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19-1211 Wednesday “Daily Bugle”

19-1211 Wednesday “Daily Bugle”

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Wednesday, 11 December
2019

[No items of interest today.]
  1. Items Scheduled for Publication in Future Federal Register Editions
  2. Commerce/BIS: (No new postings.)
  3. State/DDTC: (No new postings.)
  4. Treasury/OFAC Issues Two New Iran-Related Frequently Asked Questions
  1. American Shipper: “US Exporters Attempt to Head Off New Content Restrictions”
  2. Jane’s 360: “Wassenaar Targets Cyber-Warfare Systems, Communications Surveillance with New Rules”
  1. Fox Rothschild: “Apple’s Lesson: Software Alone Won’t Prevent Export Violations”
  2. M. O’Kane: “JS Global Discloses Possible Breach of US Sanctions on IRISL”
  1. 19th Annual ‘Partnering for Compliance’ “Export/Import Control Conference” on 10-12 Mar; 7th Annual “Customs/Import Boot Camp” on 23 Jan, both in Orlando
  2. Full Circle Compliance Presents: Export Compliance Training Seminars
  1. Bartlett’s Unfamiliar Quotations
  2. Are Your Copies of Regulations Up to Date? Find the Latest Amendments Here!
  3. Weekly Highlights of the Daily Bugle Top Stories 

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EXIMITEMS FROM TODAY’S FEDERAL REGISTER

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OGSOTHER GOVERNMENT SOURCES

OGS_a11
. Items Scheduled
for Publication in Future Federal Register Editions

(Source: Federal Register)
 

* Treasury/OFAC; NOTICES; Blocking or Unblocking of Persons and Properties [Pub. Date: 12 Dec 2019.]


 
* Commerce/BIS; NOTICES; Agency Information Collection Activities; Proposals, Submissions, and Approvals: Report of Requests for Restrictive Trade Practice or Boycott [Pub. Date: 12 Dec 2019.]

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OGS_a22
. Commerce/BIS: (No new postings.)

(Source: Commerce/BIS)

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OGS_a33
.
State/DDTC: (No new postings.)

(Source: State/DDTC)

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OGS_a44
.
Treasury/OFAC Issues Two New Iran-Related Frequently Asked Questions
(Source: Treasury/OFAC, 11 Dec 2019.)
 
Today, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) is issuing two new Iran-related frequently asked questions (FAQs).

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COMNEWS

NWS_a15.
American Shipper: “US Exporters Attempt to Head Off New Content Restrictions”

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NWS_a26.
Jane’s 360: “Wassenaar Targets Cyber-Warfare Systems, Communications Surveillance with New Rules”

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COMCOMMENTARY

COM_a17.
Fox Rothschild: “Apple’s Lesson: Software Alone Won’t Prevent Export Violations”
(Source: Fox Rothschild, 9 Dec 2019.)
 
* Author: John Cornell Fuller, Esq., jfuller@foxrothschild.com, Fox Rothschild LLP.
 
Apple Inc.’s recent settlement with the Treasury Department’s Office of Foreign Assets Control (OFAC) has exposed a potentially costly wrinkle in complying with international trade regulations. While sanctions screening technologies may help a company catch and report errors, this software alone will not absolve faults and shortcomings in a company’s overall export compliance programs.
 
The compliance woes at Apple serve as a signal to businesses of all sizes that rely on third-party sanction screening software. Ultimately, it’s not one technology but a company’s entire compliance program – collective policies, trainings, technology, efforts to address vulnerabilities and corrective responses – that will be accountable if a failure occurs.
 
Overreliance on Sanctions Screening Tech
 
On November 25, 2019, OFAC announced a $467,000 settlement with Apple, Inc. for apparent violations of international sanctions regulations. The apparent violations stem from errors in Apple’s sanction screening software and from Apple’s failure to take timely and complete corrective actions.
Apple entered into an app development agreement with Slovenian software company, SIS, d.o.o. (SIS), in July 2008. On February 24, 2015, OFAC identified SIS and its principal, Savo Stjepanovic, on its List of Specially Designated Nationals and Blocked Persons (SDN List).
 
On the same day as the designation, Apple screened its existing app developers against the updated SDN List, but failed to identify SIS or Stjepanovic. Apple later determined that its sanctions screening software failed to match the lower-case of the Slovenian corporate designation “d.o.o.” with the upper-case “DOO” contained in Apple’s systems, and that Stjepanovic’s name appeared in an un-reviewed “account administrator” field. In February 2017, Apple enhanced its sanctions screening tools and discovered SIS’s identification on the SDN List. Apple immediately suspended all payments to SIS’s account, but continued to permit payments to an entity to which SIS had transferred a portion of its apps in 2015. In all, Apple made 47 payments totaling more than $1 million to SIS after the company was placed on the SDN List.
 
OFAC identified several aspects of Apple’s response which mitigated the civil penalties against it, including:
 
– Apple undertook various measures to enhance its compliance program, including: improving escalation and review processes; reconfiguring the search capabilities in its sanctions screening tool; expanding the scope of sanctions screening; and updating instructions and training provided to employees relating to export and sanctions.
– Apple promptly responded to OFAC’s post-disclosure requests for information.
– Apple voluntarily self-disclosed its potential violations in what OFAC determined to be a non-egregious case.
– Apple had not received a penalty notice of Finding of Violation from OFAC in the five years prior to the transactions at issue.
– The total amount of violative payments was not significant compared to Apple’s total annual volume of transactions.
 
The following aggravating factors increased Apple’s civil penalties:
 
– Apple’s conduct demonstrated “multiple points of failure” in its compliance program.
– Apple is a “large and sophisticated organization operating globally with experience and expertise in international transactions.”
– Apple failed to take timely corrective actions when it continued to send payments to an affiliated entity after learning of its error.
– Apple failed to “anticipate potential vulnerabilities” in its compliance programs.
 
The failure of the compliance software at a technology giant is disconcerting for many businesses. However, both the aggravating and mitigating factors identified in OFAC’s announcement of the settlement offer meaningful insights into what companies should do if they find that their compliance tools have failed them.
 
For Apple, its efforts to update its sanctions screening software allowed it to discover its error and voluntarily disclose its conduct. But its compliance program as whole failed to prevent transactions with SDNs. The settlement demonstrates that companies cannot rely on any one technological aspect of their compliance programs to ensure export compliance. A company should aim to have a healthy compliance program that integrates trainings, technologies, response policies and risk mitigation efforts.

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COM_a28. 
M. O’Kane: “JS Global Discloses Possible Breach of US Sanctions on IRISL”
(Source: EU Sanctions, 10 Dec 2019.)  
 

* Author: Michael O’Kane, Esq.,
mokane@petersandpeters.com,
Peters & Peters.

 
JS Global, a Hong Kong-based appliance maker, has disclosed in a US Securities and Exchange Commission (SEC) filing that, in 2017, its US subsidiary, SharkNinja Operating LLC, “engaged in a wire transfer in relation to a shipment on an Iranian-flagged vessel operated by the Islamic Republic of Iran Shipping Line (IRISL), which could be deemed a violation of the Iranian Transactions and Sanctions Regulations (ITSR)

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TEEX/IM TRAINING EVENTS & CONFERENCES

TE_19.
19th Annual ‘Partnering for Compliance “Export/Import Control Conference” on 10-12 Mar; 7th Annual “Customs/ Import Boot Camp” on 23 Jan, both in Orlando
 
* What: The 19th Annual “Partnering for ComplianceTM” export control program and 7th Annual 1-day “Customs/Import Boot Camp” will focus intensely on a broad spectrum of export/import regulatory and compliance matters of current relevance to companies and individuals involved in global trading. Senior-level government officials and trade experts will provide first-class training.
* Where: Holiday Inn Orlando International Airport Hotel (completely renovated)  
* When:
  – Tue – Thu, 10-12 Mar: “19th Annual ‘Partnering for ComplianceTM‘ Export Control Program”
  – Thu, 23 Jan: 1-Day Program “Customs/Import Boot Camp”
* Speakers confirmed: DoS/DDTL: Terry Davis & 1 other;  DoS/DDTC: Jae Shin;  DoC/BIS: Sharron Cook & Special Agents Lauren Nieland & Tina Stasulli Korb, BIS/OEE;  DoD/DTSA: Tracy Minnifield; DoT/OFAC: Nell Williams, Enforcement  &  Anthony Musa (Invited), Licensing;  Census Bureau: Omari Wooden;  DHS/CBP: Nils Borregaard & Mihai Gata;  ICE: Timothy Dwyer.
* Opening Keynote: Delegation of the E.U. to the U.S. (Invited)
* Customs/Import Boot Camp: Braumiller Law Group PLLC: Adrienne Braumiller & Bruce Leeds
* Cost: Export 3-day program: $650. Customs/Import 1-day program: $250. Both programs: $900.
* Remarks: Maximum capacity is 200 participants to maintain informal and collaborative environment for both programs.
* As time permits, all Government and trade speakers will informally hold short “one-to-one” meetings with participants on a “first-come, first-served” basis.
* Certificates of Completion granting: 4.5 IIEI CEUs and 20 CES NCBFAA Credits for 3-day Exports program, and 6.5 CCS NCBFAA Credits for 1-day Customs/Import Boot Camp will be awarded for each program.
* More information re both programs: Click Here 

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TE_a210. Full Circle Compliance Presents: Export Compliance Training Seminars
(Source: Full Circle Compliance)

U.S. and EU Sanctions & Embargoes

Tuesday, 4 February 2020 in Amsterdam

Designing an ICP for Export Controls & Sanctions

Tuesday, 3 March 2020 in Amsterdam

Implementing an ICP for Export Controls & Sanctions

Wednesday, 4 March 2020 in Amsterdam

ENEDITOR’S NOTES

EN_a111. Bartlett’s Unfamiliar Quotations

(Source: Editor)
 


* Aleksandr Solzhenitsyn
(Aleksandr Isayevich Solzhenitsyn; 11 Dec 1918 – 3 Aug 2008; was a Russian novelist, historian, and short story writer. He was an outspoken critic of the Soviet Union and Communism and helped to raise global awareness of its Gulag labor camp system. His most known writings are One Day in the Life of Ivan Denisovich (1962) and The Gulag Archipelago (1973). Solzhenitsyn was awarded the 1970 Nobel Prize in Literature “for the ethical force with which he has pursued the indispensable traditions of Russian literature”.
  – “Human beings are born with different capacities. If they are free, they are not equal. And if they are equal, they are not free.”

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EN_a212. 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 are listed below.
 
Agency 
Regulations 
Latest Update 
DHS CUSTOMS REGULATIONS: 19 CFR, Ch. 1, Pts. 0-199.  5 Apr 2019:  5 Apr 2019: 84 FR 13499-13513: Civil Monetary Penalty Adjustments for Inflation.
DOC EXPORT ADMINISTRATION REGULATIONS (EAR): 15 CFR Subtit. B, Ch. VII, Pts. 730-774.  13 Nov 2019: 84 FR 61674-61676Addition of Entities to the Entity List, Revision of an Entry on the Entity List, and Removal of Entities from the Entity List.
DOC 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 
DOD NATIONAL INDUSTRIAL SECURITY PROGRAM OPERATING MANUAL (NISPOM): DoD 5220.22-M. Implemented by Dep’t of Defense.  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.   23 Feb 2015: 80 FR 9359, comprehensive updating of regulations, updates the activities and technologies subject to specific authorization and DOE reporting requirements. 
DOE EXPORT AND IMPORT OF NUCLEAR EQUIPMENT AND MATERIAL; 10 CFR Part 110. 
25 Nov 2019: 84 FR 64740-64754: Rules of Practice in Explosives License and Permit Proceedings; Revisions Reflecting Changes Consistent With the Homeland Security Act of 2002
DOJ ATF ARMS IMPORT REGULATIONS: 27 CFR Part 447-Importation of Arms, Ammunition, and Implements of War.  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.  30 Aug 2019: 84 FR 45652-45654, Adjustment of Controls for Lower Performing Radar and Continued Temporary Modification of Category XI of the United States Munitions List.

DOT FOREIGN ASSETS CONTROL REGULATIONS (OFAC FACR): 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders.
22 Nov 2019:

84 FR 64415-64417: Venezuela Sanctions Regulations

USITC HARMONIZED TARIFF SCHEDULE OF THE UNITED STATES (HTS, HTSA or HTSUSA),

1 Jan 2019: 19 USC 1202 Annex. 

 

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

  

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EN_a3

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