;

19-0207 Thursday “Daily Bugle'”

19-0207 Thursday “Daily Bugle”

Thursday, 7 February 2019

[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 Announces TFTEA Drawback Support Calls
  4. OMB/OIRA Reviews of Proposed Ex/Im Regulations
  5. State/DDTC: (No new postings.)
  6. Treasury/OFAC Posts Settlement Agreement with Kollmorgen Corporation re Alleged Iran Sanctions Violations
  1. Reuters: “French Senate Rejects Tougher Telecoms Controls despite U.S. Huawei Warning”
  2. RFE/RL: “Son of Ex-Kyrgyz Envoy Jailed for Three Years for U.S. Weapons Smuggling”
  3. ST&R Trade Report: “Importing into Russia Still Challenging, USTR Finds”
  1. M. Hearn & G. Benson: “Iran Sanctions”
  2. M. Lester: “UK Parliament Committee Inquiry on Arms Export Control”
  3. T. McVey “Company Incurs $7,772,102 Penalty for Dealing With Specially Designated National”
  1. Bartlett’s Unfamiliar Quotations 
  2. Are Your Copies of Regulations Up to Date? Latest Amendments: DHS/Customs (14 Jan 2019), DOC/EAR (20 Dec 2018), DOC/FTR (24 Apr 2018), DOD/NISPOM (18 May 2016), DOE/AFAEC (23 Feb 2015), DOE/EINEM (20 Nov 2018), DOJ/ATF (26 Dec 2018), DOS/ITAR (4 Oct 2018), DOT/FACR/OFAC (15 Nov 2018), HTSUS (1 Jan 2019) 
  3. Weekly Highlights of the Daily Bugle Top Stories 

EXIMITEMS FROM TODAY’S FEDERAL REGISTER

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

OGSOTHER GOVERNMENT SOURCES

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

* Commerce; NOTICES; Agency Information Collection Activities; Proposals, Submissions, and Approvals: Procedures for Submitting Request for Objections from the Section 232 National Security Adjustments of Imports of Aluminum and Steel [Pub. Date: 8 Feb 2019.]
 
* Treasury; Foreign Assets Control Office; NOTICES; Blocking or Unblocking of Persons and Properties [Pub. Date: 8 Feb 2019.]

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

OGS_a2
2. 
Commerce/BIS: (No new postings.)

(Source: 
Commerce/BIS)

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

(Source:
CSMS #19-000039, 5 Feb 2019.)
 
This is a reminder that filing of Trade Facilitation and Trade Enforcement Act (TFTEA) drawback claims will become mandatory on February 24, 2019, at which time all drawback claims must be filed electronically in ACE and pursuant to TFTEA legislation. TFTEA, which provides significant enhancements to the drawback laws under 19 U.S.C. § 1313, will be the only legal framework for filing drawback claims from February 24, 2019 onward.
 
In support of the transition, CBP will host a series of drawback support calls to address any questions or concerns from the trade. The calls will be held one week before and one week after the transition date, from 2:00 PM ET to 3:00 PM ET daily. Additional details are available via the attached flyer and below:
 
Tuesday, Feb. 19 – Friday, Feb. 22 &
Monday, Feb. 25 – Friday Mar. 1
 
Call-In Information:
Number: 1-877-336-1828
Code: 6124214
 
Calls may end early if there are no active questions, so please be sure to call in promptly at 2:00 PM ET to ensure your questions are answered.
 
Please send any additional questions to
OTDrawback@cbp.dhs.gov.
 
For technical issues, please contact the ACE Support Desk at
ACE.Support@cbp.dhs.gov or (866) 530-4172.
 

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

(Source:
OMB/OIRA, 6 Feb 2019.)   
 
* Notice of Inquiry; Request for Comments Regarding Review of United States Munitions List Categories IV and XV
  – AGENCY: State
  – STAGE: Proposed Rule
  – RECEIVED DATE: 6 February 2019
  – RIN:
1400-AE73  
  – STATUS:
Pending Review  

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

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

OGS_a6

6. Treasury/OFAC Posts Settlement Agreement with Kollmorgen Corporation Concerning Iran Sanctions Violations


(Source:
Treasury/OFAC, 7 Feb 2019.)

 
The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) today announced a $13,381 settlement with Kollmorgen Corporation (“Kollmorgen”) of Radford, Virginia.  Kollmorgen has agreed to settle potential civil liability on behalf of its Turkish affiliate Elsim Elektroteknik Sistemler Sanayi ve Ticaret Anonim Sirketi (“Elsim”) for six apparent violations of Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560 (ITSR).  
The alleged violations involved Elsim dispatching employees to Iran to service machines and providing other services to Iran in violation of ITSR § 560.215.  OFAC determined that Kollmorgen voluntarily self-disclosed the violations on behalf of Elsim and that the violations constitute a non-egregious case.
 
For more information, please visit this
web notice and
press release

back to top
 

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


NWSNEWS

NWS_a07. Reuters: “French Senate Rejects Tougher Telecoms Controls despite U.S. Huawei Warning”

(Source: Reuters, 6 Feb 2019.) [Excerpts.]
 
The French Senate rejected on Wednesday proposed legislation aimed at toughening checks on telecoms equipment, following a U.S. warning about Chinese telecoms giant Huawei.
 
The new legislation was a last-minute addition by the government to a wide-ranging corporate law and would have required telecom operators to seek formal approval for the use of certain kinds of equipment considered to be particularly sensitive for spying or sabotage risks.
 
In justification of their vote against the amendment, several senators stressed that the government did not offer them sufficient time to properly discuss the matter, which they recognized as crucial and strategic. …
 

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

NWS_a28. RFE/RL: “Son of Ex-Kyrgyz Envoy Jailed for Three Years for U.S. Weapons Smuggling”

(Source: Radio Free Europe/Radio Liberty, 6 Feb 2019.)
 
The son of the former Kyrgyz ambassador to the United States has been sentenced to three years in a U.S. prison after he pleaded guilty to trying to smuggle weapons to Chechnya.
 
Judge T. S. Ellis issued the order in January, three months after Tengiz Sydykov agreed to plead guilty to a single charge of violating the Arms Export Control Act.
 
Sydykov and another man, Eldar Rezvanov, were arrested by U.S. authorities in February 2018 in a suburb of Washington, D.C.
 
Federal prosecutors alleged that Sydykov and Rezvanov bought more than
100 disassembled firearms and attempted to ship them to the southern Russian region of Chechnya without a license.
 
The two had been charged under the Arms Export Control Act, which regulates foreign military sales and commercial sales of defense articles, conspiracy to smuggle goods from the United States, bank fraud, and money laundering.
 
Sydykov, who could have received up to 20 years in prison in the case, had initially pleaded not guilty to the charges. It wasn’t immediately clear why he changed his plea. He is scheduled to turn himself in to federal prison officials on March 4.
 
According to court records, Rezvanov, a Kazakh citizen, pleaded guilty to a similar charge in July 2018, and was sentenced to four years in prison.
 
Sydykov’s mother is Zamira Sydykova, a well-known journalist who served as Kyrgyzstan’s ambassador to Washington in 2005-10.
 
Last year, after her son’s arrest, Sydykova said he had been wrongly accused as the result of a “misunderstanding.”
 
In an interview with RFE/RL, Sydykova said she thought the sentence was excessive given that, she said, the two men hadn’t fully understood U.S. export regulations.
 
  “The boys didn’t know that they needed a license,” she said.
 
Before the judge issued the verdict, dated January 11, Sydykov wrote a letter to the court, apologizing for his actions and asking for a lenient sentence, citing in part the birth of his son in October.
 
  “I am extremely remorseful for getting involved in this criminal activity and for the lawbreaking acts that I have committed along the way,” he wrote in the letter, dated December 25, 2018. “As an immigrant, I am also very regretful to have broken trust of the country that has given my family and myself a privilege of residency, the country in which I grew up and call home.”
 
Sydykov also suggested that he feared for his personal safety, citing an unnamed “Russian counterpart.”
 
  “My involvement in illicit export continued for a short period until I was able to withdraw,” he wrote. “I was afraid that the Russian counterpart could harm my family physically or through blackmail if I was to decline his requests for certain items.”

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

NWS_a39. ST&R Trade Report: “Importing into Russia Still Challenging, USTR Finds”

 
Despite a few positive steps, Russia is continuing to promulgate protectionist economic policies and disregard the general principles of the World Trade Organization, according to the Office of the U.S. Trade Representative’s annual report on Russia’s compliance with its WTO accession commitments. The report pledges that the U.S. will investigate and use all appropriate means to resolve any actions inconsistent with Russia’s WTO commitments to keep that market open to U.S. exports.
 
The report identifies a number of non-tariff barriers to importing into Russia, including the following:
 
  – an import licensing regime that is burdensome and opaque
  – a less-than-transparent customs legal regime exacerbated by Russia’s failure to meet its notification commitments in the WTO Customs Valuation Committee and under the Trade Facilitation Agreement
  – a ban on imports of nearly all agricultural goods from the U.S. and other WTO members
  – sanitary and phytosanitary requirements that are not consistent with international standards or based on scientific justification
  – localization and domestic content policies expanded beyond government procurement to state-owned enterprises and often by implication the private sector
  – a lack of reliable and effective implementation of strengthened intellectual property rights rules 

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

COMMCOMMENTARY

 
* Authors: Miranda Hearn, Senior Associate, miranda.hearn@hilldickinson.com, +44 (0)20 7280 9136; and Georgina Benson, Paralegal, georgina.benson@hilldickinson.com, +44 (0)20 7280 9151. Both of Hill Dickinson LLP.
 
Commodity traders and shipping companies have been forced to reconsider Iran-related activity following the “snap-back” of US sanctions on 5 November 2018. On top of that, EU businesses are finding themselves in a conflict of laws due to the US and EU’s divergent positions on Iran.
 
Introduction
 
On 8 May 2018 President Trump announced the withdrawal of the US from the Joint Comprehensive Plan of Action (JCPOA) (the JCPOA provides that Iran shall not develop or acquire nuclear weapons and shall in exchange receive relief from sanctions. It was agreed between China, France, Germany, Russia, the UK, the US, the EU and Iran and came into force on 16 January 2016) and directed the US Secretary of State and the US Treasury to immediately begin taking steps to re-impose all those US sanctions which had been lifted as a result of US participation in the JCPOA within 180 days.
 
The re-imposition of the US sanctions was subject to two wind-down periods, the first of which expired on 6 August 2018 (the ’90-Day Wind-Down Period’) and the second of which expired on 4 November 2018 (the ‘180-Day Wind-Down Period’). The final tranche of sanctions snapped back into place on 5 November 2018. Nearly all of the sanctions which have been re-imposed have extraterritorial reach – known as secondary sanctions – and therefore affect non-US businesses and people as well as those based or incorporated in the US.
 
The EU has censured the US for its withdrawal from the nuclear deal and has promised to support EU businesses to continue trade with Iran. To this end, on 7 August 2018 the EU countered the US withdrawal by amending the EU Blocking Regulation to extend to the US sanctions on Iran. The effect of the amended Blocking Regulation is that EU persons are prohibited from complying with the re-imposed US sanctions. As the Blocking Regulation and the US sanctions regime are directly conflicted, EU persons with Iran-related dealings are left between a rock and a hard place: facing US penalties if they fail to comply with US sanctions but in breach of the Blocking Regulation if they do comply with them.
 
This briefing explains the Iran sanctions which are in force now.
 
What changes have been made to US law to implement the US decision to withdraw from the JCPOA?
 
Executive Order 13846
 
On 6 August 2018 President Trump issued Executive Order 13846 re-imposing and amplifying the sanctions that had been in effect prior to the implementation of the JCPOA on 16 January 2016.
 
General licenses revoked
 
On 28 June 2018 OFAC (the Office of Foreign Assets Control, or OFAC, is the division of the US Treasury which administers the US sanction programmes) revoked General License H (authorising non-US entities owned or controlled by US persons to engage in specified Iran-related dealings), General License I (authorising the export of passenger aircraft to Iran) and the general licenses at sections 560.534 and 560.535 of the Iranian Transactions Sanctions Regulations (ITSR) (the Iranian Transactions Sanctions Regulations (ITSR) are contained in Part 31 of the US Code of Federal Regulations (CFR)) authorising imports of Iranian foods and carpets. The revocation of each General License was subject to a wind-down period, each of which has now expired.
 
More SDNs added
 
On 16 October 2018 OFAC reinstated a number of financial institutions to its list of Specially Designated Nationals (the ‘SDN List’) including Bank Mellat, Parsian Bank and Sina Bank.
On 5 November 2018 OFAC added or reinstated a total of over 700 individuals, entities, aircraft and vessels to the SDN List.
 
What activities are sanctioned now?
 
The following activities have been sanctioned since 7 August 2018:
  – Assisting, sponsoring or supporting the purchase or acquisition of US bank notes or precious metals by the Government of Iran
  – Knowingly engaging in a significant transaction for the sale, supply or transfer to Iran of significant goods or services used in connection with the Iranian automotive sector
  – The purchase, subscription to or facilitation of the issuance of Iranian sovereign debt
  – Conducting or facilitating significant transactions related to the purchase or sale of Iranian rials or the maintenance of significant funds or accounts outside of Iran denominated in Iranian rials
  – The sale, supply or transfer to or from Iran of graphite, raw or semi-finished metals such as aluminium and steel, coal and software for integrating industrial purposes
 
The following activities have been sanctioned since 5 November 2018:
 
  – Assisting, sponsoring or supporting the National Iranian Oil Company (NIOC), Naftiran Intertrade Company (NICO) or the Central Bank of Iran
  – Transactions or activity relating to:
(1) Iranian petroleum, petroleum products or petrochemical products
(2) Iran’s energy, shipping or shipbuilding sectors
(3) The operation of ports in Iran
(4) Iranian persons on the SDN List
 
What measures might the US take against persons who engage in sanctioned activities?
 
  – Blocking of the person’s property and interests in the US so that it may not be transferred, paid, exported, withdrawn or otherwise dealt in
  – Fines
  – Declining the person the issuance of a guarantee, insurance, extension of credit from the Export-Import Bank of the United States
  – Declining the person permission to export or re-export goods or technology
  – Refusal of entry to the US
  – Where the person is a financial institution, it may be:
(1) denied designation as a primary dealer in US Government debt instruments
(2) prevented from serving as an agent of the US Government or serving as a repository for US Government funds
(3) excluded from procurement contracts
  – Where the person is a foreign financial institution, it may be prohibited from opening or maintaining in the US a correspondent account or a payable-through account
  – Adding the person to the SDN List
 
Temporary waivers
 
In a press briefing on 5 November 2018 US Secretary of State Michael Pompeo announced that the US Government was issuing ‘temporary allotments’ to eight countries – China, India, Italy, Greece, Japan, South Korea, Taiwan and Turkey – being countries identified as heavily reliant on imports of Iranian crude but which had demonstrated substantial reductions in their purchasing of crude from Iran since President Trump’s withdrawal announcement in May 2018. The precise terms of the temporary allotments are unknown but they are understood to involve permitting the eight countries mentioned above to continue importing Iranian crude on an exceptional and temporary basis (understood to be for six months, expiring in May 2019) and on condition that they continue gradually reducing imports from Iran.
 
Exceptions
 
The following are exempt from the US sanctions:
  – Certain transactions for the sale, supply or transfer to or from Iran of natural gas and/or relating to natural gas projects
  – Certain transactions for the provision of agricultural commodities, food, medicine and medical devices to Iran
 
The EU’s response to the US withdrawal from the nuclear deal
 
Amendment to the EU Blocking Regulation
 
The purpose of the EU Blocking Regulation, Council Regulation (EC) No 2271/96, originally introduced in 1996, is to counteract the effects of the extra-territorial application of laws of third countries to EU persons where such application affects their engagement in international trade. It is based on the EU’s view that such extra-territorial application of laws is a violation of international law. In response to President Trump’s announcement in May 2018 it was amended with effect 7 August 2018 by Commission Regulation (EU) No 2018/1100 to cover most of the reimposed US sanctions on Iran, as listed in the annex to the EU Blocking Regulation (the ‘Annex’).
 
The EU Blocking Regulation counteracts the US sanctions by:
 
  (1) Prohibiting EU persons from complying with the US sanctions in the Annex. (Article 5)
  (2) Nullifying the effect in the EU of any foreign decision (judicial, arbitral or administrative) giving effect to the US sanctions listed in the Annex. (Article 4)
  (3) Entitling EU persons to recover damages arising from the application of the US sanctions in the Annex or actions based on them, together with legal costs, from the person causing them. The recovery of such damages may take the form of seizure and sale of assets. (Article 6)
  (4) Requiring EU persons whose economic or financial interests are affected by the application of the US sanctions specified in the Annex to notify the European Commission within 30 days of becoming aware of same. (Article 2)
 
INSTEX
 
France, Germany and the United Kingdom have launched a special purpose vehicle, known as INSTEX (Instrument for Supporting Trade Exchanges), to act as a clearing house creating a payment channel for Euro monetary transfers with Iran. INSTEX will enable trading parties to circumvent the US block on sanctioned dollar payments by transacting independently of the US dollar-denominated international financial system. Initially, the use of INSTEX will be limited to the exportation of goods to Iran as required for humanitarian reasons, specifically pharmaceutical goods, medical devices and foods. At the time of writing, INSTEX is not yet operational and it is believed that is will take some weeks or months until it is up and running.
 
What are the penalties for non-compliance with the Blocking Regulation?
 
The Blocking Regulation does not itself impose penalties for breach of its terms, but instead provides that EU Member States must impose sanctions where a breach arises and the sanctions must be “effective, proportional and dissuasive”. So far, EU member states do not appear to have enforced the Blocking Regulation. However they may of course start doing so.
 
What steps can businesses take to avoid breaching sanctions laws?
 
We make the following general recommendations to businesses seeking to avoid falling foul of US sanctions laws (and for that matter residual EU and UN sanctions, of which there are some):
 
  (1) Sale contracts, charterparties, insurance policies and all other contracts should be drafted to take into account the US sanctions. This may involve including a sanctions clause entitling the parties to refrain from performing their contractual obligations in the event that it would cause them to breach sanctions regulations
  (2) Vessels should not call at Iranian ports
  (3) Vessels and counterparties – and their beneficial owners – should be screened against the SDN ListWhere there is a chain of contracts it is prudent to screen all parties in the chainIf an entity is owned 50% or more by an SDN, the company itself is also considered by the US Government to be blocked regardless of whether it appears on the SDN List. This is known as OFAC’s 50 Percent Rule
  (4) Check the SDN List regularly as OFAC is updating it often
 
As always it is critical that the precise measures taken in any particular case are tailored to the specific business or transaction, and are designed with careful reference to the factual and legal context – which may encompass the amended EU Blocking Regulation. Clearly EU businesses must tread extra carefully as they navigate the difficult path between the US sanctions regime on the one hand and the EU Blocking Regulation on the other.
 
Iran sanctions timeline: key dates
 
November 1979
Iran hostage crisis begins; US imposes first ever sanctions on Iran
1980s, 1990s and early 2000s
US imposes more and more sanctions; UN and EU introduce sanctions on Iran
2003
Iran suspends its uranium enrichment programme and allows the International Atomic Energy Agency (IAEA) to inspect its nuclear facilities
2005
Election of President Ahmadinejad; Tehran says it has resumed uranium enrichment
2006
UN freezes assets of individuals and companies linked to nuclear activities
January – July 2012
Iranian oil trade embargoed by US and EU
October 2012
Iranian Rial falls to record low
24 November 2013
JCPOA agreed in principle 
April 2014
International Atomic Energy Agency confirms Iran has halved its higher-enriched uranium stockpile
14 July 2015
JCPOA is signed
16 January 2016 – ‘Implementation Day’
JCPOA comes into force; most sanctions are lifted; OFAC issues General License H
8 May 2018
US withdrawal from JCPOA announced
6 August 2018
Expiry of 90-day wind-down period
7 August 2018
 
First tranche of US sanctions re-imposed; Executive Order 13846 issued; and 
EU amends the Blocking Regulation 
4 November 2018
Expiry of 180-day wind-down period
5 November 2018
Further US sanctions re-imposed; over 700 SDNs added

 

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

(Source:
European Sanctions Blog, 7 Feb 2019.)
 
The UK Parliamentary Joint Committee on Arms Export Controls has launched an
inquiry into UK arms export control, covering in particular:
 
  –
UK arms exports in 2017 – analysis of statistical trends from 2016 and 2017, the use/adequacy of the ‘Consolidated criteria’ for assessing arms exports, and the Government/HMRC’s approach to enforcement.
  –
End-use/compliance audits – the rationale and adequacy of the Government’s licence compliance checking regime, the scope for more extensive auditing of the end-use of UK arms exports, whether particular types of arms and/or countries should be subject to different degrees of audit, and the lessons from the experience of other arms exporting countries that might be applied in any UK end-use auditing system.
  –
Brokering and extra-territoriality – the extent, adequacy and consistency of UK controls and oversight of arms brokering, licensing provisions applied to brokerage, and the pros and cons of establishing a register of brokers.
 
Yesterday (6 February 2019) the Committee held its
first oral evidence session, including witnesses from Oxfam, Saferworld, Conflict Armament Research, and Privacy International. For all the written evidence submitted to the Committee, click
here.

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

(Source:
Williams Mullen, 15 Jan 2019.)
 
* Author: Thomas McVey, Esq., 
tmcvey@williamsmullen.com; 202 293-8118; Partner at Williams Mullen.
 
A U.S. company was recently charged with major sanctions violations when its foreign subsidiary entered business transactions with a party listed on the Specially Designated Nationals List.  This is a reminder of the importance of understanding and complying with the U.S. sanctions laws in international business transactions.
 
According to the recent OFAC release, Zoltek Companies, Inc. (“Zoltek”), a U.S. manufacturer, entered multiple transactions to purchase chemical products from a supplier in Belarus.  The purchases were of acrylonitrile, a chemical used in Zoltek’s manufacturing process, and were made through Zoltek’s subsidiary in Hungary.  The party that supplied the product, J.S.C. Jaftan (“Jaftan”), had previously been designated by OFAC on the List of Specially Designated Nationals and Blocked Persons (the “SDN List”) in August 2011 and was on the list throughout the period in which the purchases were made.  According to OFAC, the Zoltek U.S. parent company was aware that its subsidiary was purchasing products from a party listed on the SDN List and actually approved the transactions on multiple occasions.
 
Under the U.S. sanctions laws, if a party is listed on the SDN List U.S. persons are prohibited from entering business transactions with such party and are required to block and not deal in assets of such party.  In addition, if an entity such as a corporation or a limited liability company is owned 50% or more by parties listed on the SDN List, that entity is also treated as if it is on the SDN List and subject to blocking and asset freezes, even if it is not itself named on the list.  U.S. persons are also prohibited from the “facilitation” of foreign parties entering into such transactions.  While under a number of the sanctions programs requirements may not apply to a U.S. company’s foreign subsidiary in certain circumstances, personnel from the U.S. parent company are not permitted to be involved in or otherwise “facilitate” the foreign subsidiary entering such transactions. 
 
Penalties for violations of the U.S. sanctions laws include civil and criminal penalties of up to $1,000,000 per transaction and 20 years imprisonment. 
 
Foreign companies can also have exposure for violations of the U.S. sanctions laws including for providing material assistance and support to certain parties designated for sanctions and knowingly facilitating a “significant” transaction with such parties. 
 
In the current case, OFAC learned of the transactions, conducted an investigation and concluded that Zoltek violated §548.201 of the Belarus Sanctions Regulations, 31 CFR Part 548. Zoltek agreed to a penalty of $7,772,102.  The statutory maximum civil monetary penalty for Zoltek’s alleged violations was $37,824,392 – mitigating factors that OFAC considered in reducing the penalty included that Zoltek cooperated with OFAC in its investigation, agreed to toll the statute of limitations pending the investigation and agreed to adopt various compliance measures as a condition of the settlement.  A copy of the OFAC release regarding the case is available 
here.
 
Many companies have been taking multiple compliance steps to avoid violations under the U.S. sanctions laws including the following: 
 
  – Regularly screening customers and other parties with whom they conduct business (such as marketing agents, transportation companies and banks) against the SDN List and other OFAC restricted party lists either through automated or manual screening searches; [FN/1]
  – Conducting due diligence reviews to verify that foreign companies with which they are dealing are not owned or controlled by parties listed on the SDN List and for other sanctions compliance issues;
  – Using a heightened level of care when entering transactions in countries with increased sanctions regulation including Russia and Eastern Europe, the Middle East, Asia and Latin America;
  – Updating their Export Compliance Programs to cover the latest sanctions legal requirements.
 
Complying with the U.S. sanctions laws is only one step that companies can take in their export compliance activities.  Other steps, which have been discussed previously in these articles but bear repeating, include:
  (i) proper classification of products, technologies, software and services being exported;
  (ii) compliance with licensing requirements (including licensing conditions and provisos);
  (iii) screening against prohibited parties, prohibited countries and prohibited end-uses;
  (iv) controls to limit disclosure of export-controlled technical data and software, including controls in the company’s data system;
  (v) adoption of an Export Compliance Program with written policies and procedures;
  (vi) employee training;
  (vii); proper agreement administration for TAA’s, MLA’s and other authorizations;  and
  (viii) compliance with export recordkeeping requirements.
 
The sanctions laws have become a major focal point for the United States in dealing with some of its most important foreign policy issues including anti-terrorist activity, nuclear negotiations, anticorruption and cyber-security. As a result, OFAC takes enforcement of these laws extremely seriously.  Companies should use care to understand and comply with these requirements so they do not get caught in the cross-fire.

———-
[FN/1] Parties also typically screen against the Bureau of Industry and Security’s Denied Persons List, Entity List and Unverified List, the State Department’s Nonproliferation Sanctions List and 
AECA Debarred Parties List, and OFAC’s other restricted party lists including the 
Foreign Sanctions Evaders List
Sectoral Sanctions Identifications (SSI) List
Palestinian Legislative Council (PLC) List
The List of Foreign Financial Institutions Subject to Part 561 (the Part 561 List);and 
Persons Identified as Blocked (PIB) Solely Pursuant to E.O. 13599.

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

ENEDITOR’S NOTES

* Charles Dickens (Charles John Huffam Dickens; 7 Feb 1812 – 9 Jun 1870; was an English writer and social critic. He created some of the world’s best-known fictional characters and is regarded by many as the greatest novelist of the Victorian era. A few of his many works include The Pickwick Papers, Oliver Twist, A Christmas Carol, David Copperfield, Bleak House, A Tale of Two Cities, and Great Expectations.)
  – “The pain of parting is nothing to the joy of meeting again.”
  – “If there were no bad people, there would be no good lawyers.”

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

EN_a314
. Are Your Copies of Regulations Up to Date?
(Source: Editor)

 
* DHS CUSTOMS REGULATIONS: 19 CFR, Ch. 1, Pts. 0-199.  Implemented by Dep’t of Homeland Security, U.S. Customs & Border Protection.
  – Last Amendment: 14 Jan 2019: 84 FR 112-116: Extension of Import Restrictions Imposed on Certain Archaeological and Ecclesiastical Ethnological Material from Bulgaria; and 84 FR 107-112: Extension of Import Restrictions Imposed on Certain Archaeological Material From China 
 

DOC EXPORT ADMINISTRATION REGULATIONS (EAR): 15 CFR Subtit. B, Ch. VII, Pts. 730-774. Implemented by Dep’t of Commerce, Bureau of Industry & Security.
  – Last Amendment: 20 Dec 2018: 83 FR 65292-65294: Control of Military Electronic Equipment and Other Items the President Determines No Longer Warrant Control Under the United States Munitions List (USML); Correction [Concerning ECCN 7A005 and ECCN 7A105.]
 
* DOC FOREIGN TRADE REGULATIONS (FTR): 15 CFR Part 30.  Implemented by Dep’t of Commerce, U.S. Census Bureau.
  – 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 (1 Jan 2019) 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.   

 

DOD NATIONAL INDUSTRIAL SECURITY PROGRAM OPERATING MANUAL (NISPOM): DoD 5220.22-M. Implemented by Dep’t of Defense.
  – 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.)
 
 
DOE ASSISTANCE TO FOREIGN ATOMIC ENERGY ACTIVITIES: 10 CFR Part 810; Implemented by Dep’t of Energy, National Nuclear Security Administration, under Atomic Energy Act of 1954.
  – Last Amendment: 23 Feb 2015: 80 FR 9359, comprehensive updating of regulations, updates the activities and technologies subject to specific authorization and DOE reporting requirements. This rule also identifies destinations with respect to which most assistance would be generally authorized and destinations that would require a specific authorization by the Secretary of Energy.
 
DOE EXPORT AND IMPORT OF NUCLEAR EQUIPMENT AND MATERIAL; 10 CFR Part 110; Implemented by Dep’t of Energy, U.S. Nuclear Regulatory Commission, under Atomic Energy Act of 1954.
  – Last Amendment: 20 Nov 2018, 10 CFR 110.6, Re-transfers.
 

* DOJ ATF ARMS IMPORT REGULATIONS: 27 CFR Part 447-Importation of Arms, Ammunition, and Implements of War.  Implemented by Dep’t of Justice, Bureau of Alcohol, Tobacco, Firearms & Explosives.
  – 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.  

 

DOS INTERNATIONAL TRAFFIC IN ARMS REGULATIONS (ITAR): 22 C.F.R. Ch. I, Subch. M, Pts. 120-130. Implemented by Dep’t of State, Directorate of Defense Trade Controls.
  – 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: 1 Jan 2019) 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.
 
* DOT FOREIGN ASSETS CONTROL REGULATIONS (OFAC FACR): 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders. 

Implemented by Dep’t of Treasury, Office of Foreign Assets Control.

  – Last Amendment: 15 Nov 2018: 83 FR 57308-57318: Democratic Republic of the Congo Sanctions Regulations
  

* USITC HARMONIZED TARIFF SCHEDULE OF THE UNITED STATES (HTS, HTSA or HTSUSA), 1 Jan 2019: 19 USC 1202 Annex. Implemented by U.S. International Trade Commission. (“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 Jan 2019: 2019 Basic Edition of the HTS.
  – HTS codes for AES are available here.
  – HTS codes that are not valid for AES are available here.

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

EN_a0315
Weekly Highlights of the Daily Bugle Top Stories

(Source: Editor) 

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

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

EPEDITORIAL POLICY

* The Ex/Im Daily Update is a publication of FCC Advisory B.V., compiled by: Editor, James E. Bartlett III; Assistant Editors, Alexander P. Bosch and Vincent J.A. Goossen; and Events & Jobs Editor, Alex Witt. The Ex/Im Daily Update is emailed every business day to approximately 6,500 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.


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

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

* TO UNSUBSCRIBE: Use the Safe Unsubscribe link below.

Scroll to Top