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17-0727 Thursday “Daily Bugle”

17-0727 Thursday “Daily Bugle”

Thursday, 27 July 2017

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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 
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  1. DHS/CBP Seeks Comments on Form 3495, Application for Exportation of Articles Under Special Bond 
  2. DHS/CBP Seeks Comments on Form 255, Declaration of Unaccompanied Articles 
  3. DHS/CBP Seeks Comments on Entry of Articles for Exhibition 
  4. DHS/CBP Seeks Comments on Generic Clearance for the Collection of Qualitative Feedback on Agency Service Delivery 
  5. DHS/CBP Seeks Comments on Notice of Detention 
  6. DHS/CBP Seeks Comments on Form 1303, Ship’s Store Declaration 
  1. Ex/Im Items Scheduled for Publication in Future Federal Register Editions
  2. Commerce/BIS: (No new postings.)
  3. DHS/CBP Publishes ACE Post Release Deployment Update
  4. DoD/DSCA Posts Additional SAMM and Policy Memo for Week 23-29 July
  5. DoD/DSS Posts Notice on NISP Psychological Evaluation Process Enhancements
  6. State/DDTC Posts Address Change for Defense Acquisition Program Administration
  7. Treasury/OFAC: “CSE Global Limited and CSE TransTel Pte. Ltd. Settle Apparent Violations of the IEEPA and Iranian Sanctions”
  8. EU Amends for the 272nd Time Restrictive Measures Concerning ISIL and Al-Qaeda
  1. ST&R Trade Report: “Newly Ordered Defense Supply Chain Review Could Foreshadow More Trade Probes”
  2. WorldECR News Alert, 27 Jun
  1. D.M. Edelman: “Should Businesses Worry About Changes to Recent Trade Programs?”
  2. F. Danny: “How Export Control Software Can Ease Pains for Your Business”
  3. K. King, R. Ross & K. Tsai: “Export Control Reminder: Semi-Annual Encryption Reporting Deadline, 1 Aug”
  4. M. Volkov: “FCPA Risks and Acquisition Integration Challenges”
  1. ECTI Presents US Export Controls Interactive Workshop 2017 in Wash DC, 12-13 Sep 
  1. Bartlett’s Unfamiliar Quotations 
  2. Are Your Copies of Regulations Up to Date? Latest Changes: ATF (15 Jan 2016), Customs (13 Jul 2017), DOD/NISPOM (18 May 2016), EAR (7 Jul 2017), FACR/OFAC (16 Jun 2017), FTR (19 Apr 2017), HTSUS (25 Jul 2017), ITAR (11 Jan 2017) 
  3. Weekly Highlights of the Daily Bugle Top Stories 

EXIMEX/IM ITEMS FROM TODAY’S FEDERAL REGISTER

EXIM_a1

1. DHS/CBP Seeks Comments on Form 3495, Application for Exportation of Articles Under Special Bond

(Source: Federal Register) [Excerpts.]
 
82 FR 34962-34963: Agency Information Collection Activities: Application for Exportation of Articles Under Special Bond
* AGENCY: U.S. Customs and Border Protection (CBP), Department of Homeland Security.
* ACTION: 30-Day notice and request for comments; extension of an existing collection of information. …
* ADDRESSES: Interested persons are invited to submit written comments on this proposed information collection to the Office of Information and Regulatory Affairs, Office of Management and Budget. Comments should be addressed to the OMB Desk Officer for Customs and Border Protection, Department of Homeland Security, and sent via electronic mail to dhsdeskofficer@omb.eop.gov. …
* SUPPLEMENTARY INFORMATION: …
  – Title: Application for Exportation of Articles Under Special Bond.
  – OMB Number: 1651-0004.
  – Form Number: CBP Form 3495.
  – Current Actions: CBP proposes to extend the expiration date of this information collection with no change to the burden hours or to the information being collected.
  – Abstract: CBP Form 3495, Application for Exportation of Articles Under Special Bond, is an application for exportation of articles entered under temporary bond pursuant to 19 U.S.C. 1202, Chapter 98, subchapter XIII, Harmonized Tariff Schedule of the United States, and 19 CFR 10.38. CBP Form 3495 is used by importers to notify CBP that the importer intends to export goods that were subject to a duty exemption based on a temporary stay in this country. It also serves as a permit to export in order to satisfy the importer’s obligation to export the same goods and thereby get a duty exemption. This form is accessible here. …
 
  Dated: July 24, 2017.
Seth Renkema, Branch Chief, Economic Impact Analysis Branch, U.S. Customs and Border Protection.

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EXIM_a2

2. DHS/CBP Seeks Comments on Form 255, Declaration of Unaccompanied Articles

(Source: Federal Register) [Excepts.]
 
82 FR 34964-34965: Agency Information Collection Activities: Declaration of Unaccompanied Articles
* AGENCY: U.S. Customs and Border Protection (CBP), Department of Homeland Security.
ACTION: 30-Day notice and request for comments; extension of an existing collection of information. …
* ADDRESSES: Interested persons are invited to submit written comments on this proposed information collection to the Office of Information and Regulatory Affairs, Office of Management and Budget. Comments should be addressed to the OMB Desk Officer for Customs and Border Protection, Department of Homeland Security, and sent via electronic mail to dhsdeskofficer@omb.eop.gov. …
* SUPPLEMENTARY INFORMATION: …
  – Title: Declaration of Unaccompanied Articles.
  – OMB Number: 1651-0030.
  – Form Number: CBP Form 255.
  – Current Actions: This submission is being made to extend the expiration date of this information collection with no change to the burden hours or the information being collected.
  – Abstract: CBP Form 255, Declaration of Unaccompanied Articles, is completed by travelers arriving in the United States with a parcel or container which is to be sent from an insular possession at a later date. It is the only means whereby the CBP officer, when the person arrives, can apply the exemptions or five percent flat rate of duty to all of the traveler’s purchases.
  A person purchasing articles in American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, or the Virgin Islands of the United States receives a sales slip, invoice, or other evidence of purchase which is presented to the CBP officer along with CBP Form 255, which is prepared in triplicate. The CBP officer verifies the information, indicates on the form whether the article or articles were free of duty, or dutiable at the flat rate. Two copies of the form are returned to the traveler, who sends one form to the vendor. Upon receipt of the form the vendor places it in an envelope, affixed to the outside of the package, and clearly marks the package “Unaccompanied Tourist Shipment,” and sends the package to the traveler, generally via mail, although it could be sent by other means. If sent through the mail, the package would be examined by CBP and forwarded to the Postal Service for delivery. Any duties due would be collected by the mail carrier. If the shipment arrives other than through the mail, the traveler would be notified by the carrier when the article arrives. Entry would be made by the carrier or the traveler at the customhouse. Any duties due would be collected at that time.
  CBP Form 255 is authorized by 19 U.S.C. 1202 (Chapter 98, Subchapters IV and XVI) and provided for by 19 CFR 145.12, 145.43, 148.110, 148.113, 148.114, 148.115 and 148.116. A sample of this form may be viewed here. …
 
  Dated: July 24, 2017.
Seth Renkema, Branch Chief, Economic Impact Analysis Branch, U.S. Customs and Border Protection.

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EXIM_a3

3. DHS/CBP Seeks Comments on Entry of Articles for Exhibition
(Source: Federal Register) [Excerpts.]
 
82 FR 34965: Agency Information Collection Activities: Entry of Articles for Exhibition
* AGENCY: U.S. Customs and Border Protection (CBP), Department of Homeland Security.
* ACTION: 30-Day notice and request for comments; Extension of an existing collection of information. …
* ADDRESSES: Interested persons are invited to submit written comments on this proposed information collection to the Office of Information and Regulatory Affairs, Office of Management and Budget. Comments should be addressed to the OMB Desk Officer for Customs and Border Protection, Department of Homeland Security, and sent via electronic mail to dhsdeskofficer@omb.eop.gov. …
* SUPPLEMENTARY INFORMATION: …
  – Title: Entry of Articles for Exhibition.
  – OMB Number: 1651-0037.
  – Form Number: None.
  – Current Actions: CBP proposes to extend the expiration date of this information collection with no change to the burden hours or to the information collected.
  – Abstract: Goods entered for exhibit at fairs, or for constructing, installing, or maintaining foreign exhibits at a fair, may be free of duty under 19 U.S.C. 1752. In order to substantiate that goods qualify for duty-free treatment, the consignee of the merchandise must provide information to CBP about the imported goods, which is specified in 19 CFR 147.11(c). …
 
  Dated: July 24, 2017.
Seth Renkema, Branch Chief, Economic Impact Analysis Branch, U.S. Customs and Border Protection.

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EXIM_a4

4. DHS/CBP Seeks Comments on Generic Clearance for the Collection of Qualitative Feedback on Agency Service Delivery
(Source: Federal Register) [Excerpts.]
 
82 FR 34965-34966: Agency Information Collection Activities: Generic Clearance for the Collection of Qualitative Feedback on Agency Service Delivery
* AGENCY: U.S. Customs and Border Protection (CBP), Department of Homeland Security.
* ACTION: 60-Day Notice and request for comments; extension of an existing collection of information. …
* ADDRESSES: Written comments and/or suggestions regarding the item(s) contained in this notice must include the OMB Control Number 1651-0136 in the subject line and the agency name. To avoid duplicate submissions, please use only one of the following methods to submit comments:
  (1) Email. Submit comments to: CBP_PRA@cbp.dhs.gov.
  (2) Mail. Submit written comments to CBP Paperwork Reduction Act Officer, U.S. Customs and Border Protection, Office of Trade, Regulations and Rulings, Economic Impact Analysis Branch, 90 K Street NE., 10th Floor, Washington, DC 20229-1177. …
* SUPPLEMENTARY INFORMATION: …
  – Title: Generic Clearance for the Collection of Qualitative Feedback on Agency Service Delivery.
  – OMB Number: 1651-0136.
  – Current Actions: This submission is being made to extend the expiration date with no change to the burden hours.
  – Abstract: The information collection activity will garner qualitative customer and stakeholder feedback in an efficient, timely manner, in accordance with the Administration’s commitment to improving service delivery. By qualitative feedback we mean information that provides useful insights on perceptions and opinions, but are not statistical surveys that yield quantitative results that can be generalized to the population of study. This feedback will provide insights into customer or stakeholder perceptions, experiences and expectations, provide an early warning of issues with service, or focus attention on areas where communication, training or changes in operations might improve delivery of products or services. These collections will allow for ongoing, collaborative and actionable communications between the Agency and its customers and stakeholders. It will also allow feedback to contribute directly to the improvement of program management. Feedback collected under this generic clearance will provide useful information, but it will not yield data that can be generalized to the overall population. This type of generic clearance for qualitative information will not be used for quantitative information collections that are designed to yield reliably actionable results, such as monitoring trends over time or documenting program performance. Such data uses require more rigorous designs that address: The target population to which generalizations will be made, the sampling frame, the sample design (including stratification and clustering), the precision requirements or power calculations that justify the proposed sample size, the expected response rate, methods for assessing potential nonresponse bias, the protocols for data collection, and any testing procedures that were or will be undertaken prior fielding the study. Depending on the degree of influence the results are likely to have, such collections may still be eligible for submission for other generic mechanisms that are designed to yield quantitative results. …
 
  Dated: July 24, 2017.
Seth Renkema, Branch Chief, Economic Impact Analysis Branch, U.S. Customs and Border Protection.

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EXIM_a5

5. DHS/CBP Seeks Comments on Notice of Detention
(Source: Federal Register) [Excerpts.]
 
82 FR 34963-34964: Agency Information Collection Activities: Notice of Detention
* AGENCY: U.S. Customs and Border Protection (CBP), Department of Homeland Security.
* ACTION: 30-Day notice and request for comments; Extension of an existing collection of information. …
* ADDRESSES: Interested persons are invited to submit written comments on this proposed information collection to the Office of Information and Regulatory Affairs, Office of Management and Budget. Comments should be addressed to the OMB Desk Officer for Customs and Border Protection, Department of Homeland Security, and sent via electronic mail to dhsdeskofficer@omb.eop.gov. …
* SUPPLEMENTARY INFORMATION: …
  – Title: Notice of Detention.
  – OMB Number: 1651-0073.
  – Form Number: None.
  – Current Actions: CBP proposes to extend the expiration date of this information collection with no change to the burden hours or the information collected. …
   – Abstract: Customs and Border Protection (CBP) may detain merchandise when it has reasonable suspicion that the subject merchandise may be inadmissible but requires more information to make a positive determination. If CBP decides to detain merchandise, a Notice of Detention is sent to the importer or to the importer’s broker/agent no later than 5 business days from the date of examination stating that merchandise has been detained, the reason for the detention, and the anticipated length of the detention. The recipient of this notice may respond by providing information to CBP in order to facilitate the determination for admissibility, or may ask for an extension of time to bring the merchandise into compliance. The information provided assists CBP in making a determination whether to seize, deny entry of, or release detained goods into the commerce. Notice of Detention is authorized by 19 U.S.C. 1499 and provided for in 19 CFR 151.16, 133.21, 133.25, and 133.43. …
 
  Dated: July 24, 2017.
Seth Renkema, Branch Chief, Economic Impact Analysis Branch, U.S. Customs and Border Protection.

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EXIM_a6

6. DHS/CBP Seeks Comments on Form 1303, Ship’s Store Declaration
(Source: Federal Register) [Excerpts.]
 
82 FR 34966-34967: Agency Information Collection Activities: Ship’s Store Declaration
* AGENCY: U.S. Customs and Border Protection (CBP), Department of Homeland Security.
* ACTION: 30-Day notice and request for comments; extension of an existing collection of information. …
* ADDRESSES: Interested persons are invited to submit written comments on this proposed information collection to the Office of Information and Regulatory Affairs, Office of Management and Budget. Comments should be addressed to the OMB Desk Officer for Customs and Border Protection, Department of Homeland Security, and sent via electronic mail to oira_submission@omb.eop.gov or faxed to (202) 395-5806. …
* SUPPLEMENTARY INFORMATION: …
  – Title: Ship’s Stores Declaration.
  – OMB Number: 1651-0018.
  – Form Number: CBP Form 1303.
  – Current Actions: CBP proposes to extend the expiration date of this information collection with no change to the burden hours. There is no change to the information collected or CBP Form 1303. …
  – Abstract: CBP Form 1303, Ship’s Stores Declaration, is used by the carriers to declare articles to be retained on board the vessel, such as sea stores, ship’s stores (e.g., alcohol and tobacco products), controlled narcotic drugs or bunker fuel in a format that can be readily audited and checked by CBP. This form collects information about the ship, the ports of arrival and departure, and the articles on the ship. CBP Form 1303 form is provided for by 19 CFR 4.7, 4.7a, 4.81, 4.85 and 4.87 and is accessible here. …
 
  Dated: July 24, 2017.
Seth Renkema, Branch Chief, Economic Impact Analysis Branch, U.S. Customs and Border Protection.

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OGSOTHER GOVERNMENT SOURCES

OGS_a17. Ex/Im Items Scheduled for Publication in Future Federal Register Editions
(Source: Federal Register

* Justice; Alcohol, Tobacco, Firearms, and Explosives Bureau; NOTICES; Agency Information Collection Activities; Proposals, Submissions, and Approvals: Federal Firearms License RENEWAL Application – ATF F 8 (5310.11) Part 11 [Publication Date: 28 July 2017.]

* U.S. Customs and Border Protection; RULES; U.S. Customs and Border Protection Regulations; Technical Corrections [Publication Date: 28 July 2017.]

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(Source:
CSMS #17-000423, 27 July 2017.)
 
On June 27, 2017, CBP announced a delay in the deployment for the Automated Commercial Environment (ACE) post release capabilities that had been scheduled for July 8, 2017. This deployment includes liquidation (with the exception of the previously deployed electronic posting of the Notices of Liquidation on CBP.gov), reconciliation, drawback, duty deferral, statements, collections and the Automated Surety Interface (ASI). With the exception of the collections functionality, these remaining post-release capabilities are ready and available for trade testing. Based on the results of rigorous testing of the collections capabilities, CBP has modified the deployment approach.

Since the collections capabilities are largely inward facing, the replanned deployment strategy will enable us to separate collections and deploy the other post release capabilities of ACE core using a phased approach. Developers are working software changes that will allow ACE deployment of these post release capabilities, while also ensuring that they continue to interface seamlessly with collections in the legacy system. 

The current phased deployment schedule is as follows: 

  – ACE Deployment G (September 16, 2017) – Non-ABI Entry Summary/Lineless (for CBP only), Duty Deferral, e214 (electronic Foreign Trade Zone admission) and Manufacturer ID Creation
  – ACE Deployment G (December 16, 2017) – Statements
  – ACE Deployment G (February 24, 2018) – Reconciliation, ACE Core Drawback and Trade Facilitation and Trade Enforcement Act (TFTEA) Drawback, Liquidation and Automated Surety Interface (ASI)

More information on the deployment may be found at CBP.gov/ACE

Between February 2018 and February 2019, trade users will have the option to file either Core Drawback or TFTEA Drawback.

* Core Drawback includes the following: 
  – Consolidation to entry type 47
  – For electronic claims, submission of entire drawback package electronically
  – System validations
  – Integration with post release processes
  – Improved system controls
  – Does not require line level reporting

* TFTEA Drawback includes the following:
  – Substitution based on 8-digit HTS or Schedule B number
  – Requirement to file all drawback claims electronically
  – Recordkeeping requirement three years from date of liquidation
  – All claims due five years from date of importation
  – Reliance on documents kept in “normal course of business”
  – Requires line level reporting 

Please note the following:  

  – CBP will be retraining our personnel and providing updated materials on each capability prior to these deployments.  
  – The re-planning required to address the issues with collections capabilities is continuing.  
  – The ABI Query for Foreign Currency Rates will remain in ACS until ACS is no longer available. In parallel, currency rate calculation information is also posted on www.cbp.gov/ace.
  – CBP will develop and deploy TFTEA drawback capabilities in accordance with the legislative mandate. 

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OGS_a511
. DoD/DSS Posts Notice on NISP Psychological Evaluation Process Enhancements

(Source: DoD/DSS)
 
Prior to the DoD Consolidated Adjudications Facility (CAF) consolidation, psychiatric consultation services for designated contractor personnel were provided and funded through the Defense Office of Hearings and Appeals (DOHA); however, that process has since changed and the DoD CAF is now responsible for arranging medical evaluations when a potential security concern has been identified. To fulfill this mission, the DoD CAF has contracted a company to provide qualified psychologists/psychiatrists to conduct medical evaluations in support of DoD/NISP requirements.
 
When DoD CAF security and psychological professionals identify an individual who may have a medical condition and/or substance abuse issue of potential security concern, the DoD CAF will contact individuals through his/her facility security officer. If the individual consents to participate in the evaluation, the DoD CAF will arrange an evaluation at no cost to the individual or his/her company. Once completed, DoD CAF will review the results of the evaluations for accuracy and security relevance. The expectation is that DoD CAF should receive results of these medical evaluations within 90 days of the initial consent.

Initially, DoD CAF is processing collateral cases. DoD CAF will begin processing Sensitive Compartmented Information (SCI) eligibility cases at a later date (more details will follow). For questions, please email the DoD CAF Call Center at whs.meade.dodcaf.mbx.dodcaf-callcenter@mail.mil

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OGS_a612
. State/DDTC Posts Address Change for Defense Acquisition Program Administration

(Source: State/DDTC) [Excerpts.]
 
Effective immediately, DAPA, 54-99 Duteopbawi-ro, Yongsan-gi, Seoul, Republic of Korea will change as follows: DAPA, Bldg. 3 & 4 of Gwacheon Government Complex, 47 Gwanmoon-Ro, Gwacheon City, Gyeonggi Province, Republic of Korea. Due to the volume of authorizations requiring amendments to reflect this change, the Deputy Assistant Secretary for Defense Trade Controls is exercising the authority under 22 CFR 126.3 to waive the requirement for amendments to change currently approved license authorizations. The amendment waiver does not apply to approved or pending agreements. …

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OGS_a713
. Treasury/OFAC: “CSE Global Limited and CSE TransTel Pte. Ltd. Settle Apparent Violations of the IEEPA and Iranian Sanctions”

(Source: Treasury/OFAC)    
 
CSE TransTel Pte. Ltd. (“TransTel”), a wholly- owned subsidiary of the international technology group CSE Global Limited (“CSE Global”), both of which are located in Singapore, has agreed to pay $12,027,066 to settle its potential civil liability for 104 apparent violations of the International Emergency Economic Powers Act 1 (IEEPA) and the Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560 (ITSR). Specifically, from on or about June 4, 2012 to on or about March 27, 2013, TransTel appears to have violated § 1705 (a) of IEEPA and § 560.203 of the ITSR by causing at least six separate financial institutions to engage in the unauthorized exportation or re-exportation of financial services from the United States to Iran, a prohibition of § 560.204 of the ITSR.
 
OFAC determined that TransTel did not voluntarily self-disclose the apparent violations to OFAC, and that the apparent violations constitute an egregious case. Both the statutory maximum and base penalty civil monetary penalty amounts for the apparent violations were $38,181,161.
 
Between August 25, 2010 and November 5, 2011, TransTel entered into contracts with, and received purchase orders from, multiple Iranian companies to deliver and install telecommunications equipment for several energy projects in Iran and/or Iranian territorial waters. TransTel hired and engaged a number of different third-party vendors – including several Iranian companies – to provide goods and services on its behalf in connection with the above-referenced contracts and purchase orders.
 
Prior and subsequent to entering into the above-referenced contracts, CSE Global and TransTel separately maintained individual U.S. Dollar (USD) and Singaporean Dollar accounts with a non-U.S. financial institution located in Singapore (the “Bank”). In a letter entitled “Sanctions – Letter of Undertaking,” dated April 20, 2012 and signed by TransTel’s then-Managing Director and CSE Global’s then-Group Chief Executive Officer (referred to hereafter as the “Letter of Undertaking”), TransTel made the following statement to the Bank: “In consideration of [the Bank] agreeing to continue providing banking services in Singapore to our company, we, CSE TransTel Pte. Ltd … hereby undertake not to route any transactions related to Iran through [the Bank], whether in Singapore or elsewhere.” TransTel continued to receive banking services from the Bank after execution and delivery of its Letter of Undertaking.

Despite the written attestation that TransTel and CSE Global provided to the Bank, TransTel appears to have begun originating USD funds transfers from its USD-denominated account with the Bank that were related to its Iranian business beginning no later than June 2012 – less than two months after TransTel’s and CSE Global’s management signed and submitted the Letter of Undertaking.
 
From on or about June 4, 2012 to on or about March 27, 2013, TransTel appears to have violated § 1705 (a) of IEEPA and/or § 560.203 of the ITSR when it originated 104 USD wire transfers totaling more than $11,111,000 involving Iran. TransTel initiated the wire transfers from its account with the Bank. The transactions were destined for multiple third-party vendors (including several Iranian parties) that supplied goods or services to or for the above-referenced energy projects in Iran, and all of the funds transfers were processed through the United States. None of the transactions contained references to Iran, the Iranian projects, or any Iranian parties.
 
For more information regarding the conduct that led to the apparent violations, please see the Settlement Agreement between OFAC and CSE Global and TransTel here.
 
The settlement amount reflects OFAC’s consideration of the following facts and circumstances, pursuant to the General Factors under OFAC’s Economic Sanctions Enforcement Guidelines, 31 C.F.R. part 501, app. A. OFAC considered the following to be aggravating factors:
  (1) TransTel willfully and recklessly caused apparent violations of U.S. economic sanctions by engaging in, and systematically obfuscating, conduct it knew to be prohibited, including by materially misrepresenting to its bank that it would not route Iran-related business through the bank’s branch in Singapore or elsewhere, and by engaging in a pattern or practice that lasted for 10 months;
  (2) TransTel’s then-senior management had actual knowledge of – and played an active role in – the conduct underlying the apparent violations;
  (3) TransTel’s actions conveyed significant economic benefit to Iran and/or persons on OFAC’s List of Specially Designated Nationals and Blocked Persons by processing dozens of transactions through the U.S. financial system that totaled $11,111,812 and benefited Iran’s oil, gas, and power industries; and
  (4) TransTel is a commercially sophisticated company that engages in business in multiple countries.
 
OFAC considered the following to be mitigating factors:
  (1) TransTel has not received a penalty notice, Finding of Violation, or cautionary letter from OFAC in the five years preceding the date of the earliest transaction giving rise to the apparent violations;
  (2) TransTel and CSE Global have undertaken remedial steps to ensure compliance with U.S. sanctions programs; and
  (3) TransTel and CSE Global provided substantial cooperation during the course of OFAC’s investigation, including by submitting detailed information to OFAC in an organized manner, and responding to several inquiries in a complete and timely fashion.
 
This enforcement action highlights the sanctions compliance obligations of all individuals and entities that conduct business in OFAC-sanctioned jurisdictions or with OFAC-sanctioned parties
and that also process transactions directly or indirectly through the United States, or involving U.S. companies, or U.S.-origin goods, services, and technology. When signing letters of attestation or making other representations and warrantees to financial institutions that provide access to the U.S. financial system, individuals and entities should consider carefully whether they are willing and able to act within the parameters of such agreements.
 
For more information regarding OFAC regulations, please go to: www.treasury.gov/ofac.

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OGS_a814
. EU Amends for the 272nd Time Restrictive Measures Concerning ISIL and Al-Qaeda

(Source: Official Journal of the European Union, 27 July 2017.)
 
Regulations
  – Commission Implementing Regulation (EU) 2017/1390 of 26 July 2017 amending for the 272nd time Council Regulation (EC) No 881/2002 imposing certain specific restrictive measures directed against certain persons and entities associated with the ISIL (Da’esh) and Al-Qaeda organisations

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NWSNEWS

 
President Trump has issued an executive order directing the Department of Commerce to aid in an investigation of U.S. manufacturing capacity, defense industrial base, and supply chain resiliency. Although administration officials said this effort is unrelated to the Section 232 national security investigation currently underway for steel and aluminum, there is some speculation that it could lead to similar probes, and ultimately import restrictions, on other goods.
 
The order does not specifically mention international trade but does appear to favor U.S. production of goods critical to national security. While it is critical for the U.S. to “maintain a manufacturing and defense industrial base and supply chains capable of manufacturing or supplying” such goods, the order states, modern supply chains are often long and the ability of the U.S. to manufacture or obtain such goods “could be hampered by an inability to obtain various essential components, which themselves may not be directly related to national security.” The order also laments “the loss of more than 60,000 American factories, key companies, and almost 5 million manufacturing jobs since 2000,” which administration officials have frequently blamed on international trade, as undermining the ability of U.S. manufacturers to meet national defense requirements.
 
The order thus directs the Defense Department to lead an investigation and submit within 270 days a report that does the following:
 
  – identifies the military and civilian materiel, raw materials, and other goods that are essential to national security
  – identifies the manufacturing capabilities essential to producing such goods, including emerging capabilities
  – identifies the defense, intelligence, homeland, economic, natural, geopolitical, or other contingencies that may disrupt, strain, compromise, or eliminate the supply chains of such goods and that are sufficiently likely to arise so as to require reasonable preparation for their occurrence
  – assesses the resiliency and capacity of the U.S. manufacturing and defense industrial base and supply chains to support national security needs upon the occurrence of the identified contingencies (e.g., exclusive or dominant supply of the goods by or through nations that are or are likely to become unfriendly or unstable)
  – identifies the causes of any aspect of the defense industrial base or national security-related supply chains assessed as deficient
  – recommends such legislative, regulatory, and policy changes or actions deemed appropriate based upon a reasoned assessment that the benefits outweigh the costs
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  (1) US Congress Passes Russian Sanctions Bill
  (2) OFAC Targets Venezuelan Officials over Election
  (3) ExxonMobil Fights Back after $2 Million Fine from OFAC
  (4) EU Regulation Extends Scope of Sanctions Reporting to Lawyers and Others in the UK
  (5) UK Government Announces New OGEL for Turkish Jet Fighter Program
 
[Editor’s Note: To subscribe to WorldECR, the journal of export controls and sanctions, please visit http://worldecr.com/.]
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COMMCOMMENTARY

COMM_a01
17. D.M. Edelman: “Should Businesses Worry About Changes to Recent Trade Programs?”

        
* Author: Doreen M. Edelman, Esq., Baker Donelson LLP, 202-508-3460, dedelman@bakerdonelson.com.
 
Wow. Trade issues had barely been addressed during the Obama Administration. Now in the last 6 months there has been a flurry of government activity. We have seen:
 
  (1) Continual increase in restricted parties added under the Iran, Russian, Sudanese and N. Korean sanctions programs
  (2) Released NAFTA negotiating objectives with negotiations begin this Fall
  (3) Tightening of enforcement of anti-dumping and countervailing duties (CVD)
  (4) Potential CFIUS legislative changes
  (5) Increased concern limiting Chinese investment and trade
  (6) Changes to Cuba regulations and new restricted parties coming this Fall
 
There is the potential that your business activities could be affected by any of the above. Some of the actions are more significant than others. We are seeing an increase in questions regarding enforcement and pre-payment of anti-dumping and CVD duties. The North Korea secondary sanctions could become a serious concern for companies doing business in China. The NAFTA objectives have been released by USTR and can be considered moderate and reasonable objectives. The details will be determined during the negotiations. So far, it is my opinion that the Administration could improve the almost 25 year old agreement by adding labor, environment, digital trade and intellectual property concerns while not altering the framework itself or the mechanism of the rules of origin for determining North American content. If you have a specific concern regarding a change affecting your company, you can communicate your concerns to your Congressional representatives and trade associations. Of course getting Congress on board could be another issue with the far left and ultra-right teaming up to object to the changes. Read the objectives here.
 
What can you do to determine your company’s risk?
 
  (1) Learn about your business partners and have diligence reviews as part of your risk procedures. For example, are you Chinese suppliers and/or customers doing business in North Korea or Iran?
  (2) Check government websites for trade-related sanctions and see if they apply. Monitor the websites for changes.
  (3) Ensure your company is screening for restricted parties and end use as part of your internal process.
  (4) Determine if you have a system to keep records of these risk mitigation steps.
  (5) Your actions and your “intent” to comply may protect you from potential violations.
  (6) Do you have alternative sources, partners and/or supply chains in case you need them?
Consider having internal discussions on these issues and consider the possible NAFTA changes.
 
If you need more information on any of the above, check our related articles. One on North Korea is here.

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COMM_a2
18. F. Danny: “How Export Control Software Can Ease Pains for Your Business”

(Source: Ezine Articles)
 
* Author: Fred Danny, Intredex. Contact information available here.
 
Exporters and importers would certainly prefer their business flourish by mitigating unnecessary risks that may hamper their brand name, reputation and import & export privileges.
 
On the other hand, the companies which failed to comply with export control regulations ended up with heavy fines and penalties. In fact, some companies still remain unaware of the set of laws codified as the US export control regulation, until they fall into the non-compliant companies and organizations situation when the U.S. government export enforcement office investigates them for violations.
 
The governmental agencies, particularly, the U.S. Department of Commerce’s Office of Export Enforcement, U.S. DHS Immigration and Customs Enforcement (ICE) and U.S. Department of Justice request exporters to conduct certain safeguarding activities, widely known as checks and verifications under “Know Your Customer“, as in the following:
 
  – Check customers, suppliers and other trade partners thoroughly prior to completing any business transactions with them.
  – Check if ordered products match the customer’s businesses practice or not.
  – Verify about modes of transportation and packaging requests.
  – Check for the red flags in routing of shipment through multiple countries.
  – Deny high-value transactions in cash.
  – Carefully screen their names and addresses against Denied party lists.
 
The aforementioned methods would also be great steps in implementation of good export compliance posture. Several U.S. Government agencies and other country government agencies, including the International organizations, regularly publish red flags and lists of banned, prohibited and denied persons, entities and companies. Periodically referring to those large numbers of lists, one can discover whether an entity is acceptable to do business from the U.S. export control regulations perspective or not. But, would this be effective enough for you? Does it make easier or faster for you? Absolutely not! Unless there’s something as efficient as automated export control software, the fact-checking against restricted party lists will be quite difficult, cumbersome and labor intensive.
 
How the software can help your business?
 
In the current scenario, if you don’t keep up with the recent technological trends and the speed of international trading you may hinder your business’ progress. Having efficient and accurately working export control software is a definite must. Automated restricted party screening software will help you check your trading partners against several internationally barred and denied company lists. Not only that, it will also help you keep a tab over ever changing international and national import and export control regulations. You can request top software providers for a complete software package that also helps you with ECCN and HTS classification as quickly as possible. The advantages of using this software include:
 
Reliable trade partner screening prevents long hours of manual search operations. With greatly improved flexible searching capabilities, such as phonetic search and fuzzy logic search, screening software in the market today allow users to find accurate results in a fraction of seconds.
 
Batch/bulk screening of lists makes it highly efficient for businesses that have got a lot of work to do. You will have a cost-effective solution at work, which helps you with compliance measures and saves money at the same time.
 
Some companies were severely misguided when they’re told that verifying only BIS and OFAC lists were sufficient. But, that’s not it. Companies operating globally would be bound by screening their trade partners against 100-120 U.S. and international denied party lists.
 
Under the defense export control regulations, achieving high level of ITAR compliance prior to importing and exporting defense articles is a major requirement. Unauthorized trading will invite an application of criminal and civil penalties. Per violation may impose a fine up to $500,000 and debarment under criminal penalties.
 
Therefore, you should utilize robust compliance automation software in your business transactions that helps you in complying with US export regulations while you focus on your core business processes.

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COMM_a3
19. K. King, R. Ross & K. Tsai: “Export Control Reminder: Semi-Annual Encryption Reporting Deadline, 1 Aug”

(Source: Cooley LLP)
 
* Authors: Kevin King, Esq., kking@cooley.com; Rebecca Ross, Esq., rross@cooley.com; and Karen Tsai, Esq., ktsai@cooley.com.  All of Cooley LLP, Washington DC.
 
August 1, 2017, is the deadline for submitting semi-annual reports for certain ENC Restricted encryption items exported or re-exported between January 1 and June 30, 2017, pursuant to paragraphs (b)(2) and (b)(3)(iii) of License Exception ENC (15 CFR 740.17). The encryption items subject to the semi-annual reporting requirement include, but are not limited to, network infrastructure items, items with an open cryptographic interface, certain encryption source code, and encryption items performing vulnerability or forensic analyses.
 
Certain “network infrastructure” items (including WAN, MAN, VPN, backhaul or long-haul equipment, certain satellite infrastructure, media gateways and terrestrial wireless infrastructure) may no longer be subject to the semi-annual reporting requirement due to recent changes to the encryption controls under the US Export Administration Regulations (“EAR”), effective September 20, 2016. In addition, “network infrastructure” items no longer require a license for export to “less-sensitive government end-users” in any country (other than the designated terrorist-supporting countries or countries/territories subject to US economic embargoes (currently, Cuba, Iran, North Korea, Sudan, Syria and the Crimea region of Ukraine). “Less-sensitive government end-users” include local, municipal and provincial governments, and federal government agencies responsible for civil public works; civil service human resources administration; public health; energy regulation and administration, including oil, gas and mining sectors; and economic and business development functions.

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COMM_a4
20. M. Volkov: “FCPA Risks and Acquisition Integration Challenges”

(Source: Volkov Law Group Blog. Reprinted by permission.)
 
* Author: Michael Volkov, Esq., Volkov Law Group, mvolkov@volkovlaw.com, 240-505-1992.
 
Chief compliance officers have devoted significant efforts to conducting pre-acquisition due diligence of a proposed target companies. I do not intend to diminish the importance of pre-acquisition due diligence, but I have noticed companies are increasing attention to post-acquisition integration planning and execution.
 
There is no question that disruption in the integration process can be very harmful to the overall success of an acquisition. Companies that acquire companies and fail to focus on the integration process are likely to suffer real and significant bottom line reductions. On the other hand, those companies that devote attention and effort to integrate new companies and assets can maximize gains over their competitors.
 
Compliance officers have to use the integration process as a significant opportunity to build internal relationships with their companies. By engaging in a comprehensive integration process the compliance officer can identify issues early in the process, work closely with the business to understand their operations and form important strategies and buy in for compliance issues.
 
In my experience, I have seen some common practices for effective integration procedures:
 
  (1) A responsible committee with a designated chair or co-chairs: An integration committee should be established early in the acquisition process. The members should include a representative from every function. A chairperson or co-chairs should be appointed by senior management to run the committee. Members should design specific tasks and create timelines for assignments in their respective responsible areas. The chairperson(s) should report regularly to senior management. The more time and effort devoted will reap more effective results.
 
  (2) The scheduling of regular integration planning meetings. The integration committee should meet weekly so that tasks are monitored and assigned as needed. Each member should understand his or her responsibilities and should be held accountable for their tasks.
 
  (3) Detailed timelines and schedules for completing tasks. A master timeline or project map should be maintained so that overall progress can be measured and issues identified early in the process.
 
The success of an integration committee often depends on the chairperson(s). A company should designate a senior executive who has strong management and collaboration skills. The integration process is critical to a seamless transition for new company operations and employees.
 
A chief compliance officer has to plan for integration of new employees, third parties and critical compliance functions. Initially, CCOs will focus on training of the new company personnel, and onboarding of new employees.   Many CCOs will visit new company sites and conduct in-person training to maximize the opportunity to promote a new compliance program to the employees. It is an important opportunity to advance a company’s compliance program to the new company.
 
CCOs also should conduct an anti-corruption audit of the new company after closing. Pre-acquisition due diligence is important but often is not detailed enough to verify the absence of bribery. A post-acquisition audit should be conducted soon after the closing to ensure that no bribery is occurring or that unaddressed significant corruption risks exist.
 
In many cases, senior executives can play a critical role in emphasizing the importance of ethics and compliance to the new company employees. Employees at the acquired company are often anxious or excited about new ownership and CCOs should recognize quickly the prevailing concerns among the new employees.   CCOs usually can build on this initial meeting to reassure the new company employees and establish open lines of communication to address their concerns.

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ECEX/IM TRAINING EVENTS & CONFERENCES

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21. ECTI Presents US Export Controls Interactive Workshop 2017 in Wash DC, 12-13 Sep

(Source: Jill Kincaid, jill@learnexportcompliance.com)

* What: United States Export Controls Interactive Workshop in Washington, DC
* When: Sep 12-13, 2017
* Where: Embassy Suites Alexandria Old Town, 1900 Diagonal Road, Alexandria
* Sponsor: Export Compliance Training Institute (ECTI); Akin Gump; Department of Homeland Security
* ECTI Speaker Panel: John Black, Greg Creeser, along with guest presentations from: Kevin Wolf, Jonathan Poling and Christopher Tafe
* Register: Here, or Jessica Lemon, 540-433-3977, jessica@learnexportcompliance.com.

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ENEDITOR’S NOTES

* Leo Durocher (Leo Ernest Durocher; 27 Jul 1905 – 7 Oct 1991; was an American professional baseball player, manager and coach. Upon his retirement, he ranked fifth all-time among managers with 2,009 career victories. Durocher still ranks tenth in career wins by a manager. A controversial and outspoken character, Durocher had a stormy career dogged by clashes with umpires; his 95 career ejections as a manager still rank fourth on the all-time list.)
  – “I never questioned the integrity of an umpire. Their eyesight, yes.”
  – If you don’t win, you’re going to be fired. If you do win, you’ve only put off the day you’re going to be fired.”

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EN_a323
. 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: 13 Jul 2017: 82 FR 32232-32241: Electronic Information for Cargo Exported from the United States; Technical Amendments

 

* 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 cancelled Supp. 1 to the NISPOM  (Summary here.)


EXPORT ADMINISTRATION REGULATIONS (EAR)
: 15 CFR Subtit. B, Ch. VII, Pts. 730-774

  – Last Amendment: 7 July 2017: 
82 FR 31442-31449: Revisions to the Export Administration Regulations Based on the 
2016 Missile Technology Control Regime Plenary Agreements. 

  
*
FOREIGN ASSETS CONTROL REGULATIONS (OFAC FACR)
: 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders
  – Last Amendment: 16 Jun 2017: 82 FR 27613-27614: Removal of Burmese Sanctions Regulations 
 
*
FOREIGN TRADE REGULATIONS (FTR)
: 15 CFR Part 30
  – Last Amendment: 19 Apr 2017: 82 FR 18383-18393: Foreign Trade Regulations: Clarification on Filing Requirements 
  – HTS codes that are not valid for AES are available
here.
  – The latest edition (18 July 2017) 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, Census/AES guidance, and to many errors contained in the official text. 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: 25 Jul 2017: Harmonized System Update 1706, containing 834 ABI records and 157 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.
  – Last Amendment: 11 Jan 2017: 82 FR 3168-3170: 2017 Civil Monetary Penalties Inflationary Adjustment
  – The only available fully updated copy (latest edition: 10 Jun 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 800 footnotes containing amendment histories, 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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EN_a0324. 
Weekly Highlights of the Daily Bugle Top Stories

(Source: Editor) 

Review last week’s top Ex/Im stories in “Weekly Highlights of the Daily Bugle Top Stories” published 
here

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EPEDITORIAL POLICY

* The Ex/Im Daily Update is a publication of FCC Advisory B.V., compiled by: Editor, James E. Bartlett III; Assistant Editors, Alexander P. Bosch and Vincent J.A. Goossen; and Events & Jobs Editor, John Bartlett. The Ex/Im Daily Update is 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.

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