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18-0321 Wednesday “Daily Bugle”

18-0321 Wednesday “Daily Bugle”

Wednesday, 21 March 2018

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The Daily Bugle is a free daily newsletter from Full Circle Compliance, containing changes to export/import regulations (ATF, DOE/NRC, Customs, NISPOM, EAR, FACR/OFAC, FAR/DFARS, FTR/AES, HTSUS, and ITAR), plus news and events.  Subscribe 
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  1. DHS/CBP Extends National Customs Automation Program, eBond Test Indefinitely 
  1. Items Scheduled for Publication in Future Federal Register Editions
  2. Commerce/BIS: (No new postings.)
  3. DHS/CBP Announces Cargo Reference Queries Fixes
  4. DHS/ICE: “Iranian National Sentenced in Minnesota to 15 Months in Federal Prison for Conspiring to Illegally Export Restricted Technology to Iran”
  5. Justice: “Florida Man Pleads Guilty to Conspiracy to Illegally Export Defense Articles to Russia”
  6. Justice: “Iranian National Arrested for Scheme to Evade U.S. Economic Sanctions by Illicitly Sending More Than $115 Million From Venezuela Through the U.S. Financial System”
  7. State/DDTC: (No new postings.)
  8. EU Amends Restrictive Measures Concerning Situation in Egypt
  9. Hong Kong/TID Suspends E-Services Due to Maintenance on 26 Mar
  1. Expeditors News: “Kevin McAleenan Confirmed by the Senate for CBP Commissioner”
  2. Reuters: “U.S. Makes Contingency Plans in Case Iran Nuclear Talks Fail”
  3. ST&R Trade Report: “CBP Clarifies Policy for Collection of Bills”
  1. T.G. Ficaretta: “Armor Piercing Ammunition: Basics of Federal Regulation”
  2. Gary Stanley’s EC Tip of the Day
  3. R.C. Burns: “OFAC Doesn’t Understand How Digital Currencies Work”
  1. Bartlett’s Unfamiliar Quotations 
  2. Are Your Copies of Regulations Up to Date? Latest Amendments: ATF (15 Jan 2016), Customs (22 Feb 2018), DOD/NISPOM (18 May 2016), EAR (16 Feb 2018), FACR/OFAC (19 Mar 2018), FTR (20 Sep 2017), HTSUS (14 Mar 2018), ITAR (14 Feb 2018) 
  3. Weekly Highlights of the Daily Bugle Top Stories 

EXIMITEMS FROM TODAY’S FEDERAL REGISTER

EXIM_a11. DHS/CBP Extends National Customs Automation Program, eBond Test Indefinitely
(Source: Federal Register, 21 Mar 2018.) [Excerpts.]
 
83 FR 12403-12404: Extension of National Customs Automation Program; eBond Test
* AGENCY: Customs and Border Protection, Department of Homeland Security.
* ACTION: General notice.
* SUMMARY: This document announces the extension of U.S. Customs and Border Protection’s (CBP’s) National Customs Automation Program (NCAP) test concerning the automation of CBP’s bond program (eBond test). CBP announced the eBond test in a Federal Register notice published on November 28, 2014. The test program has run continuously and without interruption since it commenced on January 3, 2015, and continues to run currently. This notice informs interested members of the public that CBP is extending the test until further notice.
* DATES: The eBond test program is extended until further notice. CBP will publish notice of the conclusion of the eBond test in the Federal Register.
* ADDRESSES: Written comments and/or questions regarding this notice or any aspect of this test may be submitted to CBP via email to eBondTest@cbp.dhs.gov with the subject line identifier reading “Comments/Question on eBond Test.” Requests for a surety filer code, and surety requests to participate in the eBond test should be sent to CONRAD.L.HENRY@cbp.dhs.gov, with a subject line identifier specifying either “Surety filer code request” or “Surety request to participate in eBond test.”
* FOR FURTHER INFORMATION CONTACT: For operational questions, please contact Kara Welty, Chief, Debt Management Branch, Revenue Division, Office of Finance at KARA.N.WELTY@CBP.DHS.GOV. For technical questions, please contact John Everett, Chief, Post Release Branch, Trade Transformation Office at JOHN.R.EVERETT@cbp.dhs.gov.
* SUPPLEMENTARY INFORMATION: …
  In this document, CBP announces that it is extending the test
indefinitely. CBP will publish notice of the conclusion of the test in the Federal Register. The extension of the test program is intended to encourage greater participation in the test by the trade and thereby provide CBP data needed to assess the feasibility of implementing the test program on a permanent basis. Comments concerning this notice and any aspect of the prototype may be submitted at any time during the test period. Except with respect to transmission of bond contracts via email pursuant to the regulations, rather than pursuant to the eBond test, all aspects, rules, terms and conditions announced in previous notices regarding the eBond test remain in effect. CBP will inform interested members of the public of its decision to implement and/or conclude the test program by way of announcement in the Federal Register.
 
  Dated: March 15, 2018.
Brenda B. Smith, Executive Assistant Commissioner, Office of Trade.
* * * * * * * * * * * * * * * * * * * * 

OGSOTHER GOVERNMENT SOURCES

OGS_a12. Items Scheduled for Publication in Future Federal Register Editions
(Source: Federal Register)

* Commerce; Industry and Security Bureau; RULES; Addition of Certain Persons to the Entity List and Removal of Certain Persons from the Entity List; Correction of License Requirements [Publication Date: 22 March 2018.]
* Commerce; Industry and Security Bureau; NOTICES; Export Privileges; Denials: Volodymyr Nedoviz [Publication Date: 22 March 2018.]
* State; NOTICES; Meetings: Defense Trade Advisory Group [Publication Date: 22 March 2018.]
* Treasury; Foreign Assets Control Office; PROPOSED RULES; Effectiveness of Licensing Procedures for Exportation of Agricultural Commodities, Medicine, and Medical Devices to Sudan and Iran [Publication Date: 22 March 2018.]

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

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

(Source:
CSMS #18-000237, 21 Mar 2018.)
 
The following fixes to the Cargo Reference Queries will be deployed to the certification environment on Thursday, 3/22/18 at 6 AM;
 
The word SPECIFIED spelling was fixed in the FQ/FO response messages for the following error messages:
 
  – NAME SPEICIFIED WITH FIRMS CODE
  – PORT SPEICIFIED WITH FIRMS CODE
  – NAME AND PORT SPEICIFIED WITH FIRMS CODE
 
The F105 query will no longer be supported in FQ transaction. Instead use of F105 will result in the error message 006 INVALID RECORD TYPE
 
Corrected the issue where addresses were being returned without House Number in the carrier query F106.
 
Modify FQ Query to disallow F112 “import specialist team” query. The F112 query will no longer be supported in FQ transaction. Instead use of F112 will result in the error message 006 INVALID RECORD TYPE
* * * * * * * * * * * * * * * * * * * * 

(Source:
DHS/ICE, 20 Mar 2018.) [Excerpts.]
 
An Iranian national, who was arrested in New York City, was sentenced in Minneapolis Tuesday to 15 months in prison for his role in illegally exporting restricted technology to his home country. …
 
Aliereza Jalali, 39, was sentenced before U.S. District Judge Joan N. Ericksen in the District of Minnesota, on one count of conspiracy to defraud the United States. He pleaded guilty to the charge on Nov. 29, 2017. …
 
“Jalali and his co-conspirators illegally sent sensitive military-use technology to Iran, where it could fall into the hands of Iran’s Islamic Revolutionary Guard Corps (IRGC), in clear violation of U.S. law,” said Assistant Attorney General Demers. “This is a threat to the national security of the United States and our allies, and we will aggressively prosecute those who brazenly violate our export control laws.” …
 
According to the defendant’s guilty plea, from 2009 through December 2015, Jalali was a part-time employee of Green Wave Telecommunication, Sdn Bhn, (Green Wave) a Malaysian company located in Kuala Lumpur, Malaysia. Since its incorporation in 2009, Green Wave operated as a front company for Fanavar Moj Khavar (Fana Moj), an Iran-based company that specializes in both broadcast communications and microwave communications.
 
As part of this conspiracy, Green Wave was used to acquire unlawfully sensitive export-controlled technology from the United States on behalf of Fana Moj. In order to accomplish these acquisitions, Jalali and his co-conspirators concealed the ultimate unlawful destination and end users of the exported technology through false statements, unlawful financial transactions, and other means.
 
The defendant’s co-conspirators contacted producers of the sought-after technology, solicited purchase agreements, and negotiated the purchase and delivery of the goods with the seller. When the goods were received by Green Wave in Malaysia, Jalali repackaged and unlawfully exported the items from Malaysia to Fana Moj in Tehran, Iran. In 2017, the U.S. Department of the Treasury placed Fana Moj on its list of “Specially Designated Nationals” for providing financial, material, technological or other support for, or goods or services in support of, the IRGC.    
* * * * * * * * * * * * * * * * * * * * 

(Source:
Justice, 20 Mar 2018.)
 
Vladimir Nevidomy, 31, of Hallandale Beach, Florida, pleaded guilty on March 19, to conspiring to illegally export military-grade night vision and thermal vision devices and ammunition primers to Russia. …
 
According to information contained in court documents, from as early as April 2013 through November 2013, customers in Russia contacted Nevidomy by email requesting night vision rifle scopes, thermal monoculars and ammunition primers, all of which were on the U.S. Munitions List and subject to export control by the U.S. Department of State. Nevidomy proceeded to obtain at least three ATN MARS 4×4 night-vision rifle scopes and an ODIN 61BW thermal multi-purpose monocular from U.S. vendors by falsely representing to the vendors that the items were not for export.
 
On or about April 16, 2013, a co-defendant caused a wire transfer from a Shanghai, China bank account in the amount of $11,755 for the purchase and shipment of two ATN MARS 4×4 night-vision rifle scopes. That same day, Nevidomy paid $9,599 to a U.S. vendor for the purchase of those two night-vision rifle scopes. On or about May 2, 2013, Nevidomy also caused a wire transfer in the amount of $10,000 to be sent to a U.S. vendor for the purchase of the ODIN 61BW thermal multi-purpose monocular.
 
Later, Nevidomy’s co-defendant caused a wire transfer from a bank account in Riga, Latvia in the amount of $18,036, part of which was for the purchase of a third ATN Mars 4X4 night-vision rifle scope. On the same day, Nevidomy caused a wire transfer in the amount of $9,599 to a U.S. vendor, part of which was for the purchase of the third ATN Mars 4X4 night-vision rifle scope.
 
After the U.S. vendors sent the night vision devices to Nevidomy in South Florida, he exported them to the co-defendant in Russia by either concealing the defense articles in household goods shipments sent through a freight forwarding company or using a private Russian postal service that operated in South Florida. In June 2013, Nevidomy aided and abetted the export of the ATN MARS 4×4 night-vision rifle scopes from the U.S. to the co-defendant in Russia, and in August 2013, he exported the ODIN 61BW thermal multi-purpose monocular from the U.S. to the co-defendant in Russia.
 
On or about July 19, 2013, the same co-defendant sent an email to Nevidomy requesting 1,000 large-rifle ammunition primers to be shipped to Vladivostok, Russia. On or about Oct. 2, 2013, Nevidomy attempted to export 1,000 Sellier & Bellot ammunition primers from the U.S. to the co-defendant in Vladivostok, Russia. These ammunition primers were seized by U.S. Customs and Border Protection.
 
These night vision rifle scopes, thermal monocular, and ammunition primers required a license or other authorization from the U.S. Department of State before being exported from the U.S. since they were on the U.S. Munitions List. A certified license history check revealed that neither Nevidomy nor his associates ever applied or attempted to apply for an export license from the State Department for the night-vision equipment or ammunition primers.
 
Sentencing is scheduled before U.S. District Judge Kathleen Williams, on May 25. Nevidomy, a Ukraine-born naturalized U.S. citizen, faces a maximum sentence of 5 years imprisonment. …
* * * * * * * * * * * * * * * * * * * * 

(Source:
Justice, 20 March 2018) [Excerpts.]
 
An indictment was unsealed today charging Ali Sadr Hashemi Nejad (Sadr) for his alleged involvement in a scheme to evade U.S. economic sanctions against Iran, to defraud the U.S., and to commit money laundering and bank fraud. Sadr was charged with participating in a scheme in which more than $115 million in payments for a Venezuelan housing complex were illegally funneled through the U.S. financial system for the benefit of Iranian individuals and entities. …
 
Beginning in 1979, the President, pursuant to the International Emergency Economic Powers Act (the IEEPA), has repeatedly found that the actions and policies of the government of Iran constitute an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States and declared a national emergency to deal with the threat. In accordance with these presidential declarations, the United States has instituted a host of economic sanctions against Iran and Iranian entities. This sanctions regime prohibits, among other things, financial transactions involving the United States or U.S. persons that were intended for the benefit of the Government of Iran or Iranian individuals or entities.
 
In August 2004, the Governments of Iran and Venezuela entered into an agreement (the Agreement), whereby they agreed to cooperate in certain areas of common interest. The following year, both governments supplemented the Agreement by entering into a Memorandum of Understanding regarding an infrastructure project in Venezuela (the Project), which was to involve the construction of thousands of housing units in Venezuela.
 
The Project was led by Stratus Group, an Iranian conglomerate controlled by Sadr and his family with international business operations in the construction, banking, and oil industries. In December 2006, Stratus Group incorporated a company in Tehran, which was then known as the Iranian International Housing Corporation (IIHC). IIHC was responsible for construction for the Project. Thereafter, IIHC entered into a contract with a subsidiary of a Venezuelan state-owned energy company (the VE Company), which called for IIHC to build approximately 7,000 housing units in Venezuela in exchange for approximately $475,734,000. Stratus Group created the Venezuela Project Executive Committee to oversee the execution of the Project. Sadr was a member of the committee and was responsible for managing the Project’s finances.
 
In connection with his role on the Project, Sadr took steps to evade U.S. economic sanctions and to defraud U.S. banks by concealing the role of Iran and Iranian parties in U.S. dollar payments sent through the U.S. banking system. For example, in 2010, Sadr and a co-conspirator used St. Kitts and Nevis passports and a United Arab Emirates address to incorporate two entities outside Iran that would receive U.S. dollar payments related to the Project on behalf of IIHC. The first entity, Clarity Trade and Finance (Clarity), was incorporated in Switzerland, and the second, Stratus International Contracting, J.S., aka Stratus Turkey, aka Straturk, was incorporated in Turkey. Stratus Turkey and Clarity were both owned and controlled by Sadr and his family members in Iran. Sadr then opened U.S. dollar bank accounts for Clarity and Stratus Turkey at a financial institution located in Switzerland.
 
Thereafter, Sadr and others conducted a series of international financial transactions using Clarity and Stratus Turkey for the benefit of Iranian parties in a manner that concealed the Iranian nexus to the payments, in violation of U.S. economic sanctions. Specifically, between April 2011 and November 2013, the VE Company, at the direction of Sadr and others, made approximately 15 payments to IIHC through Stratus Turkey or Clarity, totaling approximately $115,000,000.
 
Sadr and others directed that payments be routed through banks in the U.S. to Stratus Turkey’s or Clarity’s bank accounts at the financial institution in Switzerland. The majority of the funds were then transferred to another offshore entity located in the British Virgin Islands, which had been incorporated by Sadr and others in 2009. In addition, on Feb. 1, 2012, Clarity wired more than $2,000,000 of proceeds from the Project directly into the United States. Those proceeds were then used to purchase real property in California.
 
The Indictment charges Sadr with: one count of Conspiracy to Defraud the United States which carries a maximum penalty of 5 years in prison; one count of Conspiracy to Violate IEEPA which carries a maximum penalty of 20 years in prison; one count of Bank Fraud which carries a maximum penalty of 30 years in prison; one count of Conspiracy to Commit Bank Fraud which carries a maximum penalty of 30 years in prison; one count of Money Laundering which carries a maximum penalty of 20 years in prison; and one count of Conspiracy to Commit Money Laundering which carries a maximum penalty of 20 years in prison. …
* * * * * * * * * * * * * * * * * * * * 

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Regulations:
* Council Implementing Regulation (EU) 2018/465 of 21 March 2018 implementing Regulation (EU) No 270/2011 concerning restrictive measures directed against certain persons, entities and bodies in view of the situation in Egypt
 
Decisions:
* Council Decision (CFSP) 2018/466 of 21 March 2018 amending Decision 2011/172/CFSP concerning restrictive measures directed against certain persons, entities and bodies in view of the situation in Egypt
* * * * * * * * * * * * * * * * * * * * 

 
All e-services of our website will be suspended from 18:30 to 22:30 on 26 March 2018 (Monday) due to system maintenance.

We apologize for any inconvenience caused.

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NWSNEWS

NWS_a1
11. Expeditors News: “Kevin McAleenan Confirmed by the Senate for CBP Commissioner”
(Source: Expeditors News, 20 Mar 2018.)
 
On 19 March 2018, the U.S. Senate confirmed Kevin McAleenan to be Commissioner of U.S. Customs and Border Protection (CBP). Kevin McAleenan has been the Acting Commissioner since January 20, 2017. The vote passed with 77 votes for yea and 19 votes for nay.
 
The Senate action may be found here.
 
More information on CBP’s leadership may be found here.

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NWS_a2
12. Reuters: “U.S. Makes Contingency Plans in Case Iran Nuclear Talks Fail”

(Source: Reuters, 21 Mar 2018.)
 
The United States has had constructive talks about the Iran nuclear deal with Britain, France and Germany but is making contingency plans should they fail, the lead U.S. negotiator said on Wednesday.
 
U.S. President Donald Trump gave an ultimatum on Jan. 12 to the European powers, saying they must agree to “fix the terrible flaws” of the 2015 Iran nuclear deal or he would refuse to extend the U.S. sanctions relief on Iran that it calls for. U.S. sanctions will resume unless Trump again waives them on May 12.
 
  “We have had constructive talks with the Europeans toward a supplemental agreement but I can’t predict whether we will reach an agreement with them or not,” Brian Hook, the State Department policy planning director, told reporters in a conference call.
 
  “We are engaged in contingency planning because it would not be responsible not to,” said Hook, the lead U.S. negotiator in the talks with the Europeans. “We are kind of dual tracking this.”
 
Hook held talks with the three European powers in Berlin on Thursday followed by wider talks on Friday in Vienna with a group that tracks the implementation of the nuclear deal negotiated under former President Barack Obama’s administration.
 
The United States also had a bilateral meeting with Iran in Vienna to demand the release of U.S. citizens held by Tehran, Hook said.
 
A senior Iranian foreign ministry official confirmed that the United States had raised the issue in the bilateral talks, saying that the Iranian side had responded that this was a matter for the Iranian judiciary, which acts independently.
 
  “However, on humanitarian grounds, we said we will do whatever possible,” said the Iranian official on condition of anonymity, adding that at the same meeting “Iran asked for the release of Iranians jailed” in the United States.
 
He also said the issue was discussed with the foreign minister of Oman when he visited Tehran earlier this month.
 
The crux of the 2015 agreement between Iran and six major powers – Britain, China, France, Germany, Russia and the United States – was that Iran would restrict its nuclear program in return for relief from sanctions that have crippled its economy.
 
Trump sees three defects in the deal: its failure to address Iran’s ballistic missile program; the terms under which international inspectors can visit suspect Iranian nuclear sites; and “sunset” clauses under which limits on the Iranian nuclear program start to expire after 10 years. He wants all three strengthened if the United States is to stay in the deal.
 
Iran is technically complying with the agreement, Hook said.
 
However, he repeated the Trump administration view Iran is violating the deal’s preamble, which expressed the expectation that the agreement’s “full implementation … will positively contribute to regional and international peace and security.”
 
Some analysts reject this stance, arguing the expression of this expectation did not imply a commitment on Iran’s part.
 
Iran argues it is not receiving the full benefits of the sanctions relief, in part because big banks have continued to stay away for fear of falling foul of remaining U.S. sanctions.
 
Hook said he had rejected this argument.
 
  “Iran’s opaque economy makes it hard for investors to know whether they’re supporting commerce or supporting terrorism,” he said. “Iran needs to stop sponsoring terrorism and overhaul its banking and business sectors.”
 
He also played down Iranian concerns that Trump has yet to approve licenses for Western aircraft companies to sell to Iran although the Obama administration did so.
 
  “I said to them you use your commercial airlines to move terrorists and weapons around the Middle East, including to Syria, and we will not issue licenses at the expense of our national security,” Hook said.
 
European planemaker Airbus and its U.S. rival Boeing have agreed to sell a total of 180 jets to renew the aging fleet of state carrier IranAir, but depend on U.S. support for the deal because of the number of U.S. parts in all their jets.

 

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NWS_a3
13. ST&R Trade Report: “CBP Clarifies Policy for Collection of Bills”
 
U.S. Customs and Border Protection has clarified its policy regarding collection efforts on bills for supplemental duties, taxes, and fees and vessel repair duties.
 
Effective March 26, CBP will start mailing dunning letters 120 days from the date of a bill to outline what will happen if payment is not received or a protest is not filed within 180 days. CBP states that “in general” if a protest is filed within 180 days the agency will not divert payments owed to the importer for refunds or place the importer on sanction until the protest has been decided. These policies represent a change from CBP’s August 2017 announcement that dunning letters would be issued on the 61st day after issuance of a bill and that collection activities (such as diverting refunds) would commence on any bill older than 60 days.
 
However, it is not clear what CBP means by “in general” when describing when it will divert refunds or sanction an importer that has not filed a protest even though time remains under the 180-day protest period. Importers should therefore take dunning letters seriously, even if they intend to file a timely protest.

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COMMCOMMENTARY

COMM_a01
14. T.G. Ficaretta: “Armor Piercing Ammunition: Basics of Federal Regulation”
(Source: Ficaretta Legal Services, LLC, 20 Mar 2018.)
 
*
Author:  Teresa G. Ficaretta, Esq., teresa@ficarettalegal.com, 301-353-3558; Ficaretta Legal Services, LLC.
 
In 1986 Congress amended the Gun Control Act of 1968 (“GCA”) and imposed significant controls over “armor piercing ammunition.”  The restrictions (1) prohibit the manufacture and importation of armor piercing ammunition; (2) authorize the Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATF”) to revoke the license of any licensed dealer who willfully transfers armor piercing ammunition; (3) impose marking requirements on such ammunition; and (4) require licensees to keep records of disposition of armor piercing ammunition.  This bulletin will address the statutory definition and provide an overview of the restrictions.
 
(1) Definition of “Armor Piercing Ammunition”
 
The GCA definition of armor piercing ammunition is composition-based and includes the following two tests:
 
  – A projectile or projectile core which may be used in a handgun and which is constructed entirely from one or a combination of tungsten alloys, steel, iron, brass, bronze, beryllium copper, or depleted uranium; and
  – A full jacketed projectile larger than .22 caliber designed and intended for use in a handgun and whose jacket has a weight of more than 25 percent of the total weight of the projectile.
 
Both tests require that ammunition be capable of use in a handgun.  What if the handgun that chambers the ammunition is a prototype produced in limited quantities?  If the handgun is commercially available, ATF is likely to classify the ammunition as armor piercing despite limited production and availability.
 
Turning to the specifics of the two statutory tests, it is apparent the first test is easier to apply than the second.  If the projectile or projectile core is made of one of the specified metals and is capable of use in a handgun, it is armor piercing.  The second test is more complex, as it requires consideration of whether the projectile has a jacket weighing more than 25 percent of the total weight of the projectile.  Such a determination requires weighing the projectile, then weighing the jacket after melting away or otherwise removing the projectile core.  This type of testing is difficult and should be conducted by a qualified laboratory or ATF’s Firearms and Ammunition Technology Division.  
 
(2) Exclusions from the Definition
 
The statutory definition specifically excludes from the category of “armor piercing ammunition” the following:
 
  – Shotgun shot required by federal or state environmental or game regulations for hunting purposes;
  – Frangible projectiles designed for target shooting;
  – Projectiles which the Attorney General finds are primarily intended to be used for sporting purposes; or
  – Any other projectile or projectile core which the Attorney General finds is intended to be used for industrial purposes, including a charge used in an oil and gas well perforating device.
 
ATF regulations require persons who wish to obtain an exemption for ammunition that fits within the third and fourth categories listed above to submit a written request to the Director.  In 1986 ATF exempted from the statute 5.56 mm (.223) SS109 and M855 “green tip” ammunition containing a steel core.  In 1992 ATF exempted .30-06 M2AP cartridges.  Both of these exemptions were granted under the “sporting purposes” test above.
 
Beginning in 2011, ATF received over 30 exemption requests for armor piercing ammunition on the basis that they were primarily intended to be used for sporting purposes.  In February, 2015, ATF published a “Framework” (available here) setting forth proposed criteria for acting on the exemption requests the agency received.  The agency received over 80,000 comments on the Framework and withdrew its proposal.  To the best of this writer’s knowledge, the agency has not acted on any of the exemption requests to date.  
 
(3) Statutory Exemptions
 
The GCA includes the following exemptions from the prohibitions on importation and manufacture of armor piercing ammunition:
 
  – Manufacture of ammunition for federal, state, or local government agencies;
  – Manufacture of ammunition for exportation; and
  – Manufacture or importation of ammunition for purposes of testing or experimentation authorized by ATF.
 
Manufacturers who make and distribute ammunition to government agencies should document their eligibility for this exemption through government contracts and purchase orders. 
 
Manufacturers and importers who wish to make or import armor piercing ammunition for purposes of testing or experimentation must obtain approval from ATF pursuant to 27 C.F.R. § 478.149. 
 
(4) Record Keeping
 
Licensed manufacturers, importers, dealers, and collectors are required to create and retain records of their disposition of armor piercing ammunition.  Failure to maintain disposition records gives ATF investigators authority to issue a Report of Violations which, if willful, would provide a basis for license revocation. 
 
(5) Marking
 
Licensed manufacturers and licensed importers of armor piercing ammunition must identify it by means of painting, staining or dying the exterior of the projectile with an opaque black coloring.  The coloring must completely cover the point of the projectile and at least 50 percent of the portion visible when the projectile is loaded into the cartridge case.  Packages in which armor piercing ammunition is contained must also be conspicuously labeled with the words “ARMOR PIERCING” in block letters at least ¼ inch in height.  The package must also be marked in block lettering at least 1/8 inch in height the words “FOR GOVERNMENTAL ENTITIES OR EXPORTATION ONLY.” 
 
Conclusion
 
Industry members who manufacture and import ammunition should ensure they are aware whether products they make or import fit within the statutory definition of armor piercing ammunition.  This is a continuing obligation, as rounds originally designed and marketed as rifle ammunition may become regulated as armor piercing if a handgun that will chamber the ammunition is commercially available.  Dealers in ammunition should obtain information from manufacturers about all products they sell to ensure they do not inadvertently sell armor piercing ammunition in violation of law.   Industry members with questions about classification of a particular product should contact ATF’s Firearms and Ammunition Technology Division at fire_tech@atf.gov or (304)616-4300. 

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* Author: Gary Stanley, Esq., Global Legal Services, PC, (202) 352-3059,
gstanley@glstrade.com
.
 
General Prohibition Ten in EAR Part 736 states that no one may sell, transfer, export, reexport, finance, order, buy, remove, conceal, store, use, loan, dispose of, transport, forward, or otherwise service, in whole or in part, any item subject to the EAR and exported or to be exported with knowledge that a violation of the Export Administration Regulations, the Export Administration Act, or any order, license, License Exception, or other authorization issued thereunder has occurred, is about to occur, or is intended to occur in connection with the item. Nor may anyone rely upon any license or License Exception after notice of the suspension or revocation of that license or exception. There are no License Exceptions to this General Prohibition Ten in EAR Part 740.

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COMM_a3
16. R.C. Burns: “OFAC Doesn’t Understand How Digital Currencies Work”
(Source:
Export Law Blog
, 20 Mar 2018 Reprinted by permission.)
 
* Author: R. Clifton Burns, Esq., Bryan Cave LLP, Wash DC,
Clif.Burns@bryancave.com
, 202-508-6067).
 
Yesterday, the White House issued an executive order prohibiting U.S. persons from transactions in the Petro, the new Venezuelan digital currency. As you might recall, OFAC initially suggested that dealings in the Petro would violate restrictions on providing debt financing to the Venezuelan government, an idea that I said was a foolish misunderstanding of the difference between debt and currency.
 
The new executive order does what it should have done to begin with: restrict the digital currency directly. Of course, as the only current and guaranteed use for the Petro is to pay Venezuelan taxes and government fees, it is doubtful that the Petro will be of interest to U.S. persons and, as a result, it is hard to see that the new executive order will have much impact, other than, I suppose, preventing U.S. persons  or persons in the U.S. from operating nodes in the P2P network for the Petro.

In addition to banning U.S. persons, the new order gave OFAC the opportunity to wade into digital currencies again and shows fundamental misconceptions about how digital currencies work. Astonishingly, the new FAQs on digital currencies issued with the executive order propose to add digital currency addresses as identifiers on the SDN List:
 
To strengthen our efforts to combat the illicit use of digital currency transactions under our existing authorities, OFAC may include as identifiers on the SDN List specific digital currency addresses associated with blocked persons.
 
Oh. My. Goodness. They really said that. Next OFAC will be adding an SDN’s favorite unicorn name as identifiers on the SDN List.
 
Here’s what’s wrong with this idea of using  digital currency addresses as identifiers on the SDN List: they are only used once (unless you’re particularly clueless). For each payment request, the requester generates a unique public and private key pair. The digital address is a hash of that key pair. The payment request is signed with the private key and sent with the public key, allowing the authentication of the request. When the individual wants to make another payment request, a new key pair and address is generated.
 
So, if OFAC puts an address on the list, hoping to prevent U.S. persons from sending digital currency to that address, it is a waste of time because it is highly unlikely that address will ever be used again for a payment request (particularly once the address is on the SDN List). Nor will it prevent U.S. persons from receiving money from that address, because  the digital currency can be transferred to a newly-generated address prior to sending the currency. (And this problem is not solved by looking at the last-sent-to address in a blockchain explorer, because that will not establish that the new address is controlled by the same, presumably blocked person. If sent by the blocked person to an address of an unblocked person, the transferred digital currency is no longer blocked because the blocked person no longer has any interest in it.)
 
Of course, in the unlikely event that the SDN is not savvy enough to use a different address for all of his/her digital currency transactions (or to use wallet software preventing address reuse), then he will get caught by listing his reused address as an identifier. But, I’m guessing the only people re-using the same address for all their digital currency transactions are working at OFAC.

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ENEDITOR’S NOTES

 
Gary Oldman (Gary Leonard Oldman, born 21 March 1958; is an English actor who has worked in theatre, film and television. Among other accolades, Oldman won an Academy Award (Best Actor for portrayal of Winston Churchill in Darkest Hour), three BAFTA Awards, two Critics’ Choice Awards, a Golden Globe Award and a Screen Actors Guild Award, along with nominations for an Emmy Award and the Palme d’Or. In 2011.)
  – “Reality TV to me is the museum of social decay.”
  – “I just think political correctness is crap.”
 
Jean Paul (21 Mar 1763 – 14 Nov 1825; born Johann Paul Friedrich Richter, was a German Romantic writer, best known for his humorous novels and stories.)
   – “Joy descends gently upon us like the evening dew, and does not patter down like a hailstorm.” 
  – “Every man regards his own life as the New Year’s Eve of time.”

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EN_a318
. 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.  The latest amendments 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: 22 Feb 2018: 83 FR 7608-7610: Technical Amendment to List of User Fee Airports: Name Changes of Several Airports and the Addition of Five Airports
 
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: 
16 Feb 2018:
83 FR 6949-6956
: Russian Sanctions: Addition of Certain Entities to the Entity List [Addition of 21 Entities to Entity List.]

  
*
FOREIGN ASSETS CONTROL REGULATIONS (OFAC FACR)
: 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders

  – Last Amendment: 19 Mar 2018:
83 FR 11876-11881: Inflation Adjustment of Civil Monetary Penalties 

 
*
FOREIGN TRADE REGULATIONS (FTR)
: 15 CFR Part 30
  – Last Amendment:
20 Sep 2017:
 
82 FR 43842-43844
: Foreign Trade Regulations (FTR): Clarification on Filing Requirements; Correction
 
  – HTS codes that are not valid for AES are available
here.
  – The latest edition (16 March 2018) 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 approximately 250 footnotes containing case annotations, practice tips, Census/AES guidance, and explanations of the numerous errors contained in the official text. Subscribers receive revised copies in Microsoft Word every time the FTR is amended. The BAFTR is available by annual subscription from the Full Circle Compliance websiteBITAR subscribers are entitled to a 25% discount on subscriptions to the BAFTR. Government employees (including military) and employees of universities are eligible for a 50% discount on both publications at www.FullCircleCompiance.eu.  
 
*
HARMONIZED TARIFF SCHEDULE OF THE UNITED STATES (HTS, HTSA or HTSUSA)
, 1 Jan 2018: 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: 14 Mar 2018: Harmonized System Update 1803, containing 449 ABI records and 92 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: 14 Feb 2018: 83 FR 6457-6458: Amendment to the International Traffic in Arms Regulations: Addition of South Sudan [Amends ITAR Part 126.] 

  – The only available fully updated copy (latest edition: 14 Feb 2018) 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_a0319
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, DOE/NRC, DOJ/ATF, DoD/DSS, DoD/DTSA, FAR/DFARS, 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, provided attribution is given to “The Export/Import Daily Bugle of (date)”. 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.


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