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17-0328 Tuesday “The Daily Bugle”

17-0328 Tuesday “Daily Bugle”

Tuesday, 28 March 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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[No items of interest noted today.] 

  1. Ex/Im Items Scheduled for Publication in Future Federal Register Editions
  2. Commerce/BIS: (No new postings.) 
  3. State/DDTC: (No new postings.) 
  4. EU P2P Post Summary of Activities in Zambia
  1. RadioFreeEurope: “Top EU Court Upholds Sanctions Against Russia’s Rosneft” 
  2. Reuters: “Turkish Bank Executive Charged in U.S. Case on Iran Sanctions Evasion” 
  3. ST&R Trade Report: “Conflict Minerals Sourcing is Subject of State Department Inquiry” 
  1. M. Volkov: “Compliance, Technology and Data Analytics” 
  1. Bartlett’s Unfamiliar Quotations 
  2. Are Your Copies of Regulations Up to Date? Latest Changes: ATF (15 Jan 2016), Customs (27 Jan 2017), DOD/NISPOM (18 May 2016), EAR (24 Feb 2017), FACR/OFAC (10 Feb 2017), FTR (15 May 2015), HTSUS (7 Mar 2017), ITAR (11 Jan 2017) 

EXIMEX/IM ITEMS FROM TODAY’S FEDERAL REGISTER

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OGS
OTHER GOVERNMENT SOURCES

OGS_a11. Ex/Im Items Scheduled for Publication in Future Federal Register Editions

(Source: Federal Register)
 

* Commerce; Industry and Security Bureau; RULES; Certain Persons from the Entity List [Publication Date: 29 March 2017.]:
  – Removal
  – Removal and Addition; and Export Administration Regulations Conforming Change
 
* Defense Acquisition Regulations System; NOTICES; Agency Information Collection Activities; Proposals, Submissions, and Approvals: Defense Federal Acquisition Regulation Supplement (DFARS) Appendix I, DoD Pilot Mentor-Protege Program [Publication Date: 29 March 2017.]
 
* State; NOTICES; Designations as Global Terrorists [Publication Date: 29 March 2017.]:
  – Ahmad Hasan Yusuf, aka Abu-Maryam, aka Sajjad Hassan Nasir Al Zubaydi
  – Alsayed Murtadha Majeed Ramadhan Alawi, aka Murtadha Majeed Ramadan Al Sindi, aka Murtadha Majeed Ramadhan al-Sindi, aka Mortada Majid Al-Sanadi
 
* State; NOTICES; Determination and Certification under Section 490(b)(l)(A) of Foreign Assistance Act [Publication Date: 29 March 2017.]:
  – Largest Exporting and Importing Countries or Certain Precursor Chemicals
  – Imposition of Nonproliferation Measures Against Rosoboronexport, Including Ban on U.S. Government Procurement
 
* U.S. Customs and Border Protection; NOTICES; Agency Information Collection Activities; Proposals, Submissions, and Approvals [Publication Date: 29 March 2017.]:
  – e-Allegations Submission
  – Entry and Manifest of Merchandise Free of Duty, Carrier’s Certificate and Release
  – Foreign Trade Zone Annual Reconciliation Certification and Record Keeping Requirement

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OGS_a22. Commerce/BIS: (No new postings.)

(Source: Commerce/BIS

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OGS_33State/DDTC: (No new postings.)

(Source:
State/DDTC)

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OGS_44
.

EU P2P Post Summary of Activities in Zambia

 
The German Federal Office for Economic Affairs and Export Control (BAFA) is in the process of organizing the second ad hoc seminar for Zambia in Lusaka, within the framework of the Arms Trade Treaty (ATT) EU Partner-to-Partner (EU P2P) Outreach Programme on 22-23 March 2017. Based on the outcomes of the first seminar in 2016, the event aims to further support the implementation of the ATT in Zambia.
 
At the beginning of the seminar, Zambian representatives will provide an update on the current state of the national ATT implementation which will be followed by a presentation on the national ATT implementation from a West African country. Subsequently, participants and experts will engage in discussions on controlled transfers, end-use verification as well as customs enforcement and illegal arms diversion in Southern Africa. Furthermore, discussions on physical security and stockpile management are scheduled as well.
 
In Zambia, the organizers will be supported by experts from Croatia, Ghana, Hungary, Slovenia and the UK.

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COMMNEWS

NWS_a15RadioFreeEurope: “Top EU Court Upholds Sanctions Against Russia’s Rosneft”

(Source:
RadioFreeEurope)
 
The top European Union court has ruled that EU sanctions imposed on Russian energy giant Rosneft over Moscow’s seizure of Crimea and involvement in the conflict in eastern Ukraine are lawful.
 
The European Court of Justice (ECJ) said in a statement on March 28 that “restrictive measures…in response to the crisis in Ukraine against certain Russian undertakings, including Rosneft, are valid.”
 
The EU imposed sanctions on Russia in July 2014, after it illegally annexed Crimea from Ukraine, and later expanded them in response to Moscow’s support for separatists fighting Ukrainian forces in eastern Ukraine.
 
The court said in its ruling that the EU’s hindering of state-controlled Rosneft’s ability to conduct business was in proportion to the level of economic sanctions placed on Russia.
 
Rosneft said in a statement that it was disappointed with the decision, saying “the decision proves that the rule of law in Europe is being replaced by the primacy of political situation.”
 
Rosneft lawyer Lode van den Hende called the ruling “a setback for judicial protection in the EU.”
 
Rosneft is headed by Igor Sechin, a close ally of Russian President Vladimir Putin.
 
It became Russia’s largest oil producer after acquiring the main production assets of Yukos, which was dismantled and sold off following the arrest of its chief, Mikhail Khodorkovsky, in 2003.
 
Khodorkovsky spent 10 years in prison on two convictions on financial-crimes charges he and supporters say were orchestrated by the Kremlin to punish him for challenging Putin and seize control of Yukos.
 
The oil and gas company had challenged the EU’s restrictions against it, which include its ability to conduct oil deals within the European Union.
 
The court ruling is seen as establishing its jurisdiction over the EU’s common foreign policy, an issue that is being contested by some EU member countries.

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NWS_a2
6. Reuters: “Turkish Bank Executive Charged in U.S. Case on Iran Sanctions Evasion”

(Source:
Reuters)
 
U.S. authorities have arrested an executive of a Turkish state-owned bank who is accused of conspiring to evade U.S. sanctions on Iran.
 
Mehmet Hakan Atilla, a deputy general manager of Turkey’s Halkbank, is alleged to have conspired with Turkish gold trader Reza Zarrab, according to a criminal complaint filed in federal court in New York.
 
U.S. prosecutors have charged the Iranian-born Zarrab and others of engaging in hundreds of millions of dollars worth of transactions for Iran’s government and Iranian entities from 2010 to 2015 in a scheme to evade U.S. sanctions.
 
Atilla is expected to appear in court in New York on Tuesday afternoon, according to the U.S. Attorney’s office in Manhattan.
 
Turkish officials contacted by Reuters said they had no information on the arrest.
 
Zarrab and the other defendants tricked numerous U.S. banks into processing barred transactions by using front companies and creating false invoices, according to prosecutors.
 
The case has been closely watched in Turkey, where Zarrab was arrested in 2013 in a corruption probe into people with close ties to President Tayyip Erdogan, who was then the prime minister.

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NWS_a37. ST&R Trade Report: “Conflict Minerals Sourcing is Subject of State Department Inquiry”

 
The Department of State is seeking input from stakeholders no later than April 28 to inform recommendations of how best to support responsible sourcing of tin, tantalum, tungsten, and gold (known as conflict minerals).
 
Under the 2010 Dodd-Frank Act and the Securities and Exchange Commission’s implementing regulations, companies that file reports with the SEC under the Securities and Exchange Act of 1934, whether foreign or domestic, must file a specialized report disclosing their use of conflict minerals originating in the Democratic Republic of the Congo or an adjoining country if those minerals are necessary to the functionality or production of a product they manufacture or contract to manufacture. The minerals at issue are used to make a variety of goods such as cell phones, computers and video game systems, medical equipment, high-speed tools, machine parts, glass, and lamps.
 
SEC regulations require companies that use any of these conflict minerals to conduct a reasonable inquiry to determine whether they originated in the covered countries. If the inquiry determines that the company knows or has reason to believe that the minerals may have originated in those countries, the company must undertake due diligence on the source and chain of custody of its conflict minerals, file a conflict minerals report with the SEC, and make that report publicly available on its Web site.
 
Since the law and the SEC regulations were implemented the following developments have taken place.
 
  –
A federal court ruled in April 2014 that the requirement to publicly disclose that a company’s products use conflict minerals that have not been found to be conflict-free violates constitutional free speech protections, prompting the SEC to issue guidance advising companies that they would not be required to make such disclosures and issue an order staying the effect of the rule’s compliance date for those portions of the rule found to be unconstitutional.
  – The Government Accountability Office
reported in August 2015 that most companies have been unable to determine the source of their conflict minerals.
  – The House Financial Services Committee
approved in September 2016 legislation that would have eliminated the requirement for companies to disclose whether their products contain conflict minerals.
  – The SEC
solicited through March 17 comments on possible further relief from the conflict minerals regulations.

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COMMCOMMENTARY

COMM_a18. 
M. Volkov: “Compliance, Technology, and Data Analytics”

(Source:
Volkov Law Group Blog. Reprinted by permission.)
 
* Author: Michael Volkov, Esq., Volkov Law Group,
mvolkov@volkovlaw.com, 240-505-1992.
 
Compliance professionals cannot do it alone. Of course, CCOs need compliance staff and the collaboration of business, human resources, legal, financial and audit, and related functions in order to succeed. I have made this point over and over (again and again).
 
Along with human and functional resources, CCOs need to embrace technology and data analytics. I have written about the importance of technology to the compliance function. (Here). We have seen a rapid increase in the development of technology solutions for compliance professionals, particularly with respect to compliance dashboards, third party risk management platforms, and internal investigation management programs.
 
CCOs who embrace technology have greater access to metrics and monitoring data. In the end, CCOs who understand the importance of technology are more productive and have greater job satisfaction. Technology is an important means to collect data, monitor performance, and increase communications with compliance staff, business participants in a compliance program, and facilitate compliance operations.
 
For example, internal investigations and incident management systems have been developed to permit entry of information by corporate managers and employees responsible for reporting investigations and incidents into a databases where such data is stored, and organized for monitoring and reporting purposes. Companies can use this technology to keep track of internal investigations but collect and maintain important incident information that may not rise to the level of an internal investigation.
 
As part of the technology and compliance movement, CCOs have yet to embrace the capabilities of data analytics. Mature and sophisticated compliance programs with substantial resources have been utilizing data analytics to promote compliance.
 
Just like the compliance technology industry, we are likely to see growth in accessible and user-friendly data analytics programs. A compliance program generates significant data across the company. The data can be classified and divided on a number of fronts. It can also be linked to financial expenditures relating to certain key functions (e.g. gifts, meals and entertainment).
 
Data analytics can provide important insights into business activities in select categories and geographic areas. As data is collected, the analytical function can identify important trends, red flags and point to areas that should be scrutinized.
 
A data analytic program organizes large amounts of data, which by itself can be reviewed and understood through presentation modules that allow compliance professionals to understand patterns and trends and understand ongoing business activities.
 
In addition to organizing data, mixing compliance analysis with financial transactions can explain important financial activity and determine whether these activities are captured by the compliance controls.
 
Hopefully, we will see an increased effort to make data analytics easily accessible for compliance professionals. It may take years for such programs to operate like “plug-ins” for other computer programs but I am aware of various efforts in this area.
 
Compliance officers have numerous challenges in terms of subject-matter expertise outside of compliance. An understanding of the law, financial accounting systems, and technology are just a few to consider. When it comes to leveraging resources, and given the typical corporate resistance to assign more personnel, technology is an excellent resource to consider, along with data analytics and other systems that enhance efficiency and improve overall understanding of a company’s compliance environment.

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ENEDITOR’S NOTES

(Source: Editor)

 * Frank A. Clark (Frank Clark, 28 Mar 1860 – 14 Apr 1936, was an American lawyer and politician for some 50 years, including his 20 years in the United States Congress.)

  – “The most important thing that parents can teach their children is how to get along without them.”
 
*
Saint Teresa of Avila (Saint Teresa of Ávila, baptized as Teresa Sánchez de Cepeda y Ahumada, 28 Mar 1515 – 4 Oct 1582, was a prominent Spanish mystic, Roman Catholic saint, Carmelite nun and author during the Counter Reformation, and theologian of contemplative life through mental prayer.)
  – “Pain is never permanent.”

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EN_a210
. 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: 27 Jan 2017: 82 FR 8589-8590: Delay of Effective Date for Importations of Certain Vehicles and Engines Subject to Federal Antipollution Emission Standards [New effective date: 21 March 2017.]; and 82 FR 8590: Delay of Effective Date for Toxic Substance Control Act Chemical Substance Import Certification Process Revisions [New effective date: 21 March 2017.]

* 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: 24 Feb 2017: 82 FR 11505-11506: Temporary General License: Extension of Validity

  
*
FOREIGN ASSETS CONTROL REGULATIONS (OFAC FACR)
: 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders
  – Last Amendment: 10 Feb 2017: 82 FR 10434-10440: Inflation Adjustment of Civil Monetary Penalties.  
 
*
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: 7 Mar 2017: Harmonized System Update 1702, containing 1,754 ABI records and 360 harmonized tariff records. 

  – 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: 11 Jan 2017: 82 FR 3168-3170: 2017 Civil Monetary Penalties Inflationary Adjustment
 – The only available fully updated copy (latest edition 8 Mar 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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