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17-0119 Thursday “The Daily Bugle”

17-0119 Thursday “Daily Bugle”

Thursday, 19 January 2017

TOPThe 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 
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  1. Commerce/BIS Amends EAR, Implements Additional Phase of India-U.S. Export Control Cooperation
  2. Commerce/BIS Amends EAR, Expands Support Document Requirements With Respect to Hong Kong
  3. President Continues National Emergency With Respect to Cuba and Emergency Authority Relating to the Regulation of the Anchorage and Movement of Vessels
  4. President Continues National Emergency With Respect to Iran
  5. President Continues National Emergency With Respect to Libya
  6. President Continues National Emergency With Respect to Ukraine
  7. President Continues National Emergency With Respect to Venezuela
  8. President Continues National Emergency With Respect to Zimbabwe
  1. Ex/Im Items Scheduled for Publication in Future Federal Register Editions
  2. Commerce/BIS: (No new postings.) 
  3. Commerce/Census: Schedule B and Harmonized Tariff Schedule (HTS) Updated in the Automated Export System (AES) 
  4. State/DDTC: (No new postings.) 
  1. Air Cargo News: “UK Forwarders Want More Detail on Brexit Plan”
  2. Reuters: “Compliance Job Market Shows Strength in AML and Financial Crime As Other Areas Slow”
  3. Reuters: “Obama to Trump: Keep Russia Sanctions Separate From Nuclear Talks”
  1. D.M. Edelman: “Iran and Russia Sanctions Programs Under a Trump Administration-What to Expect” 
  2. J. Dickeson: “Export Controls for Beginners – ECCN and EAR Country Chart”
  3. M. Volkov & L. Connell: “Multi-Jurisdictional Prosecutions and the SFO Show Teeth in Rolls Royce Settlement”
  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 (19 Jan 2017), FACR/OFAC (17 Jan 2017), FTR (15 May 2015), HTSUS (1 Jan 2017), ITAR (10 Jan 2017) 

EXIMEX/IM ITEMS FROM TODAY’S FEDERAL REGISTER

EXIM_a11. Commerce/BIS Amends EAR, Implements Additional Phase of India-U.S. Export Control Cooperation

(Source: Federal Register) [Excerpts.]
 
82 FR 6218-6221: Amendments to the Export Administration Regulations Implementing an Additional Phase of India-U.S. Export Control Cooperation
* AGENCY: Bureau of Industry and Security, Commerce.
* ACTION: Final rule.
* SUMMARY: In this final rule, the Bureau of Industry and Security (BIS) amends the Export Administration Regulations (EAR) to implement the India-U.S. Joint Statement of June 7, 2016 (June Statement), which recognized the United States and India as Major Defense Partners. This rule amends the EAR by establishing a licensing policy of general approval for exports or reexports to or transfers within India of items subject to the EAR and controlled only for National Security or Regional Stability reasons. In addition, BIS amends the end use and end user provisions of the Validated End User (VEU) authorization to state that items obtained under authorization VEU in India may be used for either civil or military end uses other than those that are for use in nuclear, “missile,” or chemical or biological weapons activities.
* DATES: This rule is effective January 19, 2017.
* FOR FURTHER INFORMATION CONTACT: Alexander Lopes, Director, Office of Nonproliferation Controls and Treaty Compliance, Bureau of Industry and Security, Phone: (202) 482-3825.
* SUPPLEMENTARY INFORMATION: …
 
New Amendments
 
    In this rule, BIS implements an additional step in furtherance of the U.S.-India bilateral understanding and global strategic partnership. On June 7, 2016, the United States and India issued a Joint Statement entitled, “The United States and India: Enduring Global Partners in the 21st Century.” Specifically, in this rule, BIS implements the understanding between the United States and India expressed in the June Statement regarding U.S. export control policy toward India by establishing a new paragraph (b)(8) in Sec.  742.4 (National Security) and a new paragraph (b)(5) in Sec.  742.6 (Regional Stability). These new provisions establish licensing policies of general approval for exports or reexports to or transfers within India of items subject to the EAR, including “600 series” military items, for civil or military end uses in India or for the ultimate end use by the Government of India, for reexport to a Country Group A:5 country, or for return to the United States, so long as such items are not for use in nuclear, “missile,” or chemical or biological weapons activities. This rule does not amend any other licensing policies in part 742 such as those with respect to Missile Technology items. The rule also does not amend any licensing policies pertaining to naval nuclear propulsion. The Country Group A:5 countries are listed in Supplement Number 1 to part 740 and are often informally referred to as the “STA-36” countries because they are the list of countries to which exports under License Exception Strategic Trade Authorization are authorized pursuant to the conditions and limitations of section 740.20(b)(3).
    In addition, BIS amends the end user and end use provisions of the Validated End User (VEU) authorization in Sec.  748.15 (Authorization Validated End-User (VEU)), paragraphs (a) (eligible end user provision) and (d) (end-use restrictions), to allow that items obtained under authorization VEU in India may be used for civil or military end uses other than those that involve items controlled for MT reasons, or if for use in nuclear, “missile,” or chemical or biological weapons activities. Section 748.15(c) does not change the January 23, 2015 (80 FR 3463), amendment to the EAR regarding the export and reexport of Crime Control (CC) columns 1 and 3 items to India. Conforming changes are made to paragraph (7)(ii) in Supplement No. 8 to Part 748 (Information Required in Requests for Validated End-User (VEU) Authorization). No other material changes are made in this rule to the VEU program, such as the process for approving a VEU, VEU compliance obligations, the rules pertaining to VEUs in China, or the process of identifying approved VEUs and eligible items and facilities in Supplement No. 7 to Part 748. …
 
    Dated: January 6, 2017.
Kevin J. Wolf, Assistant Secretary for Export Administration.

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EXIM_a2
2
. Commerce/BIS Amends EAR, Expands Support Document Requirements With Respect to Hong Kong

(Source: Federal Register) [Excerpts.]
 
82 FR 6216-6218: Support Document Requirements With Respect to Hong Kong
* AGENCY: Bureau of Industry and Security, Commerce.
* ACTION: Final rule.
* SUMMARY: This rule requires persons intending to export or reexport to Hong Kong any item subject to the Export Administration Regulations (EAR) and controlled on the Commerce Control List (CCL) for national security (NS), missile technology (MT), nuclear nonproliferation (NP column 1), or chemical and biological weapons (CB) reasons to obtain, prior to such export or reexport, a copy of a Hong Kong import license or a written statement from the Hong Kong government that such a license is not required.
    This rule also requires persons intending to reexport from Hong Kong any item subject to the EAR and controlled for NS, MT, NP column 1, or CB reasons to obtain a Hong Kong export license or a statement from the Hong Kong government that such a license is not required.
* DATES: The rule is effective April 19, 2017.
* FOR FURTHER INFORMATION CONTACT: Tracey Patts, Foreign Policy Division, Bureau of Industry and Security, Phone: (202) 482-4252.
* SUPPLEMENTARY INFORMATION: … This rule imposes new support documentation requirements affecting items subject to the EAR that are exported or reexported to Hong Kong or are reexported from Hong Kong. BIS is taking this action to provide greater assurance that U.S. origin items that are subject to the multilateral control regimes noted above will be properly authorized by the United States to their final destination, even when those items first pass through Hong Kong. This rule does not impose any new license requirements.
 
Exports and Reexports to Hong Kong
 
    This rule requires exporters and reexporters using a BIS license or a license exception to export or reexport to Hong Kong items controlled for NS, MT, NP column 1, or CB reasons to obtain certain documents that verify the items’ status under the Hong Kong Import and Export (Strategic Commodities) Regulations. The exporter or reexporter must obtain from its client or consignee a copy of a valid import license issued to the Hong Kong importer by the Hong Kong government authorizing import of the item(s) to be shipped to Hong Kong, or a copy 
of a written statement issued by the Hong Kong government stating that no import license is required to import the item(s) into Hong Kong. The exporter or reexporter must have the copies in its possession, and any Hong Kong import license must not have expired at the time of the export or reexport to Hong Kong. For purposes of this requirement, a written statement issued by the Hong Kong government includes either a written communication to a license applicant informing the applicant that the item does not require a license or a statement available to the general public (including a statement on a Web site by the Hong Kong government) that a license is not required for the item.
 
Reexports From Hong Kong
 
    This rule also requires reexporters in Hong Kong intending to reexport from Hong Kong items subject to the EAR that are controlled for NS, MT, NP column 1, or CB reasons to obtain from the Hong Kong government a license authorizing export from Hong Kong of the items, or a copy of a written statement issued by the Hong Kong government stating that no export license is required from Hong Kong to export the items. If a Hong Kong license is issued, the reexport must be in accordance with the terms of that license and must be completed during the validity period of the Hong Kong-issued export license. For purposes of this requirement, a written statement issued by the Hong Kong government includes a written communication to a license applicant informing the applicant that the item does not require a license or a statement available to the general public (including a statement on a Web site by the Hong Kong government) that a license is not required for the item. …
 
    Dated: January 6, 2017.
Kevin J. Wolf, Assistant Secretary for Export Admiration.

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EXIM_a3
3
. President Continues National Emergency With Respect to Cuba and of the Emergency Authority Relating to the Regulation of the Anchorage and Movement of Vessels

(Source: Federal Register)
 
82 FR 6185: Continuation of the National Emergency With Respect to Cuba and of the Emergency Authority Relating to the Regulation of the Anchorage and Movement of Vessels
 
On February 25, 2016, by Proclamation 9398, the national emergency with respect to Cuba was modified and continued to reflect the re-establishment of diplomatic relations between the United States and Cuba. The unauthorized entry of any U.S.-registered vessel into Cuban territorial waters continues to be detrimental to the foreign policy of the United States. Therefore, in accordance with section 202(d) of the National Emergencies Act (50 U.S.C. 1622(d)), I am continuing the national emergency with respect to Cuba and the emergency authority relating to the regulation of the anchorage and movement of vessels set out in Proclamation 6867 as amended by Proclamation 7757 and as further modified by Proclamation 9398.
              
(Presidential Sig.)
THE WHITE HOUSE,
January 13, 2017.

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EXIM_a044
. President Continues National Emergency With Respect to Iran

(Source: Federal Register)
 
82 FR 6187-6188: Continuation of the National Emergency With Respect to Iran
 
On March 15, 1995, by Executive Order 12957, the President declared a national emergency with respect to Iran to deal with the unusual and extraordinary threat to the national security, foreign policy, and economy of the United States constituted by the actions and policies of the Government of Iran. On May 6, 1995, the President issued Executive Order (E.O.) 12959, imposing more comprehensive sanctions on Iran to further respond to this threat. On August 19, 1997, the President issued E.O. 13059, consolidating and clarifying the previous orders. I took additional steps pursuant to this national emergency in E.O. 13553 of September 28, 2010, E.O. 13574 of May 23, 2011, E.O. 13590 of November 20, 2011, E.O. 13599 of February 5, 2012, E.O. 13606 of April 22, 2012, E.O. 13608 of May 1, 2012, E.O. 13622 of July 30, 2012, E.O. 13628 of October 9, 2012, and E.O. 13645 of June 3, 2013.
 
On July 14, 2015, the P5+1 (China, France, Germany, Russia, the United Kingdom, and the United States), the European Union, and Iran reached a Joint Comprehensive Plan of Action (JCPOA) to ensure that Iran’s nuclear program is and will remain exclusively peaceful. January 16, 2016, marked Implementation Day under the JCPOA, when the International Atomic Energy Agency (IAEA) issued a report verifying that Iran had completed key nuclear- related steps as specified in the JCPOA, and the Secretary of State confirmed the report’s findings. As a result, the United States lifted nuclear-related sanctions on Iran consistent with its commitments under the JCPOA, including the termination of a number of Executive Orders that were issued pursuant to this national emergency. While nuclear-related sanctions were lifted pursuant to our JCPOA commitments, a number of non-nuclear sanctions remain in place.
 
Since Implementation Day, the IAEA has repeatedly verified, and the Secretary of State has confirmed, that Iran continues to meet its nuclear commitments pursuant to the JCPOA. However, irrespective of the JCPOA, which continues to ensure that Iran’s nuclear program is and remains exclusively peaceful, certain actions and policies of the Government of Iran continue to pose an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States. For this reason, the national emergency declared on March 15, 1995, must continue in effect beyond March 15, 2017. Therefore, in accordance with section 202(d) of the National Emergencies Act (50 U.S.C. 1622(d)), I am continuing for 1 year the national emergency with respect to Iran declared in E.O. 12957. The emergency declared by E.O. 12957 constitutes an emergency separate from that declared on November 14, 1979, by E.O. 12170. This renewal, therefore, is distinct from the emergency renewal of November 2016.
               
(Presidential Sig.)
THE WHITE HOUSE,
January 13, 2017.

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

EXIM_a5
5
. President Continues National Emergency With Respect to Libya

(Source: Federal Register)  
 
82 FR 6189: Continuation of the National Emergency With Respect to Libya
 
On February 25, 2011, by Executive Order 13566, I declared a national emergency pursuant to the International Emergency Economic Powers Act (50 U.S.C. 1701-1706) to deal with the unusual and extraordinary threat to the national security and foreign policy of the United States constituted by the actions of Colonel Muammar Qadhafi, his government, and close associates, who took extreme measures against the people of Libya, including by using weapons of war, mercenaries, and wanton violence against unarmed civilians. In addition, there was a serious risk that Libyan state assets would be misappropriated by Qadhafi, members of his government, members of his family, or his close associates if those assets were not protected. The foregoing circumstances, the prolonged attacks, and the increased numbers of Libyans seeking refuge in other countries caused a deterioration in the security of Libya and posed a serious risk to its stability.
 
The situation in Libya continues to pose an unusual and extraordinary threat to the national security and foreign policy of the United States, and we need to protect against the diversion of assets or other abuse by certain members of Qadhafi’s family and other former regime officials.
 
For this reason, the national emergency declared on February 25, 2011, must continue in effect beyond February 25, 2017. Therefore, in accordance with section 202(d) of the National Emergencies Act (50 U.S.C. 1622(d)), I am continuing for 1 year the national emergency declared in Executive Order 13566.
 
(Presidential Sig.)
THE WHITE HOUSE,
January 13, 2017.

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

EXIM_a6
6. 
President Continues National Emergency With Respect to Ukraine

(Source: Federal Register)  
 
82 FR 6191-6192: Continuation of the National Emergency With Respect to Ukraine
 
On March 6, 2014, by Executive Order 13660, I declared a national emergency pursuant to the International Emergency Economic Powers Act (50 U.S.C. 1701-1706) to deal with the unusual and extraordinary threat to the national security and foreign policy of the United States constituted by the actions and policies of persons that undermine democratic processes and institutions in Ukraine; threaten its peace, security, stability, sovereignty, and territorial integrity; and contribute to the misappropriation of its assets.
 
On March 16, 2014, I issued Executive Order 13661, which expanded the scope of the national emergency declared in Executive Order 13660, and found that the actions and policies of the Government of the Russian Federation with respect to Ukraine undermine democratic processes and institutions in Ukraine; threaten its peace, security, stability, sovereignty, and territorial integrity; and contribute to the misappropriation of its assets.
 
On March 20, 2014, I issued Executive Order 13662, which further expanded the scope of the national emergency declared in Executive Order 13660, as expanded in scope in Executive Order 13661, and found that the actions and policies of the Government of the Russian Federation, including its purported annexation of Crimea and its use of force in Ukraine, continue to undermine democratic processes and institutions in Ukraine; threaten its peace, security, stability, sovereignty, and territorial integrity; and con- tribute to the misappropriation of its assets.
 
On December 19, 2014, I issued Executive Order 13685, to take additional steps to address the Russian occupation of the Crimea region of Ukraine.
 
The actions and policies addressed in these Executive Orders continue to pose an unusual and extraordinary threat to the national security and foreign policy of the United States. For this reason, the national emergency declared on March 6, 2014, and the measures adopted on that date, on March 16, 2014, on March 20, 2014, and on December 19, 2014, to deal with that emergency, must continue in effect beyond March 6, 2017. Therefore, in accordance with section 202(d) of the National Emergencies Act (50 U.S.C. 1622(d)), I am continuing for 1 year the national emergency declared in Executive Order 13660.
 
(Presidential Sig.)
THE WHITE HOUSE,
January 13, 2017.

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

EXIM_a77.

President Continues National Emergency With Respect to Venezuela

 
82 FR 6193: Continuation of the National Emergency With Respect to Venezuela
 
On March 8, 2015, I issued Executive Order 13692, declaring a national emergency with respect to the situation in Venezuela, including the Govern- ment of Venezuela’s erosion of human rights guarantees, persecution of political opponents, curtailment of press freedoms, use of violence and human rights violations and abuses in response to antigovernment protests, and arbitrary arrest and detention of antigovernment protestors, as well as the exacerbating presence of significant government corruption. Therefore, in accordance with section 202(d) of the National Emergencies Act (50 U.S.C. 1622(d)), I am continuing for 1 year the national emergency declared in Executive Order 13692.
 
(Presidential Sig.)
THE WHITE HOUSE,
January 13, 2017.

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

EXIM_a88.

President Continues National Emergency With Respect to Zimbabwe

 
82 FR 6193: Continuation of the National Emergency With Respect to Zimbabwe
 
On March 6, 2003, by Executive Order 13288, the President declared a national emergency and blocked the property of certain persons, pursuant to the International Emergency Economic Powers Act (50 U.S.C. 1701-1706), to deal with the unusual and extraordinary threat to the foreign policy of the United States constituted by the actions and policies of certain members of the Government of Zimbabwe and other persons to undermine Zimbabwe’s democratic processes or institutions. These actions and policies had contributed to the deliberate breakdown in the rule of law in Zimbabwe, to politically motivated violence and intimidation in that country, and to political and economic instability in the southern African region.
 
On November 22, 2005, the President issued Executive Order 13391 to take additional steps with respect to the national emergency declared in Executive Order 13288 by ordering the blocking of the property of additional persons undermining democratic processes or institutions in Zimbabwe.
 
On July 25, 2008, the President issued Executive Order 13469, which expanded the scope of the national emergency declared in Executive Order 13288 and authorized the blocking of the property of additional persons undermining democratic processes or institutions in Zimbabwe.
The actions and policies of these persons continue to pose an unusual and extraordinary threat to the foreign policy of the United States. For this reason, the national emergency declared on March 6, 2003, and the measures adopted on that date, on November 22, 2005, and on July 25, 2008, to deal with that emergency, must continue in effect beyond March 6, 2017. Therefore, in accordance with section 202(d) of the National Emergencies Act (50 U.S.C. 1622(d)), I am continuing for 1 year the national emergency declared in Executive Order 13288
 
(Presidential Sig.)
THE WHITE HOUSE,
January 13, 2017.

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

OGS
OTHER GOVERNMENT SOURCES

OGS_a19Ex/Im Items Scheduled for Publication in Future Federal Register Editions

(Source: Federal Register)
 
* Commerce; RULES; Entity List [Publication Date: 25 January 2017.]
 
* Commerce; RULES; Updated Statements of Legal Authority for the Export Administration Regulations [Publication Date: 23 January 2017.]
 
* Commerce; NOTICES; Meetings [Publication Date: 23 January 2017.]:
 – Information Systems Technical Advisory Committee

 – Sensors and Instrumentation Technical Advisory Committee

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

OGS_a210. Commerce/BIS: (No new postings.)

(Source: Commerce/BIS)
* * * * * * * * * * * * * * * * * * * *

OGS_a311. Commerce/Census: Schedule B and Harmonized Tariff Schedule (HTS) Updated in the Automated Export System (AES)

(Source:
census@subscriptions.census.gov, 19 Jan 2017)
 
Effective immediately, the Schedule B, Harmonized Tariff Schedule (HTS), and HTS Codes That Are Not Valid for AES tables have been updated to accept the changes to the 2017 codes.
 
AES will accept shipments with outdated 2016 codes during a grace period for 30 days beyond the expiration date of December 31st, 2016. Reporting an outdated 2016 code after the 30-day grace period will result in a fatal error.
 
The ACE AESDirect program has been updated with the 2017 codes and will accept shipments with outdated 2016 codes during the grace period as well.
 
Please note that revised tables will be posted by the end of the month in line with expected HTS corrections from USITC. An additional AES Broadcast message will be sent when the tables are revised.
 
The 2017 Schedule B and HTS tables are available for downloading at
here.
 
(Note: Although the header indicates 2016, these are the current 2017 Concordance files. The header will soon be updated to reflect 2017.)
 
The current list of HTS codes that are not valid for AES are available at
here.
        
For further information or questions, contact the U.S. Census Bureau’s International Trade Indicator Micro Analysis Branch.
 
  – Telephone: (800) 549-0595, select option 2 for International Trade Indicator Micro Analysis Branch
  – Email:
eid.scheduleb@census.gov

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

OGS_a412. State/DDTC: (No new postings.)

(Source: State/DDTC)
* * * * * * * * * * * * * * * * * * * *

MSNEWS

MS_a1
13.

Air Cargo News: “UK Forwarders Want More Detail on Brexit Plan”

 
The British International Freight Association (Bifa) has said freight is “none the wiser” after the UK prime minister yesterday outlined the government’s plan for leaving the European Union.
 
Yesterday, UK prime minister Theresa May revealed that as part of exiting the European union it would also leave the single market, which allows for tariff free trade across borders, but said the UK would push for “the freest possible trade” with the EU and other countries.
 
The association said that the speech “delivered some clarity” but “remains short on the details that will assist members as they go about their business of managing much of the UK’s visible international trade”.
 
May said the UK would aim to negotiate tariff free trade with the EU, arrange new trade agreements with countries outside of the EU, create a Customs agreement with the EU and maintain the common travel area between the UK and the Republic of Ireland.
 
  “Our members across the country over the last few months have been dealing with a lot of uncertainty,” said Robert Keen, director general of Bifa.
 
  “They would have welcomed clarity on the mechanics that will underpin Mrs May’s desire for ‘tariff-free and frictionless trade’.
 
  “The prime minister said that she wanted ‘an ambitious customs agreement with the EU’ while rejecting the Customs Union because of the common external tariff that prevents Britain from negotiating separate trade deals with third countries.
 
  “Freight forwarding executives are none the wiser on the actual mechanics of Britain’s future trading relationships and how they might affect the freight forwarding sector.
 
  “Will Customs reintroduce EU transaction border controls? Will the replacement for CHIEF [the Customs processing system] go ahead and will the new system be able to handle the millions of extra transactions? How will controls on dual use items be managed?
 
  “Mrs. May has made reference to maintaining the common travel arrangements between the UK and the Republic of Ireland, but how will freight be managed between the two countries?
 
  “What our members need from Government is some answers to those questions. As the old saying goes, the devil is in the details. And after today’s much anticipated speech, much of the real detail is missing.”
 
The UK’s Freight Transport Association and parcel firm Fastlane International yesterday expressed mixed feelings about May’s plans.
 
The FTA said May’s statement allowed the association to identify where the new ‘friction points’ in international trade could occur and work with the government to negotiate the best possible outcome for UK businesses.
 
Meanwhile, Fastlane warned that May’s declared aim of abandoning the EU Common External Tariff will cost UK exporters £44bn and lead to excessive delays and red tape for shipments at EU borders.

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

NWS_a214.

“Compliance Job Market Shows Strength in AML and Financial Crime As Other Areas Slow”

 
Amid the self-evaluation and manager assessments of the annual performance review season, many compliance professionals consider or ask the question: “am I in a good place, being fairly compensated, or better off elsewhere?”
 
The answer reflects in part the individual’s performance and skills. Outside factors such as supply and demand within the industry and sub-specialty areas are also essential to determine adequacy of compensation, job prospects, and the overall job market. This year’s change in the U.S. presidential administration, with its promises of relaxed regulation, inject an additional element to the consideration.
 
Job recruiters who specialize in placing compliance professionals expressed a view in conversations for this article that the growth of jobs may be peaking, but there remain areas of strong demand such as anti-money laundering (AML) skills, and they saw little early indication of a political change in Washington affecting the job market in compliance.
 
Many recruiters spoke on condition of anonymity, as they were not speaking in an official capacity for their firms.
 
GROWTH IN COMPLIANCE JOBS MAY BE PEAKING
 
Since the financial crisis the only steady area of job growth in financial services has been in legal, compliance and risk disciplines. As Wall Street has cut jobs in virtually every other area, the need for compliance grew partly due to the wave of new rules and regulations in the aftermath of the crisis.
 
Early in 2016 the Chairman and CEO of Goldman Sachs, Lloyd Blankfein, said most of the firm’s increase in headcount in recent years was from “heightened compliance efforts,” but he saw the effect as temporary.
 
“This has a Y2K feel about it – that is, we have to hire additional people because we have to get ourselves up to speed,” he said. “I think once we catch up and once automated, we probably will be able to reduce that headcount in some of these costs.”
 
Blankfein’s comment initially raised eyebrows with compliance, legal, and recruiting professionals. However industry recruiters tended to agree that a multi-year, massive investment and build-up of compliance staffing by financial firms appears now to be inevitably leveling off.
 
  “Archaic programs and budgets were out of line with their needs, and this underinvestment caught up to them,” a recruiter told Regulatory Intelligence. For the last several years firms had “real projects and deadlines to meet and the money to spend on hiring to get the projects done,” the recruiter said. Those commitments and investments have now finally been made and for the most part met.
 
With new systems now in place for the most part there isn’t the need for staffing new projects and building new systems. Another recruiter described, “a shift toward hiring attorneys and more senior people at the VP and higher level to now monitor the systems that have been put in place.”
 
The more senior personnel must also be “focused on regulatory change and making sure things are operating smoothly and correctly.” The recruiter added that it appears that the large firms have slowed in hiring people to build systems and now are outsourcing some of this work.
 
Some building of new systems and transition from legacy systems was done by contract workers. Now, a fair amount of the day-to-day work is now also being outsourced to third-party compliance firms. Recruiters claim that the largest outsource compliance firms are still adding staff but question for how long.
 
SKILLS IN DEMAND INCLUDE AML, CYBER SECURITY, DATA ANALYSIS
 
After the significant growth in hiring in virtually all areas of compliance and risk after the financial crisis, hiring has become more targeted in specific areas with a need for individuals with particular skills, many recruiters said. Because of the regulatory emphasis and global focus on terrorist financing as well as the complexity and new rules, the largest firms continue to spend and invest in these areas. As one recruiter put it, “highly skilled AML and financial-crime experts, especially those with backgrounds in law enforcement, like the FBI are highly sought after.”
 
Similar to experienced AML and know-your-customer (KYC) professionals, cyber security experts are also in demand. Meeting the demand is often a matter of price, and it is up to recruiters to convince tech professionals with security skills to shift from a career in technology to compliance and legal.
 
  “There is still very much a need for senior compliance professionals especially those with backgrounds in financial crime and AML,” said Maurice Gilbert with Conselium Executive Search.
 
There is also great demand for “senior people with skills in technology, particularly predictive data analysis capabilities,” he said.
 
These individuals must thoroughly understand technology and its capabilities and be able to work with the programmers to customize the necessary systems, he said. The population of these types of individuals “currently is very low and demand for these types of people will continue unabated for years to come,” according to Gilbert.
 
PERSONAL LIABILITY IS A CONCERN WITH TOP PROFESSIONALS
 
Sounding a note of concern, Gilbert said that last year he saw on multiple occasions qualified senior compliance officers turn down the top compliance job at other firms “because of a concern for personal liability.” Such concerns arose after publication of the “Yates Memo” by the U.S. Department of Justice which stressed the importance of holding individuals personally accountable for their actions. Additionally, any move to a different firm inherently carries the risk of an unknown culture of compliance and a new surrounding cast. Stepping into the top spot at a new firm with both culture concerns and personal liability concerns after the Yates Memo is causing some deputies to stay put, according to Gilbert.
 
GEOGRAPHY MATTERS
 
One trend universally cited by recruiters is that firms are shifting compliance jobs to lower-cost locations. Job cuts in the higher-cost New York metropolitan area are occurring at many of the large banks. The positions in many cases have been relocated to area suburbs or other states, including North Carolina, Florida and Utah.
 
As for New York, recruiters reported that activity has slowed somewhat but there is demand in a few areas. Mid-size international banks are actively seeking people particularly with experience in AML/KYC compliance, U.S. international sanctions and financial crimes.
 
Internationally, one recruiter said the London market has cooled off after the Brexit decision last summer. He said, however, the compliance job-market uncertainty will not likely last long as firms gain Brexit clarity, and firms still have projects that need to be completed. Activity in the Middle East, China, and South America remains robust as firms deal with myriad global financial rules and regulations.
 
FIRMS ARE MATCHING AND PAYING UP TO KEEP SKILLED PEOPLE
 
One recruiter mentioned seeing late last year instances of skilled junior employees being offered positions at competing firms at slightly higher pay levels. However, he cited one notable case where that a talented junior analyst with less than a year on the job was able to win a higher offer from the current employer, which was eager not to lose the person. “It’s not a lot of money in some of these cases; we are talking about the $60,000 to $80,000 annual pay packages, so a 10 or even 15 percent pay bump to keep someone they know is good is very doable.”
 
TECHNOLOGY EXPERIENCE AND UNDERSTANDING IS IMPORTANT
 
Technical skills or at a minimum technology understanding, are a must according to all of the recruiters. In more junior positions, technology skills such as VBA (Visual Basic for Applications, the programming language of Excel and other Office programs to create a macro to automate tasks) and SQL (Structured Query Language, a special-purpose language designed for managing databases) are highly sought after, as they allow for the customization and creation of necessary reports.
 
Experience with any other compliance software programs such as order management systems, e-mail review and retention programs, and other portfolio and risk monitoring programs are helpful but not critical. Many branded and custom built programs are similar in nature and user friendly, so familiarity with such programs as opposed to expertise is sufficient.
 
RISK ASSESSMENT, MOCK ASSESSMENT, OR REAL AUDIT EXPERIENCE IN DEMAND
 
Smaller firms that have grown to the point they need to separate duties of dual-hatted chief compliance officers and chief financial officers are often searching for candidates experienced with mock or real regulatory audits. Candidates with even a year or two under their belt with a regulator may find this experience valuable to prospective employers.
 
The overall number of such positions is limited, however, as smaller firms in general are struggling to grow against the much larger competitors in a fee-compressed environment.
 
THE TRUMP ERA AND REGULATORY UNCERTAINTY
 
When the topic of President-elect Donald Trump and his promises to roll-back or repeal regulations was asked, every recruiter was skeptical of the prospects actually occurring quickly enough to affect the near-term hiring market.
 
Even if some firms were inclined to take a wait and see approach, the recruiters said, international rules and regulations won’t go away, and neither will financial crime. Firms have spent billions building out systems and compliance and risk departments to comply with rules and regulations, and these systems need to be staffed. Therefore, the firms will be very cautious to undo what they have invested so heavily in over the last several years. 
 

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NWS_a3
15.

Reuters: “Obama to Trump: Keep Russia Sanctions Separate From Nuclear Talks”

 
President Barack Obama urged President-elect Donald Trump on Wednesday to keep separate the issue of economic sanctions on Russia from the pursuit of talks to reduce nuclear stockpiles.
 
Trump, who takes office on Friday after winning the Nov. 8 election, said in an interview with the Times of London published on Monday that he would propose offering to end sanctions on Moscow in return for a nuclear arms reduction deal.
 
Obama’s administration imposed the sanctions in 2014 after Russia’s annexation of the Crimea peninsula from Ukraine.
 
  “Russia continues to occupy Ukrainian territory and meddle in Ukrainian affairs,” Obama told reporters during his final news conference at the White House.
 
  “I think it would probably best serve, not only American interests, but also the interests of preserving international norms if we made sure that we don’t confuse why these sanctions have been imposed with a whole set of other issues,” he said.
 
  “It is important for the United States to stand up for the basic principal that big countries don’t go around and invade and bully smaller countries,” the Democratic president added.
 
Trump, a Republican, has said he wants he wants to improve ties with Russia, despite allegations by U.S. intelligence agencies that Russian President Vladimir Putin ordered a cyber campaign to boost Trump’s campaign against Democrat Hillary Clinton. Moscow has denied the allegations.
 
Obama worked on a nuclear arms control agreement with Moscow early in his presidency, resulting in the Strategic Arms Reduction Treaty signed in 2010.
 
  “I was prepared to go further, I told President Putin I was prepared to go further. They have been unwilling to negotiate,” Obama said, blaming Putin for “escalating anti-American rhetoric” and resuming what he called a Cold War-like “adversarial spirit.”
 
Obama said a more “constructive relationship” with Russia would be a good goal. The United States and Russia are by far the world’s biggest nuclear powers.
 
  “If President-elect Trump is able to restart those talks in a serious way, I think there remains a lot of room for our two countries to reduce our stockpiles,” Obama said.

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COMMCOMMENTARY

COMM_a116.
 D.M. Edelman: “Iran and Russia Sanctions Programs Under a Trump Administration-What to Expect”

 
* Author: Doreen M. Edelman, Esq., Baker Donelson LLP, 202-508-3460,
dedelman@bakerdonelson.com
 
In the final weeks of December, President Obama amended sanctions to both the Iran and Russia programs. These changes further relaxed sanctions on Iran while they tightened sanctions on Russia (see our
client advisory). Yet, just three days from the inauguration of President-elect Donald Trump, exporters are no doubt wondering what the new president will do with regard to these changes and other sanctions relief that has come to pass under the Obama administration.
 
Iran
 
In anticipation of possible changes by the Trump administration to the Iran Transactions and Sanctions Regulations (ITSR), the Office of Foreign Assets Control (OFAC) released a guidance to help exporters currently exporting to Iran understand what happens if there is a policy reversal prohibiting such exports. The guidance makes it clear that:
 
  – Exporters cannot be retroactively liable for exporting items that were authorized during the Obama administration
  – If changes to the ITSR are made, exporters will be afforded a 180 wind-down period so that they can stop operations and collect payment for goods and services provided to Iranian buyers before the changes.
 
President-elect Trump has made clear his disapproval of the Iran nuclear deal (also known as the Joint Comprehensive Plan of Action (JCPOA)), and indeed, it is no doubt that the guidance is meant to allay exporter concerns. The wind-down period is particularly significant since receiving payment for goods and services rendered once changes are made to a sanctions regime is always an issue. Although the wind-down period is not binding on the new President, it is hopeful that the pragmatic business-friendly new President will honor the process. However, it is important for exporters to understand that the guidance could be revoked.
 
Other changes to the ITSR made last December include a change to the definition of “Iranian-origin goods,” which effectively allows goods exported to Iran under a general or specific license to be serviced or repaired outside of Iran such that the service or repair would not be considered an export. The change also allows goods to transit through Iran so long as they are not destined for Iran, including goods that are temporarily offloaded. Other changes include an expansion of general licenses for medical devices and agricultural products. The definition of medical devices now comports with the definition found in the Food, Drug, and Cosmetic Act (FDCA), and the general license for the export of medical devices now includes software used in medical devices. Shrimp may also now be exported to Iran.
 
Russia
 
Also unclear is what action President-elect Trump may take with regard to sanctions currently in effect against Russia. In December, President Obama strengthened these sanctions, adding more entities to the Specially Designated Nationals (SDN) and Sectoral Sanctions Identifications (SSI) list maintained by OFAC and the Entity List maintained by the Bureau for Industry and Security (BIS). New “cyber sanctions” were introduced against a number of entities and individuals identified in hacking.
 
In short, like the Iran sanctions, the Russian sanctions are the product of Executive Orders. As new presidents have carte blanche authority to revoke, amend, and issue new Executive Orders, it is important for exporters to watch for changes and understand how those changes will be implemented.

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COMM_a217
. J. Dickeson: “Export Controls for Beginners – ECCN and EAR Country Chart”

(Source: Author)
 
* Author: Jim Dickeson, “Export-Import Compliance Geek,” jim@dickeson.net 
 

Are you starting from zero to learn export controls?  Here are two videos on EAR basics: ECCN and Commerce Country Chart.

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COMM_a318

M. Volkov & L. Connell: “Multi-Jurisdictional Prosecutions and the SFO Show Teeth in Rolls Royce Settlement”

(Source:
Volkov Law Group Blog. Reprinted by permission.)
 
* Author: Michael Volkov, Esq.,
mvolkov@volkovlaw.com, 240-505-1992; Lauren Connell, Esq.,
lconnell@volkovlaw.com.  Both of Volkov Law Group.  
 
Rolls Royce’s $800 million global settlement further solidifies what the future of anti-bribery and corruption enforcement looks like: multi-jurisdictional prosecutions based on egregious conduct supported by strong evidence. The similarities to the recent Odebrecht – Braskem $3.5 billion global settlement are striking. Both enforcement actions were multi-jurisdictional, Odebrecht settled with authorities in the US, Brazil, and Switzerland while Rolls Royce settled with authorities in the US, the UK, and Brazil. The DOJ also cited assistance from Austria, Germany, the Netherlands, Singapore, and Turkey in its press release on the Rolls Royce settlement.
 
Both enforcement actions alleged widespread corruption that occurred at the highest levels of the company across the globe. Odebrecht had its own “Bribery Department” (the “Division of Structured Operations,” very clever name) while Rolls Royce paid over $35 million in bribes through third parties in countries around the world.
 
Like the Odebrecht settlement, described here, Rolls Royce’s settlement gives us a detailed description of a complex and multi-level bribery scheme in which a “high-level executive with substantial decision-making authority” was involved. The DOJ lists five different third parties who allegedly funneled money for Rolls Royce to bribe government officials in over seven countries, including executives of Petrobras.
 
Rolls Royce depended primarily upon inflated commission payments to third parties to fund its bribery payments. Government officials were bribed in Thailand, Brazil, Kazakhstan, Azerbaijan, Angola, and Iraq. Rolls Royce’s settlement with UK authorities cited bribery in a wider list of countries, including China, India, Indonesia, Malaysia, Nigeria, Russia, and Thailand. According to the SFO, it is its largest investigation conducted to date and further defines how the SFO will exercise its enforcement authority.
 
The enforcement actions were aided by email evidence showing that Rolls Royce was aware of the intended use of inflated commission payments. When Rolls Royce attempted to crack down on inflated commission payments, by limiting sales commissions to 5%, Rolls Royce managers and executives disguised commission payments to third parties by booking them separately for other fees or expenses, such as a no-services consulting contract, again documented via email, such as in this email regarding commission payments in Thailand:
 
I know we have reached agreement with you that [Intermediary 4]’s commission on this project will be 6.5% but this cannot be paid under a single agreement with [Intermediary 4] as it will not be allowed by RR Corporate. So -what we need to do is to split it into two parts – one normal commission, for say 4.5%, and the other 2% must be covered under a separate contract for “local Engineering Assistance.” … [I]t would need to be a separate company, and for a defined scope of work, for which you would invoice RR according to an agreed progress payment schedule.
 
As companies around the world increase their global footprint, multi-jurisdictional enforcement actions like this will increasingly become the norm. Companies operating globally, particularly those with operations in high-risk countries, need to be proactive in implementing effective compliance programs, conducting internal investigations, and addressing enforcement authorities. In explaining the settlement amount, the DOJ cited that Rolls Royce did not disclose the conduct until after the media was already reporting on it. Considering the scope of the multi-jurisdictional prosecutions we have seen lately, the risks of failing to act will continue to grow.

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ENEDITOR’S NOTES

(Source: Editor)

* Janis Joplin (Janis Lyn Joplin, 19 Jan 1943 – 4 Oct 1970, was an influential American singer of the 1960s.  Her raw, powerful, and uninhibited singing style, combined with her turbulent and emotional lifestyle, made her one of the biggest female stars in her lifetime. She died of an accidental drug overdose in 1970, aged 27, after releasing three albums. A fourth album, Pearl, was released a little more than three months after her death, reaching number 1 on the charts.)
  – “If I hold back, I’m no good. I’d rather be good sometimes than holding back all the time.”
  – “Rock on out!”
 
* Edgar Allan Poe (born Edgar Poe, 19 Jan 1809 – 7 Oct 1849, was an American writer, editor, and literary critic. Poe is best known for his poetry and short stories, particularly his tales of mystery and the macabre. He died at age 40 after being found wandering delirious on the streets of Baltimore.)
  – “Of puns it has been said that those who most dislike them are those who are least able to utter them.”

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EN_a220
. 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: 19 Jan 2017: 82 FR 6218-6221: Amendments to the Export Administration Regulations Implementing an Additional Phase of India-U.S. Export Control Cooperation; and 82 FR 6216-6218: Support Document Requirements With Respect to Hong Kong

  
*
FOREIGN ASSETS CONTROL REGULATIONS (OFAC FACR)
: 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders
  – Last Amendment: 17 Jan 2017: 82 FR 4793-4794: Sudanese 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 15 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.  

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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 subscribers to inform 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 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.

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