;

18-0411 Wednesday “Daily Bugle”

18-0411 Wednesday “Daily Bugle”

Wednesday, 11 April 2018

TOP
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 
here for free subscription. Contact us
for advertising inquiries and rates
.

[No items of interest noted today.]

  1. Items Scheduled for Publication in Future Federal Register Editions
  2. Commerce/BIS Denies Export Privileges to 4 Persons
  3. State/DDTC Posts 2 Address Change Notices
  4. UK DIT/EJCU Announces 1 New OGEL, Updates 26 OGELS
  5. UK DIT/EJCU Posts Export Control (Belarus) and (Syria Amendment) Order 2011: Post Implementation Review, and New Training Bulletin
  6. Singapore Customs Announces Tradened Downtime on 22 Apr
  1. MyNewsLA.com: “Russian Man Faces Sentencing for Rifle Scope Export Attempt”
  1. C.A. Conry, A.J. Dale & M.R. Littenberg: “Department of Homeland Security Publishes FAQs on North Korean Labor in Supply Chains”
  2. King & Spalding: “Congress Debates Export Control Reform”
  3. M. Volkov: “Bringing a Compliance Program to Life: Connecting the Dots”
  4. Gary Stanley’s EC Tip of the Day
  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 (5 Apr 2018), FACR/OFAC (19 Mar 2018), FTR (20 Sep 2017), HTSUS (30 Mar 2018), ITAR (14 Feb 2018) 
  3. Weekly Highlights of the Daily Bugle Top Stories 

EXIMITEMS FROM TODAY’S FEDERAL REGISTER

EXIM_a1

  

[No items of interest noted today.]

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

OGSOTHER GOVERNMENT SOURCES

OGS_a11. Items Scheduled for Publication in Future Federal Register Editions
(Source: Federal Register)

* DHS/CBP; RULES; U.S. Customs and Border Protection
Rules: Definition of Importer Security Filing Importer [Publication Date: 12 Apr 2018.]
 
* Justice/ATF; NOTICES; Agency Information Collection Activities; Proposals, Submissions, and Approvals: 
Report of Multiple Sale or Other Disposition of Pistols and Revolvers [Publication Date: 12 Apr 2018.] 
* * * * * * * * * * * * * * * * * * * *

(Source: 
Commerce/BIS
, 11 Apr 2018.) [Summary.]
 
 
* Respondent: Earl Henry Richmond of Green Valley, AZ.
* Charges: Knowingly and intentionally conspiring with others to knowingly and willfully export from the U.S. to Hong Kong ammunition of firearms, designated as defense articles on the U.S. Munitions List, without the required State Department licenses.
* Penalty: Denied export privileges for a period of 10 years from the date of his conviction.
* Date of Order: 6 Apr 2018.
 
 
* Respondent: Peter Steve Plesinger of San Pedro, CA.
* Charges: Knowingly and willfully exporting or causing to be exported from the U.S. to Hong Kong firearms and ammunition, designated as defense articles on the U.S. Munitions List, without the required State Department licenses.
* Penalty: Denied export privileges for a period of 10 years from the date of his conviction.
* Date of Order: 6 Apr 2018.
 
 
* Respondent: Stephen Edward Smith of Anthony, NM.
* Charges: Knowingly and willfully exporting or causing to be exported from the U.S. to Hong Kong firearms, designated as defense articles on the U.S. Munitions List, without the required State Department licenses.
* Penalty: Denied export privileges for a period of 10 years from the date of his conviction.
* Date of Order: 6 Apr 2018.
 
 
* Respondent: Erdal Kuyumcu of Joint Base MDL, NJ.
* Charges: Knowingly and willfully conspired to export from the U.S. to Iran a metallic powder composed of cobalt and nickel, without having obtained the required U.S. Government authorization. Kuyumcu thereby violated the International Emergency Economic Powers Act (“IEEPA”). 
* Penalty: Denied export privileges for a period of 10 years from the date of his conviction.
* Date of Order: 9 Apr 2018.

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

OGS_a33. State/DDTC Posts 2 Address Change Notices

(Source: 
State/DDTC, 11 Apr 2018.)
 
* Expeditors Int’l of Washington Inc. address change 
web notice

* Korade B.V. address change web notice

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

OGS_a044. 
UK DIT/EJCU Announces 1 New OGEL, Updates 26 OGELS, 

(Source: 
UK DIT/EJCU, Notice to Exporters 2018/08, 11 Apr 2018.) [Excerpts.]
 
The Export Control Joint Unit (EJCU) of the UK Department of International Trade (DIT) has published a new open general export license (OGEL): 
information security items. The purpose of this OGEL is to allow the export of ‘low risk’ information security items deploying encryption to a wide range of destinations.
 
All items specified in Schedule 1 of the new license must only use:
  – standard encryption algorithms that have been approved or adopted by recognized international standards bodies (examples: 3GPP, ETSI, GSMA, IEEE, IETF, ISO, ITU, TIA)
  – any cryptographic functionality used by the item cannot be easily changed by the user
 
Before using this license, you must register through 
SPIRE, the export control joint unit’s (ECJU’s) electronic licensing system, stating where you will keep records of the exports or transfers and where the ECJU may inspect them. There are also additional technical data reporting requirements that must be completed prior to the first export of each item.
 
OGELs amended
 
A number of military and dual use OGELs have also been updated and amended to reflect new contact details of the ECJU and Ministry of Defense (MOD). References to outdated government departments have been changed and, where appropriate, visual branding of the OGELs updated. The scope of these OGELs remains the same.
 
Military OGELs updated:
  – certified companies
  – export for exhibition: military goods
  – exports or transfers in support of UK government defense contracts
  – exports under the US-UK Defense Trade Cooperation Treaty
  – historic military vehicles and artillery pieces
  – military components
  – military goods, software and technology
  – military goods: Collaborative Project Typhoon
  – military goods, software and technology: government or NATO end use
  – military surplus vehicles
  – vintage aircraft
  – exports in support of joint strike fighter: F-35 Lightning II
  – military goods: A400M Collaborative Program
 
Dual-Use OGELs updated:
  – chemicals
  – cryptographic development
  – export after exhibition: dual use items
  – export after repair/replacement under warranty: dual use items
  – export for repair/replacement under warranty: dual use items
  – low value shipments
  – oil and gas exploration: dual use items
  – technology for dual use items
  – specified dual use Items (X)
  – PCBs and components for dual use items
 
Military/dual use OGELS updated:
  – military and dual use: UK forces deployed in embargoed destinations
  – military and dual use goods: UK forces deployed in non-embargoed destinations
  – exports of non-lethal military and dual use goods: to UK diplomatic missions or consular posts
 
In force date
 
The information security items OGEL and 26 amended OGELs come into force on Wednesday 11 April 2018.
 
ECJU Contact details
 
Helpline: Export Control Joint Unit
2nd floor 
3 Whitehall Place
London
SW1A 2AW

Telephone: + 44 (0)20 7215 4594
 
Contact for general queries about strategic export licensing. More information on export controls is available on the 
ECJU pages of the GOV.UK website, also the 
SPIRE export licensing database. … 

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

OGS_a5
5.

UK DIT/EJCU Posts Export Control (Belarus) and (Syria Amendment) Order 2011: Post Implementation Review, and New Training Bulletin


(Source: 
UK DIT/EJCU
, 11 Apr 2018.) 
 
Export Control (Belarus) and (Syria Amendment) Order 2011: Post Implementation Review 
 
These documents set out the results of a review required by Article 9 of the Export Control (Belarus) and (Syria Amendment) Order 2011, which implements EU trade sanctions. The review was designed to check if:
 
  – the regulations had achieved their original objectives
  – the regulations’ objectives were still valid
  – the regulations were still required or could be improved to  reduce the burden on business and its overall costs
 
This Order will be revoked and replaced when an equivalent instrument is laid under the forthcoming Sanctions and Anti-Money Laundering Act. The Act will give the UK the necessary legal powers to continue to implement sanctions and introduce tough new measures post-Brexit. This will enable us to maintain existing sanctions regimes currently imposed through EU law, while providing the necessary legal underpinning for the UK to decide when and how to act against new threats. 
The Order is available 
here
.
 
Export Control Training Bulletin
 
This bulletin contains details of courses, seminars and workshops from the 
Export Control Joint Unit to increase your understanding of the UK’s strategic export controls. Events are aimed at exporting and trading individuals or companies of all sizes, as well as government organizations and cater for a wide range of knowledge levels. Includes all details, charges and an application form. This issue covers new courses from March to December 2018. 
The training bulletin is available 
here
.

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

(Source: 
Singapore Customs, Notice No. 04/2018, 10 Apr 2018.)
 
In addition to the usual housekeeping time for TradeNet on Sundays from 0400 hours to 0800 hours and the extended downtime on 15 April 2018 (as indicated in Notice No. 03/2018), Singapore Customs will also be performing system maintenance work which will affect TradeNet on 22 April 2018 from 0400 hours to 1200 hours. 
 
As a result of the above maintenance work, applications submitted via TradeNet will not be processed during the above mentioned period. Processing of these applications will resume in TradeNet after 1200 hours on 22 April 2018. 

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

NWSNEWS

NWS_a1
7.
MyNewsLA.com: “Russian Man Faces Sentencing for Rifle Scope Export Attempt”

(Source: 
MyNewsLA.com, 11 Apr 2018.)  
 
A Russian citizen who describes himself as a big-game hunter and gun developer for Kalashnikov, the Russian arms company that manufactures AK-47 assault rifles, faces sentencing Wednesday for attempting to take a restricted rifle scope back to Moscow without a U.S. export license.
 
Evgeny Spiridonov, 40, was arrested in January at Los Angeles International Airport following a large gun show in Las Vegas. He was attempting to board an Aeroflot flight for Moscow, where he lives, according to the U.S. Attorney’s Office.
 
Spiridonov subsequently pleaded guilty to trying to violate U.S. export controls, a federal charge punishable by up to five years behind bars. Prosecutors have recommended that U.S. District Judge Manuel L. Real impose a probationary term.
 
The case stems from Spiridonov’s visit to the gun show, where he ordered a $2,400 restricted advanced tactical rifle scope from a Pennsylvania gun dealer who turned out to be a cooperating witness. When told that the item required a license to export to Russia, Spiridonov “brushed aside those concerns, told (the witness) he would remove the serial number on the rifle scope, and said that if asked, he would lie and say he obtained it from a pawnshop,” according to a sentencing memorandum filed in Los Angeles federal court.
 
The dealer informed federal investigators of the sale and a controlled delivery of the scope to Spiridonov’s Las Vegas hotel was staged, documents said.
 
Following his arrest at LAX, Spiridonov expressed a desire to admit his guilt and resolve the case quickly, papers show. He also furnished evidence that he makes his living primarily as a big-game hunter and consented to a search of various electronic devices seized by authorities during his arrest, prosecutors said.

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

COMMCOMMENTARY

COMM_a01
8.
C.A. Conry, A.J. Dale & M.R. Littenberg: “Department of Homeland Security Publishes FAQs on North Korean Labor in Supply Chains” 

(Source: 
Ropes & Gray LLP, 5 Apr 2018.) 
 
* Authors: Colleen A. Conry, Esq., 
Colleen.Conry@ropesgray.com; Andrew J. Dale, Esq., 
Andrew.Dale@ropesgray.com; and Michael R. Littenberg, Esq., 
Michael.Littenberg@ropesgray.com. All of Ropes & Gray LLP.
 
On March 30, the U.S. Department of Homeland Security published FAQs relating to Section 321(b) of the Countering Americas Adversaries Through Sanctions Act. The CAATSA was adopted on August 2, 2017. Section 321(b) restricts entry into the United States of goods made with North Korean labor, wherever located, and imposes sanctions on foreign persons that employ North Korean labor.
 
This Alert describes the more significant FAQs published by DHS. For additional information on the CAATSA, see our earlier Alert 
here.
 
Rebutting the Presumption that North Korean Labor Is Forced Labor
 
The CAATSA established a presumption that goods made with North Korean labor involve the use of forced labor. As a result, goods made with North Korean labor generally are prohibited under Section 307 of the Tariff Act, which prohibits the importation into the United States of goods, wares, articles and merchandise mined, produced or manufactured wholly or in part in any foreign country by convict labor, forced labor or indentured labor under penal sanctions. However, the presumption can be rebutted if the Commissioner of Customs and Border Protection finds, by “clear and convincing evidence,” that the goods, wares, articles or merchandise were not produced with convict labor, forced labor or indentured labor under penal sanctions.
 
According to the FAQs, “clear and convincing evidence” is a higher standard of proof than a preponderance of the evidence, and generally means that a claim or contention is highly probable. An importer who wishes to import merchandise that is subject to the rebuttable presumption under the CAATSA carries the burden to overcome the presumption by providing sufficient information to meet the clear and convincing standard.
 
Due Diligence to Mitigate the Risk of North Korean Labor in the Supply Chain 
 
The FAQs recommend that companies review due diligence best practices and closely reexamine their entire supply chain with the knowledge of high risk countries and sectors for North Korean workers.
 
The FAQs note that, generally, human rights due diligence and related practices identify, prevent and mitigate actual and potential adverse impacts and account for how these impacts are addressed. The FAQs acknowledge that due diligence will likely vary based on the size of the company and industry. The FAQs also note that due diligence is a flexible, risk-based process and not a specific formula for companies to follow. 
 
The FAQs provide the following examples of actions that may be taken to ensure due diligence:
 
  – a high-level statement of policy demonstrating the company’s commitment to respect human rights and labor rights;
  – a rigorous continuous risk assessment of actual and potential human rights and labor impacts or risks of company activities and relationships, which is undertaken in consultation with relevant stakeholders, such as governments, local business partners and members of civil society such as local communities, workers, trade unions, vulnerable groups and NGOs; 
  – integrating the foregoing commitments and assessments into internal control and oversight systems of company operations and supply chains; and
  – tracking and reporting on areas of risk.
 
The FAQs also indicate that importers have the responsibility to exercise reasonable care and provide CBP with such information as is necessary to enable CBP to determine if merchandise may be released from CBP custody. As it relates to North Korean forced labor, to demonstrate reasonable care, an importer may present any material that it chooses to, which may include comprehensive due diligence efforts that may have been undertaken, such as:
 
  – Information demonstrating that it engaged meaningfully with affected stakeholders, including workers and trade unions, as part of the due diligence process;
  – Workforce composition at the location in question;
  – Training materials on North Korean forced labor prohibitions that have been provided to suppliers and sub-contractors;
  – Company policies, and evidence of implementation, on using North Korean laborers;
  – Contracts with suppliers and sub-contractors that state its policy on North Korean forced labor;
  – Publishing the full names of all authorized production units and processing facilities, the worksite addresses, the parent company of the business at the worksite, the types of products made and the number of workers at each worksite;
  – Information on how and to whom wages are paid at the location;
  – Information demonstrating that recruitment agencies are within the scope of any third-party audit with suppliers;
  – Documents verifying the use of authorized recruitment agencies and brokers or that the company uses direct recruitment;
  – Documents verifying that the fee structure presented by the recruitment agency is transparent and has been verified through worker interviews;
  – If the company has reimbursed any fees paid, verification of such reimbursement;
  – Demonstrated commitment to human rights and labor due diligence at the highest levels of the company; and
  – Results of human rights and labor impact assessments.
 
Additional CBP Guidance on Exercising Reasonable Care
 
The FAQs note that importers have an obligation to exercise reasonable care (as discussed above) and take all necessary and appropriate steps to ensure that goods entering the United States comply with all laws and regulations, including Section 307 of the Tariff Act and the CAATSA. In this context, the FAQs note that CBP recently updated its Informed Compliance Publication on reasonable care (this occurred during September 2017). CBP’s guidance, which is described below, is linked to in the FAQs. 
 
In the forced labor context, CBP recommends that importers examine the following questions, which, in its view, may prompt or suggest a program, framework or methodology that importers may find useful in avoiding compliance problems and meeting reasonable care responsibilities:
 
  – Have you taken reliable measures to ensure imported goods are not produced wholly or in part with convict labor, forced labor and/or indentured labor (including forced or indentured child labor)?
  – Have you established reliable procedures to ensure you are not importing goods in violation of Section 307 of the Tariff Act and related provisions?
  – Do you know how your goods are made, from raw materials to finished goods, by whom, where and under what labor conditions?
  – Have you reviewed CBP’s “Forced Labor” webpage, which includes a list of active withhold release orders and findings, as well as forced labor fact sheets?
  – Have you reviewed the Department of Labor’s “List of Goods Produced by Child Labor or Forced Labor” to familiarize yourself with at-risk country and commodity combinations?
  – Have you obtained a ruling from CBP regarding the admissibility of goods under Section 307 of the Tariff Act and, if so, have you established reliable procedures to ensure that you followed the ruling and brought it to CBP’s attention?
  – Have you established a reliable procedure of conducting periodic internal audits to check for forced labor in your supply chain?
  – Have you established a reliable procedure of having a third-party auditor familiar with evaluating forced labor risks conduct periodic, unannounced audits of your supply chain for forced labor?
  – Have you reviewed the International Labour Organization’s “Indicators of Forced Labour” booklet?
  – Do you vet new suppliers/vendors for forced labor risks through questionnaires or some other means?
  – Do your contracts with suppliers include terms that prohibit the use of forced labor, a time frame by which to take corrective action if forced labor is identified and the consequences if corrective action is not taken, such as the termination of the contractual relationship?
  – Do you have a comprehensive and transparent social compliance system in place? Have you reviewed the Department of Labor’s “Comply Chain” webpage? (Click 
here for a recent webinar discussing Comply Chain that was moderated by Michael Littenberg, one of the authors of this Alert).
  – Have you developed a reliable program or procedure to maintain and produce any required customs entry documentation and supporting information?
 
Involvement of North Korean Labor in the Transportation of Goods
 
The FAQs note that, generally, if North Korean nationals or citizens are not involved in the mining, production or manufacturing of imported merchandise, that merchandise is not prohibited under Section 321(b). However, if North Korean nationals or citizens are present at the docks or otherwise involved in the movement and shipping of merchandise, that may violate other provisions of the CAATSA or other U.S. laws and regulations, such as the North Korea Sanctions Regulations administered and enforced by the Treasury Department’s Office of Foreign Assets Control, even if not subject to Section 321(b).
 
Enforcement
 
CBP and U.S. Immigration and Customs Enforcement, which are both part of DHS, can enforce Section 321(b) through civil and criminal enforcement actions, respectively.
 
The FAQs note that, if CBP finds evidence that goods have been produced with prohibited North Korean labor, CBP will deny entry and undertake available enforcement actions, which may include detention, seizure and forfeiture of the goods. Civil penalties may also be considered where appropriate. CBP generally does not publicly report information on specific detentions, seizures, enforcement actions and other pending cases until the enforcement action is complete. If a detention leads to a penalty proceeding, after the proceeding is closed, CBP may disclose the identity of the violator, the section of the law violated, the amount of the penalty assessed, loss of revenue, mitigated amount and amount of money paid, in response to a request for that information under The Freedom of Information Act.
 
ICE Homeland Security Investigations may initiate criminal investigations for violations of U.S. law. ICE HSI’s criminal enforcement authorities can lead to the criminal prosecution of individuals and/or corporations for their roles in the importation of goods into the United States in violation of existing laws.
 
The FAQs note that CBP and ICE HSI may consider a company’s due diligence when contemplating engaging in an enforcement action.
 
Reporting
 
The FAQs encourage companies that find North Korean workers in their supply chains to report their findings to CBP’s E-allegations site, as well as ICE’s forced labor intake point.
The FAQs note that information on overseas suppliers who are using North Korean labor should be reported through the same mechanism. ICE has the discretion and statutory authorization to pay for information and/or evidence that is used in support of criminal investigations.
 
Selected Resources for Assessing Forced Labor Risk
 
Specific to North Korea, the FAQs note that the State Department regularly reports on countries and sectors hosting North Korean workers in its annual reports, including the 
Country Reports on Human Rights Practices and 
Trafficking in Persons Report. The FAQs also reference research by the following NGOs: the 
Database Center for North Korean Human Rights, the 
ASAN Institute
C4ADS and the 
Committee for Human Rights in North Korea.
 
More generally, the FAQs reference the DOL’s 
List of Goods Produced by Child Labor or Forced Labor. The List includes goods that DOL has reason to believe are produced by forced labor or child labor in the country listed. The List includes the country where the exploitation is taking place, regardless of the nationality of workers. Accordingly, the North Korean goods listed are goods produced in North Korea. Although DOL may have evidence that goods produced in other countries are produced by North Korean workers, those goods are listed under the country where the production is taking place.
 
Additional tools, reports, initiatives and guidance are listed in the Appendix to the FAQs. These include both U.S. Government resources, resources developed by NGOs and selected international principals and guidance.

 

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

COMM_a039.

King & Spalding: “Congress Debates Export Control Reform”

(Source: 
JD Supra, 9 Apr 2018.) [Excerpts.]
 
As we noted 
previously, Congress is considering legislation to reform the process associated with review by the Committee on Foreign Investment in the United States (CFIUS) of inbound foreign investments with potential national security implications. One of the chief critiques of this reform effort is that it could create a redundant transaction-by-transaction review process for technology transfers that are already governed by existing export controls law.
 
In response, House Foreign Affairs Committee (HFAC) Chair, Ed Royce (R-CA), and Ranking Member Eliot Engel (D-NY), introduced the Export Control Reform Act of 2018 (ECRA, H.R. 
5040) to modernize and strengthen the commercial and dual-use export controls regime and provide updated statutory authorization for the Export Administration Regulations governed by the U.S. Department of Commerce’s Bureau of Industry and Security (BIS). HFAC held a hearing on March 14 to discuss the interplay between investment, export controls, and technology transfers. Chairman Royce explained that the ECRA “would repeal the expired and Cold War-era Export Administration Act of 1979 and replace it with a modern statutory authority to regulate ‘dual-use’ items” under which “modernized U.S. export control laws and regulations will continue to have broad authority, governing the transfer of less-sensitive military and dual-use items and technology to foreign persons, whether that transfer takes place abroad or here in the U.S..” Ranking Member Engel noted that while historically “the defense sector nearly always drove the development of high-tech, which later ended up in the commercial sector. Today, the opposite is often quite true. High-tech in the commercial sector is now often the precursor of advanced weapons.”
 
U.S. manufacturers that export items and technology-and non-U.S. manufacturers that utilize such items in their manufacturing or reexport them to third countries-should stay abreast of ECRA legislative developments, because the bill could impact their operations if passed by Congress and signed into law by President Trump. For example, the bill would require the U.S. government to establish a faster process to identify and classify “emerging critical technologies” for export purposes, including related “information at whatever stage of its creation, such as foundational information and know-how.” This means that manufacturers who create or use these technologies would need to more regularly update their export control procedures if item classifications change more frequently. ECRA also could lead to additional export control reforms with a greater “focus on those core technologies and other items that are capable of being used to pose a serious national security threat”, including allowing exporters to explain why they should not require licenses if comparable foreign versions of their technology are readily available. … 

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

COMM_a3
10. 
M. Volkov: “Bringing a Compliance Program to Life: Connecting the Dots”

(Source: 
Volkov Law Group Blog, 9 Apr 2018. Reprinted by permission.) 
 
* Author: Michael Volkov, Esq., Volkov Law Group, 
mvolkov@volkovlaw.com, 240-505-1992. 
 
A compliance program is an interdependent function that gains exponentially from coordination and cooperation with key functions.  CCOs have to be politicians and they have to develop effective interpersonal skills. Without an ability to connect with other individuals in a company, a compliance program will suffer some real and substantial difficulties.
 
Compliance officers have to develop a target list of coordinators and cooperators.  A CCO should look at the overall compliance program priorities and ask two important questions:
 
  – What is the priority of the proposed project?
  – Who else has an important stake or role in this project?
In many cases, CCOs have natural partners that are interested in the project.  For example, a CCO who needs to enhance the company’s internal investigation function will usually bring the legal and human resource functions to the table to discuss how to improve the company’s internal investigations.  Naturally, there are other stakeholders who will be “interested” in this project but legal and human resources have significant stakes in such a project and, for that reason, may be willing to devote resources to assist in the project.
 
As another example, a CCO may want to build a strong invoice to payment process for vendors and third parties in order to mitigate potential fraud and corruption risks.  I would not expect the CCO to play the lead role in such a project, but I would expect that compliance would work closely with procurement and accounts payable to coordinate the process and develop new strategies for this important function.
 
One final example – some companies have robust security functions that have access to intelligence and other databases.  As a result, a security office may be an important partner for compliance in conducting due diligence reviews of potential third parties, vendors and suppliers. In addition, security officers sometimes have law enforcement contacts that may be valuable in certain circumstances. As a result, I have observed coordination between compliance and security functions to advance due diligence operations.
 
My overall point is that CCOs have to develop priorities and projects with active outreach and assistance from natural partners.  Key stakeholders need to be enlisted to join the effort, contribute time and resources, and ultimately build successful strategies that are win-wins for everyone involved.
 
This is the true meaning of “operationalizing” a compliance program.  A compliance staff can never operationalize a compliance program on its own; its success depends on the “kindness of strangers” and the ability of the CCO and others to work as a team for the common good of the organization.
 
CCOs have to approach their responsibilities with these key considerations in mind.  A CCO who “goes it alone” will never succeed beyond his or her so-called accomplishments.  In the end, a CCO is only as good as his or her internal compliance team, and the ability of the compliance function to enlist the support of others from senior leadership to key functions.
 
One thing is clear that a compliance program will never satisfy any operationalizing standard without the CCO building strategic alliances with interested functions. CCOs have to live by the motto that the sum of a compliance program is more than the sum of individual functions.

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

COMM_a4
11. 
Gary Stanley’s EC Tip of the Day

(Source: Defense and Export-Import Update; 9 Apr 2018. Available by subscription from 
gstanley@glstrade.com.)
 
* Author: Gary Stanley, Esq., Global Legal Services, PC, (202) 352-3059, 
gstanley@glstrade.com
 
DDTC has posted on its website ”
Tips for a Successful Commodity Jurisdiction Application” [posted 17 Nov 2016].  As this guidance notes, a good commodity jurisdiction (CJ) application tells a story. It is the biography of your product – where it came from, what it was designed to do, and how it is actually being used. What can you tell us about its genesis? Is it the heir to a distinguished lineage, being derived from earlier products? Or is it a brand-new, cutting-edge concept and a revolutionary approach? Is it produced to serve a single purpose or solve a specific problem, or is it versatile across a variety of functions and industries? Is it designed for military or commercial applications, or both? In addition, in some cases, it might be helpful to explain what the product is not, and what it cannot do. Bear in mind that your story has two distinct audiences. On the one hand are the engineers, who will pore over your product’s technical drawings and assess its scientific properties and capabilities. On the other hand are the regulators, who must determine whether, and where, your product is controlled on either the U.S. Munitions List (USML) or the Export Administration Regulations (EAR). The first group would appreciate technical precision and completeness. The second group would be grateful for a thorough layman’s description of the product laid out in clear, grammatically correct prose. A successful CJ application will leave both audiences satisfied.

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

ENEDITOR’S NOTES

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

EN_a313
. 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(s): 
2 Apr 2018:
83 FR 13849-13862
: Implementation of the February 2017 Australia Group (AG) Intersessional Decisions and the June 2017 AG Plenary Understandings; Addition of India to the AG [Amendment of EAR Parts 738, 740, 745, and 774.]; and 5 Apr 2018: 83 FR 14580-14583: Reclassification of Targets for the Production of Tritium and Related Development and Production Technology Initially Classified Under the 0Y521 Series [Imposes License Requirements on Transfers of Specified Target Assemblies and Components for the Production of Tritium, and Related “Development” and “Production” Technology.]

  
*
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: 30 Mar 2018:
Harmonized System Update 1804, containing 710 ABI records and 166 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.

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

EN_a0314
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

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

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.


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

* BACK ISSUES: An archive of Daily Bugle publications from 2005 to present is available HERE.

* TO UNSUBSCRIBE: Use the Safe Unsubscribe link below.

Scroll to Top