Closed on 20 Jan Due to Inauguration Day 
  5. UK/BIS ECO Posts Special Rules on Export Military or Dual Use Goods, Services or Technology 
  1. Reuters: “Tillerson Says Supports Keeping Russia Sanctions For Now” 
  2. ST&R Trade Report: “Six-Week Comment Period on Duty Suspension and Reduction Petitions Opens” 
  1. T.G. Ficaretta & J. Reeves: “10 Things Trump Can Do for the Firearms Industry” 
  2. M. Volkov: “Compliance Trends and Predictions for 2017” 
  3. R.C. Burns: “Homeless Travel Blogger Advises Readers To Violate OFAC Rules” 
  1. Bartlett’s Unfamiliar Quotations 
  2. Are Your Copies of Regulations Up to Date? Latest Changes: ATF (15 Jan 2016), Customs (20 Dec 2016), DOD/NISPOM (18 May 2016), EAR (10 Jan 2017), FACR/OFAC (23 Dec 2016), FTR (15 May 2015), HTSUS (1 Jan 2017), ITAR (10 Jan 2017) 

EXIMEX/IM ITEMS FROM TODAY’S FEDERAL REGISTER

EXIM_a1

1. Commerce/BIS: Information Systems Technical Advisory Committee to Meet on 25 Jan in Wash DC

(Source: Federal Register) [Excerpts.]
 
82 FR 3281: Information Systems; Technical Advisory Committee; Notice of Open Meeting
 
The Information Systems Technical Advisory Committee (ISTAC) will meet on January 25, 2017, 9:00 a.m., in the Herbert C. Hoover Building, Room 3884, 14th Street between Constitution and Pennsylvania Avenues NW., Washington, DC. The Committee advises the Office of the Assistant Secretary for Export Administration on technical questions that affect the level of export controls applicable to information systems equipment and technology. …
  The open session will be accessible via teleconference to 20 participants on a first come, first serve basis. To join the conference, submit inquiries to Ms. Yvette Springer at Yvette.Springer@bis.doc.gov, no later than January 18, 2017.
  A limited number of seats will be available for the public session. Reservations are not accepted. To the extent time permits, members of the public may present oral statements to the Committee. The public may submit written statements at any time before or after the meeting. However, to facilitate distribution of public presentation materials to Committee members, the Committee suggests that public presentation materials or comments be forwarded before the meeting to Ms. Springer.
  For more information, call Yvette Springer at (202) 482-2813.
 
Dated: January 5, 2017.
Yvette Springer, Committee Liaison Officer.

* * * * * * * * * * * * * * * * * * * *

EXIM_a2

2. Commerce/BIS: Sensors and Instrumentation Technical Advisory Committee to Meet on 1 Feb in Wash DC
(Source: Federal Register) [Excerpts.]
 
82 FR 3281: Sensors and Instrumentation Technical Advisory Committee; Notice of Open Meeting
 
The Sensors and Instrumentation Technical Advisory Committee (SITAC) will meet on February 1, 2017, 9:30 a.m., (Pacific Standard Time) at the SPIE Photonics West, Moscone South, 747 Howard Street, Exhibit Level, Room 102, San Francisco, CA 94103. The Committee advises the Office of the Assistant Secretary for Export Administration on technical questions that affect the level of export controls applicable to sensors and instrumentation equipment and technology. …
  The open session will be accessible via teleconference to 20 participants on a first come, first serve basis. To join the conference, submit inquiries to Ms. Yvette Springer at Yvette.Springer@bis.doc.gov no later than January 25, 2017.
  A limited number of seats will be available during the public session of the meeting. Reservations are not accepted. To the extent that time permits, members of the public may present oral statements to the Committee. The public may submit written statements at any time before or after the meeting. However, to facilitate distribution of public presentation materials to the Committee members, the Committee suggests that the materials be forwarded before the meeting to Ms. Springer.
  For more information contact Yvette Springer on (202) 482-2813.
 
  Dated: January 5, 2017.
Yvette Springer, Committee Liaison Officer.
* * * * * * * * * * * * * * * * * * * *

EXIM_a3

3. Commerce/ITA Establishes Advisory Council on Trade Enforcement and Compliance

(Source: Federal Register) [Excerpts.]
 
(10 Jan 2017) 82 FR 2953-2954: U.S. Department of Commerce Advisory Council on Trade Enforcement and Compliance
* AGENCY: International Trade Administration, U.S. Department of Commerce.
* ACTION: Notice of establishment of the U.S. Department of Commerce Advisory Council on Trade Enforcement and Compliance.
* SUMMARY: The Secretary of Commerce (Secretary), having determined that it is in the public interest in connection with the performance of duties imposed on the Department of Commerce by law, and with the concurrence of the General Services Administration, announces establishment of the U.S. Department of Commerce Advisory Council on Trade Enforcement and Compliance (ACTEC). The ACTEC shall advise the Secretary on laws and government policies that deal with trade enforcement; identify and recommend programs, policies, and actions to help the Department in its efforts to ensure that U.S. trading partners comply with their trade agreement commitments; and recommend ways that the Department’s trade enforcement and compliance policies and programs can better support a strong trade and manufacturing agenda and enhance the commercial competitiveness of the United States. The ACTEC shall act as a liaison with the stakeholders represented by the membership, and shall provide a forum for stakeholder input regarding current and emerging issues in trade enforcement and compliance matters. The Department of Commerce will publish a notice in January soliciting nominations for membership on the ACTEC.
* DATES: Effective January 10, 2017.
* FOR FURTHER INFORMATION CONTACT: Meredith Rutherford, U.S. Department of Commerce, 1401 Constitution Avenue NW., Room 3089, Washington, DC 20230; telephone: 202 482 6199; email: meredith.rutherford@trade.gov.
* SUPPLEMENTARY INFORMATION: …
  The ACTEC shall consist of no more than twenty members appointed by the Secretary. Members shall represent U.S. entities involved in and significantly affected by imports and/or those that heavily export to, or operate in, countries with which the United States has trade agreements.
  All members must be U.S. Nationals and shall be selected based on their ability to carry out the objectives of the ACTEC, in accordance with applicable Department of Commerce guidelines, in a manner that ensures the ACTEC is balanced in terms of points of view, demographics, industry sector, geography of both production infrastructure and product inputs, and company size. Members shall also represent a broad range of products and services and shall be drawn from large, medium, and small enterprises, private sector organizations, and other entities, such as, non-governmental organizations, associations, and economic development organizations. Members shall serve in a representative capacity, representing the views and interests of their sponsoring entities and those of their particular industrial and regional sector (as applicable); they are, therefore, not Special Government Employees. Appointments to the ACTEC shall be made without regard to political affiliation.
  Members serve for a term of two years and will serve at the pleasure of the Secretary. The Secretary may at his/her discretion reappoint any member to an additional term or terms, provided that the member proves to work effectively on the ACTEC and his/her knowledge and advice are still needed.
  The Secretary shall designate the ACTEC chair and vice chair or vice chairs from among the members of the ACTEC. The Executive Director may establish subcommittees from among the ACTEC members, in order to perform specific functions within the jurisdiction of the ACTEC, subject to the provisions of the Federal Advisory Committee Act (FACA), the FACA implementing regulations, and applicable Department of Commerce guidance. Subcommittees must report back to the parent committee and do not provide advice or work product directly to the Secretary. …
 
   Dated: January 4, 2017.
Steven Presing, Executive Director for Trade Agreements Policy and Negotiations.

* * * * * * * * * * * * * * * * * * * *

EXIM_a4

4. NARA/ISOO Seeks Comments on Proposed Revision of the NISP Directive
(Source: Federal Register) [Excerpts.]
 
82 FR 3218-3232: National Industrial Security Program
 
* AGENCY: Information Security Oversight Office, National Archives and Records Administration (NARA).
* ACTION: Proposed rule.
* SUMMARY: The Information Security Oversight Office (ISOO) of the National Archives and Records Administration (NARA), proposes to revise the National Industrial Security Program (NISP) Directive. The NISP safeguards classified information the Federal Government or foreign governments release to contractors, licensees, grantees, and certificate holders. This proposed revision adds provisions incorporating executive branch insider threat policy and minimum standards, identifies the Office of the Director of National Intelligence (ODNI) and the Department of Homeland Security (DHS) as new cognizant security agencies (CSAs), and adds responsibilities for all CSAs and non-CSA departments and agencies (to reflect oversight functions that are already detailed for private sector entities in the National Industrial Security Program Operating Manual (NISPOM)). The proposed revisions also make other administrative changes to be consistent with recent revisions to the NISPOM and with updated regulatory language and style.
* DATES: Submit comments by February 10, 2017. …
* FOR FURTHER INFORMATION CONTACT: Kimberly Keravuori, External Policy Program Manager, by email at regulation_comments@nara.gov, or by telephone at 301.837.3151. For information about the NISP and the requirements in this regulation, contact William A. Cira, Acting Director, ISOO, by telephone at 202-357-5323.
* SUPPLEMENTARY INFORMATION: …
  This proposed rule reflects a national level policy framework that should not change existing practices and procedures for any of the affected agencies or for entities in any significant way. A working group comprised of NISP CSA representatives, ISOO staff, the Department of Defense’s (DoD) Defense Security Service (DSS), and the Central Intelligence Agency, drafted this proposed rule. …
  During review of the regulation, the working group determined that, although the NISPOM provides requirements and procedures for entities, this regulation did not include many of the coinciding oversight requirements for agencies. We therefore expanded the revision to include adding aspects of NISP implementation for which the agencies have a responsibility that weren’t already spelled out in the regulation. These proposed changes include adding responsibility provisions for CSAs and Government contracting activities (GCAs), standards by which they make entity and employee eligibility determinations for access to classified information, standards for assessing foreign ownership, control, or influence and for mitigating or negating it, and identifying CSA and non-CSA agency responsibilities for security classification and for authorizing entity information systems to process classified information. While CSAs and other agencies have been carrying out these responsibilities since the establishment of the NISP under E.O. 12829, and they have been spelled out in the NISPOM, they were not previously included in this regulation. We are including them to ensure agencies consistently apply the NISP requirements for all entities that have access to classified information and thereby aid in reducing processing burdens on entities. This affords agencies the opportunity to ensure that they are complying with existing NISP requirements, to include verifying that all current contracts or agreements with contractors, licensees, or grantees include appropriate security requirements. E.O. 12829 was amended by E.O. 13691, Promoting Private Sector Cybersecurity Information Sharing, in February 2015. The amendment established the DHS as a CSA, not limited to the classified critical infrastructure protection program (CCIPP). As part of its CSA responsibilities, DHS will perform oversight of critical sector entities participating in the CCIPP. We also incorporated DHS responsibilities as a CSA and the provisions of the CCIPP into this revision. …
 
   Dated: January 3, 2017.
David S. Ferriero, Archivist of the United States.
* * * * * * * * * * * * * * * * * * * *

EXIM_a5

5. State Posts 2017 Civil Monetary Penalties Inflationary Adjustment
(Source: Federal Register) [Excerpts.]
 
82 FR 3168-3170: 2017 Civil Monetary Penalties Inflationary Adjustment
 
* Agency: AGENCY: Department of State.
* ACTION: Final rule.
* SUMMARY: This final rule is issued to adjust the civil monetary penalties (CMP) for regulatory provisions maintained and enforced by the Department of State. The revised CMP adjusts the amount of civil monetary penalties assessed by the Department of State based on the December 2016 guidance from the Office of Management and Budget. The new amounts will apply only to those penalties assessed on or after the effective date of this rule, regardless of the date on which the underlying facts or violations occurred.
* DATES: This final rule is effective on January 11, 2017.
* FOR FURTHER INFORMATION CONTACT: Alice Kottmyer, Attorney-Adviser, Office of Management, kottmyeram@state.gov. ATTN: Regulatory Change, CMP Adjustments, (202) 647-2318.
* SUPPLEMENTARY INFORMATION: …
 
Part 103
 
The CWC Act provided domestic implementation of the Convention on the Prohibition of the Development, Production, Stockpiling, and Use of Chemical Weapons and on Their Destruction. The penalty provisions of the CWC Act are codified at 22 U.S.C. 6761. Based on the June 2016 final rule, a person violating 22 U.S.C. 6761(a)(1)(A), Prohibited acts relating to inspections, is subject to a civil penalty of an amount not to exceed $36,256 for each such violation. A person violating 22 U.S.C. 6761(a)(1)(B), Recordkeeping violations, is subject to a civil penalty in an amount not to exceed $7, 251 for each such violation.
Applying the 2016 multiplier (1.01636), the new maximum amounts are as follows: Prohibited acts related to inspections, $36,849; for Recordkeeping violations, $7,370.
 
Part 127
 
The Assistant Secretary of State for Political-Military Affairs is responsible for the imposition of CMPs under the International Traffic in Arms Regulations (ITAR), which is administered by the Directorate of Defense Trade Controls (DDTC).
 
  (1) AECA section 38(e):
According to the June 2016 final rule, the new maximum penalty under 22 U.S.C. 2778(e), or Section 38(e) of the AECA, is $1,094,010 per violation. Applying the 2016 multiplier (1.01636), the new maximum penalty is $1,111,908.
  (2) AECA section 39A(c):
According to the June 2016 final rule, the new maximum adjusted penalty for 22 U.S.C. 2779a(c), or Section 39A(c) of the AECA, is $795,445 per violation. Applying the 2016 multiplier (1.01636), the new maximum penalty is $808,458.
  (3) AECA section 40(k):
According to the June 2016 final rule, the maximum penalty for 22 U.S.C. 2780(k), or Section 40(k) of the AECA, is $946,805 per violation. Applying the 2016 multiplier (1.01636), the new maximum penalty is $962,295.
 
Part 138
 
Section 319 of Public Law 101-121, codified at 31 U.S.C. 1352, provides penalties for recipients of federal contracts, grants, and loans who use appropriated funds to lobby the Executive or Legislative Branches of the federal government in connection with a specific contract, grant, or loan. Any person who violates that prohibition is subject to a civil penalty. The statute also requires each person who requests or receives a federal contract, grant, cooperative agreement, loan, or a federal commitment to insure or guarantee a loan, to disclose any lobbying; there is a penalty for failure to disclose.

The June 2016 final rule raised the maximum penalties for both improper expenditures and failure to disclose, to not less than $18,936 and not more than $189,361. Applying the 2016 multiplier (1.01636), the new maximum penalty under 31 U.S.C. 1352 is: not less than $19,246, and not more than $192,459. …
 
  Dated: January 4, 2017.
Alicia Frechette, Executive Director, Office of the Legal Adviser & Bureau of Legislative Affairs, Department of State.

* * * * * * * * * * * * * * * * * * * *

OGSOTHER GOVERNMENT SOURCES

OGS_a16. Ex/Im Items Scheduled for Publication in Future Federal Register Editions
(Source: Federal Register)


* Commerce; International Trade Administration; NOTICES; Agency Information Collection Activities; Proposals, Submissions, and Approvals: Request for Duty-Free Entry of Scientific Instrument or Apparatus [Publication Date: 12 January 2017.]

* State; NOTICES; Designations as Global Terrorists  [Publication Date: 12 January 2017.]:
  – Alexanda Amon Kotey, aka Alexanda Kotey, aka Allexanda Kotey, aka Alexander Kotey, aka Alexe Kotey, aka Alex Kotey, aka Abu Salih, aka Abu-Salih al-Baritani
  – Mustafa Mughniyeh, aka Mustafa Mughniyah 

* * * * * * * * * * * * * * * * * * * *

 
* Respondent: Berty Tyloo, Morges, Switzerland
* Charges: On or about June 14, 2013, Berty Tyloo (“Tyloo”) made false or misleading statements to BIS in the course of an investigation. Specifically, Tyloo was interviewed by two BIS supervisory special agents on or about June 14, 2013, in relation to an investigation of unlicensed exports and reexports to Syria of items subject to the Regulations and manufactured by Agilent Technologies, Inc. (“Agilent”), a U.S. company. As early as 2001, Tyloo was the area sales manager or distribution channel manager for the Middle East and Africa for Agilent products for European subsidiaries or affiliates of Agilent, including with regard to the sale and distribution of Agilent products to Syria through a Lebanese distributor or reseller, Technoline SAL “Technoline”). In addition, upon information and belief, Tyloo had an ownership interest in Technoline from at least March 2003 until at least thespring of 2008, as demonstrated, inter alia, by correspondence between Tyloo and Technoline management or ownership during this time period in which Tyloo sought information regarding his “share” and “assets” and “profit” in or from Technoline.
* Debarred: Tyloo is denied export privileges under the Regulations for a period of 3 years from the date of Tyloo’s conviction, until 10 January 2020.
* Date of Order: 10 January 2017

* * * * * * * * * * * * * * * * * * * *

(Source: CSMS# 17-000009, 11 Jan. 2017.)
 

The January 14, 2017 deployment of post release capabilities including liquidation (with the exception of the electronic posting of the Notices of Liquidation on
CBP.gov), drawback, reconciliation, duty deferral, collections, statements and the Automated Surety Interface will be postponed. However, pursuant to the Final Rule published on December 12, 2016, CBP will post the Notices of Liquidation on
CBP.gov effective January 14, 2017 as planned.
 
In consideration of stakeholder feedback and the complexity of the ongoing integration testing, CBP is providing additional time to prepare for the final core ACE deployment and ensure a smooth transition of liquidation, drawback, reconciliation, duty deferral, collections, statements and Automated Surety Interface capabilities in ACE. CBP will provide updated information and a new deployment date in the near future.

* * * * * * * * * * * * * * * * * * * *

OGS_a49. State/DDTC Announces Offices Will Be Closed on 20 Jan Due to Inauguration Day
(Source: State/DDTC)
 
Inauguration Day falls on Friday, January 20, 2017, and is a legal public holiday only for Federal employees who work in the “Inauguration Day area” (defined in law as the District of Columbia, Montgomery and Prince George’s Counties in Maryland, Arlington and Fairfax Counties in Virginia, and the cities of Alexandria and Falls Church in Virginia). (See 5 U.S.C. 6103(c).)
 
  – As such DDTC offices will be closed on January 20, 2017.
  – The DDTC’s 3:00 PM drop-off/pick-up in the second floor lobby for Friday, January 20, 2017 is cancelled.
  – The DDTC Response Team and DDTC Help Desk will not be taking calls or responding to emails on Friday, January 20, 2017.
* * * * * * * * * * * * * * * * * * * *

OGS_a510. UK/BIS ECO Posts Special Rules on Export Military or Dual Use Goods, Services or Technology

(Source: UK/BIS ECO) [Excerpts.] 
 
You must have a licence to supply anything on the UK strategic export control lists to someone based outside the UK (except for exporting most ‘dual use’ items to EU countries).
 
The UK strategic export control lists include finished items or systems, raw materials and components. For example:
 
  – weapons and explosives
  – goods, technology, software or components designed or modified for military use (for example vehicles, aircraft or marine craft, imaging equipment, armoured protective equipment, cryptographic technology or training materials for a weapons system)
  – ‘dual use’ goods, technology, software, documents or diagrams which meet certain technical standards and could be used for military or civilian purposes (for example nuclear materials, chemical agents, electronics, computer or telecommunications equipment, sensors, lasers, machine tools, navigation and avionics equipment, marine technology or aerospace technology).
 
The UK strategic export control lists include the transfer of information that could be used for military or dual use purposes.
For example:
 
  – technical or training manuals
diagrams or blueprints
  – You’ll need a licence for information in any form. For example print, email, telephone, text message or electronic file transfers or carrying a laptop abroad containing information about controlled technology.
 
You must apply for a licence if the government tells you that you need one.
 
Tip: If you’re exporting goods that are being picked directly from your place of work by your customer (‘ex-works goods’), tell them to check if they need an export licence.
 
WHEN YOU NEED AN EXPORT LICENSE
 
If you don’t get a licence for items that need one your goods will be delayed at customs. They could be confiscated and you could be fined or prosecuted.
 
Tip: Use the
goods checker to determine if your goods are on the UK strategic export control lists, and how they’re categorised.
 
 
You must have a licence to supply anything on the UK strategic export control lists to someone based outside the UK, unless you’re exporting:
 
  – most dual use items to EU countries or the Channel Islands
  – goods owned by the Ministry of Defence
 
 
Exporting Dual Use Items To Other EU Countries
 
If your items are categorised as ‘Schedule 3 UK controlled dual-use, software and technology’ in the goods checker, you may not need a licence unless they’re listed in Annex IV of EU Dual Use Regulation 428/2009.
 
You don’t need a licence to export dual use items to the Channel Islands.
 
Even if your items don’t need a licence, the customs and transport documents must state that the items can only be moved outside the EU with an export licence.
 
Exporting Goods Owned By The Ministry of Defence
 
You don’t need a licence to export goods owned by the UK Ministry of Defence (MOD).
 
Instead, get an approval letter from the Export Control Joint Unit in the MOD. Email ECJU-MODTeam@mod.uk for details.
 
GOODS YOU CAN’T GET A LICENSE FOR
 
Even if your items wouldn’t usually need a licence, you must not export or broker the movement of any items, services or technology if you find out or are told they might be used:
 
  – for weapons of mass destruction (WMD) purposes (for example, chemicals, biological agents or technology that might be used in a nuclear weapons facility)
  – for military purposes in an embargoed country
This includes ‘technical assistance’ – for example, assembly, maintenance or repair services.
 
These are called ‘end use’, ‘end user’ or ‘catch all’ controls.
 
If you’ve any concerns about your end user, use the SPIRE service to request end user advice from the Export Control Organisation (ECO). You must apply for a licence if the ECO or HMRC tells you to.
 
APPLY FOR AN EXPORT LICENSE
 
Tip: Use the SPIRE service to apply for all types of export licences.
 
There’s no charge for a licence. You can read guidance on how to use the SPIRE service.
 
ECO statistics data has information on how long licence applications usually take based on the country you’re sending your goods to.
 
TAKING MILITARY OR DUAL USE GOODS OUT OF THE UK TEMPORARILY
 
You still need to get an export licence to take military or dual use goods out of the country temporarily (for example to demonstrate them to potential buyers at a trade show or take them to a commemorative military event).
 
Use the SPIRE system to apply for a temporary export licence.
 
ADDITIONAL FORMS YOU MAY NEED TO COMPLETE YOUR LICENSE APPLICATION
 
When you apply through the SPIRE service, you’ll be told whether you need to complete any additional forms.
 
You can find links to the forms in the guidance to using SPIRE.
 
HOW ECO DECIDES WHETHER TO GIVE LICENSES
 
ECO uses the consolidated EU and national arms export licensing criteria to decide whether to give a licence.
 
ECO also looks at the ‘incorporation factors‘ if the goods will be incorporated into military equipment which will then be exported to another country.
 
Decisions are partly based on where you’re exporting to. For example, ECO won’t usually give a licence if there’s an embargo on exporting military goods (arms embargo). Embargoed countries are:
 
  – Argentina (if the goods will be used by the Argentine military)
  – Armenia and Azerbaijan (if the goods could be used on the border between the two countries, or in the Nagorno-Karabakh region)
  – Belarus
  – Democratic Republic of Congo
  – Eritrea
  – Iran
  – Ivory Coast
  – Lebanon
  – Libya
  – North Korea (Democratic People’s Republic of Korea)
  – Republic of Guinea
  – Russia
  – Sierra Leone
  – Somalia
  – South Sudan
  – Sudan
  – Syria
  – Zimbabwe
 
There’s also an embargo on exporting jet fuel and jet fuel additives to Syria.
 
There are some limited exceptions (like for some types of goods that will be used for humanitarian relief or peacekeeping).
 
There’s an embargo on exporting small arms, light weapons, weapon components or ammunition to:
 
  – Benin
  – Burkina Faso
  – Cape Verde
  – The Gambia
  – Ghana
  – Guinea Bissau
  – Liberia
  – Mali
  – Niger
  – Nigeria
  – Senegal
  – Togo
 
There’s an embargo on exporting any of the following to China:
 
  – lethal weapons such as machine guns, large calibre weapons, bombs, torpedoes, rockets and missiles (plus specially designed components and ammunition for these items)
  – military aircraft and helicopters, vessels of war, armoured fighting vehicles and other weapons platforms
  – any equipment which might be used for internal repression
 
BROKERING AND ARRANGING SALES OR MOVEMENTS
 
Brokering (known as ‘trade controls’) can include anything that helps to transfer items from one non-EU country to another. For example:
 
  – arranging or negotiating contracts
  – arranging or providing freight or transport services
  – arranging intra company transfers
  – drop shipping
 
Goods That You Can’t Arrange Sales For Or Move
 
There’s a ban on Category A’ goods, including:
 
  – explosives like anti personnel land mines and cluster munitions
  – torture goods
 
You won’t be able to export items classified in the goods checker as ‘Schedule 3 UK controlled dual-use, software and technology’ if you are told they might be used for weapons of mass destruction (WMD) purposes.
 
Brokering Banned Goods Or To Embargoed Countries
 
There are tighter controls on brokering for some goods and for some locations.
 
For goods where there’s a total ban on UK exports (for example, anti personnel land mines) or where there’s a UK arms embargo in place, brokering also includes:
 
  – general advertising and promotion (for example placing advertisements)
  – finance, financial services, insurance or reinsurance services
  – contract promotion activity
 
When You Need a Licence
 
You must have a trade control licence if you or your company is involved in brokering anything that’s categorised in the goods checker as ‘Schedule 2 military goods, software and technology’, except:
 
  – goods with the code ML21 (software)
  – goods with the code ML22 (technology).
 
There are 2 types of Open General Trade Control Licences available. These are quicker to get than other types of licences.
They are for:
 
  – some equipment for riot control and delivering incapacitation chemicals – contact ECO for details
  – some ‘Schedule 2 military goods, software and technology’ goods – small arms and light weapons
 
Tip: Use the
goods checker to find out how your goods are categorised.
 
Use the SPIRE service to apply for a trade control licence.
 
Who The Brokering Rules Apply To
 
The brokering rules apply to:
 
  – companies or other bodies incorporated under UK law
  – UK nationals (including British citizens, British overseas territories citizens, British Nationals (Overseas), British Overseas Citizens and ‘British subjects’ and ‘British protected persons’ under the British Nationality Act 1981)
 
The rules apply to UK nationals whether they have right of abode in the UK or not. They apply whether the UK national is working for a UK company, for a non-UK company or for themselves.
 
SHARING CLASSIFIED INFORMATION
 
You must get approval from the Ministry of Defence (MOD) before sharing classified information or equipment with a person or organisation outside the UK. This means:
 
  – information or equipment classified as ‘official-sensitive’ or higher
  – information or equipment classified as ‘official’ – but only if it’s connected with other information or equipment that’s classified as ‘official-sensitive’ or higher
 
Use MOD form 680 on the SPIRE system to apply for approval.
 
It’s not just exporters and potential exporters who must apply for approval. The rule applies to anyone sharing classified information (for example, academics and researchers).
 
Contact your usual desk officer or email ACP-ELC@mod.uk if you have a question about MOD form 680 applications.
 
YOUR LICENSE RESPONSIBILITIES
 
You’ll get an electronic copy of your licence through the SPIRE system.
 
You must include a copy of the licence with the shipping paperwork. If you’re posting the goods, include a copy of the licence in a separate envelope, attached to the package.
 
You are responsible for making sure that your export licence is still valid when you export the goods.
 
Keep up to date with the ECO notices to exporters.
 
If you don’t comply with the terms of your licence it could be revoked, and you could be fined or prosecuted.
 
If You Use An Open General Export Licence (OGEL)
 
If you use an Open General Export Licence (OGEL), check the terms of your OGEL.
 
If You Have a Standard Individual Export Licence (SIEL)
 
If you have a Standard Individual Export Licence (SIEL), you must:
 
  – contact HMRC in advance to arrange an inspection of your goods (goods must be available for inspection at least 3 days before the export date)
  – keep records of end user details
 
If You Need a Signed Hard Copy Of Your Licence
 
Some countries require Private Security Companies (PSCs) to provide signed hard copies of their licences. This is to comply with international rules on preventing maritime piracy. Contact ECO for details.
 
ECO Compliance Sisits
 
ECO carries out regular compliance visits to make sure licence holders follow the correct processes. The ECO compliance code of practice has guidance on:
 
  – what records to keep
  – what compliance processes to put in place
  – how to train staff
  – how compliance audits work …

* * * * * * * * * * * * * * * * * * * *

NWSNEWS

(Source:
Reuters) [Excerpts.]
 
President-elect Donald Trump’s nominee for secretary of state, Rex Tillerson, said on Wednesday he favored maintaining current U.S. sanctions against Russia for now and that NATO allies were right to be alarmed by Moscow’s growing aggression.
 
But Tillerson’s support for a more assertive policy toward Russia than Trump has espoused was tempered by his refusal to commit to support maintaining President Barack Obama’s executive order authorizing additional sanctions against Moscow because of its interference in the 2016 U.S. presidential election. …  
“I would leave things in the status quo so we are able to convey this can go either way,” Tillerson said during a Senate confirmation hearing interrupted sporadically by protesters opposed to his nomination.  
He later said, “I would recommend maintaining the status quo until we are able to engage with Russia and understand better what their intentions are.”  …
* * * * * * * * * * * * * * * * * * * *

NWS_a3
12. ST&R Trade Report: “Six-Week Comment Period on Duty Suspension and Reduction Petitions Opens”

 
The International Trade Commission has established Feb. 24 as the deadline for public comments on petitions seeking duty suspensions or reductions under the miscellaneous trade bill process revised and reinstated by the American Manufacturing Competitiveness Act of 2016. All such petitions timely filed with the ITC will be available on the ITC’s website for review and comment beginning Jan. 11.
 
The ITC states that it is particularly interested in receiving comments from domestic producers with respect to (1) whether they produce an article that is identical to, like, or directly competitive with an article named in a petition and (2) if they do, whether they object to the petition. The ITC is also interested in receiving comments from individuals and entities who believe they would be a likely beneficiary of a particular duty suspension or reduction or who, having been named in the petition or another comment as a likely beneficiary, wish to state that they would not be a likely beneficiary.
 
Comments on these petitions may only be filed electronically via the ITC’s designated secure web portal and in the format designated in that portal. Commenters must be prepared to complete their entire comment when they enter the portal, which will not allow them to edit, amend, or complete the comment at a later time.
 
Following the comment period the ITC will submit preliminary (in June) and final (in August) reports to the House Ways and Means and Senate Finance committees on the petitions received. The reports will include the ITC’s analysis and recommendations regarding each petition, including whether there is domestic production of the article, whether the estimated loss in revenues due to the duty suspension or reduction exceeds $500,000, and whether the duty suspension or reduction will be available to any person importing the article. The ITC is required to classify the petitions into categories based on whether (1) the petition meets the requirements for inclusion in an MTB, (2) the ITC recommends inclusion in an MTB with specified technical changes, changes in product scope, or adjustment in the amount of duty reduction, (3) the ITC recommends against inclusion in an MTB because the petition does not meet the requirements or the petitioner is not a likely beneficiary, and (4) the ITC otherwise recommends not including the petition. Congress will make the final decision regarding the imported articles to be included in an MTB.

* * * * * * * * * * * * * * * * * * * *

COMMCOMMENTARY

COMM_a1
13. T.G. Ficaretta & J. Reeves: “10 Things Trump Can Do for the Firearms Industry — President Should Use Executive Authority to Improve the Regulatory Environment for the U.S. Firearms Industry”
(Source: Small Arms Defense Journal, Vol. 9 No. 1 (January 2017))
 
* Authors: Teresa G. Ficaretta, Esq., tficaretta@reevesdola.com, and Johanna Reeves, Esq., jreeves@jreeveslaw.com. Both of Reeves & Dola LLP, 202-683-4200
 
The election of Donald Trump as our country’s forty-fifth President brings an experienced businessman and staunch supporter of the Second Amendment to the White House.  Business people all over the country have high expectations the new administration will eliminate unnecessary government regulations and make it easier to operate profitable businesses.  There are a number of executive actions President Trump can take to make things better for the U.S. firearms industry and improve its standing in the world defense markets.  This article outlines ten specific actions the President can implement to improve the regulatory landscape for the U.S. firearms industry. 
 
(1) Permit Importation of U.S.-Origin Firearms
 
President Trump should revoke the policy of denying requests to bring into the United States “military-grade firearms” of U.S. origin, which President Obama first announced by way of a Fact Sheet titled “New Executive Actions to Reduce Gun Violence” on August 29, 2013.  See here (last visited Nov. 18, 2016).
 
Regulations of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) require that applications to import U.S.-origin firearms, be accompanied by written retransfer authorization from the Department of State (DOS).  Prior to 2013, DOS had approved retransfers of U.S. origin firearms including M1 Garands, M1 Carbines, and 1911 pistols, sought for importation back into the United States.  The 2013 White House directive put a halt to such importations. 
 
The fact sheet does not offer a definition of what constitutes “military-grade firearms.”  However, with the stated goal of “Keeping Surplus Military Weapons Off Our Streets,” it is clear this import ban was intended to capture all U.S. origin firearms exported overseas, whether through direct commercial sales or through the foreign military sales or military assistance programs. 
 
What President Obama has never acknowledged is the fact that existing law already restricted importation of surplus military firearms.  The Gun Control Act (GCA) permits importation of surplus military firearms only if they are classified as “curio or relic” and are being imported by a licensed importer.  To be classified as “curio or relic” firearms, the firearms must be at least 50 years old or certified by ATF or a museum curator as being of collector interest.  Arguably, this pre-existing law should have been sufficient to ensure that no firearms of interest to traffickers or criminals are brought into the country for commercial sale.
 
There is tremendous U.S. collector interest in the WWII-era firearms that the Obama Administration has banned from being imported back into the United States.  This so-called “common sense” policy should be reversed immediately. 
 
(2) Direct the Departments of State, Commerce, and Defense to Complete Export Control Reform
 
In 2009, President Obama directed an interagency reform of the U.S. export control system with the goal of strengthening national security and the competitiveness of the U.S. manufacturing and technology sectors.  As part of this process a number of items have been moved from the U.S. Munitions List (USML), administered by DOS pursuant to the International Traffic in Arms Regulations (ITAR), to the Commerce Control List (CCL), administered by the Department of Commerce pursuant to the Export Administration Regulations (EAR).  This reform process has not been completed for firearms, firearm parts, components and accessories, and ammunition, which remain regulated under the untouched Categories I-III of the USML. 
 
It is anticipated that moving firearms and ammunition from the USML to the CCL will streamline the process for U.S. exporters to obtain export licenses, as well as eliminate the more burdensome aspects present of the ITAR, including the requirement that foreign customers and partners obtain retransfer authorization from DOS for U.S. defense articles.  This, of course, would increase the competitive positioning of U.S. companies in the world market and benefit our allies, two of the key forces that have driven export control reform from the beginning.  The President should immediately direct the executive branch agencies to move forward with the export control reform process and revise USML Categories I-III accordingly.
 
(3) Streamline the Form 9 Process for Exports of NFA Firearms
 
Exports of firearms from the United States are subject to the license requirements and restrictions of DOS.  However, to export certain firearms falling under the National Firearms Act (NFA), such as machineguns, short-barrel rifles, short-barrel shotguns, silencers, and destructive devices, one must obtain approval from a second agency, the ATF, on the Form 9 Application and Permit for Permanent Exportation of Firearms.  There is no apparent reason why two federal agencies should approve the same export, but this dual licensing system has been in place for at least 40 years.  Indeed, ATF will not approve a Form 9 without an approved permanent export license issued by DOS, so the process of getting approval for a particular shipment of registered NFA firearms can be lengthy and burdensome, not just for the U.S. exporter but also for the foreign customer or partner. 
 
On August 27, 2015, the F.A.I.R. Trade Group submitted a petition for rulemaking to ATF, requesting that regulations relating to the Form 9 be amended so it is a notice submitted following lawful exportation, rather than an application submitted prior to export.  The F.A.I.R. petition (available on its website http://www.fairtradegroup.org) noted this change would avoid a delay of 30-60 days in getting firearms lawfully exported and end needless duplication in issuance of export licenses.  The President and Attorney General should direct ATF to immediately publish a notice of proposed rulemaking proposing the amendments to NFA regulations outlined in the F.A.I.R. petition.
 
(4) Reduce Registration Fees Imposed by State under the ITAR
 
The Arms Export Control Act and the ITAR require persons who engage in the business of manufacturing defense articles, including firearms and ammunition, to register with DOS, even if such persons never export.  Registration fees under the ITAR are significant.  First-time registrants pay a fee of $2,250 per year.  Compare this to the fees ATF collects for issuance of a manufacturer’s license under the Gun Control Act, which range from $50/year for firearms other than destructive devices to $1,000/year for manufacturers of destructive devices.
 
On May 24, 2016, the F.A.I.R. Trade Group petitioned the State Department to amend the ITAR registration fee structure to create a flat, per-license application fee that applies equally to all sectors of the industry.  The petition is available on the trade group’s website at http://www.fairtradegroup.org.  The White House should direct the Secretary of State to immediately review and reduce the registration fee structure to create a more transparent and level playing field.
 
(5) Direct the Department of State to Discontinue Congressional Notification for Parts and Components of Firearms Parts
 
The Arms Export Control Act requires the President to notify Congress of license applications for commercial exports of defense articles exceeding certain dollar thresholds.  For defense articles that are “firearms” controlled under Category I of the United States Munitions List, the value is $1 million or more.  The $1 million threshold for firearms is well below that applicable to other defense articles, which range from $14 million-$100 million depending on the article and location of the end user.  Export licenses requiring congressional notification can take 3 to 9 months in addition to the normal processing times.  Such delays are extremely burdensome on industry and our allies, and weaken our standing in the world marketplace as foreign customers choose non-U.S. sources for firearms. 
 
DOS has taken a broad view of what constitutes a “firearm” requiring congressional notification, expanding the term to include certain parts or components for firearms.  State’s broad interpretation is at odds with the definition of “firearm” in the ITAR and guidelines published on the agency website. 
 
In an advisory opinion dated October 27, 2016, State’s Directorate of Defense Trade Controls provides a nonsensical justification for this position.  Rather than pointing to a clear requirement in either the statute or its own regulations, DDTC relies solely on prior legal and policy review and a “long-standing practice” of notifying Congress to support its interpretation that the $1 million threshold applies equally to parts and attachments listed in USML Cat. I paragraphs (e), and (g).  DDTC does not articulate what the prior review entailed, and does not address the fact that such interpretation is in direct conflict with the regulations.  DDTC does explain, however, that the statutory requirement to notify “firearms” valued at $1 million or more could “reasonably be interpreted” to extend to firearm parts, components and attachments identified in USML Cat. I(e) and (g) because of the “treatment” of the term “firearm” in other statutes and regulations.  
 
State has failed to articulate any public policy requiring congressional notification for firearms parts and components.  Requiring this lengthy process for firearms parts delays shipment of repair and replacement parts to allies who have already received shipments of U.S. firearms approved by State.  DOS should be directed to immediately discontinue the practice of requiring congressional notification for export of firearm parts and components totaling $1 million or more.
 
(6) Revoke and Replace State’s Guidance on Registration for Firearms Manufacturers
 
On July 22, 2016, DOS published guidance addressing the registration requirements of the ITAR as they relate to gunsmithing activities.  The guidance addressed differences in activities DOS believes are manufacturing, which requires registration under the ITAR, and gunsmithing, which does not require registration.  Unfortunately, the guidance turns the concept of firearm manufacturing on its head, stating that any operation using special tooling or equipment to improve the capability of assembled or repaired firearms is manufacturing.  The guidance also indicates that threading of muzzles or installation of muzzle brakes, operations frequently performed by licensed dealers, is manufacturing that requires registration.  Blueprinting of firearms is also included as an example of an operation that requires ITAR registration.
 
DOS guidance requires many small machine shops and gunsmiths to register under the ITAR and pay the significant registration fee.  There is no public purpose served by the registration requirement, as all these businesses are already licensed under the GCA. 
 
The Trump Administration should direct the Secretary of State to revoke the July 22, 2016, guidance and issue new guidance that is more consistent with established understanding of what constitutes firearm manufacturing.
 
(7) Allow Licensed Manufacturers to Transfer Registered Machineguns to Other Qualified Manufacturers
 
Prior to 2014, ATF authorized qualified manufacturers of machineguns to transfer registered machineguns, including frames or receivers, to another qualified manufacturer.  Authorization was granted through variances issued by ATF’s Firearms Technology Branch.  The system worked well for the industry, as it is often necessary to transfer registered receivers to another manufacturer for heat treating, coating, or another manufacturing process.  Transfers were accomplished through Form 3 transfers, and a copy of the variance issued by Firearms Technology was submitted with the transfer application. 
 
In 2014, ATF issued ATF Rul. 2014-1 revoking all variances that authorized manufacturer-to-manufacturer transfers of registered machineguns.  The ruling announced the position that 18 U.S.C. § 922(o) prohibits such transfers unless there is specific written authorization from a federal, state, or local government agency authorizing the transfer.  Members of the industry advise it is very difficult to obtain government contracts that specifically authorize such transfers. 
 
In the 2014 ruling, ATF recognized the need for more than one manufacturer to be involved in the manufacturing process and noted that an unlawful transfer can be avoided if an employee of the registrant maintains continuous custody and control of the machineguns while they are at the premises of the second manufacturer.  This type of “babysitting” is extremely costly for manufacturers, but it is the process many use for getting machineguns manufactured without violating the law.
 
ATF officials, when questioned about the necessity for issuing ATF Rul. 2014-1, have been unable to articulate any law enforcement basis for imposing restrictions on manufacturer-to-manufacturer transfers.  The only reason ATF has provided publicly is that lawyers at the Department of Justice believe this is the only permissible reading of section 922(o).  The authors believe the statute can be interpreted to authorize transfers between qualified manufacturers if the machineguns are destined for federal, state, or local government agencies or for export.   As ATF authorized this practice prior to 2014, it is clear personnel within the agency believed it was permissible under the law. 
 
The new White House and Department of Justice should revisit the issues addressed in ATF Rul. 2014-1 and supersede or overrule it.  The ruling imposes significant costs on manufacturers of machineguns and serves no apparent law enforcement or public safety purpose. 
 
(8) Direct the Department of the Treasury to Provide More Resources to the Alcohol and Tobacco Tax and Trade Bureau
 
Manufacturers and importers of firearms and ammunition are subject to a 10-11 percent federal excise tax on the sale of their products.  The tax is collected by the Treasury Department’s Alcohol and Tobacco Tax & Trade Bureau (TTB).  In fiscal year 2015 TTB collected over $638 million in excise taxes from the firearms and ammunition industries.
 
In addition to its responsibility to collect firearms and ammunition excise tax, TTB responsibilities include collection of federal tax on alcohol and tobacco and administration of the Federal Alcohol Administration Act.  This is a lot of responsibility for a tiny agency with just over 500 employees nationwide. 
 
Members of the firearms industry have been complaining for years that it is virtually impossible to get guidance from TTB on the complex rules relating to firearms excise tax.  It is not uncommon for written requests for guidance to take 6 months to a year for response.  This is an untenable situation that cannot continue if industry members are expected to accurately calculate and timely pay excise tax.  The Secretary of the Treasury should be directed to provide TTB with more resources dedicated to firearms and ammunition excise tax. 
 
Alternatively, the new Secretary of the Treasury should consider re-delegating administration and enforcement of firearms and ammunition excise tax to the Internal Revenue Service, the agency responsible for this tax from 1918-1991.
 
(9) Direct ATF to Implement Reliable and Efficient e-Forms
 
ATF has an e-Forms system industry members may use for some, but not all, of the agency’s firearms-related forms.  ATF’s e-Forms system is down at least one day per week for maintenance.  Even when the system is up, it is slow and cumbersome to use.  A significant number of licensees opt to submit ATF applications in hard copy rather than through e-Forms because of the time required for employees to navigate the slow, unreliable system.  When forms are submitted in hard copy, ATF data entry contractors must input all the information from the forms so they can be processed.  This slows down processing and may result in data entry errors.  The unreliability of ATF’s e-forms system and the fact it is not available for all firearms forms is one of the reasons some National Firearms Act (NFA) forms take over 6 months to process.  These delays often result in late delivery of essential equipment to law enforcement agencies within the U.S. and abroad and make consumers wait for months to get firearms that are legal for them to possess.
 
ATF’s regulatory forms processing suffers in comparison to the Departments of State and Commerce.  State and Commerce will not accept hard copies of their applications for export licenses and other authorizations.  All forms must be submitted via their on-line systems (SNAP-R and D-Trade), which are rarely down and easy and efficient to use.  State and Commerce have personnel available to answer questions about e-Forms and assist industry members in using them.  State and Commerce recognize the importance of customer service and put considerable resources into the software and hardware necessary to maintain their e-forms.  Forms processing times for Commerce and State are significantly less than those of ATF. 
 
ATF officials have promised upgrades and improvements to their e-forms for the last 5 years, but very little has changed.  In 2015 ATF officials announced discontinuance of funding for e-Forms, as the agency’s top priority for its IT budget is an agency-wide case management system. 
 
President Trump and the new Attorney General should direct ATF to commit funding to upgrade and maintain its e-forms system.  The system needs to include all forms required for administration of the Gun Control Act, National Firearms Act, and Arms Export Control Act.  ATF also needs to establish a help desk to assist members of the industry who use the system.  ATF’s budget is well over $1 billion annually and the agency should be able to reprogram funds to cover this expense.  The firearms industry needs and deserves customer service from ATF commensurate with the level of service they get from State and Commerce.  
 
(10) Consider Another Amnesty Period
 
Last but not least, the President should direct the Attorney General to study the legal and policy issues raised by declaration of another firearms amnesty period.  The Attorney General has authority to declare an amnesty period allowing possessors of firearms regulated under the NFA to register them.  Allowing owners of such firearms to register them with ATF would get more firearms out of the attics and basements of our country and accounted for in accordance with the law.  Many valuable firearms of historical significance could enter commerce and be displayed and used in accordance with law. 
 
The Department of Justice should be directed to review the legal and policy issues relating to declaration of another amnesty period and provide options for the administration on this important issue.
 
Conclusion
 
The executive actions identified in this article are clearly within the authority of the new administration and involve issues that have a significant impact on the firearms industry.  We urge President Trump and his Administration to seriously consider implementing these initiatives to improve the regulatory environment for this essential segment of the defense industry. 
* * * * * * * * * * * * * * * * * * * *

COMM_a2
14. M. Volkov: “Compliance Trends and Predictions for 2017”

(Source: Volkov Law Group Blog.
Reprinted by permission.)
 
* Author: Michael Volkov, Principal of The Volkov Law Group LLC, mvolkov@volkovlaw.com, 240-505-1992.
 
The past year was another great success for the compliance profession and related technologies. Compliance continues to grow as the “professionalization” of compliance continues to skyrocket. As my good friend Donna Boehme always reminds me, compliance professionals have the requisite subject matter expertise that many other professionals such as lawyers and auditors lack.
 
I often remind compliance professionals of the old saying – “Be careful what you ask for, you might just get it.” Not that I am a pessimist, but compliance professionals continue to be the solution to most corporate governance problems. Chief compliance officers are the overwhelming solution to many problems. Corporate boards and senior executives have placed a lot of responsibilities on their shoulders.
 
To preserve themselves and protect against corporate blame games, CCOs have to educate company boards and executive leaders that an effective compliance program is not a guarantee against misconduct but is an important mitigating factor against risk.
 
As we turn to 2017 and a more realistic set of expectations surrounding ethics and compliance programs, here are my predictions for the upcoming year.
 
Government’s Rising Expectation for Ethics and Compliance Programs
 
I know that I can be somewhat repetitive (ask my kids or my wife) but the Justice Department continues to increase its expectations with respect to corporate ethics and compliance programs. Hui Chen, the DOJ Compliance Counsel, has had a big impact in pushing the envelope.
 
But perhaps the more significant force has been the compliance profession itself. As more people flock to the profession, compliance organizations continue to develop compliance training and information exchanges that inevitably lead to greater innovation and capabilities. In turn, government prosecutors and regulators are learning more about compliance themselves, further developing expectations and potential solutions.
 
Operationalizing Your Compliance Program
 
With the increased focus on compliance programs, one specific area of focus has been operationalizing your compliance program. While many companies have adopted detailed policies, procedures and controls, the operationalizing of a compliance program is the true test of a compliance program. Hui Chen coined the phrase in her public statements about compliance programs, and specifically referred to the existence of meaningful working relationships among compliance and critical functions, such as finance, human resources, information technology, legal, auditing and security. A paper program is just that – a program that exists on paper but has not been operationalized.
 
Auditing and Monitoring Compliance Programs
 
As more compliance programs mature, companies have to devote attention to auditing and monitoring functions. A compliance program, once operationalized, has to be audited and monitored so that improvements can be identified and implemented.
 
Companies have to expend increased resources to auditing programs that include third parties and establish proactive strategies to identify potential red flags. Internal auditing of compliance programs and functions is an essential aspect of any auditing and monitoring program.
 
Focus on Corporate Cultures
 
Companies are steadily recognizing that promoting a culture of ethics is profitable and an effective control to mitigating the risk of misconduct. As a result, companies are devoting more resources to developing appropriate corporate values, messaging their values, and reinforcing the importance of corporate values. Senior executives are devoting more attention to communicating the importance of corporate culture and companies are looking for innovative mechanisms to embed corporate culture in mid-level managers and employees.
 
Budget Growth
 
Compliance programs require more resources – people and technology. As compliance programs mature, compliance budgets have been relatively stable, except for large regulated companies that have to devote more attention to compliance issues. Even in the manufacturing segment, I would expect compliance budgets to increase in the next few years, especially as companies understand the importance and benefits of promoting a culture of ethics.
 
Technology Solutions
 
CCOs are quickly learning that they need to technology to leverage their available resources to advance their compliance programs. Whether it is third party due diligence, training or communications systems, CCOs are seeking new technologies that help them to improve their compliance program and devote increased resources to other compliance functions.
 
Whistleblowers
 
The SEC has taken an aggressive position with respect to protecting whistleblowers and potential reporting of corporate wrongdoing. There are a lot of legal and institutional forces that will continue this push even if the new administration backs away from aggressive whistleblower protections.
 
Improved Board Performance
 
Corporate boards will devote more attention to compliance issues. It is inevitable and a fact of life. Compliance is a critical function. Board members are not adequately trained on how to supervise and monitor a corporate compliance program. CCOs recognize this fact and will devote more attention to managing and educating corporate board members.

* * * * * * * * * * * * * * * * * * * *

COMM_a3
15. R.C. Burns: “Homeless Travel Blogger Advises Readers To Violate OFAC Rules”

(Source:
Export Law Blog
. Reprinted by permission.)
 
* Author: R. Clifton Burns, Esq., Bryan Cave LLP, Wash DC,
Clif.Burns@bryancave.com
, 202-508-6067)
 
A homeless blogger named Ben “Lucky” Schlappig, who makes his living flying on airplanes and staying in hotels, has decided to take up the practice of law along with advising fellow travelers on the intricacies of the airline and hotel reward programs. The result is pretty much what you would expect when Lucky opines on the legality of traveling to Cuba as a tourist.
 
Technically Americans can only travel to Cuba for one of about a dozen approved reasons. … In practice, most people traveling to Cuba as tourists choose either “Support For The Cuban People” or “People-To-People Exchanges” as the reason for visiting.
 
So technically you can’t go if tourism is your stated reasons [sic], though in practice there are tens of thousands of American tourists going. That’s because they keep the categories intentionally broad, and you won’t generally be asked about the details of why you’re going to Cuba. Arguably when you’re a tourist somewhere you have “people-to-people exchanges” and also “provide support” to the people.
 
Without hesitation I’d feel comfortable recommending people visit Cuba as tourists and just state one of those as the reasons.
 
Arguably, when you’re relying on a pretend lawyer, your mileage may vary. Also, never trust anyone who goes by the name of “Lucky.”
 
Of course, OFAC anticipated that amateur lawyers like Lucky would say that all tourism in Cuba was inherently a people-to-people exchange, so it gave an example here, in the actual rules (which Lucky clearly did not bother to read), to put the kibosh on such silliness:
 
An individual plans to travel to Cuba to rent a bicycle to explore the streets of Havana, engage in brief exchanges with shopkeepers while making purchases, and have casual conversations with waiters at restaurants and hotel staff. None of these activities are educational exchange activities that will result in meaningful interaction between the traveler and individuals in Cuba, and the traveler’s trip does not qualify for the general license.
 
So, just as you should not trust my opinions on how to get the most frequent flyer miles from your airline, you probably shouldn’t trust Lucky when he tells you to travel to Cuba as a tourist.

* * * * * * * * * * * * * * * * * * * *

ENEDITOR’S NOTES

(Source: Editor) 

 
*
William James (11 Jan 1842 – 26 Aug 1910, was an American philosopher, psychologist, and physician. The first educator to offer a psychology course in a U.S. university, James believed by many to be one of the most influential philosophers the United States has ever produced, and others have labeled him the “Father of American psychology”.)

  – “The art of being wise is the art of knowing what to overlook.”

  – “The deepest principle in human nature is the craving to be appreciated.”

 

*
Alexander Hamilton (11 Jan 1755 – 12 Jul 1804, was one of the Founding Fathers of the United States, and the first Secretary of the Treasury.)

  – “Men often oppose a thing merely because they have had no agency in planning it, or because it may have been planned by those whom they dislike.”

* * * * * * * * * * * * * * * * * * * *

EN_a317
. Are Your Copies of Regulations Up to Date?
(Source: Editor)

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.  Changes to applicable regulations are listed below.
 
*
ATF ARMS IMPORT REGULATIONS
: 27 CFR Part 447-Importation of Arms, Ammunition, and Implements of War
  – Last Amendment: 15 Jan 2016: 81 FR 2657-2723: Machineguns, Destructive Devices and Certain Other Firearms; Background Checks for Responsible Persons of a Trust or Legal Entity With Respect To Making or Transferring a Firearm 
 
*
CUSTOMS REGULATIONS
: 19 CFR, Ch. 1, Pts. 0-199
  – Last Amendment: 20 Dec 2016: 81 FR 92978-93027: Regulatory Implementation of the Centers of Excellence and Expertise 

* DOD NATIONAL INDUSTRIAL SECURITY PROGRAM OPERATING MANUAL (NISPOM): DoD 5220.22-M
  – Last Amendment: 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 canceled Supp. 1 to the NISPOM  (Summary here.)

* EXPORT ADMINISTRATION REGULATIONS (EAR): 15 CFR Subtit. B, Ch. VII, Pts. 730-774 
  – Last Amendment: 10 Jan 2017: 82 FR 2883-2889: Addition of Certain Persons and Revisions to Entries on the Entity List; and Removal of a Person From the Entity List; and 82 FR 2875-2883: Revisions to the Export Administration Regulations (EAR): Control of Spacecraft Systems and Related Items the President Determines No Longer Warrant Control Under the United States Munitions List (USML) 

  
*
FOREIGN ASSETS CONTROL REGULATIONS (OFAC FACR)
: 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders
  – Last Amendment: 23 Dec 2016: 81 FR 94254-94259: Iranian Transactions and Sanctions Regulations  
 
*
FOREIGN TRADE REGULATIONS (FTR)
: 15 CFR Part 30
  – Last Amendment: 15 May 2015; 80 FR 27853-27854: Foreign Trade Regulations (FTR): Reinstatement of Exemptions Related to Temporary Exports, Carnets, and Shipments Under a Temporary Import Bond 
  – HTS codes that are not valid for AES are available
here.
  – The latest edition (9 Mar 2016) of Bartlett’s Annotated FTR (“BAFTR”), by James E. Bartlett III, is available for downloading in Word format. The BAFTR contains all FTR amendments, FTR Letters and Notices, a large Index, and footnotes containing case annotations, practice tips, and Census/AES guidance.  Subscribers receive revised copies every time the FTR is amended. The BAFTR is available by annual subscription from the Full Circle Compliance website.  BITAR subscribers are entitled to a 25% discount on subscriptions to the BAFTR.
 
*
HARMONIZED TARIFF SCHEDULE OF THE UNITED STATES (HTS, HTSA or HTSUSA)
, 1 Jan 2017: 19 USC 1202 Annex. (“HTS” and “HTSA” are often seen as abbreviations for the Harmonized Tariff Schedule of the United States Annotated, shortened versions of “HTSUSA”.)
  – Last Amendment: 1 Jan 2017: 2017 Basic HTS 
  – HTS codes for AES are available
here
.
  – HTS codes that are not valid for AES are available
here.
 
INTERNATIONAL TRAFFIC IN ARMS REGULATIONS (ITAR): 22 C.F.R. Ch. I, Subch. M, Pts. 120-130.
  – Latest Amendment: 10 Jan 2017: 82 FR 2889-2892: International Traffic in Arms Regulations: Revision of U.S. Munitions List Category XV
  – The only available fully updated copy (latest edition 10 Jan 2017) of the ITAR with all amendments is contained in Bartlett’s Annotated ITAR (“BITAR”), by James E. Bartlett III.  The BITAR contains all ITAR amendments to date, plus a large Index, over 750 footnotes containing case annotations, practice tips, DDTC guidance, and explanations of errors in the official ITAR text.  Subscribers receive updated copies of the BITAR in Word by email, usually revised within 24 hours after every ITAR amendment.  The BITAR is available by annual subscription from the Full Circle Compliance website.  BAFTR subscribers receive a 25% discount on subscriptions to the BITAR, please contact us to receive your discount code.  

* * * * * * * * * * * * * * * * * * * *

EPEDITORIAL POLICY

* The Ex/Im Daily Update is a publication of FCC Advisory B.V., edited by James E. Bartlett III and Alexander Bosch, and emailed every business day to approximately 8,000 readers of changes to defense and high-tech trade laws and regulations. We check the following sources daily: Federal Register, Congressional Record, Commerce/AES, Commerce/BIS, DHS/CBP, DOJ/ATF, DoD/DSS, DoD/DTSA, State/DDTC, Treasury/OFAC, White House, and similar websites of Australia, Canada, U.K., and other countries and international organizations.  Due to space limitations, we do not post Arms Sales notifications, Denied Party listings, or Customs AD/CVD items.

* RIGHTS & RESTRICTIONS: This email contains no proprietary, classified, or export-controlled information. All items are obtained from public sources or are published with permission of private contributors, and may be freely circulated without further permission. Any further use of contributors’ material, however, must comply with applicable copyright laws.

* CAVEAT: The contents of this newsletter cannot be relied upon as legal or expert advice.  Consult your own legal counsel or compliance specialists before taking actions based upon news items or opinions from this or other unofficial sources.  If any U.S. federal tax issue is discussed in this communication, it was not intended or written by the author or sender for tax or legal advice, and cannot be used for the purpose of avoiding penalties under the Internal Revenue Code or promoting, marketing, or recommending to another party any transaction or tax-related matter.

* SUBSCRIPTIONS: Subscriptions are free.  Subscribe by completing the request form on the Full Circle Compliance website.

* TO UNSUBSCRIBE: Use the Safe Unsubscribe link below.

Scroll to Top