ITEMS FROM TODAY’S FEDERAL REGISTER
| | 1 . Commerce/BIS Denies Export Privileges to Companies Linked to Pakistan’s Nuclear Program
85 FR 4271-4276: Order Temporarily Denying Export Privileges
– Muhammad Kamran Wali, 1st Floor, Jahanzeb Center, Bank Road, Saddar, Rawalpindi, Pakistan
– Muhammad Ahsan Wali, 4453 Weeping Willow Drive, Mississauga, Ontario, Canada
– Haji Wali Muhammad Sheikh, 4453 Weeping Willow Drive, Mississauga, Ontario, Canada
– Ahmed Waheed, 143 Wards Road, Ilford, Essex, United Kingdom
– Ashraf Khan Muhammad, M/F 20 Pei Ho Street, Sham Shui Po, Kowloon, Hong Kong
– Business World, 1st Floor, Jahanzeb Center, Bank Road, Saddar, Rawalpindi, Pakistan
– Buziness World, 4453 Weeping Willow Drive, Mississauga, Ontario, Canada
– Business World, 2nd Floor, Kau On Building, 251-253 Cheung Shaw Wan Road, Kowloon, Hong Kong
– Industria Hong Kong Ltd, d/b/a Transcool Auto Air Conditioning Products, d/b/a Electro-Power Solutions, 2nd Floor, Kau On Building, 251-253 Cheung Shaw Wan Road, Kowloon, Hong Kong
– Product Engineering, Unit 10, Chowk Gowalmandi, Daryabad, Gowalmandi, Rawalpindi, Punjab, Pakistan
I. Introduction and Background on the Parties
Pursuant to Section 766.24 of the Export Administration Regulations (the “Regulations” or “EAR”),1 the Bureau of Industry and Security (“BIS”), U.S. Department of Commerce, through its Office of Export Enforcement (“OEE”), has requested that I issue an order temporarily denying, for a period of 180 days, the export privileges of Muhammad Kamran Wali, Muhammad Ahsan Wali, Haji Wali Muhammad Sheikh, Ahmed Waheed, Ashraf Khan Muhammad, Business World (of Pakistan), Buziness World (of Canada), Business World (of Hong Kong), and Industria Hong Kong Ltd, d/b/a Transcool Auto Air Conditioning Products, d/b/a Electro-Power Solutions (collectively, “Respondents” and when only referring to natural persons “individual Respondents”). OEE also has requested, pursuant to Sections 766.23 and 766.24 of the Regulations, that this order (“the TDO”) be applied to Product Engineering as a related person. . . .
OEE has presented evidence that the Respondents have been operating an international procurement scheme to illegally obtain U.S.-origin items on behalf of two entities involved in nuclear and missile proliferation activities, the Pakistan Atomic Energy Commission (“PAEC”) and Pakistan’s Advanced Engineering Research Organization (“AERO”), without the required BIS licenses. The PAEC and AERO have been on BIS’s Entity List since November 1998, and September 2014, respectively, and a license is required for all items subject to the EAR for export, reexport or in-country transfer to the PAEC or AERO.2 . . .
A. Recent Transactions
Through its investigation, OEE has developed reasonable cause to believe that the Respondents and other members of the procurement network continue to obtain U.S.-origin items from U.S. companies in violation of U.S. law. Further, because the procurement channels change to avoid detection, a PAEC or AERO order may take several months for the procurement network to fulfill from a given U.S. company and even longer to ultimately reach the prohibited end users. Accordingly, the issuance of this TDO is necessary to stop transactions-in-progress and prevent U.S.-origin items from reaching prohibited end users. Moreover, the scheme is ongoing as OEE’s investigation has uncovered that the Respondents continued to obtain items in 2018 as detailed below and have initiated the process to obtain additional U.S.-origin items in late 2019. . . .
| | 2 . Commerce/BIS Issues Charging Letter to AW-Tronics
85 FR 4276-4278: Order Relating to Marjan Caby
The Bureau of Industry and Security, U.S. Department of Commerce (“BIS”), has notified Marjan Caby, of Miami, Florida, that it has initiated an administrative proceeding against her pursuant to Section 766.3 of the Export Administration Regulations (the “Regulations”),1 through the issuance of a Charging Letter alleging that Marjan Caby, Ali Caby, Arash Caby, AW-Tronics LLC, (“AW-Tronics”) and Arrowtronic, LLC (“Arrowtronic”) (collectively, “Respondents”) violated the Regulations as follows: . . .
Charge 1 15 CFR 764.2(d)–Conspiracy
Beginning as early as in or about September 2013, and continuing through in or about March 2014, Respondents conspired and acted in concert with others, known and unknown, to bring about one or more acts that constitute a violation of the Regulations. The purpose and object of the conspiracy was to unlawfully export goods from the United States through transshipment points to Syria, including to Syrian Arab Airlines (“Syrian Air”), the flag carrier airline of Syria and a Specially Designated Global Terrorist (“SDGT”), and in doing so evade the prohibitions and licensing requirements of the Regulations and avoid detection by U.S. law enforcement. . . .
It is therefore ordered:
First, for the period of four (4) years from the date of this Order, Marjan Caby, with a last known address of 8500 SW 109th Avenue, Apt. 211, Miami, FL 33173, and when acting for or on her behalf, her successors, assigns, representatives, agents, or employees (hereinafter collectively referred to as the “Denied Person”), may not, directly or indirectly, participate in any way in any transaction involving any commodity, software or technology (hereinafter collectively referred to as “item”) exported to or to be exported from the United States that is subject to the Regulations, or in any other activity subject to the Regulations, including, but not limited to:
A. Applying for, obtaining, or using any license, license exception, or export control document;
B. Carrying on negotiations concerning, or ordering, buying, receiving, using, selling, delivering, storing, disposing of, forwarding, transporting, financing, or otherwise servicing in any way, any transaction involving any item exported or to be exported from the United States that is subject to the Regulations, or engaging in any other activity subject to the Regulations; or
C. Benefitting in any way from any transaction involving any item exported or to be exported from the United States that is subject to the Regulations, or from any other activity subject to the Regulations. Second, no person may, directly or indirectly, do any of the
A. Export or reexport to or on behalf of the Denied Person any item subject to the Regulations;
B. Take any action that facilitates the acquisition or attempted acquisition by the Denied Person of the ownership, possession, or control of any item subject to the Regulations that has been or will be exported from the United States, including financing or other support activities related to a transaction whereby the Denied Person acquires or attempts to acquire such ownership, possession or control;
C. Take any action to acquire from or to facilitate the acquisition or attempted acquisition from the Denied Person of any item subject to
the Regulations that has been exported from the United States;
D. Obtain from the Denied Person in the United States any item subject to the Regulations with knowledge or reason to know that the item will be, or is intended to be, exported from the United States, or
E. Engage in any transaction to service any item subject to the Regulations that has been or will be exported from the United States and which is owned, possessed or controlled by the Denied Person, or service any item, of whatever origin, that is owned, possessed or controlled by the Denied Person if such service involves the use of any item subject to the Regulations that has been or will be exported from the United States. For purposes of this paragraph, servicing means installation, maintenance, repair, modification or testing. Third, any licenses issued under the Regulations in which Marjan Caby has an interest as of the date of this Order shall be revoked by BIS.
Fourth, after notice and opportunity for comment as provided in Section 766.23 of the Regulations, any person, firm, corporation, or business organization related to the Denied Person by affiliation, ownership, control, or position of responsibility in the conduct of trade or related servicesmay also be made subject to the provisions of the Order. Fifth, Marjan Caby shall not take any action or make or permit to be made any public statement, directly or indirectly, denying the allegations in the Charging Letter or this Order. Sixth, the Charging Letter, the Settlement Agreement, and this Order shall be made available to the public. Seventh, this Order shall be served on Marjan Caby and shall be published in the Federal Register.
This Order, which constitutes the final agency action in this matter related to Marjan Caby, is effective immediately. . . .
OTHER GOVERNMENT SOURCES
| | 3 . Items Scheduled for Publication in Future Federal Register Editions
[No items of interest today.]
| | 4 . Commerce/BIS: (No new postings.)
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| | 6. World ECR: “US Puts Pressure on Netherlands to Block ‘Sensitive Technology’ Exports to China”
A Dutch company that manufactures computer chip-making machines has become enmeshed in the US-China trade war. Veldhoven-based, ASML applied in June 2019 for an export licence to deliver one of its machines to an unnamed Chinese customer but is still waiting while both the US and China lobby the Dutch government to, respectively, block and permit the export.
At issue is ASML’s lithography machine, which uses light to print tiny patterns on silicon – a crucial step in computer chip mass production. ASML is the world’s only manufacturer of lithography machines that use extreme ultraviolet (‘EUV’) light technology. The firm sold the first of its €120m ($134m) machines in 2017 and aims to scale up to selling 35-40 per year by 2021.
But EUV technology is included in the Wassenaar Arrangement control list, both for the lithography process (‘Imprint lithography templates designed for integrated circuits’) and for the custom integrated circuitry it can produce, ‘for which either the function is unknown or the status of the equipment in which the integrated circuit will be used is unknown’ (WA 3.A.1, p.74).
Both the US and China have attempted to influence the Dutch decision. The US, which has previously lobbied in private to stop AMSL from exporting to China, has recently confirmed its stance. In an interview with Dutch newspaper Financieele Dagblad, US ambassador Pete Hoekstra said: ‘We have made it very clear to the Dutch: we believe that this is particularly sensitive technology that does not belong in certain places’ (meaning China).
Meanwhile, China’s ambassador to the Netherlands, Xu Hong, told Financieele Dagblad that China is ‘concerned that the Netherlands is politicising our trade relationship under American pressure … If this movement continues it will of course negatively affect bilateral relations.’
Dutch Foreign Ministry spokeswoman Irene Gerritsen said this week that ‘When deciding whether to issue an export licence, the Dutch government weighs both the economic and security interests.
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| | 7. Steptoe: “Germany, France, and UK begin the JCPOA’s Dispute Resolution Mechanism Process — A Gateway to Reimpose UN and EU sanctions?”
On January 14, Germany, France and the UK initiated the dispute resolution mechanism in the Joint Comprehensive Plan of Action (JCPOA) based on Iran’s decision to pull away from its obligations under the agreement. While the European participants see the dispute resolution mechanism as a way to keep the JCPOA alive, triggering the mechanism also serves as the first of several steps that must be taken before UN and EU sanctions could potentially be reimposed. Though the reimposition of sanctions is far from inevitable, it is important to understand the functioning of the dispute resolution mechanism in order to anticipate the timeline of any possible future developments.
Referral to the Joint Commission : Under paragraphs 36-37 of the JCPOA, the dispute mechanism process is triggered when one or more participants refers an issue of non-compliance to the Joint Commission. The commission was established as part of the JCPOA and includes members from all participants (Iran, China, France, Germany, Russia, and the UK). Germany, France and the UK took this step on January 14. The Joint Commission has 15 days to resolve the issue, unless that period is extended by consensus.
Referral to the Ministers of Foreign Affairs and/or the Advisory Board
: If the issue cannot be resolved by the Joint Commission, the participants have two options: Either, they can refer the issue to the Ministers of Foreign Affairs for another 15-day period (subject to extension) or they may directly refer the issue to an Advisory Board. The Advisory Board can consider the issue either in parallel with (option 1) or in place of (option 2) the Ministers of Foreign Affairs’ consideration. The Advisory Board is made up of three members, one selected by each party and a third independent member. By the end of the second 15-day period, the Advisory Board will issue a non-binding opinion on compliance.
Reconsideration by the Joint Commission
: If the opinion itself does not resolve the issue, the Advisory Board will refer the issue along with the opinion back to the Joint Commission. The Joint Commission then has an additional 5 days to resolve the issue.
Notification to the Security Council of Non-compliance
: If the Joint Commission remains unable to resolve the issue, the European JCPOA signatories “could treat the unresolved issue as grounds to cease performing [their] commitments.” At this point European signatories could decide to notify the UN Security Council that they believe Iran’s behavior constitutes significant non-performance. According to the JCPOA, only “the complaining party” may notify the Security Council, suggesting that the United States would not be able to initiate the snap-back of UN Sanctions if Germany, France and the UK chose not to notify the Security Council.
Reimposition of UN Sanctions
: Upon referral to the Security Council, UN sanctions are automatically re-imposed after 30 days unless the Security Council adopts a resolution to continue the lifting of sanctions. The reimposition of sanctions are “automatic” because they do not require the passage of another UN Security Council resolution, meaning that China and Russia could not veto the reimposition of sanctions. The sanctions that would be reimposed would be those found in UN Security Resolutions 1696 (2006), 1737 (2006), 1747 (2007), 1803 (2008), 1835 (2008), 1835 (2008), 1929 (2010), and 2224 (2015). If reintroduced, EU Member States would automatically implement the UN sanctions.
Reimposition of EU Sanctions : In addition to UN sanctions, independent EU measures could also be reimposed. In a 2015 declaration, EU Member States indicated that they could “reintroduce without delay all EU nuclear-related sanctions that have been suspended and/or terminated in case of significant non-performance by Iran of its commitments under the JCPOA”. This would require a joint recommendation of the EU High Representative, Germany, France and the UK and a unanimous support of all EU Member States under the standard procedures.
It remains too early to tell how much of the dispute resolution process the parties will use and whether the initiation of this process signals the resumption of UN or EU sanctions against Iran. Over the past year, many European states have strongly dissociated themselves from the U.S. administration’s decision to withdraw from the JCPOA and reimpose U.S. sanctions on Iran. Even in the announcement triggering the dispute resolution mechanism, France, Germany and the United Kingdom reiterated their commitment to the JCPOA and their determination to preserve it. Moreover, the EU and its Member States continue to support a diplomatic solution that will enable de-escalation. Future developments will largely depend on Iran’s reaction in the weeks to come.
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| | 8. Torres Law: “Complying with U.S. Export Control and Immigration and Anti-Discrimination Laws”
***This article first appeared in the WorldECR journal in their November 2019 Issue.
The intersection of immigration, anti-discrimination, and U.S. export control laws can be confusing for employers. But recent settlement agreements between the U.S. Department of Justice (“DOJ”) and multinational corporations and large international law firms, demonstrate that the DOJ will not tolerate employers discriminating against non-U.S. persons. This article will provide an overview of the intersection, and friction between, U.S. immigration, anti-discrimination, and export control laws and regulations.
Export Control Laws
The International Traffic in Arms Regulations (“ITAR”) (administered by the U.S. Department of State, Directorate of Defense Trade Controls (“DDTC”)) and the Export Administration Regulations (“EAR”) (administered by the U.S. Department of Commerce, Bureau of Industry and Security (“BIS”)) are the primary export control regimes in the United States.
Both the ITAR and EAR may require that an export license be obtained from DDTC or BIS, respectively, before the release of export-controlled technical data or technology to a “foreign person.” [FN/1] A release of technical data or technology (whether oral/visual disclosure or provision of physical document or materials) may include virtually any exchange of information, including in-person discussions, telephone conversations, technical proposals, e-mails and other electronic communications, the sharing of computer databases, briefings, or training sessions.
The release of technical data or technology to a foreign person that occurs within the United States is “deemed” to be an export to the foreign person’s “home country,” and whether an export license is required for a particular release may depend on both the nature of export controls applicable to the technology or technical data (including whether it is subject to the ITAR or EAR) as well as the citizenship of the foreign person.
When a foreign person is a national of more than one country, BIS will only consider the last country of citizenship or permanent residence in determining nationality under the EAR. However, for ITAR compliance purposes, DDTC will consider all countries of citizenship and permanent residence.
Under the export control regulations, a “U.S. person”[ FN/2] is someone who is: 1) a U.S. citizen (whether born or naturalized); 2) a lawful permanent resident of the United States (e.g., “green card” holders); or 3) a protected individual as defined by 8 U.S.C. § 1324b(a)(3) (e.g., foreign persons such as refugees and asylees who are protected persons and considered U.S. persons for export control purposes). Corporations incorporated in the United States are U.S. persons for purposes of the ITAR and EAR. Moreover, the export control regulations define “foreign person”[ FN/3] to mean any person who is not a “U.S. person” as defined above. Generally, this means any foreign person in a foreign country, or any foreign person in the United States on a temporary work visa (e.g., H-1B, L-1, TN, etc.) who does not have lawful permanent resident status (e.g., a green card) or who has not been admitted to the United States as a refugee or asylee. “Foreign person” also includes foreign corporations (including foreign corporations not incorporated or organized to do business in the United States), international organizations, and foreign governments.
U.S. Immigration and Anti-Discrimination Laws
The U.S. Immigration and Nationality Act (“INA”)[ FN/4] and Title VII of the Civil Rights Act 1964 (“Title VII”) prohibit discrimination based on protected characteristics. The INA prohibits discrimination based on, among other characteristics, national origin or citizenship.[FN/5] Additionally, Title VII prohibits discrimination based on race and national origin, which typically includes discrimination based on citizenship or immigration status. Notably, the definition of “U.S. person” under the ITAR and EAR, includes the definition of “protected individuals” under the INA. These “protected individuals” are U.S. citizens, U.S. nationals, lawful permanent residents, and asylees and refugees as defined by 8 U.S.C. § 1324b(a)(3). Therefore, these individuals are not subject to the licensing requirements under the ITAR and EAR.
Furthermore, the INA prohibits “unfair documentary practices,” which are identified as instances where employers request more or different documents than/from those necessary to verify employment eligibility or request such documents with the intent to discriminate based on national origin or citizenship.
The Intersection of Export Control Laws and U.S. Immigration and Anti-Discrimination Laws
The U.S. government has implemented immigration processes that recognize that export control laws and immigration laws and policy may impact one another. For instance, U.S. employers seeking to hire a non-U.S. citizen under certain work authorization (visa) programs must complete an “I-129 – Petition for a Non-Immigrant Worker Form.” For certain types of visas (e.g., H-1B), such form requires a certification by the U.S. employer as to whether an export license is required to release any technical data or technology to the foreign person. But aside from the certification, most companies may not be aware that U.S. export control laws apply to them or their employment of non-U.S. persons.
Using the work authorization example above, assume a company is fully compliant with U.S. immigration laws and has obtained a work visa for a foreign person employee; however, this company is also a manufacturer/exporter of export-controlled items and did not verify or put in place compliance controls to ensure this individual does not have access to controlled information without the required licenses. If the foreign person employee’s co-workers discuss with the foreign person employee work-related matters regarding export-controlled technical data/technology, then the corporation will be in violation of the export control laws.
Given such a scenario, companies may initially believe that a simple solution is to have a U.S. person-only hiring policy. However, as described above, such a policy would likely constitute discrimination against individuals based on their national origin or citizenship status in violation of Title VII, the INA, and other federal, state, and local anti-discrimination laws.
As recent cases indicate, the DOJ is concerned about companies applying simple, overly broad solutions such as a U.S. person-only hiring policy, and instead expects companies to develop and implement hiring policies and processes that are non-discriminatory while also containing appropriate controls for compliance with the U.S. export control laws.
Most recently, the DOJ reached a settlement with private aircraft manufacturer and seller, Honda Aircraft Company, LLC (“Honda Aircraft”)-a subsidiary of American Honda Motor Co. Inc.[FN/6] The DOJ determined that Honda Aircraft violated the INA by requiring applicants for at least 25 job postings to be “lawful permanent residents and/or U.S. citizens” without any valid justification for such citizenship status requirements.[FN/7] The company’s misunderstanding of its requirements under ITAR and EAR resulted in a monetary penalty. The DOJ not only imposed a $44,626 civil penalty but also the requirement that the DOJ will monitor the company for the next two years.
Similarly, over the course of 2018, the DOJ settled several additional cases involving employers violating immigration, anti-discrimination laws simply because they attempted to comply with the requirements of the export control regulations. For example, Clifford Chance US, LLP (“Clifford Chance”), a large international law firm, settled with the DOJ, after the DOJ determined that Clifford Chance violated the INA by unlawfully limiting its staffing for 36 positions on an ITAR-related document review project. … [FN/9]
Employers who limit their hiring to U.S. persons without a proper legal basis may violate the INA’s anti-discrimination provision, which prohibits hiring discrimination based on citizenship and national origin.”[FN/10] As a result, DOJ imposed a $132,000 civil penalty and a requirement that the DOJ will oversee the firm’s actions for a two-year period.
Similarly, DOJ settled a claim with the United States’ second largest egg producer, Rose Acre Farms Inc. (“Rose Acre”).[FN/11] DOJ determined that Rose Acre violated the INA by discriminating against non-U.S. citizens in possession of valid work authorizations. Rose Acre “routinely required work-authorized, non-U.S. citizens to present a Permanent Resident Card or Employment Authorization Document to prove their work authorization,”[FN/12] but U.S. citizen employees were not required to provide such documentation. As a result, DOJ imposed a $70,000 civil penalty, and DOJ monitoring for a 2-year period. Notably, although the Rose Acre settlement did not explicitly address the interaction between compliance with export control laws and anti-discrimination laws, it highlights the principle that employers cannot engage in discriminatory practices when they attempt to verify work authorization status.
Lastly, another 2018 DOJ settlement makes it clear that companies cannot refuse to consider qualified non-U.S. citizens. In the Setpoint Systems Inc. (“Setpoint Systems”) case,[FN/13] the DOJ highlighted that Setpoint Systems, a Utah engineering company, refused to consider qualified non-U.S. citizens for positions involving export-controlled items, including defense articles and defense services. Instead, Setpoint Systems should have hired the qualified non-U.S. citizens and obtained export licenses for the non-U.S. citizens to be able to access export-controlled items. In fact, the company employed a policy of hiring only U.S. citizens for certain positions within the company. As Setpoint Systems learned, a company should not adopt a blanket policy of considering only U.S. citizens. The DOJ imposed a $17,475 civil penalty along with continued monitoring for three years following the settlement.
Collectively, these recent DOJ cases demonstrate that employers cannot seek to comply with U.S. export control laws by instituting a U.S. person- or U.S. citizen-only hiring policy when a position involves working with export-controlled items/information and, more generally, may not discriminate in their application of citizenship verification processes. Companies are expected to implement policies and procedures reasonably tailored to address export control compliance requirements while not engaging in unnecessary discrimination on the basis of citizenship or national origin.
Considering the DOJ’s trend of investigating unlawful employment practices involving the misunderstanding of the export control laws, companies would be well advised to invest in resources to review their compliance practices regarding U.S. export control, immigration, and anti-discrimination laws. Best practices in this area may include, but are not limited to:
Adopt policies ensuring that both qualified U.S. persons and non-U.S. persons may be considered for all positions;
Avoid using language such as “U.S. citizens only,” in hiring notices; instead use “U.S. work authorized applicants only”;
Use questions during the hiring process consistent with advice from the DOJ Immigration and Employee Rights Section (“IER”), providing questions related to work authorization that employers can ask applicants during the hiring process without fear of violating Title VIII or the INA, including:
Are you legally authorized to work in the United States?
Will you now or in the future require employment visa sponsorship?
Avoid including verification of “U.S. person” status when determining employment eligibility; and
Avoid applying export control screening procedures to positions which are not reasonably likely to be impacted by export control laws.
See 22 C.F.R. § 120.17(2) (2019); 15 C.F.R. § 734.13 (2019).
22 C.F.R. § 120.15 (2019); 15 C.F.R. § 772.1 (2019).
22 C.F.R. § 120.16 (2019); 15 C.F.R. § 772.1 (2019).
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| | 9. Volkov Law: “OFAC Sanctions Compliance: 2019 a Game-Changing Year (Part II of II)” (Source: Volkov Law Group Blog
, 21 Jan 2020. Reprinted by permission.) [ Part I was published yesterday
I usually ignore hyperbole. I cringe when I hear, “[Title] was the greatest movie of all time,” or “[Title] was the greatest book of all time” (true confession – except if someone fills in the blank with The Brothers Karamazov by Fyodor Dostoevsky).
Moving on, 2019 was a big year in OFAC compliance. The Sanctions Compliance Guidance ( here ) was a major change in sanctions compliance. OFAC has set high expectations for compliance. Whether companies have received and responded to the message is still unclear. It may take a few years of aggressive enforcement for companies to reach the conclusion that investment in sanctions compliance is an important priority.
In support of my claim, let’s look at some of the new requirements or expectations.
A Sanctions Compliance Program must, at a minimum, consist of five elements: (1) Senior Management Commitment; (2) Risk Assessment; (3) Internal Controls; (4) Testing and Audit; and (5) Training. This is a basic list.
Under Risk Assessment, companies are now required to conduct a “holistic” review of the organization from top to bottom of the following: (a) clients and customers; (b) products and services; (c) supply chain; (d) intermediaries and counter-parties; (e) transactions; (f) locations; and (g) mergers and acquisitions.
As I have pointed out (yes, repeatedly), the addition of supply chain risks and liability for sourcing from prohibited countries and parties, increases risks exponentially and requires allocation of significant resources to identify and manage these risks. At a minimum, companies will have to regularly assess and review their supply chains, especially those suppliers/vendors that operate in proximity to prohibited countries.
A Risk Assessment has to be conducted in conjunction with design of Internal Controls. As part of this element, companies have to implement screening technologies to conduct due diligence of companies falling into specific categories identified through the risk assessment process. This procedure, in turn, requires companies to identify beneficial owners of a particular company. In practical terms, OFAC has outlined a requirement that screening has to include beneficial owners of not only third-parties, vendors and suppliers, but a comp[any’s customers. In this way, OFAC has extended due diligence requirements significantly for global companies.
In addition, OFAC has mandated that companies can no longer point to screening errors or failures resulting from inadequate technology. OFAC requires companies to document the selection of a screening system, the calibration of the screening system in relation to the company’s risk profile, and annual testing of the screening system to ensure its accuracy.
Like DOJ’s Compliance Guidance, and consistent with the framework articulated in the U.S. Sentencing Guidelines, companies have to designate a Sanctions Compliance Officer responsible for the sanctions compliance program. The individual can serve as a compliance officer for other compliance programs at the same time. The sanctions compliance function, however, should have adequate resources (human and technical) and professionals with sufficient knowledge and expertise in the area.
Finally, OFAC has joined the list of mandated training programs. Aside from annual sexual harassment and discrimination training programs, the Sanctions Compliance Guidance requires companies to conduct annual training of responsible persons, i.e. those that act in or near functions with sanctions risk.
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EX/IM TRAINING EVENTS & CONFERENCES
| | 10 . FD Associates Presents “The ITAR, The EAR and the transition of USML I, II and III to the EAR” Seminar, Multiple Dates in February & March in Tysons Corner, VA
* What: Seminar, “The ITAR, The EAR and the transition of USML I, II and III to the EAR Agenda
* When: Tuesday 11 Feb, 2020; Tuesday 25 Feb, 2020; Tuesday 10 March, 2020; Tuesday 24 March, 2020
* Where: The Tower Club , 8000 Towers Crescent Dr Suite 1700, Vienna, VA 22182
* Presenters: Jenny Hahn, President, FD Associates. Presenter will also be available for private counseling session after the workshop
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|11. Full Circle Compliance Presents: Export Compliance Training Seminars |
(Source: Full Circle Compliance)
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U.S. Export Controls: ITAR
Tuesday, 7 April 2020 near Amsterdam
U.S. Export Controls: EAR
Wednesday, 8 April 2020 near Amsterdam
The ABC of Foreign Military Sales (FMS)
Tuesday, 9 April 2020 near Amsterdam
* Feb 28: Webinar; “ CTPAT “; Global Training Center
* Feb 28: Webinar; “ CTPAT “; Global Training Center
* May 07: Webinar; “ CTPAT “; Global Training Center * May 20: Webinar; “ Incoterms “; Global Training Center
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|EDITOR’S NOTES |
* Frederick the Great
(Frederick II; 24 Jan 1712 – 17 Aug 1786; ruled the Kingdom of Prussia from 1740 until 1786, the longest reign of any Hohenzollern king. His most significant accomplishments during his reign included his military victories, his reorganization of Prussian armies, his patronage of the arts, and his final success against great odds in the Seven Years’ War.)
– “I begin by taking. I shall find scholars later to demonstrate my perfect right.”
– “Every man has a wild beast within him.”
A man goes to the doctor, concerned about his wife’s hearing. The doctor says, “Stand behind her and say something and tell me how close you are when she hears you.” The man goes home, sees his wife in the kitchen, cutting carrots on the countertop. About 15 feet away he says, “Honey, what’s for dinner?” No reply. He gets halfway to her and repeats the same question. No reply. Very concerned, he gets right behind her and asks again loudly, “What’s for dinner?” She turns around and says “For the THIRD time, beef stew!”
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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.
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|5 Apr 2019:5 Apr 2019, 84 FR 13499: Civil Monetary Penalty Adjustments for Inflation. |
| ||DOC EXPORT ADMINISTRATION REGULATIONS (EAR): 15 CFR Subtit. B, Ch. VII, Pts. 730-774. || | 23 Jan 2020: 85 FR 4136: Control of Firearms, Guns, Ammunition and Related Articles the President Determines No Longer Warrant Control Under the United States Munitions List (USML)
| ||DOC FOREIGN TRADE REGULATIONS (FTR): 15 CFR Part 30. ||Last Amendment: 24 Apr 2018: 83 FR 17749: 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: 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: Bump-Stock-Type Devices. |
| ||DOS INTERNATIONAL TRAFFIC IN ARMS REGULATIONS (ITAR): 22 C.F.R. Ch. I, Subch. M, Pts. 120-130. ||23 Jan 2020: 85 FR 3819: |
Department of State final rule amending § 121.1, USML Categories I, II, and III, and numerous related sections (effective Mar. 9, 2020).
| || ||22 Nov 2019: |
| ||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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