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18-1214 Friday “Daily Bugle”

18-1214 Friday “Daily Bugle”

Friday, 14 December 2018

TOPThe Daily Bugle is a free daily newsletter from Full Circle Compliance, containing changes to export/import regulations (ATF, DOE/NRC, Customs, NISPOM, EAR, FACR/OFAC, FAR/DFARS, FTR/AES, HTSUS, and ITAR), plus news and events. Subscribe here for free subscription. Contact us for advertising inquiries and rates
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  1. Commerce/BIS Extends Review of “Controls for Certain Emerging Technologies” Until 10 Jan 2019
  1. Items Scheduled for Publication in Future Federal Register Editions 
  2. Commerce/BIS Denies Export Privileges to “Jereh Group” of Yantai, China; Company to Pay $600,000 to Settle Export Violations
  3. State/DDTC: (No new postings.)
  4. EU Publishes Brexit-Related Decisions
  5. EU Publishes 2018 Annual Update of EU Dual-Use Regulation
  6. EU Publishes 20th Annual Report Concerning the Control of Exports of Military Technology and Equipment
  7. Global Affairs Canada: “Canada Strengthens its Arms Export Controls”
  1. The Epoch Times: “Huawei’s Alleged ‘F7’ Codename”
  2. Expeditors News: “WTO Report Shows Rise in Trade Restrictions”
  3. Global Trade News: “EU-Japan Trade Agreement Approved by EU Parliament”
  4. ST&R Trade Report: “Delay in Section 301 Tariff Hike Still Not Reflected in ACE”
  5. Techcrunch: “U.S. Intelligence Community Says Quantum Computing and AI Pose An ‘Emerging Threat’ to National Security”
  1. M. Volkov: “The Mindset of Employee Fraudsters (Part III of III)”
  2. S.C. Kabange & C. Xu: “Get on Top of Your Compliance in High Risk Countries”
  3. T.G. Ficaretta: “TTB to Present FAET Seminar at SHOT Show”
  1. ECS Presents “Seminar Level III: Mastering ITAR/EAR Challenges” in Nashville, TN on 30 Apr – 1 May 2019
  2. FCC Presents “Designing an Internal Compliance Program for Export Controls & Sanctions”, 5 Feb 2019 in Bruchem, the Netherlands
  3. List of Approaching Events: 51 Events Posted This Week, Including 9 New Events
  1. Bartlett’s Unfamiliar Quotations 
  2. Are Your Copies of Regulations Up to Date? Latest Amendments: ATF (15 Jan 2016), Customs (29 Nov 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 

EXIMITEMS FROM TODAY’S FEDERAL REGISTER

EXIM_a1

1. 
Commerce/BIS Extends Review of “Controls for Certain Emerging Technologies” Until 10 Jan 2019

(Source: Federal Register, 14 Dec 2018.) [Excerpts.] 
 
83 FR 64299: Review of Controls for Certain Emerging Technologies
 
* AGENCY: Bureau of Industry and Security, Commerce.
* ACTION: Advance notice of proposed rulemaking (ANPRM), Extension of comment period.
* SUMMARY: The Bureau of Industry and Security (BIS) is extending the comment period for its November 19, 2018, advanced notice of proposed rulemaking (ANPRM), “Review of Controls for Certain Emerging Technologies” until January 10, 2019. In response to requests received from members of the public, BIS believes it is appropriate to extend the comment period to provide interested parties additional time to submit their responses to the ANPRM.
* DATES: The comment period announced in the notice that was published on November 19, 2018 (83 FR 58201) is extended. Comments on the ANPRM must now be received by BIS on or before January 10, 2019.
* ADDRESSES: You may submit comments through either of the following:
  – Federal eRulemaking Portal: http://www.regulations.gov. The identification number for this rulemaking is BIS 2018-0024.
  – Address: By mail or delivery to Regulatory Policy Division, Bureau of Industry and Security, U.S. Department of Commerce, Room 2099B, 14th Street and Pennsylvania Avenue NW, Washington, DC 20230. Refer to RIN 0694-AH61.
* FOR FURTHER INFORMATION CONTACT: Kirsten Mortimer, Office of National Security and Technology Transfer Controls, Bureau of Industry and Security, Department of Commerce. Phone: (202) 482-0092; Fax (202) 482-3355; Email: Kirsten.Mortimer@bis.doc.gov.
* SUPPLEMENTARY INFORMATION: On November 19, 2018 (83 FR 58201), the Bureau of Industry and Security (BIS) published an advanced notice of proposed rulemaking, “Review of Controls for Certain Emerging Technologies,” which included a comment period deadline of December 19, 2018. Since publication, BIS has received requests for additional time to submit comments. …
 
  Dated: December 10, 2018.
 
Matthew S. Borman, Deputy Assistant Secretary for Export Administration.

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OGSOTHER GOVERNMENT SOURCES

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. Items Scheduled for Publication in Future Federal Register Editions
 

(Source:
Federal Register)
* Commerce/BIS; NOTICES; Export Privileges; Denials [Concerning Mahan Airways, included in the Daily Bugle of 12 Dec 2018, item #4. Pub Date: 17 Dec 2018.]

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OGS_a23
Commerce/BIS Denies Export Privileges to “Jereh Group” of Yantai, China; Company to Pay $600,000 to Settle Export Violations
(Source: Commerce/BIS, 14 Dec 2018.) 
 
* Respondent: Yantai Jereh Oilfield Services Group Co., Ltd. (“Jereh Group”) of Yantai, China.
* Charges: 
  – 15 C.F.R. Part 764.2(e): Acting with Knowledge of a Violation 
  – 15 C.F.R. Part 764.2(g): False Statements to BIS in the Course of an Investigation
* Penalty: Civil penalty in the amount of $600,000 
* Debarred: 5 years from the date of the order.
* Date of Order: 10 Dec 2018.

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4
State/DDTC: (No new postings.)

(Source: 
State/DDTC)

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OGS_a04
5
EU Publishes Brexit-Related Decisions

(Source: 
Official Journal of the European Union
, 14 Dec 2018.)
Acts Adopted by Bodies Created by International Agreements
 
Decision No 1/2018 of the EU-CTC Joint Committee of 4 December 2018 as regards an invitation to the United Kingdom to accede to the Convention on a common transit procedure [2018/1987]
Decision No 2/2018 of the EU-CTC Joint Committee of 4 December 2018 amending the Convention on a common transit procedure [2018/1988]
Decision No 1/2018 of the EU-CTC Joint Committee of 4 December 2018 as regards an invitation to the United Kingdom to accede to the Convention on the simplification of formalities in trade in goods [2018/1989]

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6
EU Publishes 2018 Annual Update of EU Dual-Use Regulation

(Source: European Union, 14 Dec 2018.)
 
Regulations
 
Commission Delegated Regulation (EU) 2018/1922 of 10 October 2018 amending Council Regulation (EC) No 428/2009 setting up a Community regime for the control of exports, transfer, brokering and transit of dual-use items
 
2018 Update of the EU Control List of Dual-Use Items
Commission Delegated Regulation (EU) 2018/1922 of 10 October 2018 amending Council Regulation (EC) No 428/2009 setting up a Community regime for the control of exports, transfer, brokering and transit of dual-use items 
was published on 14 December 2018 on the Official Journal of the European Union


This delegated regulation updates the EU dual-use list in Annex I to Regulation (EC) No 428/2009 and brings it in line with the decisions taken within the framework of the international non- proliferation regimes and export control arrangements in 2017. 

The majority of the changes this year result from amendments agreed at the 2017 Plenary of the 
Wassenaar Arrangement
, including: 
 
  • Change of controls on measuring and inspection equipment (2B006) and now including angular measuring equipment; 
  • Deletion of control on robots with 3D image processing (2B007a);
  • Deletion of controls on technology for numerical control units (2E003b) and machine tool instruction generators (2E003d);
  • New control entry for electro-optic modulators (3A001i);
  • New entry for semiconductor manufacturing mask substrate blanks (3B001j);
  • New decontrols for ‘upgrade’ intrusion software (4D004);
  • New decontrol for technology for ‘vulnerability disclosure’ and ‘cyber incident 
  • response’ (4E001);
  • New control for Focal Plane Array (FPA) readout integrated circuits (ROIC) (6A002f);
  • Deletion of controls on high speed cinema film recording and mechanical cameras (6A003a);
  • New parameter for ‘corrected specific fuel consumption’ added to the control on marine gas turbine control (9A002);
  • Increase of controls for ground based spacecraft control equipment (9A004); o Change of software controls for testing aero gas turbines engines (9D004b). 
The Missile Technology Control Regime in 2017 decided to add new parameters for controls on batch and continuous mixers (1B117), to limit the scope of control for flow-forming machines (2B109) to missile production, to amend the control on satellite navigation systems (7A105) to include regional as well as global systems and to add dry weight and rotor diameter parameters for the control on turbojet/fan engines (9A101). 
 
The Nuclear Suppliers Group agreed in 2017 to add a new control for lithium target assemblies (1B235) to reflect the dual-use NSG entry 2.A.4, and to delete controls for water hydrogen sulphide exchange tray columns (1B229). 
 
The Australia Group in 2017 agreed to add a CWC schedule organic molecule to 1C350, re-write control on genetic elements and make certain additions to the controls on both chemical and biological manufacturing equipment. 
 
The Commission Delegated Regulation will enter into force the day after its publication, on 15 December 2018.
 

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7
EU Publishes 20
th 
Annual Report Concerning the Control of Exports of Military Technology and Equipment

(Source: Official Journal of the European Union, 14 Dec 2018.)
 
Notices

Twentieth Annual Report according to Article 8(2) of Council Common Position 2008/944/CFSP
 defining common rules governing the control of exports of military technology and equipment
 
[Editor’s Note: As stated in the introduction, the annual report covers statistics on licenses and exports of conventional arms from EU Member States during the 2017 calendar year. It also covers activities undertaken by the EU and its Member States in the framework of the implementation of Council Common Position 2008/944/CFSP throughout 2017 and 2018, in addition to those activities mentioned in the nineteenth annual report. In addition, the report contains non-exhaustive information on intra-EU transfers of defense-related products that are governed by Directive 2009/43/EC of the European Parliament and of the Council on simplifying terms and conditions of transfers of defense-related products within the Community.]

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8
Global Affairs Canada: “Canada Strengthens its Arms Export Controls”

(Source: Global Affairs Canada, 13 Dec 2018.) 
 
The Honorable Chrystia Freeland, [Canada] Minister of Foreign Affairs, today issued the following statement on the granting of Royal Assent to Bill C-47, An Act to amend the Export and Import Permits Act and the Criminal Code:
 
Today, Canada takes an important step forward to strengthen our existing arms export system, bringing us closer to accession to the Arms Trade Treaty. 
We are unwavering in our commitment to a stronger and more rigorous approach to the export of Canadian arms. These changes will set a permanent and higher standard that meets Canada’s commitment to human rights around the world.
This means the standards and criteria of the Arms Trade Treaty will be written directly into Canadian law, including serious violations of human rights law, peace and security, and gender-based violence. 
The new substantial risk clause means that Global Affairs Canada will need to ensure that it has a high level of confidence that arms exports will not be used to commit human rights abuses. 
I would like to thank the many parliamentarians who have helped pass this bill. I would also like to thank the many Canadians and civil society organizations who provided their feedback, insight, ideas, and views. You have helped ensure that Canada continues to raise the bar and sets a higher standard on arms export and human rights globally.
 

Canada’s existing system of export controls meets or exceeds the majority of Arms Trade Treaty (ATT) provisions, but to both enhance transparency and fully comply with the ATT, legislative amendments have been made to the Export and Import Permits Act (EIPA) and one section of the Criminal Code of Canada that:
 
  (1) establish controls over brokering in military goods between two countries outside of Canada
  (2) create a legal obligation for the minister of foreign affairs to   consider certain assessment criteria before authorizing permits
  (3) increase the maximum fine under the EIPA from $25,000 to $250,000 for summary conviction offences
 
A short description of the legislative amendments made to allow accession to the ATT follows.
 
A New System to Regulate Arms Brokering
 
To meet its obligations under article 10 of the ATT, Canada is required to implement brokering controls. Under the bill, brokering is defined as arranging or negotiating a transaction that relates to the movement of goods or technology (on a new brokering control list) from a foreign country to another foreign country.
 
The bill amends the EIPA to prohibit brokering transactions involving the movement of arms from one foreign country to another foreign country without a permit. This applies to any person or organization in Canada, as well as to any Canadian citizen, permanent resident or Canadian organization abroad.
 
Canada’s brokering controls will exceed the ATT requirements by covering more goods and technology, by controlling brokering by Canadians abroad and by weighing brokering transactions against the ATT’s assessment factors.
 
This legislation will be further specified through a series of regulations. These regulations will set out the scope of items and activities captured by brokering controls, specific requirements when applying for a brokering permit and expedited measures for lower-risk transfers.
 
Canada will accede to the ATT once all the necessary regulatory changes are implemented.
 
Mandatory Assessment Criteria for Permits
 
Article 7 of the ATT requires that each state party take several criteria into consideration before authorizing the export of items covered by the treaty. The bill establishes a new legal obligation for the minister of foreign affairs.
 
After an amendment to Bill C-47 that was accepted by the House of Commons, the assessment criteria that the minister must take into account are listed in the legislation itself. The EIPA now includes the specific obligations contained in article 7 of the ATT, notably the risk that the specific good or technology would be used to contribute to undermining or to undermine peace and security, or that it could be used to commit or facilitate:
 
  – a serious violation of international humanitarian law or international human rights law;
  – an act of terrorism or an act relating to transnational organized crime; or
  – a serious act of either gender-based violence or violence against women and children.
 
It now also includes a substantial risk clause that will mean that Global Affairs Canada would need to ensure-before the export of controlled goods-that we have a high level of confidence that those exports will not be used to commit human rights abuses.
 
Stronger Export Controls and Transparency In Canada
 
The bill also introduces other changes indirectly related to the ATT that will directly strengthen Canada’s export control system. It designates by law an annual May 31 deadline for the federal government to table two reports in Parliament: the Report on the Administration of the Export and Import Permits Act and the Report on Exports of Military Goods from Canada. The government is also working with interested stakeholders to enhance transparency by making these reports clearer and more user-friendly.
 
The legislation remains consistent with Canada’s existing export controls and system of assessing export permit applications. These changes do not impact the legitimate and lawful use of sporting firearms.

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NWSNEWS

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The Epoch Times: “Huawei’s Alleged ‘F7’ Codename”

(Source: The Epoch Times, 13 Dec 2018.) [Excerpts.] 
 
Details about the alleged crimes of Huawei Chief Financial Officer Meng Wanzhou, who was arrested in Canada on Dec. 1 at the request of U.S. authorities, remain scant.
 
Media reports have cited insider sources saying her case involves violations of U.S. sanctions on Iran.  
Sources told Reuters that a U.S. probe is looking into the Chinese telecom firm’s use of HSBC Holdings to make illegal transactions involving Iran.
 
This was hinted at when the U.S. Commerce Department published internal documents of the Huawei competitor ZTE, when the company was slapped with an export ban in 2016 after. U.S. authorities found that it had violated sanctions to provide electronic equipment to Iran.
 
The documents detailed how the firm skirted U.S. sanctions and how a rival company was doing the same thing. … 

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Expeditors News: “WTO Report Shows Rise in Trade Restrictions” 

(Source: Expeditors News, 12 Dec 2018.)
 
On December 11, 2018, the World Trade Organization (WTO) published the Director-General’s annual report on trade-related developments. The report shows a sharp increase in trade-restrictive measures taken by WTO members from mid-October 2017 to mid-October 2018.

Some of the key findings include:

  • WTO members applied 137 new trade-restrictive measures during the review period;
  • The trade coverage of the import-restrictive measures was seven times larger than the previous review;
  • WTO members implemented 162 measures to facilitate trade; and
  • Trade remedy measures accounted for approximately 63% of all trade measures in the report.

Director-General Roberto Azevêdo urged WTO members to de-escalate trade tensions. The WTO press release may be found here.

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NWS_a311
Global Trade News: “EU-Japan Trade Agreement Approved by EU Parliament” 

(Source: Integration Point Blog, 13 Dec 2018.) [Excerpts.] 
 
On December 12, the European Parliament approved the free trade agreement (FTA) between the European Union (EU) and Japan by a large majority. The EU-Japan trade agreement will create an open trading market for 635 million people, or a third of the world’s total gross domestic product (GDP).
 
The EU-Japan agreement is the first of its kind to directly incorporate the Paris climate agreement in a binding manner. It is also the first bilateral agreement between the EU and Japan, and is currently the largest bilateral FTA in the world. … 
 
The EU-Japan agreement is a new generation agreement, since it integrates visions of sustainable development, greater consumer protection, and the application of environmental standards.
 
The agreement includes a comprehensive chapter on standards for trade and sustainable development, as well as plans to ensure high standards for environmental and laborer safety. Producers of wine and alcohol, meat, dairy products, textiles, and railway companies will be the main beneficiaries of this agreement.
 
While the EU-Japan agreement is currently in the process of ratification by the member states, it is set to enter into force on February 1, 2019.
 
If you would like to learn more about this FTA, please visit the European Commission’s Press Release.

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ST&R Trade Report: “Delay in Section 301 Tariff Hike Still Not Reflected in ACE” 

(Source: Sandler, Travis & Rosenberg Trade Report, 14 Dec 2018.)
 
As previously reported, the U.S. has announced a temporary delay until March 1, 2019, of an increase from 10 percent currently to 25 percent in the additional “Section 301” tariffs on $200 billion worth of imports from China while the two sides conduct negotiations on longstanding trade irritants. However, as of this writing the Office of the U.S. Trade Representative had not published an official notice of the tariff hike delay in the Federal Register.
 
The lack of an official notice is preventing U.S. Customs and Border Protection from making the necessary changes in the Automated Commercial Environment to ensure that the additional tariff remains at 10 percent come Jan. 1. While CBP can make these changes in ACE fairly quickly after a formal notice is published, importers should seriously consider electing the arrival date as the entry date for shipments due to arrive in the next 2-3 weeks.
 
If a notice is not published in the Federal Register before the end of the year, the 10 percent additional tariff on List 3 products from China will automatically jump to 25 percent Jan. 1 at 12:01 a.m.

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NWS_a513. 
Techcrunch: “U.S. Intelligence Community Says Quantum Computing and AI Pose An ‘Emerging Threat’ to National Security”

(Source: Techcrunch, 13 Dec 2018.) [Excerpts.] 
 
It’s not often you can put nuclear weapons, terrorism and climate change on the same list as quantum computing, artificial intelligence and the Internet of Things, but the U.S. government believes all pose an “emerging threat” to its national security.
 
Several key agencies in the U.S. intelligence community were asked what they saw as long-term threats faced by the country in the next decade and beyond, and the future of “dual-use technologies” took center stage.
 
Agnostic technologies like encryption, autonomous and unmanned systems, AI and quantum computing rank at the top of the agencies’ “worry list” for fears that they could be used to cause harm, rather than advance society. While all can be used for good – to secure data, to survey a dangerous area or simply to save time and effort – the government says that all can have disastrous effects if used by an adversary. … 

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COMMCOMMENTARY

COM_1
14. 
M. Volkov: “The Mindset of Employee Fraudsters (Part III of III)”

(Source: Volkov Law Group Blog, 12 Dec 2018. Reprinted by permission.) 
 
* Author: Michael Volkov, Esq., Volkov Law Group, mvolkov@volkovlaw.com, 240-505-1992. 
 
Technology and computer analytics are important tools in the fight against fraud.  But it is not the magic and exclusive bullet.  Fraud is committed by humans and investing in the human element, while difficult to measure, is an important part of every fraud prevention strategy.
 
The fraud triangle is an essential framework for understanding fraudster behavior.  The fraud triangle is no panacea but it is a powerful tool.  The fraud triangle begins with an incentive, an expectation to perform in an organization, followed by an opportunity and an internal rationalization.  All three of these drivers must be present for an act of fraud and each can be addressed.
 
Companies have to reduce the opportunities for fraud. Building effective internal accounting controls is a critical aspect to reducing fraud opportunities.  Technology is important here in designing, revising and maintaining effective internal controls.  Companies are not devoting significant resources to counteract incentives and rationalizations.  Incentives and pressure continue to push employees towards committing fraud.
 
Internal fraud usually involves gaps in a company’s internal controls and culture.  An effective set of internal controls can be effective but should not be relied on as the only strategy for preventing fraud.  Controls can be evaded and circumvented and human actors have the authority in certain situations to override or rely on exceptions to controls.
 
Financial incentives can create opportunities for fraud. However, financial incentives are important for motivating positive sales and related conduct.  Human nature searches for and relies on incentives.
 
At the root of fraud, however, is human rationalizations.  This is exemplified by a focus on the self – meaning a rationalization for why an individual is justified in engaging in misconduct, usually because of some perceived slight or mistreatment.  A narcissistic employee who is passed over for a specific promotion can feel justified in stealing from the company because of such mistreatment.
 
The human mind can be difficult to manage when it comes to the mix of emotional and so-called rational thinking patterns. Employee fraudsters are good at rationalizing their misconduct.  They perceive their misconduct as victimless – no one is hurt, it is just money. Employees rely on such rationalizations for committing human resources fraud, asset misappropriation, procurement fraud and accounting fraud.
 
Employee fraud that is directed at advancing a corporate objective – meeting a sales target for a company or a revenue goal – can be easier to rationalize because of the importance of satisfying a corporate objective (while earning a personal benefit, e.g. a bonus).
 
In balancing these concerns, a corporate culture of ethical conduct is an essential aspect of any anti-fraud program. An effective culture will reduce opportunities and instances for employee rationalization, while promoting employee reporting of potential misconduct.
 
Companies have to find the right balance between technology and human behavior.  Fraud is a difficult and intractable problem.  Proactive strategies are essential to combat and minimize a company’s exposure to fraud risks.

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COM_2
15. 
S.C. Kabange & C. Xu: “Get on Top of Your Compliance in High Risk Countries”

(Source: Red Flag Group, 13 Dec 2018.) 
 
* Authors: Sanday Chongo Kabange (Hong Kong) and Camellia Xu (Shanghai), both of the Red Flag Group.
 
In the wake of the latest events surrounding China’s Huawei Technologies Co. Ltd, the compliance community is once again weighing-in on what constitutes proper due diligence and the roles of ongoing monitoring and repeat due diligence in a compliance program.
 
At the request of the U.S. Department of Justice, Canadian authorities arrested Huawei top executive, Meng Wanzhou, alias Sabrina Meng, Cathy Meng and Sabrina Meng Wanzhou, on allegations of fraudulent behavior; possession of multiple passports/identities; sanction and export controls violations as well as state influence.
 
Although Meng’s case is taking center stage in the short term, the backdrop to this case underpins the importance of proper due diligence, ongoing monitoring and repeat due diligence especially in high risk countries such as China and Iran.
 
We have devised some actionable pointers to help businesses navigate through complex integrity and compliance landscapes. These pointers may not necessarily be specific to China or Iran but apply to any jurisdiction and industry considered high risk.
 
Review your risk exposure regularly
. Risks change regularly and are never static. Therefore, review your risk exposure regularly especially if you do business in high risk countries and industries. Regular review of your risk exposure will help you to prioritize and manage them effectively. Your partner may not pose risks during onboarding, but this may change six to twelve months in your business relationship. Thus, reviewing your risk appetite regularly will help you to determine which partners are likely to expose you to risks and which may potentially not. Reviewing one’s risk exposure is an obvious basic practice which every compliance-savvy business should undertake regularly.
 
Conduct due diligence on ‘questionable’ affiliates, subsidiaries and other related entities
. Due diligence shouldn’t end on your key partners you directly do business with. It is highly advisable that you conduct due diligence on your direct partners, their affiliates, subsidiaries, sub-contractors and all influential related principals especially if your key partners have affiliates in high risk countries or have business interests in multiple industries (electronics, pharmaceuticals, finance, extractive industries etc.). A wholesome due diligence is meant to ascertain that your key partners are not using their related entities or shell companies to trade with sanctioned, blacklisted or entities and individuals that are on international watch lists.
 
Monitor your partners on an ongoing basis
. Ongoing monitoring of your key partners will ensure that you are timely alerted when integrity or compliance issues are flagged. You don’t have to wait for an official investigation by regulators or an arrest to act on your partners’ integrity and compliance. Ongoing monitoring solutions are available in the market that can help you receive tailored integrity alerts with customized advice on how to effectively manage the issue before impact.  Ongoing monitoring gives you the opportunity to let your partners know that you are constantly keeping an eye on their activities and business practices, which enhances ethical conduct and behavior.
 
Repeat due diligence
. Repeating due diligence is not only a business good practice but also helps you to understand the risk and integrity profile of your partners. Repeat due diligence gives you an opportunity to get on top of your third parties’ conduct and take decisive decisions against partners that may expose you to risk or do not adhere to your policies. Given that initial due diligence reports are immediately dated, in the sense that the information is useful but is only a snapshot in time, repeat due diligence enables you to keep things updated in tandem with current compliance landscape and business environment. Repeat due diligence also gives you an opportunity to raise or lower the scope based on changing factors such as your partners’ risk profile, business continuity, financial stability and operational status among others. For instance, during onboarding due diligence you may conduct basic screening and media research on your partners but raise the scope during repeat due diligence to include elements such as UBO, corporate registry verification, reputational enquires, peer benchmarking, site visits and litigation checks. Regulators strongly encourage businesses to regularly conduct repeat due diligence on their partners to ensure compliance with prescribed laws and regulations.  It goes without saying that repeat due diligence offers an effective defense in the event of third party misconduct.

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16. 
T.G. Ficaretta: “TTB to Present FAET Seminar at SHOT Show”

(Source: Author, 14 Dec 2018.)
 
* Author: Teresa G. Ficaretta, Esq., teresa@ficarettalegal.com, 301-353-3558; Ficaretta Legal Services, LLC. 
 
Officials from the Alcohol and Tobacco Tax & Trade Bureau (“TTB”) have announced that TTB will give a seminar on firearms and ammunition excise tax (“FAET”) at the 2019 SHOT Show.  The SHOT Show will be held January 22-25, 2019, at the Sands Expo Center in Las Vegas, Nevada. 
 
TTB’s seminar will be geared toward new taxpayers, but information provided will be beneficial to all manufacturers and importers who pay FAET.  For readers not familiar with FAET, the tax is imposed on the manufacture/ importation and sale of firearms, shells, and cartridges.  The tax rate is 10 percent of the sale price for pistols and revolvers, 11 percent for all other firearms, and 11 percent for shells and cartridges.  Information on FAET is available on TTB’s website
 
Topics presented at the FAET seminar will include the following:
  • History/introduction to TTB and FAET
  • When does FAET apply?
  • What articles are subject to tax?
  • Overview of tax-exempt and tax-free sales
  • Overview of new tax return
  • Common errors
Ron King, Tax Chief at TTB, will be the primary presenter.  Mr. King will be assisted by Attorney-Advisor Daniel Peralta and FAET Regulations Specialist Jesse Longbrake.  All three TTB representatives will be available to answer questions at the seminar and at the TTB booth (#2422) during the SHOT Show. 
 
The FAET seminar will take place on Thursday, January 24, 2019, from 7:00 a.m.-8:30 a.m.  It will be held at the Sands Expo Center, Lando 4202. 
 
It has been a number of years since TTB has attended SHOT Show, and this is a great opportunity for manufacturers and importers to get first-hand advice from FAET experts. Taxpayers who cannot attend the seminar should visit TTB’s booth for answers to their FAET questions. 

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TEEX/IM TRAINING EVENTS & CONFERENCES

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17.
 
ECS Presents “Seminar Level III: Mastering ITAR/EAR Challenges” in 
Nashville, TN 
on 30 Apr-1 May 2019
(Source: S. Palmer, spalmer@exportcompliancesolutions.com.)
 
* What: Seminar Level III:  Mastering ITAR/EAR Challenges; Nashville, TN
* When: April 30-May 1, 2019
* Sponsor: Export Compliance Solutions (ECS)
* ECS Speaker Panel:  Suzanne Palmer; Lisa Bencivenga; Mal Zerden; Commerce BIS TBD; Scott Jackson
* Register here or by calling  866-238-4018 or email 

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18. 
FCC Presents “Designing an Internal Compliance Program for Export Controls & Sanctions”, 5 Feb 2019 in Bruchem, the Netherlands
(Source: Full Circle Compliance, events@fullcirclecompliance.eu.)
 
The next Full Circle Compliance (FCC) academy course is specifically designed for beginning compliance professionals who aim to enhance their organization’s compliance efforts.  The course will cover multiple topics and tackle various questions, including but not limited to:
 
  – Setting the Scene: ensuring compliance in the export control and sanctions arena
  – What is expected from your organization? A closer look at the frameworks and guidelines from U.S. and European government agencies (incl. State/DDTC, Commerce/BIS, Treasury/OFAC, European Union, The Netherlands, and Germany) 
  – Key elements of an Internal Compliance Program
  – Strategic benefits of an Internal Compliance Program
  – Best practice tips for enhancing your 
compliance activities
  – Compliance Toolkit: internal controls samples (policies, procedures, instructions, checklists)
 
* What: Designing an Internal Compliance Program for Export Controls & Sanctions 
* When: Tuesday, 5 Feb 2019, 9.30 am – 4.30 pm 
* Where: Landgoed Groenhoven, Bruchem, the Netherlands
* Sponsor: Full Circle Compliance (FCC)

* Instructors: Drs. Ghislaine C.Y. Gillessen RA, Marco F.N. Crombach MSc
 

* Information & Registration: via the event page, via
events@fullcirclecompliance.eu or call +31 (0)23 – 844 – 9046.
 

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

TE_a319. 
List of Approaching Events: 51 Events Posted This Week, Including 9 New Events
(Sources: Editor and Event Sponsors)

Published every Friday or last publication day of the week, o
ur overview of Approaching Events is organized to list c
ontinuously available training, training events, s
eminars & conferences, and 
webinars. 
 
Please, submit your event announcement to Alexander Witt, Events & Jobs Editor (email: 
awitt@fullcirclecompliance.eu
), composed in the below format:
 
# DATE: LOCATION; “EVENT TITLE”; EVENT SPONSOR; WEBLINK; CONTACT DETAILS (email and/or phone number)
 

#” = New or updated listing  

 
Continuously Available Training
 
* E-Seminars: “US Export Controls” / “Defense Trade Controls“; Export Compliance Training Institute; danielle@learnexportcompliance.com 

* Webinar: ”
Company-Wide US Export Controls Awareness Program“; Export Compliance Training Institute;
danielle@learnexportcompliance.com 

* E-Seminars: “ITAR/EAR Awareness“; Export Compliance Solutions;
spalmer@exportcompliancesolutions.com
* Online: “Simplified Network Application Process Redesign (SNAP-R)“; Commerce/BIS; 202-482-2227
* E-Seminars: “Webinars On-Demand Library“; Sandler, Travis & Rosenberg, P.A.
* Online: “International Trade Webinars“; Global Training Center
*
 
Online: “On-Demand Webinars“; “General Training“; Center for Development of Security Excellence; Defense Security Service (DSS)
* Online: “ACE Reports Training and User Guide“; DHS/CBP

* Online: ”
Increase Your International Sales – Webinar Archive“; U.S. Commercial Service

* Web Form: “Compliance Snapshot Assessment“; Commonwealth Trading Partners (CTP)
* Online: “
Customs Broker Exam Prep Course
“; The Exam Center
 
 
Seminars and Conferences

 
 
 


* Jan 6-7: Long Beach, CA; ”
Fundamentals of FTZ Seminar“; NAFTZ 

Jan 15: Arlington, VA; “
Voluntary Disclosure/Voluntary Self-Disclosure Seminar
“; SIA

Jan 21-24: San Diego, CA; “ITAR Defense Trade Controls / EAR Export Controls Seminar”; ECTI; 540-433-3977

Jan 29: Rotterdam, The Netherlands; “
Awareness training Export Control, Dual-use en Sancties
“; FENEX

* Jan 30-31: Washington, DC; “
5th National Forum on CFIUS
;” American Conference Institute (ACI)
Feb 4-5: Orlando, FL; “Boot Camp: Achieving ITAR/EAR Compliance“; Export Compliance Solutions (ECS)

#
 
Feb 5; Bruchem, the Netherlands; “
Designing an Internal Compliance Program for Export Controls & Sanctions
“; Full Circle Compliance 

* Feb 6-7: Scottsdale, AZ;

Complying with U.S. Export Controls
“; Commerce/BIS
*
 
Feb 6-7: Washington , D.C.; “International Technology Transfers, Cloud Computing & Deemed Export Compliance“; American Conference Institute

* Feb 12-13: Washington, D.C.; “
2019 Legislative Summit
“; National Association of Foreign Trade Zones (NAFTZ)
 

* Feb 18-21: Orlando, FL; “
ITAR Defense Trade Controls / EAR Export Controls Seminar
“; ECTI

Mar 4-6: Savannah, GA; “
2019 Winter Back to Basics Conference
“; SIA

*
Mar 5-7:  Orlando, FL; “
‘Partnering for Compliance’ Export/Import Control Training and Education Program
“; Partnering for Compliance

* Mar 6-7: San Diego, CA;

Complying with U.S. Export Controls
“; Commerce/BIS

*
 Mar 9: Orlando, FL; “
Customs/Import Boot Camp
;” Partnering for Compliance

* Mar 12-14: Dallas, TX;

Complying with U.S. Export Controls
“; Commerce/BIS
* Mar 12-14: Dallas, TX;

How to Build an Export Compliance Program
“; Commerce/BIS

* Mar 18-21: Las Vegas, NV; “
ITAR Defense Trade Controls / EAR Export Controls Seminar
“; ECTI

* Mar 26-27: Scottsdale, AZ; “
Seminar Level II: Managing ITAR/EAR Complexities
“; Export Compliance Solutions
 

* Apr 1-4: Washington, DC;ITAR Defense Trade Controls / EAR Export Controls Seminar“; ECTI

* Apr 3-4: Denver, CO;

Complying with U.S. Export Controls
“; Commerce/BIS
*
 
Apr 9: Bruchem, The Netherlands; “Awareness Course U.S. Export Controls: ITAR & EAR from a Non-U.S. Perspective“; Full Circle Compliance
* Apr 23-24: Portsmouth, NH;

Complying with U.S. Export Controls
“; Commerce/BIS
Apr 25: Portsmouth, NH;

Technology Controls
“; Commerce/BIS

*
 Apr 30-May 1: Nashville, TN: “Seminar Level III-Mastering ITAR/EAR Challenges“; Export Compliance Solutions (ECS);

* May 5-7: Savannah, GA; “2019 Spring Seminar“; National Association of Foreign Trade Zones (NAFTZ)

May 6-7: Atlanta, GA; “
2019 Spring Conference
“; SIA
*
 
May 7: Bruchem, The Netherlands; “An Introduction to EU / Dutch Dual-Use and Military Export Controls“; Full Circle Compliance


Jun 10: Cleveland, OH; “
Letters of Credit
“; Global Training Center

Jun 11: Cleveland, OH; “
Export Doc & Proc
“; Global Training Center

Jun 12: Cleveland, OH; “
Tariff Classificatio
n“; Global Training Center

Jun 13: Cleveland, OH; “
NAFTA Rules of Origin
“; Global Training Center

Jun 14: Cleveland, OH; “Incoterms® 2010 Rules“; Global Training 

* Jun 17-20: San Diego, CA; “ITAR Defense Trade Controls / EAR Export Controls“; ECTI

Jul 8 – 10: National Harbour, MD; “
2019 Summer Back to Basics Conference
“; SIA

*
Jul 10-11: Seattle, WA: “Seminar Level I-Boot Camp: Achieving ITAR/EAR Compliance“; Export Compliance Solutions (ECS);

* Aug 20-21: Cincinnati, OH;

Complying with U.S. Export Controls
“; Commerce/BIS

* Sep 8-11: Chicago, IL; “2019 Annual Conference and Exposition“; National Association of Foreign Trade Zones (NAFTZ)

Sep 17-19: Annapolis, MD; “
The ECS 2nd Annual ITAR/EAR Symposium
“; ECS
*
 
Oct 1: Bruchem, The Netherlands; “The Export Administration Regulations (EAR) from a non-U.S. Perspective“; Full Circle Compliance

Oct 28 – 29: Washington D.C.; “
2019 Fall Advanced Conference
“; SIA
*
 
Nov 26; Bruchem, The Netherlands; “The International Traffic in Arms Regulations (EAR) from a non-U.S. Perspective“; Full Circle Compliance
 
Webinars 



Dec 18: Webinar; “
Free Duty Drawback Webinar
“; CITTA Brokeridge;
 
  
 
 

*
 
Dec 19: Webinar; “
2018: The Export Control Year in Review
“; ECTI;

* Dec 20: Webinar; “International Logistics
“; International Business Training
 

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

ENEDITOR’S NOTES

EN_a120
. Bartlett’s Unfamiliar Quotations

(Source: Editor)
 
Nostradamus (Michel de Nostredame (depending on the source, 14 or 21 Dec 1503 – 2 Jul 1566; was a French physician and reputed seer, who is best known for his book Les Propheties, a collection of 942 poetic quatrains allegedly predicting future events. The book was first published in 1555 and has rarely been out of print since his death.)
  – “That which neither weapon nor flame could accomplish will be achieved by a sweet speaking tongue in council.”
 
* J. Paul Getty (Jean Paul Getty; 15 Dec 1892 – 6 Jun 1976; was a British American petrol-industrialist and the patriarch of the Getty family. He founded the Getty Oil Company, and in 1957 Fortune magazine named him the richest living American.)
  – “Formula for success: rise early, work hard, strike oil.”
 
Friday funnies: 
* Q: What does daylight saving time mean in Seattle?
   A: An extra hour of rain.
 
* A woman in her 40s orders a drink at a bar and the bartender asks her for ID. “You’ve got to be kidding,” she said. “I’m almost 50 years old.” The bartender apologized, but said he had to see her license. She showed her ID, then paid and told the bartender to keep the change. “The tip’s for carding me,” she said. The bartender put the change in the tip cup. “Thanks,” he said. “Works every time.”

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

EN_a221. 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: 29 Nov 2018: 83 FR 61318-61320: Technical Corrections to the Vessel Repair Unit Regulations
 
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: 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.]

 

FOREIGN ASSETS CONTROL REGULATIONS (OFAC FACR): 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

 

FOREIGN TRADE REGULATIONS (FTR): 15 CFR Part 30  

  – Last Amendment: 24 Apr 2018:
83 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 April 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 
website
BITAR 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: 1 Nov 2018: 
Harmonized System Update 1809
,
containing 1,200 ABI records and 245 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: 
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 
website
. BAFTR subscribers receive a $25 discount on subscriptions to the BITAR, please
contact us
to receive your discount code.

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

EN_a322
. Weekly Highlights of the Daily Bugle Top Stories
(Source: Editor)
 

Review last week’s top Ex/Im stories in “Weekly Highlights of Daily Bugle Top Stories” posted here.

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

* 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 cannot be relied upon as legal or expert advice.  Consult your own legal counsel or compliance specialists before taking actions based upon news items or opinions from this or other unofficial sources.  If any U.S. federal tax issue is discussed in this communication, it was not intended or written by the author or sender for tax or legal advice, and cannot be used for the purpose of avoiding penalties under the Internal Revenue Code or promoting, marketing, or recommending to another party any transaction or tax-related matter.

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

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

* TO UNSUBSCRIBE: Use the Safe Unsubscribe link below.

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