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18-0710 Tuesday “Daily Bugle”

18-0710 Tuesday “Daily Bugle”

Tuesday, 10 July 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 
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  1. DHS/CBP Renews COAC Charter
  1. Items Scheduled for Publication in Future Federal Register Editions
  2. Commerce/BIS: (No new postings.)
  3. DoD/DSCA Releases 3 New Policy Memos
  4. GAO Ex/Im Reports and Testimonies of Interest
  5. State/DDTC: (No new postings.)
  1. Fortune: “This Irish Bill Could Create Huge Problems for U.S. Companies Like Apple”
  2. Reuters: “U.S. Will Consider Requests For Waivers From Iran Oil Sanctions: Pompeo”
  1. B. Mulier, S.M. Werner & S. Du: “Will China’s Upcoming Export Controls Impact Your Business?” (Part I of II)
  2. J. McShane: “New CFIUS Process Could Change Export Control Requirements”
  3. M. Volkov: “Credit Suisse Pays $76 Million for Sons and Daughters FCPA Violations in China (Part I of II)”
  1. Full Circle Compliance Presents “Awareness Course U.S. Export Controls: ITAR & EAR from a Non-U.S. Perspective “, 2 Oct in Bruchem, the Netherlands 
  1. Bartlett’s Unfamiliar Quotations 
  2. Are Your Copies of Regulations Up to Date? Latest Amendments: ATF (15 Jan 2016), Customs (12 Jun 2018), DOD/NISPOM (18 May 2016), EAR (6 Jun 2018), FACR/OFAC (29 Jun 2018), FTR (24 Apr 2018), HTSUS (8 Jun 2018), ITAR (14 Feb 2018) 
  3. Weekly Highlights of the Daily Bugle Top Stories 

EXIMITEMS FROM TODAY’S FEDERAL REGISTER

EXIM_a1

(Source: 
Federal Register, 10 Jul 2018.) [Excerpts.] 
 
83 FR 31974: Commercial Customs Operations Advisory Committee (COAC) Charter Renewal
 
* AGENCY: U.S. Customs and Border Protection (CBP), Department of Homeland Security (DHS).
* ACTION: Committee Management; Notice of Federal Advisory Committee Charter Renewal.
* SUMMARY: The Secretaries of the Department of the Treasury and the Department of Homeland Security approved the renewal of the charter for the Commercial Customs Operations Advisory Committee (COAC). The committee’s charter is effective May 15, 2018, and expires May 15, 2020. Section 109 of the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA) established the COAC. The committee operates in accordance with the provisions of the Federal Advisory Committee Act (5 U.S.C. App.), except as otherwise provided for in section 109 of TFTEA. The COAC is a statutory advisory committee that provides the Department of the Treasury and the Department of Homeland Security with the perspectives and advice of the private sector. …
* FOR FURTHER INFORMATION CONTACT: Ms. Florence Constant-Gibson, Office of Trade Relations, U.S. Customs and Border Protection, 1300 Pennsylvania Avenue NW, Room 3.5A, Washington, DC 20229; telephone (202) 344-1440; facsimile (202) 325-4290.
   – Purpose and Objective: In accordance with section 109 of TFTEA, the COAC provides advice to the Secretary of the Treasury and the Secretary of Homeland Security with respect to all matters involving the commercial operations of U.S. Customs and Border Protection (CBP), including advising with respect to significant changes that are proposed with respect to regulations, policies, or practices of CBP; provides recommendations to the Secretary of the Treasury and the Secretary of Homeland Security on improvements to the commercial operations of CBP; collaborates in developing the agenda for Advisory Committee meetings; and performs such other functions relating to the commercial operations of CBP as prescribed by law or as the Secretary of the Treasury and the Secretary of Homeland Security jointly direct.
   The COAC charter can be found 
here. …
 
   Dated: July 3, 2018.

Bradley F. Hayes, Executive Director, Office of Trade Relations.

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

OGSOTHER GOVERNMENT SOURCES

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

* State/DDTC; NOTICES; Designations as Foreign Terrorist Organizations:
  – al-Ashtar Brigades (AAB), aka Saraya al-Ashtar; and  
  – al-Ashtar Brigades (AAB), aka Saraya al-Ashtar [Publication Date: 11 Jul 2018.]
 
* USTR; NOTICES; Procedures to Consider Requests for Exclusion of Particular Products from the Determination of Action Pursuant to Section 301: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation [Publication Date: 11 Jul 2018.]
* * * * * * * * * * * * * * * * * * * *

OGS_abc23. 
Commerce/BIS: (No new postings.)
(Source: 
Commerce/BIS)

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OGS_a2
4. 
DoD/DSCA Releases 3 New Policy Memos 

(Source: 
DoD/DSCA, 10 Jul 2018.)
 
  This policy memo establishes Security Cooperation Customer Code (SCCC) W7 for Agent sales through the NATO Support and Procurement Agency (NSPA) and confirm use of SCCC N4 for other sales to NSPA in 
SAMM Table C4.T2C. – Security Cooperation (SC) Customer and Regional Codes and FMS Eligibility (NATO).
 
  By Presidential Determination 2018-05 (April 20, 2018), the President determined that
Organisation for Joint Armament Cooperation (OCCAR) is an International Organization eligible to enter into Foreign Military Sales of defense articles and services. As a result, 
SAMM Table C4.T2D., Country, International Organization, and Regional Codes and FMS Eligibility (Regions), is updated to establish a new Security Cooperation Customer Code (SCCC) 7B for Agent Sales through OCCAR.
 

  DSCA is implementing a new FMS Initiative to permit Agent sales. Agent sales enable international organizations officially designated as Agents to act on behalf of one or multiple FMS-eligible countries or international organizations to procure defense articles and services. The Agent Sales initiative and the complementary Lead-Nation Procurement initiative reaffirm the United States’ commitment to supporting partners’ ability to procure U.S. defense articles and services through innovative procurement processes.

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

 
* COMMITTEE ON FOREIGN INVESTMENT IN THE UNITED STATES: Action Needed to Address Evolving National Security Concerns Facing the Department of Defense. GAO-18-494: Published: Jul 10, 2018. Publicly Released: Jul 10, 2018.
 
Fast Facts: Foreign investment in U.S. companies can benefit the economy, but could pose risks to national security. The Committee on Foreign Investment in the United States (CFIUS) reviews certain foreign acquisitions and mergers and can mitigate risks or block transactions.
 
DOD identified some investments as national security concerns because they may give foreign investors access to emerging technologies or be in proximity to critical military locations. However, the CFIUS process doesn’t cover all the types of investments DOD identified.
 
Our 
recommendations are to help DOD and CFIUS address these risks and other concerns.

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OGS_a56. 
State/DDTC: (No new postings.)

(Source: 
State/DDTC)

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NWSNEWS

(Source: 
Fortune, 9 Jul 2018.) [Excerpts.] 
 

bill 
expected to pass Ireland’s Senate on Wednesday would criminalize trade in products and services produced in Israeli settlements. If enacted, it could force U.S. firms with Irish divisions or subsidiaries to make a costly choice between violating either Irish law or U.S. law. If the companies refuse to join in Ireland’s boycott of such products, they could violate the new Irish law. But if they abide by the Irish law, they could violate U.S. law, which 
prohibits U.S. companies from participating in foreign boycotts that the United States government does not endorse.
 
The bill would prohibit Irish persons and companies anywhere from importing or selling items, or providing services, produced in “settlements” as defined by the bill. If an Irish-connected company located in or outside of Ireland, or an Irish citizen located in or outside of Ireland, were to import or sell a vegetable or cosmetic or “provide” a service produced in the settlements, they would be subject to punishment. Violators would be imprisoned for up to five years and fined up to 250,000 euros. No other country in Europe has such a law. … 

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(Source: 
Reuters, 10 Jul 2018.) 
 
The United States will consider requests from some countries to be exempted from sanctions it will put in effect in November to prevent Iran from exporting oil, U.S. Secretary of State Mike Pompeo said on Tuesday. 
 

  “There will be a handful of countries that come to the United States and ask for relief from that. We’ll consider it,” Pompeo said according to the text of an interview in Abu Dhabi with Sky News Arabia released by the U.S. State Department. He did not name any countries.

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COMMCOMMENTARY

COMM_a0
9.
B. Mulier, S.M. Werner & S. Du: “Will China’s Upcoming Export Controls Impact Your Business?” (Part I of II)

(Source: 
Bird & Bird, 9 Jul 2018.) 

 
* Authors: Brian Mulier, Esq., 
brian.mulier@twobirds.com; Sven-Michael Werner, Esq., 
svenmichael.werner@twobirds.com; and Serena Du, Esq., 
serena.du@twobirds.com. All of Bird & Bird, Europe and China, respectively. 
[Editor’s Note: Part II of this article will be published tomorrow.]
 
Companies having China-related operating activities should watch out for and anticipate on the upcoming transformation of China’s export control framework and system. China’s released draft Export Control Law (“ECL”) [FN/1], currently pending introduction at the National People’s Congress, may affect major MNEs and SMEs operating in- and outside China which are engaged in the manufacture, development, use and/or supply of China- related products (including components) and technologies – especially – in the high-tech sector.
 
It is no secret that China, driven by its “Made in China 2025” initiative, is focusing on achieving mastery in the production and self-sufficiency of certain key technologies in key industries and sectors (such as aerospace, telecoms, power production and distribution, new IT and integrated circuits, etc.). In essence, China is aiming to become a world-leading tech quality manufacturing power.
 
You may wonder how? Well, China is among others heavily investing in promoting and upgrading its domestic innovative manufacturing technologies and capabilities (so-called “smart manufacturing”) which should ultimately enhance the global high-tech competitiveness of Chinese enterprises. Achieving smart manufacturing as well as self-sufficiency in the relevant key industries will simultaneously increase the export of high-end manufactured items having their origin in China to the rest of the world. As a consequence, China will become far less dependent on imports of high-end technology solutions, products and equipment from foreign and overseas (high-tech) companies.
Considering this shift of focus from import of foreign – to – export of its own cutting-edge technology items, it is no surprise that China is also looking to improve its export control regulations, decision-making processes and practices based on the released draft ECL. [FN/2] The latter, if adopted in its current form, will gain increasing importance – especially in relation to cross- border transfers of Chinese high-tech items and technologies – as Chinese businesses are to evolve into major manufacturers and exporters of key technologies in key industries following the “Made in China 2025” initiative.
 
(1) What are export controls?
 
Export controls stem from multilateral export control regimes which were established by several countries in a mutual effort to stem the proliferation of nuclear, chemical and biological weapons and missiles capable of delivering weapons of mass destruction (“WMD”).
 
These non-proliferation international export control regimes which include the Australia Group (AG), the Zangger Committee, the Missile Technology Control Regime (MTCR), the Nuclear Suppliers Group (NSG) and the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Technologies (WA), regulate and control among others the supply, transfer and export of conventional arms and so-called “dual-use” items and related technologies. Dual-use items are tangible (e.g. raw materials, components, complete systems, etc.) and intangible goods (e.g. software, technical data, etc.) which have the potential to be used for both military and civilian purposes. The general rule is that the export of such conventional arms and dual-use items is prohibited unless prior to the exportation formal authorization has been granted and obtained from the competent export control authority.
 
Many governments (such as Australia, Canada, EU Member States, United States, Japan, etc.) have joined as participants to the aforementioned international export control regimes in order to collectively pursue their implementation and available tools and controls into their national laws and, as such, create and define their own export control framework, license systems and policies.
 
(2) How come China is reforming its export control framework?
 
China joined as a participant to a single international export control regime, namely the NSG. The current general perception is that China’s legal framework for export controls is rather at an early stage of development due to its short existence span (originating from 1990’s) compared to the export control frameworks and policies of participants having a long-standing membership in all international export control regimes (such as the EU Member States and the United States).
 
The latter perception is about to change as China is planning to modernize and upgrade its existing export control legal framework and system which are currently made up of various laws, decrees and regulations as well as complex decision-making structures and processes.
 
Following the release of the draft ECL in June 2017, China is keen to put into place and implement a comprehensive export control framework and system whereby China’s and ECL’s main objective is to effectively safeguard and maintain China’s national security as well as protect industrial and economic development and related benefits.
 
Second, China’s existing export control framework and system was set-up a long time ago lacking proper legal authority, hierarchy and investigative powers in view of performing adequate controls and enforcement actions in practice.
And third, the draft ECL is to further guarantee fulfilment of China’s international commitments and obligations as well as – through its promotion and implementation – strengthen international cooperation.
 
(3) What aspects of the current draft ECL should you watch out for?
 
Several export control elements of the current draft ECL may affect businesses in practice, such as:
 
[New] comprehensive list of controlled items: the following items – as defined in the current draft ECL – are to comprise China’s export control list and, hence, be subject to the export control provisions and licensing requirements of the ECL:
 
  i) dual-use items;
  ii) military items;
  iii) nuclear items; and
  iv) other items.
 
In relation to sub iv), other items – not being listed on China’s export control list – may be subject to controls and licensing in certain situations (where this may endanger China’s national security or in relation to proliferation or terrorism risks). Furthermore, we note that the actual list of controlled items has not been made public (yet).
 
[NEW] consideration of competitiveness of trade and industry controls: in view of compiling and amending its export control list, besides its national security and international obligations, China will also take into consideration:
  
  i) trade and industrial competitiveness,
  ii) international market supply; and
  iii) technology development.
 
The factors i) to iii) are also be taken into account in view of submitted export control licensing applications as well as the issue of export control licences in China;
 
[NEW] possibility to impose an embargo: China may impose an embargo by prohibiting the export of certain controlled items or prohibiting them from reaching specific destinations to specific individuals, entities or organizations.
 
[NEW] re-export controls: businesses located outside China will be subject to China’s extraterritorial export control licensing provisions and controls in relation to
 
  i) the re-export of Chinese controlled items when located outside China; and
  ii) ii) re-export of foreign-made items that contain Chinese controlled items where latter value exceeds certain percentage threshold. Please see below illustrated example scenario;

[NEW] deemed export controls: this concept involves licensing controls in relation to the supply of controlled items (e.g. controlled commodities, technologies and services) by Chinese nationals and legal entities to foreign citizens (i.e. individuals that do not have Chinese nationality) and legal entities, as illustrated in below example scenario:

[NEW] possibility for blacklisting: 
China will establish so-called black lists stating foreign importers and end-users that have violated the ECL and may endanger national security and development interests of China. In addition, China’s domestic importers can be subjected to control measures prohibiting the export of controlled items to such blacklisted individuals and entities;
 
[NEW] equal principle: where China takes the view that a third country has adopted discriminatory export control measures against China, China may take corresponding measures against the relevant country;
 
[NEW] emergency controls: in wartime or other emergency situations in international relations, China may take necessary control measures for the export of any goods, technologies and services in order to safeguard its security national security.
 
Overall, the current version and content of the draft ECL demonstrates China’s desire to overhaul and tighten its export control framework and system in view of effectively protecting its national security as well as economic (and technological) development (considering its goals under the “Made in China 2025” initiative).
 
——–

  [FN/1] See 
here.

  [FN/2] Since the 1990s, China has successively formulated administrative regulations and the export control legal system such as the “Regulations on the Control of Nuclear Exports”, “Regulations on the Control of Exports of Nuclear and Dual-Use Materials, and Related Technologies” and initially established dual-use controls covering military products, nuclear, biological, chemical items as well as related guidance. In order to better promote and guarantee export controls, safeguard the interests of national security and development, and fulfil international obligations, China believes that is now necessary to formulate a single basic law in the field of export controls and to guide existing administrative regulations and rules.

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COMM_a01
10. 
J. McShane: “New CFIUS Process Could Change Export Control Requirements”

(Source: 
Export Solutions, 9 Jul 2018.) 
 
* Author: Jim McShane, Sr. Consultant, Trade Compliance, Export Solutions. 
 
In recent weeks, we’ve seen significant activity from both the legislative and executive branches that could change the way foreign investment occurs in U.S. companies. These changes could also affect the export control compliance requirements of many companies who are targets of foreign investors. Keep reading for a brief history of CFIUS reviews, and the proposed new legislation – FIRRMA.
 
CFIUS: A Brief History
 
The Committee on Foreign Investment in the United States (CFIUS) was established in 1975 by an Executive Order issued by President Gerald Ford. The Executive Order established “primary continuing responsibility within the Executive Branch for monitoring the impact of foreign investment in the United States, both direct and portfolio, and for coordinating the implementation of United States policy on such investment.”
 
The initial responsibilities were:
 
  (1) To arrange for the preparation of analyses of trends and significant developments in foreign investments in the United States;
  (2) To provide guidance on arrangements with foreign governments for advance consultations on prospective major foreign governmental investments in the United States;
  (3) To review investments in the United States which, in the judgment of the Committee, might have major implications for United States national interests; and
  (4) To consider proposals for new legislation or regulations relating to foreign investment as may appear necessary.
 
In 1988, following the Fairchild Semiconductor acquisition by Fujitsu, CFIUS was amended to give the President the authority to block proposed mergers, acquisitions, and takeovers that could threaten national security. Since then, CFIUS has pretty much continued without any major changes. Over the years, CFIUS has had its share of critics – including those who claim that the committee barely gave any review to proposed mergers and that CFIUS was just a “rubber stamp” approval. These critics pointed to the fact that notifications to CFIUS were voluntary and a notification could be withdrawn by the acquisition party before, or during, the investigative stage.
 
Tightening Controls Through FIRRMA
 
In March 2017, the U.S. House of Representatives introduced the Foreign Investment Risk Review Modernization Act of 2017 (FIRRMA). The stated goal of FIRRMA was to reform CFIUS reviews with greater scrutiny of acquisitions that would not be in the best interest of the United States for reasons of national security. The original draft of FIRRMA greatly expanded the role and objectives of the CFIUS process to include any contribution “of both intellectual property and associated support” to a foreign person as part of “any type of arrangement” if the U.S. business “produces, trades in, designs, tests, manufactures, services, or develops one or more critical technologies, or a subset of such technologies” (i.e., a “Critical Technology Company”). Under FIRRMA, the review authority of CFIUS would have been extended to export transactions (including license applications) involving critical technologies, regardless of the fact that such transactions were already reviewed, and either approved or denied, under the Export Administration Regulations (EAR) or the International Traffic in Arms Regulations (ITAR). Basically, it would have created a brand-new “Export Control Agency” to review transactions – in addition to those roles already played by BIS and DDTC – and added an extra layer to the review/approval process. Subsequent proposed legislation also sought to change the definition of “critical technologies” to include “emerging technologies.”
 
While the House advanced its proposed reform, the U.S. Senate was also busy considering its own version of FIRRMA. Within the past few weeks, President Trump was prepared to invoke emergency powers to restrict Chinese investment in the United States, but the president withdrew this step when – on June 18 – the Senate passed its own version of FIRRMA. A few days later (on June 26), the House passed a revised version of the law.
 
What’s Changed with the Latest FIRRMA Proposals?
 
Both the House and Senate have toned down the original language with respect to reviews of export transactions. Instead, they now propose that national security concerns be reviewed through a new export control process administered by the U.S. Commerce Department to protect “emerging and foundational technologies.” Nevertheless, there still remain a number of issues to be reconciled between the House and Senate versions. For example, the Senate version gives CFIUS jurisdiction to review any foreign investment (even if it does not rise to the level of control)-other than a “passive investment”-in a U.S. critical technology or critical infrastructure company. The House version, on the other hand, would limit such “covered transactions” to those “sensitive transactions involving countries of special concern.”
 
Both versions desire to have CFIUS review the purchase or lease of real estate located in close proximity to U.S. military installations, as well as any real estate that includes, or is located in, an airport or maritime port. The Senate version goes a step further by including land border crossings and government facilities that are considered sensitive for national security purposes.
 
Another change is the cost to companies subject to CFIUS reviews. In years past, these filings have always been free. Now, both versions of the law envision fees that companies will pay for the review. The House version would require a fee equal to one percent (1%) of the transaction value or $300,000 (adjusted for inflation), whichever is less. The Senate version proposes a sliding-scale fee based on established criteria. In either case, the end result will be CFIUS filings that are no longer “free.”
 
Foreign Investment and Export Controls
 
There are many more areas that both legislative entities need to reach agreement on, but work is progressing and (for the moment) President Trump is holding back from instituting measures under emergency powers until he sees a final product. Export Solutions will continue to provide updates on this topic, as export controls are still a factor and could affect the way compliance is currently undertaken.
 
Meanwhile, President Trump has already directed the Commerce Department to review its export control regime to consider issues pertaining to transfers of critical technologies and make any changes needed to defend U.S. national security and technological leadership. He has also gone further and stated explicitly that that if Congress fails to pass “strong FIRRMA legislation that better protects the crown jewels of American technology and intellectual property from transfers and acquisitions that threaten our national security,” then he will direct the “Administration to deploy new tools, developed under existing authorities, that will do so globally.” It’s safe to say that things in the export control arena could be changing rapidly – either through new Congressional legislation or new Executive-branch directives.
 
Also, don’t forget the Export Control Reform Act of 2018, which was introduced in February of this year. On April 17, a House Committee voted to move this bill forward with a full report to the House for further consideration. Historically, only one in four reports reviewed by committee are sent forward. So, there will be more to come in the months and years ahead.

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COMM_a3
11.
M. Volkov: “Credit Suisse Pays $76 Million for Sons and Daughters FCPA Violations in China (Part I of II)”

(Source: 
Volkov Law Group Blog, 9 Jul 2018. Reprinted by permission.) 
 
* Author: Michael Volkov, Esq., Volkov Law Group, 
mvolkov@volkovlaw.com, 240-505-1992. 
 
Credit Suisse Group AG and its Hong Kong subsidiary settled FCPA charges with the Justice Department and the Securities and Exchange Commission.  The Justice Department announced that Credit Suisse’s Hong Kong subsidiary agreed to pay $47 million in exchange for a non-prosecution agreement (NPA) for FCPA violations involving hiring of friends and families of Chinese officials to win investment banking business (
here).  The SEC announced that Credit Suisse agreed to pay nearly $30 million (in disgorgement and prejudgment interest) as part of civil administrative settlement for similar FCPA violations (
here).
 
From approximately 2007 to 2013, Credit Suisse’s Hong Kong unit hired more than 100 employees in order to secure banking business and regulatory approvals from various state-owned enterprises and government agencies.  Credit Suisse leveraged the corrupt hiring of unqualified individuals to secure business worth approximately $46 million in profits.
 
Credit Suisse hired unqualified relatives of foreign officials, and the subsequently provided continuing benefits such as promotions, bonuses and high-profile work assignments in a continuing effort to secure additional business from various government officials.
 
Credit Suisse managers and senior officials were aware of Hong Kong’s practice of making “relationship hires” or “referral hires” as part of an arrangement with government officials who referred such relatives to Credit Suisse for hiring, promotion and compensation.
 
The Justice Department and SEC settlement documents outlined numerous instances where Credit Suisse officials communicated in emails the need to hire, retain, promote or compensate otherwise unqualified individuals in order to secure government business. In practice, many of the hired relatives were unqualified, lacking in capabilities, and excused from training and performance requirements.  In a few cases, Credit Suisse employees drafted resumes for relatives to justify a hiring decision.
 
In reaching a settlement, DOJ outlined the following considerations under its FCPA Corporate Enforcement Policy:
 
  – Credit Suisse did not receive credit for voluntary disclosure because it did not make a voluntary and timely disclosure to DOJ.
  – Credit Suisse received partial credit for its cooperation, including conducting an internal investigation, factual presentations to DOJ, making foreign-based employees available for interviews in the United States, producing documents from foreign countries that did not implicate data privacy laws, providing translations of foreign language documents and collecting and presenting evidence to DOJ. However, Credit Suisse received only partial credit because its cooperation only occurred in response to DOJ’s investigation and had not been initiated prior to learning about DOJ’s investigation.
  – Credit Suisse received credit for remediation for the following measures: 
    (a) adding new controls related to its hiring program; 
    (b) implementing global controls to ensure anti-corruption vetting for all candidates referred for employment by government officials and SOEs; 
    (c) requiring independent screening and validation of absence of connections to government officials, SOEs and politically exposed persons; 
    (d) additional post-hiring controls to employees how may have links to government officials and SOEs, such as maintaining ethical walls to prevent identified employees from working on matters involving foreign officials and tracking of their performance; 
    (e) conducting periodic reviews of hiring controls;
    (f) conducting annual headcount reviews and confirming accuracy of data; and 
    (g) requiring improved training on anti-corruption issues for all staff, as well as job-specific training for bankers, recruiters, human resources and compliance personnel.  Interestingly, Credit Suisse did not receive full remediation credit because it failed to discipline adequately employees who engaged in the misconduct and only noted policy infractions internally and notified only three employees.
  – Credit Suisse committed to enhance its compliance program and internal controls. Based on the state of its compliance program, its commitment to enhance its compliance program, its agreement to provide annual compliance program reports, DOJ declined to impose an independent corporate monitor.
  – Credit Suisse agreed to continue to cooperate in further investigations of related individuals.
 
Based on all of these considerations, the Justice Department agreed to enter into an NPA and apply a 15 percent discount from the bottom of the US Sentencing Guideline range. 

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TECEX/IM TRAINING EVENTS & CONFERENCES

TEC_a112

Full Circle Compliance Presents “Awareness Course U.S. Export Controls: ITAR & EAR From a Non-U.S. Perspective “, 2 Oct in Bruchem, the Netherlands

(Source: Full Circle Compliance, events@fullcirclecompliance.eu.)
 
Our next academy course is specifically designed for beginning compliance officers and professionals who want to enhance their knowledge on the latest ITAR/EAR requirements and best practices.  The course will cover multiple topics regarding U.S. export controls that apply to organisations outside the U.S., such as: the regulatory framework, including the latest and anticipated regulatory amendments, key concepts and definitions, classification and licensing requirements, handling (potential) non-compliance issues, and practice tips to ensure compliance with the ITAR and EAR.
 
* What: Awareness Course U.S. Export Controls: ITAR & EAR From a Non-U.S. Perspective 
* When: Tuesday, 2 Oct 2018, 9 AM – 5 PM (CEST)
* Where: Landgoed Groenhoven, Bruchem, the Netherlands
* Sponsor: Full Circle Compliance (FCC)
* Instructors: Ghislaine Gillessen, Mike Farrell, and Alexander P. Bosch 
* Information & Registration: HERE or via events@fullcirclecompliance.eu

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ENEDITOR’S NOTES

 


James Whistler (James Abbott McNeill Whistler; 10 July 1834 – July 17, 1903; was an American artist, active during the American Gilded Age and based primarily in the United Kingdom. He was averse to sentimentality and moral allusion in painting, and was a leading proponent of the credo “art for art’s sake”. His most famous painting is 
Arrangement in Grey and Black No. 1 (1871), commonly known as 
Whistler’s Mother, the revered and oft-parodied portrait of motherhood.)
  – “I can’t tell you if genius is hereditary, because heaven has granted me no offspring.”
 

William Blackstone (Sir William Blackstone; 10 July 1723 – 14 Feb 1780; was an English jurist, judge, and Tory politician of the eighteenth century. He is most noted for writing the 
Commentaries on the Laws of England.)

  – “It is better that ten guilty escape than one innocent suffer.”
  – “Free men have arms; slaves do not.”
 

John Calvin (born Jehan Cauvin; 10 Jul 1509 – 27 May 1564; was a French theologian, pastor, and reformer in Geneva during the Protestant Reformation. He was a principal figure in the development of the system of Christian theology later called Calvinism, aspects of which include the doctrines of predestination and of the absolute sovereignty of God in salvation of the human soul.)
  
– “I consider looseness with words no less of a defect than looseness of the bowels.”

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EN_a314
. 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: 12 Jun 2018: 83 FR 27380-27407: Air Cargo Advance Screening (ACAS)
 
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: 6 June 2018: 83 FR 26204-26205: Unverified List (UVL); Correction

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

  – Last Amendment: 29 June 2018: 83 FR 30541-30548: Global Magnitsky Sanctions Regulations; and 83 FR 30539-30541: Removal of the Sudanese Sanctions Regulations and Amendment of the Terrorism List Government Sanctions Regulations 

 
*
FOREIGN TRADE REGULATIONS (FTR)
: 15 CFR Part 30
  – Last Amendment: 24 Apr 2018: 3 FR 17749-17751: Foreign Trade Regulations (FTR): Clarification on the Collection and Confidentiality of Kimberley Process Certificates
  – HTS codes that are not valid for AES are available
here.
  – The latest edition (30 Apr 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:
8 Jun 2018: Harmonized System Update 1809, containing 901 ABI records and 192 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: 25 Apr 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_a0315
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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