18-1204 Tuesday “Daily Bugle”

18-1204 Tuesday “Daily Bugle”

Tuesday, 4 December 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 Posts Reminder Concerning 5 Dec Government Closure
  4. State/DDTC: “Last Call to Test the New Registration Application!”
  5. EU Council Adopts Conclusions on Action Plan to Combat Money Laundering and Terrorist Financing
  6. UK/HMRC Posts Guidance on Exporting and Importing Goods If the UK Leaves the EU with No Deal
  7. UK/HMRC Posts Guidance on Moving Goods to and from the EU through Roll on Roll off Locations Including Eurotunnel
  1. Expeditors News: “President Announces U.S. will not Raise Tariffs on $200 Billion in Chinese Goods”
  2. The Globe and Mail: “New Zealand Becomes Third Five Eyes Member to Ban Huawei from 5G Network”
  3. ST&R Trade Report: “Advance Notice Requirement for Imports of 26 Chemical Substances Withdrawn”
  4. The Wall Street Journal: “China Maneuvers to Snag Top-Secret Boeing Satellite Technology”
  1. A.F. Enslen, J.M. Scannapieco & J. Bodie: “BIS Requests Comments on ‘Emerging’ Technologies for CFIUS and Export Control Reforms”
  2. Page-Fura, P.C.: “USMCA Officially Signed – & Updated Text Released!”
  3. R.C. Thomsen II, A.D. Paytas & M.M. Shomali: “Changes to Export Controls in November 2018” (Part II of II)
  4. W.E. Lawler III, A.L. Riella & M.M. Howell: “DOJ Announces Revised Policy Reflecting Move Away from Yates Memo”
  1. ECS Presents “Seminar Level II: Managing ITAR/EAR Complexities” in Scottsdale, AZ on 26-27 Mar 2019
  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 (2 Nov 2018), FACR/OFAC (15 Nov 2018), FTR (24 Apr 2018), HTSUS (1 Nov 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)

* Commerce/ITA; NOTICES; Meetings: Civil Nuclear Trade Advisory Committee [Pub. Date: 6 Dec 2018.]

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Commerce/BIS: (No new postings.)


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DHS/CBP Posts Reminder Concerning 5 Dec Government

CSMS# 18-000710, 5 Dec 2018.) 
On December 1, 2018, President Trump signed an Executive Order designating Wednesday, December 5, 2018 as a federal holiday in observance of a National Day of Mourning for President George H.W. Bush. U.S. Customs and Border Protection (CBP) will operate as a holiday on December 5, 2018. Self-filers and brokers should plan CBP-related business accordingly.

Entry Summaries and statements due on Wednesday, December 5, 2018 may be presented and paid on Thursday, December 6, 2018 without penalty. If you have questions before or after December 5, 2018, please contact your assigned Client Representative.

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State/DDTC: “Last Call to Test the New Registration Application!”
State/DDTC, 4 Dec 2018.)
Haven’t had a chance yet to test DDTC’s new online Registration Application?
 Try it now before the testing period ends on Monday, 10 December at 5pm. Contact the DDTC Test Support Team
 to sign up and receive further guidance. The Support Team is available during the week from 10am to 4pm EST. Thank you for your participation!

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EU Council Adopts Conclusions on an Action Plan to Combat Money Laundering and Terrorist Financing

Council of the European Union, 4 Dec 2018.) 
The EU Council adopted conclusions on an action plan to better tackle money laundering and terrorist financing.
The conclusions set out a number of short-term non-legislative actions to address 8 key objectives:  
  • identify the factors that contributed to the recent money laundering cases in EU banks, to better inform possible additional actions in the medium and long term;
  • map relevant money laundering and terrorist financing risks and the best prudential supervisory practices to address them;
  • enhance supervisory convergence and better take into account AML aspects in the prudential supervisory process;
  • ensure effective cooperation between prudential and money laundering supervisors;
  • clarify aspects related to the withdrawal of a bank’s authorisation in case of serious breaches;
  • improve supervision and exchange of information between relevant authorities;
  • share best practices and find grounds for convergence among national authorities;
  • improve the European supervisory authorities’ capacity to make better use of existing powers and tools.
The European rules on anti money laundering and terrorist financing have been considerably strengthened in the past years, with two consecutive reforms being adopted since 2015. The latest revision of the AML directive, the fifth AMLD, was adopted in April 2018 and is due to be transposed at national level by January 2020. In September 2018, the Commission also presented a proposal to further strengthen the supervision of EU financial institutions and to better address money laundering and terrorist financing threats. This proposal is currently under discussion in the Council.

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UK/HMRC Posts Guidance on Exporting and Importing Goods If the UK Leaves the EU with No Deal

UK/HM Revenue & Customs, 4 Dec 2018.)
In the unlikely event that the UK exits the EU without a deal, from 11pm GMT on 29 March 2019, many UK businesses will need to apply the same processes to EU trade that apply when trading with the rest of the world.
However, if you only import or export goods with Ireland across the Northern Ireland-Ireland land border, you do not need to take any of the actions set out here. Instead, you can disregard it. Her Majesty’s Revenue & Customs (HMRC) will write to you again with information about the arrangements for trading with Ireland as soon as
it can.
Checklist of things you’ll need to do in preparation
Here is a list of things you’ll need to do in preparation that are covered in greater detail within this guide and accompanying guides:
  – get an 
EORI number
  – get software or an agent to 
make declarations
  – check if you need a 
licence to import or export your goods
  – apply the right 
customs procedure code
  – if you use a UK roll on roll off location, for example, where a lorry or van travels through using a ferry or train, then you will need to 
declare your goods before they board the ferry or train
  – when importing, make a 
safety and security declaration before the goods arrive in the UK
Before you import or export goods
Before you import or export any goods, check if they’re 
restricted goods.
You will always need a 
licence to import or export:
  – military and paramilitary goods
  – dual-use and technology
  – artworks
  – plants and animals
  – medicines and chemicals
Exporting goods
Find out the commodity code of your goods
Commodity codes 
classify your goods so you that can fill in export declarations accurately.
Research the 
destinations you want to export to. This background information, along with the commodity code of the goods will help you work out if the goods will incur import duty in the destination country.
Choose the right customs procedure code for your goods
Customs procedure codes identify the customs or excise processes that you may want to use depending on what your business does, for example importing goods into a customs-approved warehouse, so that you can suspend payment of duty and VAT until they’re sent to a UK customer from the warehouse.
Importing goods
Find out the commodity code of your goods
Commodity codes classify goods so you can:
  – fill in declarations accurately
  – check if there’s duty to pay
  – find out about duty reliefs
Classifying your goods correctly means that you:
  – pay the right amount of duty
  – know if duty is suspended on any of your goods
  – know if you can apply any preferential duty rates
  – know if you need to get an import or export licence
If you’re unsure about how to classify your goods, check the 
product classification guides or the 
Trade Tariff lists all commodity codes.
You can also email HMRC 
classification.enquiries@hmrc.gsi.gov.uk for further advice.
Work out the value of your goods
You need to know the 
value of your goods to work out the level of Customs Duty you apply.
Check whether any reliefs apply
Duty relief schemes allow you to pay less or no duty on imports and exports.
Check whether you can use any customs procedures
There are 
customs procedures you can use to suspend duty to HMRC. They help businesses to manage cash-flow.
More information
You can read more information on importing and exporting goods to and from the EU in the 
Partnership Pack.

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UK/HMRC Posts Guidance on Moving Goods to and from the EU through Roll on Roll off Locations Including Eurotunnel

UK/HM Revenue & Customs, 4 Dec 2018.)
In the unlikely event that the UK exits the EU without a deal, from 11pm GMT on 29 March 2019, many UK businesses will need to apply the same processes to EU trade that apply when trading with the rest of the world.
However, if you only import or export goods with Ireland across the Northern Ireland-Ireland land border, you do not need to take any of the actions set out here. Instead, you can disregard it. Her Majesty’s Revenue & Customs (HMRC) will write to you again with information about the arrangements for trading with Ireland as soon as it can.
Roll on roll off locations are locations where traders use vehicles to drive onto ferries or trains to transport their goods into or out of the UK.
In the unlikely event the UK exits the EU without a deal, from 29 March 2019 the:
  • UK will apply customs and excise rules and VAT to goods it gets from the EU in the way it does for the rest of the world
  • EU will apply customs and excise rules and VAT to goods it gets from the UK in the way it does for the rest of the world
Businesses and carriers using roll on roll off locations to transport goods between the UK and the EU will have to submit customs declarations and pay any Customs Duty, Excise Duty or VAT that is due.
We will be publishing further information in January 2019 specifically for the importers, exporters, carriers, and port operators who use roll on roll off locations mentioned above. This will include more information on how we will support continued trade fluidity at these locations.
Traders – imports
In the unlikely event that the UK leaves the EU without a deal then you will need to be ready to make customs declarations and follow other customs requirements on the goods you import.
If you are going through a 
roll on roll off listed location, where customs formalities cannot be completed on site, you’ll need to pre-lodge your customs declaration before checking onto the ferry or train on the EU side.
To ensure you are as prepared as possible, you’ll need to:
  • get an Economic Operator Registration Identification (EORI)
  • decide whether you want to use a customs agent to process customs declarations on your behalf or obtain software to enable you to make declarations yourself
  • decide whether you want to use a customs procedure and arrange with a financial institution any guarantee required for these procedures
Haulage companies – imports
Haulage companies (or someone acting on their behalf) must submit safety and security information through an 
Entry Summary Declaration before the goods arrive in the UK:
  – for roll on roll off ports you must submit the declaration at least 2 hours before the goods are due to arrive in the UK
  – if the goods are being transported through the Channel Tunnel by Eurotunnel, you must submit the declaration at least 1 hour before check-in at Coquelles
You should carry either:
  – a master reference number as evidence that a full or simplified frontier customs declaration has been made
  – the EORI number of the importer if the importer has used the entry in the declarant’s records simplified procedure
The importer or their customs agent will give these to you.
Ferry operators and the Channel Tunnel operator – imports
If you’re a ferry operator or Channel Tunnel operator you must confirm with your customers that they’ve made the right customs declarations.
You can do this through your terms and conditions that your customers use when booking their transport.
You will need to show the booking as evidence to HMRC if we ask for it.
Goods that are accompanied
For goods that are accompanied (for example, where a haulier is used), the liability to submit an Entry Summary Declaration (also known as the Safety and Security Declaration) lies with the haulier in advance of the goods leaving the EU. There is no obligation for the ferry or Channel Tunnel operator to confirm that this declaration has been submitted.
Goods that are unaccompanied
Where goods are unaccompanied, for example goods on trailers or in containers, the ferry or rail freight operator is responsible for submitting the Entry Summary Declaration within the same time limits as accompanied goods. You must include the trailer or container number on the declaration.
If you’re exporting goods from the UK from a roll on roll off listed location to the EU you or your customs agent must complete an Exit Summary Declaration before the goods get to the port of departure. This is a combined declaration for customs and safety and security.
You must include the vehicle registration number of the vehicle you’re using to transport your goods on the declaration. Ask the company that’s exporting your goods for the number (usually a haulier).
You need this so that you can complete the Exit Summary Declaration in full.
If your goods are being transported unaccompanied on a trailer or in a container you must include the trailer or container number on your declaration.
Once you’ve submitted the Exit Summary Declaration, HMRC will send you a notification that either:
  – allows you to proceed
  – asks for additional documentation
  – asks you to make sure the haulier or driver transports the goods you want to export to a Designated Export Place (DEP) so that HMRC can make customs checks before we give you clearance
If you’re exporting 
high-risk goods, you must give HMRC a full departure message so that we can complete the export and account for any duty refund or discharge any liability.
You can do this by either:
  – submitting online forms to HMRC along with evidence of export
  – arranging for an appropriate third party intermediary to update HMRC IT systems
High-risk good are:
  – strategic goods that must have a license or be examined
  – duty suspended goods
  – Excise Duty suspended goods (for example alcohol or goods covered by guarantee)
Further information

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Expeditors News: “President Announces U.S. will not Raise Tariffs on $200 Billion in Chinese Goods” 

Expeditors News, 3 Dec 2018.)
On December 1, 2018, U.S. President Donald Trump and China’s President Xi agreed to maintain the tariffs on $200 billion worth of products from China at 10% ad valorem rate, and they will not raise the tariffs to 25% on January 1, 2019 for a period of 90-days.
During this time, the negotiations regarding forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services, and the purchase of a “substantial amount of agriculture, energy, industrial, and other product from the U.S.” China agreed to start purchasing agricultural product from U.S. farmers immediately.
If, at the end of a 90-day period of negotiations, both parties are unable to reach an agreement, the 10% tariffs will be raised to 25%.

The White House press release may be found here.

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The Globe and Mail: “New Zealand Becomes Third Five Eyes Member to Ban Huawei from 5G Network”

The Globe and Mail, 28 Nov 2018.) [Excerpts.] 
New Zealand is barring China’s Huawei on national-security grounds from supplying equipment for next-generation mobile networks, and in doing so has become the third member of the “Five Eyes” intelligence-sharing alliance to take action against the huge Shenzen-based telecom-gear maker.
The move by New Zealand leaves Canada and Britain as the only Five Eyes members that have not banned wireless carriers from installing Huawei Technologies Co. Ltd.’s 5G technology despite strong pressure from the United States. However, Britain recently did raise security concerns about Chinese-supplied telecommunications equipment from companies such as Huawei. … 
The Wall Street Journal reported last week that Washington has initiated a high-level outreach campaign to foreign allies [including Germany and Italy], trying to persuade wireless and internet providers in these countries to avoid Huawei equipment because of national-security concerns. … 

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ST&R Trade Report: “Advance Notice Requirement for Imports of 26 Chemical Substances Withdrawn” 

Sandler, Travis & Rosenberg Trade Report, 4 Dec 2018.)
The Environmental Protection Agency has withdrawn a 
direct final rule that would have required persons who intend to manufacture (including import) or process any of 26 specified chemical substances for an activity designated as a significant new use by that rule to notify the EPA at least 90 days before commencing that activity. The EPA is taking this action because it received adverse comments regarding this rule.
Instead, the EPA will now proceed with a proposed rule that would ultimately impose the same requirements if finalized.
  – Persons could not commence manufacture or processing for a significant new use until the EPA conducts a review of the advance notice, makes an appropriate determination, and takes such actions as are required with that determination.
  – Importers would have to certify that shipments of these substances comply with all applicable rules and orders under the Toxic Substances Control Act, including any SNUR requirements.

  – Persons who export or intend to export any of these substances would be subject to the export notification provisions of 15 USC 2611(b) and have to comply with the export notification requirements in 40 CFR part 707, subpart D.

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The Wall Street Journal: “China Maneuvers to Snag Top-Secret Boeing Satellite Technology”

The Wall Street Journal, 4 Dec 2018.) [Excerpts. Subscription required.]
The founders of a small Los Angeles firm, which ordered a satellite from Boeing, say it was financed and is now controlled by Beijing. 
Workers at a Boeing Co. plant in Los Angeles are nearing completion of a new satellite, which uses restricted technology relied on by the U.S. military. It was ordered by a local startup that seeks to improve web access in Africa.
In reality, the satellite is being funded by Chinese state money, according to corporate records, court documents and people close to the project. … 

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A.F. Enslen, J.M. Scannapieco & J. Bodie: “BIS Requests Comments on “Emerging” Technologies for CFIUS and Export Control Reforms”

Baker Donelson, 30 Nov 2018.) 
* Author: Alan F. Enslen, Esq., 
aenslen@bakerdonelson.com; John M. Scannapieco, Esq., 
jscannapieco@bakerdonelson.com; and Julius Bodie, Esq., 
jbodie@bakerdonelson.com. All of Baker Donelson. 
The Committee on Foreign Investment in the United States (CFIUS) reform legislation, titled the Foreign Investment Risk Review Modernization Act (FIRRMA), was signed into law in August 2018 as a part of the National Defense Authorization Act for Fiscal Year 2019 (2019 NDAA). CFIUS, an interagency committee chaired by the U.S. Department of the Treasury, has traditionally reviewed national security risks of certain forms of foreign direct investment in the U.S. economy that results in control of a U.S. business by a foreign person. The new legislation casts a wider net over what type of transactions and investments are subject to potential CFIUS review, including certain passive investments that do not necessarily result in control of a company. The 2019 NDAA also included the Export Control Reform Act of 2018 (ECRA), which will have major implications for U.S. and foreign businesses and implements key changes to the U.S. statutory basis for export controls of commercial, dual use, and less sensitive defense items. In November 2018, the first steps for substantive regulatory implementation of both FIRRMA and the ECRA began to take place.
First, on November 10, 2018, the FIRRMA pilot program went into effect, implementing two key provisions of the legislation: 
expanded jurisdiction rules that target critical technologies and new mandatory filing requirements. CFIUS’s jurisdiction now includes reviews of certain investments by foreign persons that do not necessarily constitute an acquisition of “control” of a U.S. business (FIRRMA refers to these as “other investments”). An investment can now fall within the purview of CFIUS review if it gives the foreign investor one of the following:
  (1) Access to any material nonpublic technical information in the possession of the U.S. business;
  (2) Membership or observer rights on the board of directors or equivalent governing body of the U.S. business, or the right to nominate an individual to a position on the board of directors or equivalent governing body of the U.S. business; or
  (3) Any involvement, other than through voting of shares, in substantive decision-making of the U.S. business regarding the use, development, acquisition, or release of 
critical technologies.
In addition, the pilot program covers any U.S. business that produces, designs, tests, manufactures, fabricates, or develops a critical technology that is: (1) utilized in connection with the U.S. business’s activity in one or more “Pilot Program Industries,” or (2) designed by the U.S. business specifically for use in one or more “Pilot Program Industries” (the program covers 27 Pilot Program Industries for which the U.S. government determined that “strategically motivated foreign investment” could pose a threat to U.S. technical superiority and national security, including the manufacturing of aircrafts, computers, wireless communications equipment, and semiconductors).
The second major change in the pilot program is that it establishes 
mandatory declarations, described by the Department of Treasury as “abbreviated notice that generally should not exceed five pages in length,” for foreign transactions that constitute either a controlling investment or a FIRRMA “other investment” described above. CFIUS filings have always been voluntary prior to this reform legislation, but you can now face potentially significant penalties for failing to submit a mandatory filing. The declarations must be filed at least 45 days prior to a transaction’s expected completion date, at which point CFIUS will have 30 days to take action. 
The pilot program’s most immediate impact will be a sharp rise in CFIUS filings due to the mandatory declarations. The Pilot Program Industries include much more than just traditional national security business sectors. U.S. commercial sectors that usually attract foreign investment like wireless communications and telephone technology, storage batteries and battery manufacturing, biochemical R&D, and optical lens manufacturing will also be subject to new mandatory CFIUS requirements. When considering such an investment moving forward, it is critical to know which industries are covered and whether your investment might trigger a filing and/or review.
The FIRRMA pilot program evidences the U.S. government’s increased emphasis on protecting critical technologies, and the ECRA serves to underpin that focus in several respects. The ECRA codifies the statutory authority of the Commerce Department’s Bureau of Industry and Security (BIS) to administer the U.S. Export Administration Regulations (EAR) that regulate the export of less sensitive military items and “dual use” items (items that are used for commercial/civilian purposes but can also have military applications). The statutory authority for the EAR was provided by the Export Administration Act of 1979, which lapsed in 2001 and has since been kept in effect since via executive orders and annual continuations.
The ECRA tasks the U.S. government and BIS to identify and establish “appropriate controls” for the export of “emerging and foundational technologies” via an ongoing interagency review process conducted by the Departments of Commerce, Defense, Energy and State. Once a new technology is determined to be classified as emerging and foundational, FIRRMA imposes multiple requirements on CFIUS to review proposed foreign investments in that technology, as identified “emerging and foundational” tech will be included within the FIRRMA definition of “critical technologies,” and therefore subject to CFIUS review.
On November 19, BIS published an advance notice of proposed rulemaking (ANPRM) in the Federal Register seeking public comments on how the U.S. should define and identify “emerging” technologies to assist and inform the ongoing interagency process.
The notice lists 14 broad categories of technology that BIS intends to focus on:
  (1) Biotechnology
  (2) Artificial intelligence (AI)
  (3) Position, Navigation, and Timing (PNT) technology
  (4) Microprocessor technology
  (5) Advanced computing technology
  (6) Data analytics technology
  (7) Quantum information and sensing technology
  (8) Logistics technology
  (9) Additive manufacturing (e.g., 3D printing)
  (10) Robotics
  (11) Brain-computer interfaces
  (12) Hypersonics
  (13) Advanced materials
  (14) Advanced surveillance technologies
BIS also noted that it will issue a separate request for comments regarding “foundational” technologies with national security implications. 
If you are conducting business in or related to one of the 14 representative technology categories in the ANPRM for emerging technologies, we encourage you to consider submitting comments to BIS by the December 19, 2018 deadline. This is an opportunity to provide clarification, prevent misunderstanding, and help shape regulatory policies that are likely to have significant downstream effects.

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Page-Fura, P.C.: “USMCA Officially Signed – & Updated Text Released!”

(Source: Page-Fura P.C., 30 Nov 2018. Available by subscription via 
In a morning ceremony held on the sidelines of the G-20 summit being conducted in Buenos Aires, Argentina, the U.S., Canada & Mexico officially consummated the revised version of the North American Free Trade Agreement, now coined the U.S.-Mexico-Canada Agreement or “USMCA”.  The signing reflects the end of a whirlwind 60 day time period as a result of which the initial text underwent a number of both small and significant revisions.  That new text may be found 
here at the Office of the U.S. Trade Representative’s website.  The revised text should be compared and reviewed carefully against the previous draft language to ensure that any early stage sourcing and/or production decisions being made are consistent with this updated version.
While the signing represents a watershed event, it is important to note that the USMCA is not yet officially in effect.  Approval by all three governments is still required and the transition to a Democratic-controlled House as of January 2019 has cast a shadow over whether the agreement and its accompanying implementing legislation will pass unscathed.  Labor and environmental considerations are at the fore although there are also other areas for potential dispute.  There is also the significant remaining issue on removal or adjustment in the Section 232 steel and aluminum tariffs being imposed on the importation of covered products from Canada and Mexico as both governments have been extremely vocal on the need to eliminate those restraints in the spirit of the USMCA.  Reciprocally, the U.S. wants to see both countries remove their retaliatory tariffs which have disproportionately harmed U.S. farming interests.

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R.C. Thomsen II, A.D. Paytas & M.M. Shomali: “Changes to Export Controls in November 2018” (Part II of II)

(Source: Thomsen and Burke LLP, 1 Dec 2018. Available by subscription via 
maher@t-b.com.) [Excerpts.]
* Authors: Roszel C. Thomsen II, Esq., +1 410-539-2596, 
roz@t-b.com; Antoinette D. Paytas, Esq., +1 410-539-2655, 
toni@t-b.com; and Maher M. Shomali, Esq., +1 410-539-6336, 
maher@t-b.com. All of Thomsen and Burke LLP. 
[Editor’s Note: due to space limitations, this article is divided into two parts.  Part I1 was published in yesterday’s Daily Bugle.]
Enforcement Actions
Last month, we notified you that the Department of Commerce took action to restrict exports to Fujian Jinhua Integrated Circuit Company, Ltd. (Jinhua) by adding them to the Entity List (Supplement No. 4 to Part 744 of the Export Administration Regulations), because Jinhua poses a significant risk of becoming involved in activities that are contrary to the national security interests of the United States. Jinhua is nearing completion of substantial production capacity for dynamic random access memory (DRAM) integrated circuits. The additional production, in light of the likely U.S.-origin technology, threatens the long term economic viability of U.S. suppliers of these essential components of U.S. military systems.
This month, the Justice Department announced the indictment of Jinhua and United Microelectronics Corporation and three individuals charging them with crimes related to a conspiracy to steal, convey, and possess stolen trade secrets of an American semiconductor company for the benefit of a company controlled by the PRC government.
According to the indictment, the defendants were engaged in a conspiracy to steal the trade secrets of Micron Technology, Inc. (Micron), a leader in the global semiconductor industry specializing in the advanced research, development, and manufacturing of memory products, including dynamic random-access memory (DRAM). DRAM is a leading-edge memory storage device used in computer electronics. Micron is the only United States-based company that manufactures DRAM. According to the indictment, Micron maintains a significant competitive advantage in this field due in large part from its intellectual property, including its trade secrets that include detailed, confidential information pertaining to the design, development, and manufacturing of advanced DRAM products. 
Before the events described in the indictment, the PRC did not possess DRAM technology, and the Central Government and State Council of the PRC publicly identified the development of DRAM and other microelectronics technology as a national economic priority. The criminal defendants are United Microelectronics Corporation (UMC), a Taiwan semiconductor foundry; Fujian Jinhua Integrated Circuit, Co., Ltd. (Jinhua’), a state-owned enterprise of the PRC; and three Taiwan nationals: Chen Zhengkun, a.k.a. Stephen Chen; He Jianting, a.k.a. J.T. Ho; and Wang Yungming, a.k.a. Kenny Wang.  
UMC is a publicly listed semiconductor foundry company traded on the New York Stock Exchange; is headquartered in Taiwan; and has offices worldwide, including in Sunnyvale, California. UMC mass produces integrated-circuit logic products based on designs and technology developed and provided by its customers. Jinhua is a state-owned enterprise of the PRC, funded entirely by the Chinese government, and established in February 2016 for the sole purpose of designing, developing, and manufacturing DRAM.
According to the indictment, Chen was a General Manager and Chairman of an electronics corporation that Micron acquired in 2013. Chen then became the president of a Micron subsidiary in Taiwan, Micron Memory Taiwan (MMT), responsible for manufacturing at least one of Micron’s DRAM chips. Chen resigned from MMT in July 2015 and began working at UMC almost immediately. While at UMC, Chen arranged a cooperation agreement between UMC and Fujian Jinhua whereby, with funding from Fujian Jinhua, UMC would transfer DRAM technology to Fujian Jinhua to mass-produce. The technology would be jointly shared by both UMC and Fujian Jinhua. Chen later became the President of Jinhua and was put in charge of its DRAM production facility.
While at UMC, Chen recruited numerous MMT employees, including Ho and Wang, to join him at UMC. Prior to leaving MMT, Ho and Wang both stole and brought to UMC several Micron trade secrets related to the design and manufacture of DRAM. Wang downloaded over 900 Micron confidential and proprietary files before he left MMT and stored them on USB external hard drives or in personal cloud storage, from where he could access the technology while working at UMC.
Société Générale S.A., a financial institution headquartered in Paris, France, has agreed to remit $53,966,916.05 to settle its potential civil liability for the 1,077 apparent violations of the Cuban Assets Control Regulations, 31 C.F.R. Part 515 (CACR); the Iranian Transactions and Sanctions Regulations, 31 C.F.R. Part 560 (ITSR); and the Sudanese Sanctions Regulations, 31 C.F.R. Part 538 (SSR).
For at least five years up to and including 2012, Société Générale S.A. processed transactions to or through the United States or U.S. financial institutions that involved countries or persons (individuals and entities) subject to the sanctions programs administered by OFAC (collectively, “OFAC-sanctioned parties”). Société Générale S.A. often processed these transactions in a non-transparent manner that removed, omitted, obscured, or otherwise failed to include references to OFAC-sanctioned parties in the information sent to the U.S. financial institutions that were involved in the transactions.
Société Générale S.A. processed 796 transactions involving Cuba totaling approximately $5,503,813,992.25 between July 11, 2007 and October 26, 2010, in apparent violation of the CACR. The total base penalty for this set of apparent violations was $25,870,000.00. Société Générale S.A. processed 30 transactions involving Iran totaling approximately $34,152,962.50 between November 20, 2008 and January 20, 2009, in apparent violation of the ITSR. The total base penalty for this set of apparent violations was $34,152,962.50. Société Générale S.A. processed 251 transactions involving Sudan totaling $22,486,039.61 between July 9, 2007 and March 19, 2012, in apparent violation of the SSR. The total base penalty for this set of apparent violations was $41,656,278.22.
Arash Sepehri, a citizen of Iran, pleaded guilty on Nov. 7, to a federal charge stemming from his role in a conspiracy to cause the export of controlled goods and technology to Iran, in violation of U.S. Department of Commerce and military controls, as well as in contravention of sanctions imposed against Iran.
According to court documents filed in this case, Sepehri was an employee and a member of the board of directors of an Iranian company, Tajhiz Sanat Shayan, or Tajhiz Sanat Company (TSS). TSS and other companies involved in the conspiracy were listed by the European Union on May 23, 2011, as entities being sanctioned for their involvement in the procurement of components for the Iranian nuclear program. Through TSS and associated companies, Sepehri and others conspired to obtain high-resolution sonar equipment, data input boards, rugged laptops, acoustic transducers and other controlled technology from the United States without obtaining proper licenses and in violation of economic sanctions.
As stated in the court documents, Sepehri and his co-conspirators sought to evade legal controls through a variety of means, including the use of a variety of aliases, United Arab Emirates (UAE)-based front companies and an intermediary shipping company based in Hong Kong. Payments for the goods were arranged through the UAE.
Hicham Diab, of Tripoli, Lebanon, and Nafez El Mir, a Canadian citizen residing in Lebanon, were arrested this month after they traveled to a Seattle warehouse and began hiding firearms in a vehicle they planned to ship to Lebanon. Diab and El Mir appeared in federal court this afternoon, charged with conspiracy to violate the Arms Export Control Act.
According to a criminal complaint unsealed today, in 2016, Diab began communicating with a person in the U.S. who Diab believed was willing to locate firearms for him to smuggle to Lebanon. The person in the U.S. alerted Homeland Security Investigations (HSI) about the contact. Over the course of 2017 and 2018, undercover HSI agents posed as people able and willing to supply firearms sought by Diab in furtherance of his smuggling scheme. In October 2018, Diab made plans to come to the U.S. and successfully wired funds for the purchase of firearms and a vehicle in which to hide the firearms. Diab arrived in Seattle on Nov. 7, and was accompanied by El Mir who, according to Diab, had experience smuggling firearms hidden in automobile panels.
On November 7 and 8, Diab went with the undercover agents to a warehouse containing firearms that had been secured by HSI and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), and inspected the firearms, which included: twenty Glock handguns, a Smith & Wesson .50 revolver, one FN Fiveseven pistol, an AR15 rifle kit and a M203 grenade launcher. Diab and El Mir, during their November 8 warehouse visit, began hiding the firearms in door panels and bumper space inside a sport-utility vehicle. El Mir also discussed ways to get the vehicle shipped to Lebanon with the hidden weapons. The men were arrested the evening of Nov. 8, as they exited the warehouse.
Naum Morgovsky, of Hillsborough, California, was sentenced to 108 months in prison and three years of supervised release for conspiring to illegally export components for the production of night-vision and thermal devices to Russia in violation of the Arms Export Control Act, and for laundering the proceeds of the scheme.
According to their guilty pleas, which occurred during the second day of jury selection on June 12, Naum Morgovsky and Irina Morgovsky admitted that from at least April 2012 until Aug. 25, 2016, they conspired to export without the necessary license to a company called Infratech in Moscow, Russia, numerous night and thermal vision components, including image intensifier tubes and lenses. The couple used their U.S. business, Hitek International, to purchase these components and misrepresented to the sellers that the products would not be exported. The couple then shipped the products to Russia using a variety of front companies and shipment methods. Further, defendants knew the night and thermal vision components they exported were on the U.S. Munitions List and that they therefore were not permitted to export the items without a license from the Department of State, Directorate of Defense Trade Controls, which they never sought. 
In addition to exporting the components, Judge Chhabria found that Naum Morgovsky, a naturalized U.S. citizen originally of Ukraine, had taken steps to conceal his crimes so that the couple could continue to operate the illegal export business undetected, and that Naum Morgovsky laundered the proceeds of the export crimes. As the government alleged, Naum Morgovksy used numerous front companies and the identity of at least one deceased person in furtherance of the scheme. In handing down the sentence, Judge Chhabria noted that this was a “very serious crime” and that “people who export night vision . . . need to know that there is a penalty.”
For her part in the scheme, the grand jury charged Irina Morgovsky with conspiracy to violate the Armed Export Control Act and with misuse of a passport. She pleaded guilty to the charges and on Oct. 31, Judge Chhabria sentenced her to 18 months in prison for her role in the scheme.
Cobham Holdings, Inc. “Cobham), a company based in Arlington, Virginia, on behalf of its former subsidiary, Aeroflex/Metelics, Inc. (Metelics), has agreed to pay $87,507 to settle potential civil liability for three apparent violations of the Ukraine Related Sanctions Regulations, 31 C.F.R. part 589 (the URSR). Specifically, between July 31, 2014 and January 15, 2015, Metelics appears to have violated § 589.201 of the URSR when it sold 3,400 LM 102202-Q-C-301 switch limiters, 6,900 MSW 2061-206 switches, and 20 silicon diode switch limiter samples through distributors in Canada and Russia to a person whose property and interests in property are blocked pursuant to Executive Order 13661 of March 17, 2014, “Blocking Property of Additional Persons Contributing to the Situation in Ukraine”.
Prior to December 14, 2015, Metelics was a subsidiary of Cobham, a global provider of technology and services in aviation, electronics, communications, and defense. During negotiations to sell Metelics, the purchaser identified a July 31, 2014 shipment of silicon diode switches and switch limiters to a Metelics distributor in Canada for end-use by Almaz Antey Telecommunications LLC (AAT) in Russia. Cobham investigated the shipment and discovered that in December 2014 and January 2015, Metelics made two additional shipments through a Russian distributor for end-use by AAT. At all relevant times, although AAT was not explicitly identified on OFAC’s List of Specially Designated Nationals and Blocked Persons, it was 51 percent owned by Joint-Stock Company Concern Almaz-Antey (“JSC Almaz-Antey”), which OFAC had blocked and added to the SDN List on July 16, 2014, two weeks before the July 31, 2014 shipment. As a result, AAT was blocked pursuant to §§ 589.201 and 589.406 of the URSR at the time Metelics engaged in the three shipments described below. These shipments arose out of two separate transactions – one taking place between June and July 2014, and the other taking place between October 2014 and January 2015.
On June 18, 2014, Metelics agreed to ship an order of 6,900 switches and 6,900 switch limiters through a Canadian distributor to AAT. The total value of the order was $1,123,182. On June 19, 2014, Metelics performed a denied party screening for the order that returned warnings for Russia generally but not AAT specifically, as JSC Almaz-Antey had not yet been added to the SDN List. Metelics did not have sufficient stock to fill the order, so it arranged to split the order into two shipments.
Metelics prepared the first shipment associated with the June 18, 2014 order for June 27, 2014 and performed another denied party screening that day with similar results to the first screening. Knowing the shipment was destined for Russia, Metelics forwarded the end-use certificates to its Director of Global Trade Compliance to confirm that required compliance procedures had been followed and for final approval. After completing its global trade compliance review, Metelics shipped the first part of the order on June 27, 2014. The value of the shipment was $377,860. On July 16, 2014, OFAC designated JSC Almaz-Antey and added it to the SDN List.
Metelics prepared the second shipment on July 31, 2014 and again performed a denied party screening. Although OFAC had designated JSC Almaz-Antey and added it to the SDN List approximately two weeks before, and despite the inclusion of two uncommon terms in the names of both the SDN and the specific end-user for the subject transaction (Almaz and Antey), Metelics’ denied party screening produced no warnings or alerts for AAT. After the Director of Global Trade Compliance, in reliance on the results of the screening software, approved the transaction, Metelics shipped the second part of the order on July 31, 2014. The total value of the second shipment was $745,322.
In October 2014, Metelics received an order for 10 samples of two different silicon diode switch limiters from a Russian distributor for end-use by AAT. On October 27, 2014, Metelics performed a denied party screening for the parties involved in the transaction (including AAT) which did not return any matches. Metelics subsequently shipped the samples in two separate shipments following the same procedures of performing a denied party search just prior to shipment and seeking approval from its Director of Global Trade Compliance (similar to the July 2014 transaction). The first shipment occurred on December 19, 2015 and the second on January 15, 2015. The value for each of these two shipments listed on the commercial invoices was $10. Cobham determined that its screening software failed to generate an alert because JSC Almaz-Antey (the entity identified on the SDN List) did not include the word “telecom.” The third party screening software relied on by Cobham used an all word match criteria that would only return matches containing all of the searched words, even though Cobham had set the search criteria to “fuzzy” to detect partial matches. This meant that the software failed to match “Almaz Antey” when Cobham searched for “Almaz Antey Telecom.”

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W.E. Lawler III, A.L. Riella & M.M. Howell: “DOJ Announces Revised Policy Reflecting Move Away from Yates Memo”

Vinson & Elkins, 4 Dec 2018.) 
* Authors: William E. Lawler III, Esq., 
wlawler@velaw.com; Amy Lamoureux Riella, Esq., 
ariella@velaw.com; and Misty M. Howell, Esq.,
mhowell@velaw.com. All of Vinson & Elkins. 
On November 28, 2018, speaking at the American Conference Institute’s 35th International Conference on the Foreign Corrupt Practices Act (“FCPA”), Deputy U.S. Attorney General Rod Rosenstein announced changes to the Department of Justice’s (“DOJ” or “Department”) policy on individual accountability in corporate cases. [FN/1] While emphasizing that the Department remains committed to pursuing individuals, Rosenstein explained that further review of DOJ’s existing policy and consideration for concerns about inefficiencies in requiring corporations to identify 
all employees involved in wrong-doing in return for cooperation resulted in the recently announced policy change. Under the new DOJ policy, corporations will now be eligible for cooperation credit in criminal cases where they identify the individuals who were ”
substantially involved in or responsible for the criminal conduct.” [FN/2]
This newly announced policy represents a shift away from the “all or nothing”
 approach contained in the 2015 policy issued by then-Deputy U.S. Attorney General Sally Yates, pursuant to which DOJ required that in order “[t]o be eligible for 
 cooperation credit, corporations [were required to] provide to the Department all relevant facts about the individuals involved in corporate misconduct” (the “Yates Memo”). [FN/3] The policy contained in the Yates Memo did not consider an individual’s position, level of authority, or level of involvement in the alleged misconduct. [FN/4]
As a result, companies seeking cooperation credit were required to provide information on even the most peripherally involved individuals. Rosenstein explained in his remarks that the Department’s policy had the unintended result of slowing corporate investigations and potential resolutions while corporations attempted to locate and identify all involved employees – former and current – and also resulted in a failure by Department personnel to strictly adhere to the policy because of these very same concerns about inefficiency and wasted resources. 
The Department’s new policy appears, on its face, to represent a more practical approach to weighing cooperation credit in the face of potentially culpable corporate employees involved in criminal matters. In practice, the significance of Rosenstein’s announcement is not yet clear. Rosenstein acknowledged that the prior policy under the Yates Memo was not strictly enforced where it “impeded resolutions and wasted resources”; accordingly, the newly announced policy may simply more accurately reflect DOJ’s current practice than offer any new or sweeping policy change. 
The Department has not issued a formal memorandum on the revised policy, and while sections of the DOJ’s Justice Manual have been updated to incorporate the substantial involvement language [FN/5], some sections still contain language consistent with the policy contained in the Yates’ Memo – including the section regarding the FCPA, where cooperation credit can be of particular importance due to the potential for high penalties. [FN/6]
  [FN/1] Rod. J. Rosenstein, Deputy Att’y Gen., U.S. Dep’t of Justice, Remarks at the American Conference Institute’s 35th International Conference on the Foreign Corrupt Practices Act (Nov. 29, 2018), available as prepared 
Id. (emphasis added). 

  [FN/3] Memorandum from Sally Quillian Yates, Deputy Att’y Gen., U.S. Dep’t of Justice, to All U.S. Att’ys et al., Individual Accountability for Corporate Wrongdoing 2 (Sept. 9, 2015), available 

  [FN/5] U.S. Dep’t of Justice, Justice Manual § 9-28.700 (2018), available 
Id. at § 9-28.720 (explaining that, if a corporation fails to disclose “all relevant facts about the individuals who were involved in the misconduct … it will not be entitled to receive any credit for cooperation”); i
d. at § 9-47.120, available 
here(for FCPA offenses, to obtain any cooperation credit, corporations must fully cooperate and disclose “all facts related to involvement in the criminal activity by the company’s officers, employees, or agents”).

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TE_a116ECS Presents “Seminar Level II: Managing ITAR/EAR Complexities” in Scottsdale, AZ on 26-27 Mar 2019

(Source: S. Palmer, spalmer@exportcompliancesolutions.com.)
* What: Seminar Level II – Managing ITAR/EAR Complexities; Scottsdale, AZ
* When: March 26-27, 2019
* Sponsor: Export Compliance Solutions (ECS)
* ECS Speaker Panel:  Suzanne Palmer, Lisa Bencivenga
* Register here or by calling 866-238-4018 or e-mail

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Thomas Carlyle (4 Dec 1795 – 5 Feb 1881; was a Scottish philosopher, satirical writer, essayist, translator, historian, mathematician, and teacher; considered one of the most important social commentators of his time.)
  – Permanence, perseverance and persistence in spite of all obstacles, discouragements, and impossibilities: It is this, that in all things distinguishes the strong soul from the weak.
  – “No pressure, no diamonds.”

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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: 2 Nov 2018: 
83 FR 55099: Wassenaar Arrangement 2017 Plenary Agreements Implementation [Correction to 24 Oct EAR Amendment Concerning Supplement No. 1 to Part 774, Category 3.]

: 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders

  – Last Amendment: 15 Nov 2018: 83 FR 57308-57318: Democratic Republic of the Congo 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: 1 Nov 2018: 
Harmonized System Update 1819, containing 1,200 ABI records and 245 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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