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19-0328 Thursday “Daily Bugle'”

19-0328 Thursday “Daily Bugle”

Thursday, 28 March 2019

  1. President Continues National Emergency with Respect to Significant Malicious Cyber-Enabled Activities
  1. Items Scheduled for Publication in Future Federal Register Editions 
  2. Commerce/BIS: (No new postings.)
  3. State/DDTC: “Industry Testers Wanted for New DECCS Application!”
  4. Treasury/OFAC Disrupts Large Scale Front Company Network Transferring Funds to the IRGC and Iran’s Ministry of Defense
  5. Australia Updates Defense and Strategic Goods List 
  6. EU Publishes Corrections Related to Ukraine/Russia Sanctions
  1. CTECH: “Israeli Defense Ministry Suspends Export License of Interception Company Ability Subsidiaries”
  2. The Epoch Times: “Japan to Fortify Universities Against Leaks of U.S. Technology”
  3. Quartz: “How the U.S. Keeps Everyday Goods from Ending Up in Enemy Weapons”
  4. Reuters: “Exclusive: U.S.-hired Firm Audits Russia’s Rusal for Compliance with Sanctions Deal”
  1. B. Eichengreen: “How Europe Can Trade with Iran and Avoid U.S. Sanctions”
  2. G. Gijsels, E. Lakova, & D. Bertrand: “The Unseen Risks: Export Controls in the Life Science and Healthcare Sector”
  1. FCC Presents “An Introduction to EU / Dutch Dual-Use and Military Export Controls”, 7 May in Bruchem, the Netherlands
  2. ICPA Presents “2019 EU Conference”, 15-17 May in London
  1. Bartlett’s Unfamiliar Quotations 
  2. Are Your Copies of Regulations Up to Date? Latest Amendments: DHS/Customs (12 Mar 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 (14 Mar 2018), DOS/ITAR (19 Mar 2018), DOT/FACR/OFAC (15 Mar 2018), HTSUS (25 Mar 2019) 
  3. Weekly Highlights of the Daily Bugle Top Stories 

EXIMITEMS FROM TODAY’S FEDERAL REGISTER

(Source:
Federal Register, 28 Mar 2019.)
 
84 FR 11877: Notice of March 26, 2019 – Continuation of the National Emergency with Respect to Significant Malicious Cyber-Enabled Activities
 
On April 1, 2015, by Executive Order 13694, the President declared a national emergency pursuant to the International Emergency Economic Powers Act (50 U.S.C. 1701-1706) to deal with the unusual and extraordinary threat to the national security, foreign policy, and economy of the United States constituted by the increasing prevalence and severity of malicious cyber- enabled activities originating from, or directed by persons located, in whole or in substantial part, outside the United States. On December 28, 2016, the President issued Executive Order 13757 to take additional steps to address the national emergency declared in Executive Order 13694.
 
These significant malicious cyber-enabled activities continue to pose an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States. For this reason, the national emergency declared on April 1, 2015, must continue in effect beyond April 1, 2019. Therefore, in accordance with section 202(d) of the National Emergencies Act (50 U.S.C. 1622(d)), I am continuing for 1 year the national emergency declared in Executive Order 13694, as amended by Executive Order 13757.
 
This notice shall be published in the Federal Register and transmitted to the Congress.
 
THE WHITE HOUSE,
March 26, 2019.

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

OGSOTHER GOVERNMENT SOURCES

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

 

* Treasury/OFAC; NOTICES;
  – Agency Information Collection Activities; Proposals, Submissions, and Approvals: Electronic License Application Form; and
  – Blocking or Unblocking of Persons and Properties [Pub. Dates: 29 Mar 2019.]

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

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

(Source:
Commerce/BIS)

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OGS_a34.
State/DDTC: “Industry Testers Wanted for New DECCS Application”

(Source:
State/DDTC, 27 Mar 2019.)
 
Want to provide feedback on DDTC’s latest Defense Export Control and Compliance System (DECCS) application? Now is your chance!
Industry Participants
Wanted to test DDTC’s DECCS Commodity Jurisdiction Application. 
 
Commodity Jurisdiction Application
 
Participants can directly test the Commodity Jurisdiction application through the following URL: 
https://pmddtcqa.service-now.com/deccsqa. First time users must enroll to create a new user account, then use their account to login to the DECCS Portal. Once logged in, users can select Commodity Jurisdiction from the menu bar at the top of the page to test the online form and provide feedback through the “Submit Feedback” button on the right-hand side of the screen. 
 
The testing period will close on 3 April. 
 
DDTC Test Support
 
Participants can contact the DDTC Test Support Team
 at the number or email below with any questions.  
 
Phone: (202) 663-1282 / (202) 663-2838
 

The DDTC Test Support Team will be available during the week from 10 am to 4 pm EST.  

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

OGS_a45.
Treasury/OFAC Disrupts Large Scale Front Company Network Transferring Funds to the IRGC and Iran’s Ministry of Defense

(Source:
Treasury/OFAC, 26 Mar 2019.) [Excerpts.]
 
The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) took action against 25 individuals and entities, including a network of Iran, UAE, and Turkey-based front companies, that have transferred over a billion dollars and euros to the Islamic Revolutionary Guard Corps (IRGC) and Iran’s Ministry of Defense and Armed Forces Logistics (MODAFL), in addition to procuring millions of dollars’ worth of vehicles for MODAFL. Today’s action exposes an extensive sanctions evasion network established by the Iranian regime, which it increasingly relies on as the United States’ maximum pressure campaign severely constricts the regime’s sources of revenue. OFAC also designated Iran’s MODAFL pursuant to Executive Order (E.O.) 13224 for its role in assisting the IRGC-Qods Force (IRGC-QF), as well as an Iran-based bank for providing banking services to the IRGC-QF. …

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

OGS_a56.
Australia Updates Defense and Strategic Goods List
(Source:
Australia DoD/DEC, 28 Mar 2019.)
 
Australia Defense Export Controls (DEC) has published the below update on its website.
 
The
Defense and Strategic Goods List (DSGL) has been updated and came into effect on 28 March 2019. The DSGL 2019 (
here) includes a total of 70 notable amendments: 23 are changes which remove or reduce the requirement to obtain an approval prior to export; 13 of the amendments are either new controls or changes to existing controls that result in an expanded scope; and the remaining 34 amendments are clarifications that do not involve a scope change. Details of these amendments are available in the Explanatory Statement (
here). The Online DSGL Tool (
here) is currently being updated to reflect the amendments made to the DSGL.

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

OGS_a67.
EU Publishes Corrections Related to Ukraine/Russia Sanctions

(Source:
Official Journal of the European Union, 28 Mar 2019.)


Regulations
*
Corrigendum to Council Implementing Regulation (EU) 2019/352 of 4 March 2019 implementing Regulation (EU) No 208/2014 concerning restrictive measures directed against certain persons, entities and bodies in view of the situation in Ukraine (OJ L 64, 5.3.2019)
   
*
Corrigendum to Council Decision (CFSP) 2019/354 of 4 March 2019 amending Decision 2014/119/CFSP concerning restrictive measures directed against certain persons, entities and bodies in view of the situation in Ukraine (OJ L 64, 5.3.2019)

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


NWSNEWS

NWS_a1
8.
CTECH: “Israeli Defense Ministry Suspends Export License of Interception Company Ability Subsidiaries”

(Source:
CTECH
, 27 Mar 2019.) [Excerpts.]
 
The defense ministry suspended the export and marketing licenses of the two companies due to “violations of the defense export control law”
 
The Israeli Defense Ministry has suspended the export licenses of two subsidiaries of Tel Aviv-based Ability Inc., a company providing interception, geolocation, and cyber intelligence products to security agencies, the ministry announced Tuesday. The two subsidiaries are Ability Security Systems Ltd. and Ability Computer & Software Industries Ltd.
 
Founded in 1994, Ability provides interception, geolocation, and cyber intelligence products to security agencies. Due to Ability’s inability to maintain a minimum of $2,500,000 in shareholders’ equity by its July 11 deadline, the company received a delisting determination from Nasdaq, but disputed the deadline and remains listed on both Nasdaq and the Tel Aviv Stock Exchange. …

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

NWS_a2
9.
The Epoch Times: “Japan to Fortify Universities Against Leaks of U.S. Technology”

(Source:
The Epoch Times, 27 Mar 2019.) [Excerpts.]
 
Japan is looking to bolster the country’s academic monitoring system to prevent leaks of sensitive U.S. technologies to other countries such as China through its universities.
 
Many Japanese universities have become recipients of advanced technologies through various research partnerships with companies and institutes from other countries, including the United States and China. That creates the risk that U.S. technology could end up in the hands of Chinese companies.
 
To guard against these possible leaks, Japan’s Ministry of Economy, Trade, and Industry is set to revise guidelines for the management of technology at universities under the country’s Foreign Exchange and Foreign Trade Law, The Japan News
reported March 24. The move is also aimed at bringing the country in line with U.S. technology export policy. …

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

NWS_a3
10
.
Quartz: “How the U.S. Keeps Everyday Goods from Ending Up in Enemy Weapons”

(Source:
Quartz, 28 Mar 2019.) [Excerpts.]
 
A U.S. grand jury last week released a 52-count criminal indictment
charging two men with illegally smuggling restricted microchips into Russia.
 
Though the electronics are perfectly legal and have civilian applications, the US government bars their export to certain countries because they can also be used for military purposes, including in ballistic weapons guidance systems and aircraft avionics.
 
Foreign intelligence services are increasingly engaging in industrial, technological, and scientific espionage in addition to the traditional pursuit of government secrets, says
Janosh Neumann, a former officer with Russia’s Federal Security Service (FSB) who fled to the US in 2008. It is much cheaper to swipe someone else’s already developed technology than to create it yourself. …

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

NWS_a4
11
.
Reuters: “Exclusive: U.S.-hired Firm Audits Russia’s Rusal for Compliance with Sanctions Deal”

(Source:
Reuters, 28 Mar 2019.) [Excerpts.]
 
A firm hired by the U.S. Treasury Department is auditing Russian aluminum giant Rusal to check whether it is complying with the terms of a deal under which Washington agreed to lift sanctions on the company, Rusal said.
 
The audit is the first glimpse of how Treasury is policing whether Rusal and its parent company En+ are adhering to the deal – in particular the stipulation that Russian oligarch Oleg Deripaska’s control over the business be severed.
 
A source familiar with the situation said the audit included checks on the telephone and email records of a small circle of Rusal senior executives and board members to establish whether they remained in contact with Deripaska, who is himself still on a U.S. sanctions blacklist. …

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COMMCOMMENTARY

COM_a112
.
B. Eichengreen: “How Europe Can Trade with Iran and Avoid U.S. Sanctions”

(Source:
Project Syndicate
, 12 Mar 2019.)
 
* Author: Berry Eichengreen, Professor of Economics, University of California, Berkeley,
eichengr@econ.berkeley.edu
, (510) 642-2772.
 
Since President Donald Trump withdrew the United States from the 2015 Iran nuclear deal, European firms and banks have risked incurring US sanctions if they do business with the Islamic Republic. Fortunately for European leaders, who are eager to engage with Iran to keep the deal alive, a solution can be found in Europe’s recent past.
 
US President Donald Trump’s unilateral withdrawal from the 2015 Iran nuclear deal – formally known as the Joint Comprehensive Plan of Action – has put Europe in a bind. Its governments remain committed to economic engagement with Iran as a way to encourage compliance with the JCPOA, which means providing not just humanitarian assistance, but also other goods. Firms supplying these exports, however, risk incurring sanctions from the Trump administration.
 
For the same reason, European banks are reluctant to provide euros to finance trade with Iran. And US banks, for their part, are prohibited from providing dollars. Collectively, these obstacles constitute a formidable barrier to the sought-after engagement.
 
In response, France, Germany, and the United Kingdom, the three European signatories to the nuclear deal, have established a mechanism for conducting trade with Iran independent of the United States. That mechanism, the Instrument in Support of Trade Exchanges, or Instex, is registered in France and reports to a supervisory board of diplomats from the three countries.
 
But in the month since its establishment, Instex has financed zero trade. It has just a single staff member, the former Commerzbank manager Per Fischer. There is less information than confusion about how it will work.
 
Fortunately, there is a precedent for the initiative: the European Payments Union (EPU) that operated between 1950 and 1958.
 
In the wake of World War II, Europe’s currencies couldn’t be converted into dollars or exchanged for one another, owing to the continent’s financial difficulties. As a result, they couldn’t be used to finance or settle international transactions. Nor were there substitutes. In particular, European countries possessed little gold and few dollars with which to make international payments.
 
In order to trade, European countries therefore had to rely on bilateral agreements. They had to balance their trade country by country, essentially reducing their transactions to barter. This was not an efficient way to reconstruct the continent’s trade and payments, to put it mildly.
 
By 1950, it had become clear that these difficulties were holding back the recovery of the European economy, prompting 18 European governments to create the EPU. The new organization pooled its members’ trade deficits and surpluses, and, by offsetting the deficits a country incurred with one set of partners against the surpluses it ran with others, enabled Europe to settle its trade multilaterally without having to make its currencies convertible.
 
The analogy with Instex is a direct one. Iran will be able to offset the deficits it runs with one set of European countries using the surpluses it runs with others. It will be able to do so without recourse to dollar credits and without having to make payments via SWIFT, the Society for Worldwide Interbank Financial Telecommunications, through which conventional cross-border settlements are carried out, and which has similarly been threatened with US sanctions.
 
In addition, the EPU was endowed with $600 million to lend to members running temporary trade deficits with the group as a whole. The EPU Board was understandably concerned that these credits be repaid. When West Germany showed signs in 1950 of exhausting its credits, the Board dispatched a small team of experts to diagnose the problem. It recommended an increase in the German central bank’s interest rate, higher commercial-bank reserve requirements, and a ceiling on credit. With the adoption of these restrictive monetary measures, German trade swung back into balance. The EPU lived to fight another day.
 
Again, the implications for Instex are clear. There is no reason to expect trade between Iran and Europe to balance minute by minute. There will have to be credits to compensate firms exporting to Iran in periods when the country is buying more from Europe than it sells. There will have to be policy oversight and adjustment to insure prompt repayment of those credits.
 
Before 1950, the US government strongly opposed the creation of the EPU, just as it now strongly opposes Instex. The concern then was discrimination: European countries, it was feared, would find it easier to import from one another, but, lacking dollars, would still refuse to import from America. In addition, US officials worried that the EPU would duplicate and undermine the functions of the newly created International Monetary Fund.
 
At this point, however, the two narratives diverge. With the advent of the Cold War, President Harry S. Truman’s administration and the US Congress recognized the urgency of European reconstruction. To this end, they authorized the EPU’s use of $350 million of Marshall Plan funds.
 
This time, the US is not about to help Europe with its trade-settlement project, new Cold War or not. But, in contrast to 1950, European governments today are capable of operating this type of mechanism on their own. They have the money. They can manage the clearing. History provides guidance on how to get it done.

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COM_a2
13.
Gijsels, E. Lakova, & D. Bertrand: “The Unseen Risks: Export Controls in the Life Science and Healthcare Sector”
(Source:
Deloitte
, 27 Mar 2019.)
 
* Authors: Giovanni Gijsels, Director, Global Trade Advisory,
gigijsels@deloitte.com
; Eva Lakova, Manager, Global Trade Advisory,
elakova@deloitte.com
; and Dries Bertrand, Director, Global Trade Advisory,
dbertrand@deloitte.com
. All of Deloitte.
 
With new technological developments in the pharmaceutical, medical and biotechnology sectors, export control requirements are becoming an increasingly essential element of trade compliance in the Life Science and Healthcare (LSHC) industry. Moreover, LSHC companies operate in many sensitive destinations that are subject to strict trade and financial sanctions, as well as complex compliance requirements.
 
As evidenced by several important export control enforcement cases in the sector during the past few years, the consequences of non-compliance at stake are significant, including loss of export privileges, heavy fines and even prison sentences. More importantly, the media seizes stories of actual or alleged “export scandals” which draws critical public attention and may significantly affect the company’s reputation.
 

The ‘Blind Spot’ Or Being Fined Millions For Excessive Optimism

The life science and healthcare industry operates in one of the most highly regulated environments. Nowadays, LSHC organizations of all sizes deal with a complex and changing set of global, regional, country, and industry-specific laws and directives that span a drug or device’s developmental and commercial lifecycle.
As an example, one may think of product specific restrictions on the movement of controlled substances such as narcotics, psychotropics, biologics, precursors and the like. Depending on the concerned product and its related rules and regulations, generic and/or transaction based license requirements may apply when these products are being imported, exported or even in transit.
However, one of the important international trade considerations affecting the LSHC sector often remains overlooked: export controls and trade sanctions.
During the past few years, we have witnessed an increase of export controls enforcement cases targeting LSHC companies active across the MedTech, BioTech and Pharma sectors. Authorities all over the world are committed to raising awareness about security risks and sanction obligations. Recent international tensions and the reinforcement of sanction regimes, the scope of which already includes life science and healthcare, additionally highlight the importance of considering export controls obligations.
The legal consequences of non-compliance can be substantial, including significant fines, loss of export privileges or even prison sentences.  Sanction scandals draw critical public attention, harming a company’s reputation. Beyond what is at stake for companies, non-compliance can cause significant harm to society: export control violations can endanger international security and risk people’s lives.

How Can It Go Wrong?
 
A few years ago, a MedTech Company made a settlement of almost USD 8 million with the US trade sanctions enforcement authority – The Office of Foreign Assets Control (OFAC). All of the company’s activities are not unusual for the LSHC sector: their efforts and products are focused on improving medical care, striving for innovation while putting patient centricity at the core of their business model, including delivery to sensitive countries or bringing highly needed solutions to markets and patients in need. From a trade sanctions perspective, the company did not conduct any business that should be considered very sensitive regarding national security or foreign policy: the activities can otherwise be licensed.
 
The company had to settle for USD 8 million, as they could not prove to the authorities that the lack of major sanction violations was due to anything beyond luck. The substantial sanction amount is due to the company not having sufficient and adequate prevention mechanisms in place and is not purely a consequence of past violations. The authorities expect companies to demonstrate that they have the necessary level of awareness on potential risks and adequate controls are set in place.
 
Every LSHC company should think about the following elements:
 
Business In Sensitive Countries: Morally Obliged And Legally Limited
 
One of the sector’s biggest challenges is that the life science industry operates in many sensitive destinations, subject to strict trade sanctions. This is of course a natural market position, as the LSHC industry has important social responsibilities that go beyond regular commercial considerations.
 
Conducting business in sensitive regions (e.g. Crimea, Iran, Syria, Sudan, Cuba) would require close attention to a diverse range of restrictions, exclusions, financial limitations, restricted products and services, pre-approval licensing requirements, etc. Even when business activities would in fact be allowed in these areas, different financial restrictions remain applicable and should be considered separately. LSHC companies are then obliged to acquire deep knowledge of sanction requirements and continuously pay special attention to details, to avoid crossing the thin line between “allowed” and “forbidden” business. This exercised scrutiny is what the company in the above example could not prove.
 
To add an additional layer of complexity, business activities in the LSHC industry may be affected by more than one country jurisdiction. For instance, a life science company may be obligated to comply with both EU and US export controls for the same transaction. This is because US rules have extra-territorial applicability and extend to cover US persons, goods, technology and companies, wherever located.
 
Despite the efforts required to comply, LSHC companies cannot afford to withdraw from business in sensitive regions in order to protect their reputation. Society, represented by the media and human rights organizations, pays special attention to sensitive regions and will often hold businesses accountable for a shortage of medical supplies and needed equipment.
 
Do Not Negotiate With Terrorists
 
Typically, LSHC companies do not perceive a real risk of encountering issues with blacklisted entities in their legitimate business: it seems unlikely that terrorist or criminal organizations would be active in the sector. However, sanctions are imposed on people, companies, organizations, banks or even vessels, and are not limited to lists of the most dangerous individuals. For example, a LSHC company cooperates with a large foreign research institute for the development of new medical technology. The research institute, although well known, can still be a listed entity with whom different business activities are restricted. The argumentation for this could be that authorities want to monitor and control any business with this entity, because they have reasons to believe it is involved in prohibited military research. Unfortunately, such information is often difficult to find through a basic web search, yet companies are required to comply with the limitations.
 
Within the sector, sanctioned entities can be both subcontractors, brokers, carriers and (most often) banks. Dealing with any sanctioned entities might bring considerable fallout, from a legal or reputational perspective.
 
With the ever-increasing lists of sanctioned entities, sanctioned party list screening is an obligatory element for trade compliance. Currently, LSHC companies are operating in a smaller and highly connected world, where patients and healthcare practitioners can order products directly. These online sales significantly increase the risks of dealing with sanctioned parties. In addition, the sanctioned lists are updated on a near daily basis, leading to the need to perform checks, almost in real time, for each transaction.
 
“All our products are made to help people; export controls are not relevant for us”
 
It is sometimes forgotten that the same elements that heal and protect people’s health and lives can also significantly endanger them if misused. The sensitivity of products is an important concern for the LSHC sector and a crucial element with respect to export control compliance.
 
LSHC practitioners are already well aware of the Chemical and Biological Weapons Conventions (CWC and BWC) requirements. Use and storage of certain chemical and biological agents such as anthrax follow strict safety procedures, and the same applies for cross-border movements. Every transfer, whether intercompany or even intra-EU, would require a specific license for such “very sensitive” substances.
 
The so called “dual use goods” controls include very sensitive chemical and biological agents but also cover a much larger scope of products. Common biomedical or laboratory equipment that can be used in handling biological materials can also theoretically be used for the production of biological weapons. This is the “dual-use goods” concept, which comprises civil products that can potentially be used for military purposes or for the production of weapons of mass destruction.
 
– Dual-use equipment include certain fermenters, centrifugal separators, cryocoolers or spray-drying equipment, but also others such as protective and containment equipment. Technology related to such products can also be considered as controlled with the same measures.
 
– Medicines and pharmaceutical supplies would often be excluded from export controls, yet still certain medical products (including mixtures and API) containing toxins, pathogens or certain genetic elements can be considered as dual-use.
 
– Chemical and biological agents, including but not limited to those mentioned on the lists of CWC and BWC. Sodium fluoride would also be considered a dual use product. Mixtures with even a small percentage of controlled substances may also be considered as controlled.
 
The Future Violation Happens Now
 
Companies have the ultimate responsibility of preventing violations of export controls and sanctions. In response to the significant challenges that national authorities are facing in export controls enforcement, the detection and investigation responsibilities are progressively shifted to the business. This is also the reason LSHC companies are currently sanctioned for being “too optimistic” regarding the export control and sanction risks they face. It is no longer enough to state that products and business activities are unaffected by trade sanctions; this should be accompanied by an appropriate risk analysis and with measured controls in place.
 
Companies in the sector are expected to:
– Have a clear overview of which of their products and activities might be sensitive
– Ensure compliance with the sanctions provisions imposed by multiple jurisdictions for both destination and entity controls
– Implement controls
– Create record-keeping procedures
– Follow the frequent updates in regulatory requirements
 
All of these requirements make it crucial for practitioners in the life sciences industry to understand the broader trends in export control and nonproliferation. In the case of our above-mentioned example, although the company had a certain level of awareness of sanction requirements, the implemented measures did not fully correspond to the scope of business activities and company size. They were obliged to establish a robust compliance program that includes the appropriate corporate export and trade sanctions compliance documents, enhanced trade compliance training, and enhanced compliance procedures for screening and requesting licenses. The company should prove that the measures are adequate for the scope of trade operations. Demonstrating clear awareness of potential risks is the only way to set the appropriate controls in place.
 
What to do?
 
Achieving a good balance is essential. On one hand, a company should have the appropriate prevention and control measures in place. On the other, the company should avoid creating unnecessary operative burden by adding complex compliance processes when this would not be needed.
 
To achieve this balance, an assessment of product ranges would be useful in order to discover potentially sensitive areas, as well as proper classification if any controlled products are identified. In addition, it is important to evaluate the practical impact of both trade and financial sanctions on the particular company’s business. As mentioned above, LSHC is often treated separately under trade sanctions with particular provisions only applicable to the sector.
 
When the levels of risk are clear, a measured and fit to purpose Internal Compliance Program, with the appropriate policy, procedures and tools, can help the business deal with export control challenges in a consistent, effective and efficient manner.
 
The compliance framework does not necessarily need to be a separate and standalone structure. Typically, most LSHC companies already have suitable structures in place and appropriately skilled people able to deal with the challenges of export controls and sanctions compliance.
 
Yet, having the appropriate IT tools and systems to support the experts’ efforts is often the only way to effectively control business processes. This is especially valid for multinational LSHC companies where large amounts of transactions are processed daily and supply chain flows are complex. Sanctioned party lists screening requirements would be almost impossible to follow with purely manual validation. New technological solutions such as artificial intelligence, Blockchain and advanced analytics are demonstrating a lot of potential in managing trade compliance.
 
With an efficient export control program and supporting tools established, the company will be able to effectively manage operational export control risks with sufficient flexibility, to benefit from opportunities and deal with any future challenges. The export controls compliance organization should be capable of quickly adapting to changes such as mergers and acquisitions, new product lines, new markets, and updates in legal requirements.

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

TEEX/IM TRAINING EVENTS & CONFERENCES

TE_a114. FCC Presents “An Introduction to EU / Dutch Dual-Use and Military Export Controls”, 7 May in Bruchem, the Netherlands

 
This 1-day training course is ideally suited for compliance professionals and those in a similar role who aim to gain a better understanding of EU and Dutch export control laws and regulations and industry’s best practices to ensure compliance.
  The course will cover multiple topics relevant for organizations subject to EU and Dutch dual-use and/or military export controls, including: the EU and Dutch regulatory framework; key concepts and definitions; practical tips regarding classification and licensing, and for ensuring a compliant shipment; identifying red flag situations and handling (potential) non-compliance issues; and the latest developments regarding Internal Compliance Program requirements in the EU an the Netherlands.
 
* Training Event: “An Introduction to EU / Dutch Dual-Use and Military Export Controls” (in Dutch)
* Date: Tuesday, 7 May 2019
* Location: Full Circle Compliance, Landgoed Groenhoven, Dorpsstraat 6, Bruchem, The Netherlands
* Times:
  – Registration and welcome: 9.00 am – 9.30 am
  – Training course hours: 9.30 am – 4.00 pm
* Level: Awareness / Beginner.
* Target Audience: Compliance professionals or those in a similar role in any industry affected by EU/Dutch export controls (
e.g., manufacturing, logistics, research & development, aerospace & defense, government, etc.).
* Instructors: Marco F.N. Crombach MSc (Senior Manager) & Vincent J.A. Goossen MA (Program Manager). 
* Information & Registration: click
here or contact us at
events@fullcirclecompliance.eu or 31 (0)23 – 844 – 9046.  
* * * * * * * * * * * * * * * * * * * *

TE_a215. ICPA Presents “2019 EU Conference”, 15-17 May in London

(Source: ICPA)
 
* What: 2019 EU Conference
  – Import and Export Track (click here for the agenda)
  –
Professional Speakers
  – Hot Industry Topics
* When: 15-17 May 2019
* Where: The Tower Hotel, London, United Kingdom.
* Sponsor: International Compliance Professionals Association (ICPA)
* Information & Registration: Click here.
* * * * * * * * * * * * * * * * * * * *

ENEDITOR’S NOTES


Saint Teresa of Avila (28 Mar 1515 – 4 Oct 1582; was a prominent Spanish mystic, Roman Catholic saint, Carmelite nun, author, and theologian of contemplative life through mental prayer. In 1622, forty years after her death, she was canonized by Pope Gregory XV.)
 
 – “Be gentle to all and stern with yourself.”
  – “Our souls may lose their peace and even disturb other people’s, if we are always criticizing trivial actions – which often are not real defects at all, but we construe them wrongly through our ignorance of their motives.”

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EN_a317
. 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: 12 Mar 2019: 84 FR 8807-8809: Extension of Import Restrictions Imposed on Archaeological and Ecclesiastical Ethnological Material From Honduras
 

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: 14 Mar 2019: 84 FR 9239-9240: Bump-Stock-Type Devices 

 

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: 19 Mar 2019: 84 FR 9957-9959: Department of State 2019 Civil Monetary Penalties Inflationary Adjustment. 
  – The only available fully updated copy (latest edition: 19 Mar 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 Mar 2019: 84 FR: 9456-9458: List of Foreign Financial Institutions Subject to Correspondent Account or Payable-Through Account Sanctions (CAPTA List) 
  
* 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:
25 Mar 2019: Harmonized System Update 1904, contains 1,015 ABI records and 194 harmonized tariff records 

  – HTS codes for AES are available here.
  – HTS codes that are not valid for AES are available here.

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EN_a0318
Weekly Highlights of the Daily Bugle Top Stories

(Source: Editor) 

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

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EPEDITORIAL POLICY

* The Ex/Im Daily Update is a publication of FCC Advisory B.V., compiled by: Editor, James E. Bartlett III; Assistant Editors, Alexander P. Bosch and Vincent J.A. Goossen; and Events & Jobs Editor, Alex Witt. The Ex/Im Daily Update is emailed every business day to approximately 7,000 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.

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* 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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