18-1009 Tuesday “Daily Bugle”

18-1009 Tuesday “Daily Bugle”

Tuesday, 9 October 2018

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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[No items of interest noted today.] 

  1. Items Scheduled for Publication in Future Federal Register Editions
  2. Commerce/BIS: (No new postings.)
  3. DHS/CBP Updates Drawback Trade Issue Tracker Document
  4. DoD/DSCA Posts Policy Memo 18-28
  5. State/DDTC: (No new postings.)
  1. Expeditors News: “­Costa Rica Publishes Guidelines on Free Trade Agreement Between Costa Rica and China”
  2. Reuters: “U.S. Investigating Possible Standard Chartered Iran Breaches after 2012 Deal: CEO”
  1. M. Volkov: “CEO Falls to SEC FCPA Settlement”
  1. Bartlett’s Unfamiliar Quotations 
  2. Are Your Copies of Regulations Up to Date? Latest Amendments: ATF (15 Jan 2016), Customs (19 Sep 2018), DOD/NISPOM (18 May 2016), EAR (26 Sep 2018), FACR/OFAC (29 Jun 2018), FTR (24 Apr 2018), HTSUS (14 Aug 2018), ITAR (4 Oct 2018) 
  3. Weekly Highlights of the Daily Bugle Top Stories 



[No items of interest noted today.]
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OGS_a11. Items Scheduled for Publication in Future Federal Register Editions
(Source: Federal Register)

Treasury; Foreign Assets Control Office; NOTICES; Blocking or Unblocking of Persons and Properties [Publication Date: 10 October 2018.]

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CSMS #18-000594, 9 Oct 2018.)
Attached is the latest Drawback Trade Issue Tracker document.
As a reminder, questions relating to policy for Drawback should be emailed to the OT Drawback inbox at


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DoD/DSCA, 9 Oct 2018.)
* DSCA Policy Memo 18-28
Procedures for Offering Building Partner Capacity (BPC) Letters of Offer and Acceptance (LOA) has been posted. This memo provides updated processes so that the development and offer of BPC LOAs are accurately measured.
  – This memo revises
Section C15.3.7.2.,
Section C5.4.2., and Section C5.4.2.3.

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Expeditors News, 8 Oct 2018.)
On September 6, 2018, the Costa Rican General Director of Customs and the General Director of Foreign Trade and Application of Commercial Agreements published Guidelines in the Costa Rican Gazette for the application of the Free Trade Agreement between the Republic of Costa Rica and the People’s Republic of China (Resolution RES-DGA-001-2018-DGCE-RES-ADU-0001- 2018).
This publication defines, among other things, what the “justifying documents” are according to Article 45 of the treaty, such as commercial invoice, bill of lading and airway bill.
The guidelines also determined when China may issue retrospectively a certificate of origin for the second time due to technical reasons.
Additional information may be found

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Reuters) [Excerpts.]
U.S. authorities are investigating whether Standard Chartered breached Iran-related compliance rules as recently as 2013, a year after it settled with them over earlier allegations of breaches and pledged to improve internal controls.
Standard Chartered’s chief executive Bill Winters said in a memo to senior staff addressing recent media reports, that “the vast majority of the payments under investigation pre-date 2012, and none occurred after 2014”, in the first public acknowledgement by the bank of the later timeframe.
Media reports last week said that London-based Standard Chartered faced a possible $1.5 billion fine for Iran-related sanctions violations, in addition to the $667 million it paid in 2012 to settle alleged breaches between 2001 and 2007.
The investigation now underway focuses on breaches after 2007, with special emphasis on whether the U.S. authorities were fully informed about the bank’s dealings with Iranian clients at the time of the 2012 settlement. …

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Volkov Law Group Blog, 8 Oct 2018.) Reprinted by permission.)
* Author: Michael Volkov, Esq., Volkov Law Group,
mvolkov@volkovlaw.com, 240-505-1992.
Companies have definitely matured in the development and implementation of their ethics and compliance programs.  Whether the pace has been rapid enough or is too slow, that is a debatable issue.  A good litmus test for a mature ethics and compliance program is whether the company assesses and mitigates its C-Suite risks.
Over and over again, companies fall under government scrutiny because of misconduct in the C-Suite.  The latest poster child for this fact is Elon Musk and his misconduct resulting in an SEC enforcement action.
The FCPA enforcement landscape is littered with C-Suite misconduct and bribery schemes.  Just this year, Panasonic Avionics suffered a significant FCPA enforcement action as a result of a long-time bribery scheme run by its President, using a CEO account, which was not subject to internal controls to fund a bribery scheme.
In yet another example, the Securities and Exchange Commission settled an FCPA enforcement action against the former CEO of a Chile chemical and mining company, who agreed to pay civil penalty of $125,000.  Patricio Contesse Gonzalez was the CEO of Sociedad Quimica y Minera de Chile, S.A. (“SQM”). (
In 2017, SQM settled FCPA violations with DOJ and the SEC. SQM paid DOJ $15.5 million and the SEC $15 million to resolve FCPA criminal and civil charges. SQM made nearly $15 million in improper payments to Chilean politicians and related individuals. SQM entered into a three-year deferred prosecution agreement with the Justice Department.
Contesse was SQM’s CEO from 1990 to 2015. Starting in 2008, SQM paid nearly $15 million to Chilean politicians, candidates and persons connected to the politicians.
Contesse maintained a CEO Account, which was intended to cover travel, publicity and advisory services. In 2014, Chilean tax and criminal authorities initiated an investigation of SQM for improper payments. SQM launched a board-authorized internal investigation and eventually terminated Contesse’s CEO contract.
Contesse was charged with directing and authorizing the bribery payments through a discretionary CEO account. Contesse justified the payments by developing fake deals to hide the bribes. Contesse used fake vendors and invoices to document the improper payments.
Contese’s liability included directing false accounting entries in SQM’s books and records, lied to SQM’s independent auditor, and executed false certification in SQM’s SEC filings.
The SEC cited several examples of improper payments and documentation over five-year period, including: (a) monthly payments over a five year period to the son of a Chilean political party official; (b) purported “financial services” submitted by a relative of a Chilean official which were never provided; (c) purported payments for purported “communications advice” and “consulting services,” which were never provided; (d) purported engineering and statistical services, which were never provided; and (e) a false contract for consulting services, which were never provided.
To cover his tracks, Contesse lied to SQM’s internal auditor that he had ceased making payments to the son, but SQM’s internal auditor discovered that payments were still being made to the politician’s son. SQM’s internal auditor directed SQM’s treasury department to cease making such payments. Nonetheless, Contesse resumed such payments to an aide of the politician.

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* John Lennon (John Winston Ono Lennon; 9 Oct 1940 – 8 Dec 1980; was an English singer and songwriter who co-founded the Beatles, the most commercially successful band in the history of popular music. He and fellow member Paul McCartney formed a much-celebrated songwriting partnership. Along with George Harrison and Ringo Starr, the group ascended to worldwide fame during the 1960s.)
  – “We’ve got this gift of love, but love is like a precious plant. You can’t just accept it and leave it in the cupboard or just think it’s going to get on by itself. You’ve got to keep watering it. You’ve got to really look after it and nurture it.”
  – “Time you enjoyed wasting was not wasted.”

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. 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.
: 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. 
: 19 CFR, Ch. 1, Pts. 0-199
  – Last Amendment: 19 Sep 2018: 83 FR 47283-47284: Extension of Import Restrictions Imposed on Archaeological Material From Cambodia  


  – 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 

: 15 CFR Subtit. B, Ch. VII, Pts. 730-774

  – Last Amendment: 26 Sep 2018: 83 FR 48532-48537: Addition of Certain Entities to the Entity List, Revision of an Entry on the Entity List and Removal of an Entity From the Entity List

: 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 

: 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
  – 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.  
, 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 Aug 2018: Harmonized System Update 1812, containing 27 ABI records and 6 harmonized tariff records.

  – HTS codes for AES are available 
  – HTS codes that are not valid for AES are available 
  – Last Amendment:
4 Oct 2018: 83 FR 50003-50007: Regulatory Reform Revisions to the International Traffic in Arms Regulations.

  – The only available fully updated copy (latest edition: 4 Oct 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
. BAFTR subscribers receive a $25 discount on subscriptions to the BITAR, please
contact us
to receive your discount code.

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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 

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* 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, Alex Witt. The Ex/Im Daily Update is emailed every business day to approximately 6,000 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.  If you would to submit material for inclusion in the The Export/Import Daily Update (“Daily Bugle”), please find instructions here.

* 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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