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20-0918 Friday “Daily Bugle”

20-0918 Friday “Daily Bugle”

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Friday, 18 September 2020

  1. Treasury/OFAC: “Blocking or Unblocking of Persons and Properties (I)”
  2. Treasury/OFAC: “Blocking or Unblocking of Persons and Properties (II)”
  1. Items Scheduled for Future Federal Register Edition
  2. Commerce/BIS: Prohibits WeChat and TikTok Transactions to Protect the National Security of the United States
  3. State/DDTC: “Defense Trade Advisory Group; Notice of Open Meeting”
  4. State/DDTC: “Outage Notice”
  5. Treasury/OFAC: “Sanctions Cyber Actors Backed by Iranian Intelligence Ministry”
  6. Treasury/OFAC: “Comtech Telecommunications Corp. and Comtech EF Data Corp. Settle Potential Civil Liability for Apparent Violations of the Sudanese Sanctions Regulations”
  7. EU Commission/ Directorate-General Trade: “Notice to Stakeholders withdrawal Of The United Kingdom And Eurules In The Field Of Dual-Use Export Controls”
  1. EU Sanctions: “US Says UN Sanctions on Iran to be Re-Omposed on 19 September”
  2. WSJ: “China Has to Approve TikTok-Oracle Deal Too, ByteDance Says”
  1. Holland & Knight: “Importers Take Note: Trump Administration’s Section 301 Authority Challenged in Court”
  2. Kelley Drye: “New Export Control Test for CFIUS Mandatory Critical Technology Filings”
  3. Kirkland & Ellis: “OFAC and Delaware Department of Justice Sign Memorandum of Understanding Signaling Increased Information Sharing in Sanctions Compliance and Enforcement”
  4. Pillsbury: “CFIUS Issues Final Rule Basing Mandatory Declaration Requirement on U.S. Export Control Criteria”
  1. ECS Presents: “ECS ITAR/EAR Webinar Series”
  2. FCC Academy Presents 3 Webinars: The ABC of FMS | Designing an ICP | Implementing an ICP
  3. Friday List of Approaching Events: 202 Events Posted This Week, Including 5 New Events
  1. Bartlett’s Unfamiliar Quotations 
  2. How to Publish Your Article in the Daily Bugle 
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EXIM ITEMS FROM TODAY’S FEDERAL REGISTER

(Source: Federal Register) [Excerpts]
 
85 FR 58427: Notice
 
* AGENCY:Office of Foreign Assets Control, Treasury.
* ACTION:Notice.
* SUMMARY:The Department of the Treasury’s Office of Foreign Assets Control (OFAC) is publishing the names of one or more persons that have been placed on OFAC’s Specially Designated Nationals and Blocked Persons List based on OFAC’s determination that one or more applicable legal criteria were satisfied. All property and interests in property subject to U.S. jurisdiction of these persons are blocked, and U.S. persons are generally prohibited from engaging in transactions with them.
* DATES: See Supplementary Information section for applicable date(s). … 

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

(Source: Federal Register) [Excerpts]
 
85 FR 58427: Notice
 
* AGENCY:Office of Foreign Assets Control, Treasury.
* ACTION:Notice.
* SUMMARY:The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) is publishing the name of one or more persons that have been placed on OFAC’s Specially Designated Nationals and Blocked Persons List based on OFAC’s determination that one or more applicable legal criteria were satisfied. All property and interests in property subject to U.S. jurisdiction of this person are blocked, and U.S. persons are generally prohibited from engaging in transactions with them.
* DATES:See SUPPLEMENTARY INFORMATION section for applicable date(s).

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

OGS OTHER GOVERNMENT SOURCES

 

* Commerce/BIS; RULES; Identification of Prohibited Transactions to Implement Executive Order 13942 and Address the Threat Posed by TikTok and the National Emergency with Respect to the Information and Communications Technology and Services Supply Chain; [Pub. Date: 22 Sep 2020] (PDF)
 
* Commerce/BIS; RULES; Identification of Prohibited Transactions to Implement Executive Order 13943 and Address the Threat Posed by TikTok and the National Emergency with Respect to the Information and Communications Technology and Services Supply Chain; [Pub. Date: 22 Sep 2020] (PDF)
 
* Treasury/OFAC; NOTICES; Blocking or Unblocking of Persons and Properties; [Pub. Date: 21 Sep 2020] (PDF)

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

(Source: Commerce/BIS, 18 Sep 2020)
 
In response to President Trump’s Executive Orders signed August 6, 2020, the Department of Commerce (Commerce) today announced prohibitions on transactions relating to mobile applications (apps) WeChat and TikTok to safeguard the national security of the United States. The Chinese Communist Party (CCP) has demonstrated the means and motives to use these apps to threaten the national security, foreign policy, and the economy of the U.S. Today’s announced prohibitions, when combined, protect users in the U.S. by eliminating access to these applications and significantly reducing their functionality. 
 
“Today’s actions prove once again that President Trump will do everything in his power to guarantee our national security and protect Americans from the threats of the Chinese Communist Party,” said U.S. Department of Commerce Secretary Wilbur Ross. “At the President’s direction, we have taken significant action to combat China’s malicious collection of American citizens’ personal data, while promoting our national values, democratic rules-based norms, and aggressive enforcement of U.S. laws and regulations.”
While the threats posed by WeChat and TikTok are not identical, they are similar. Each collects vast swaths of data from users, including network activity, location data, and browsing and search histories. Each is an active participant in China’s civil-military fusion and is subject to mandatory cooperation with the intelligence services of the CCP.  This combination results in the use of WeChat and TikTok creating unacceptable risks to our national security.
As of September 20, 2020, the following transactions are prohibited:
 
(i) Any provision of service to distribute or maintain the WeChat or TikTok mobile applications, constituent code, or application updates through an online mobile application store in the U.S.;
 
(ii) Any provision of services through the WeChat mobile application for the purpose of transferring funds or processing payments within the U.S.
As of September 20, 2020, for WeChat and as of November 12, 2020, for TikTokthe following transactions are prohibited:
 
(1) Any provision of internet hosting services enabling the functioning or optimization of the mobile application in the U.S.;
 
(2) Any provision of content delivery network services enabling the functioning or optimization of the mobile application in the U.S.;
 
(3) Any provision directly contracted or arranged internet transit or peering services enabling the function or optimization of the mobile application within the U.S.;

(4) Any utilization of the mobile application’s constituent code, functions, or services in the functioning of software or services developed and/or accessible within the U.S.
 
Any other prohibitive transaction relating to WeChat or TikTok may be identified at a future date. Should the U.S. Government determine that WeChat’s or TikTok’s illicit behavior is being replicated by another app somehow outside the scope of these executive orders, the President has the authority to consider whether additional orders may be appropriate to address such activities. The President has provided until November 12 for the national security concerns posed by TikTok to be resolved. If they are, the prohibitions in this order may be lifted. . . .  
 
Background:
On August 6, 2020, President Trump signed Executive Orders (E.O.) 13942, Addressing the Threat Posed by TikTok, and E.O. 13943, Addressing the Threat Posed by WeChat. In the E.O.s, the President determined that the apps capture vast swaths of information from U.S. users, leaving the data vulnerable to CCP access for nefarious purposes. Commerce, at the Direction of the President, was required to identify transactions within 45 days to protect national security and the private data of millions of people across the country. Today’s announced prohibitions fulfill the President’s direction and mitigate national security risks.

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

(Source: State/DDTC, 17 Sep 2020)
 
The Defense Trade Advisory Group (DTAG) will meet in open session from 1:00 p.m. until 5:00 p.m. on Thursday, October 22, 2020. Based on federal and state guidance in response to the Covid-19 pandemic, the meeting will be held virtually. The virtual forum will open at 12:00 p.m. The membership of this advisory committee consists of private sector defense trade representatives, appointed by the Assistant Secretary of State for Political-Military Affairs, who advise the Department on policies, regulations, and technical issues affecting defense trade. The DTAG was established as an advisory committee under the authority of 22 U.S.C. Sections 2651a and 2656 and the Federal Advisory Committee Act, 5 U.S.C. App. The purpose of the meeting will be to discuss current defense trade issues and topics for further study. The following agenda topics will be discussed and final reports presented: (1) Provide feedback to DDTC as DDTC works to consolidate exemptions into a single part of the ITAR. (2) Help develop a comprehensive compliance risk matrix to help prevent ITAR violations and diversions by various business functions involved in ITAR activities. (3) suggest a draft (a) form or attachment that indicates when Part 130 information will be reported (e.g, annually, but in a separate filing, at the same time as the company’s registration), and (b) Part 130 (annual) report form.
 
The meeting will be held in WebEx. There will be one WebEx invitation for each attendee, and only the attendee should use the invitation. In addition, each attendee should access the virtual meeting from a private location. Please let us know if you need any of the following accommodations: Live captions, digital/text versions of webinar materials, or other (please specify).
Members of the public may attend this virtual session and may submit questions by email following the formal DTAG presentation. Members of the public may also submit a brief statement (less than three pages) to the committee in writing for inclusion in the public minutes of the meeting. Each member of the public that wishes to attend this session must provide: Name and contact information, including an email address and phone number, and any request for reasonable accommodation to the DTAG Alternate Designated Federal Officer (ADFO), Neal Kringel, via email at DTAG@state.gov by COB Monday, October 5, 2020.
 
Further Information: Ms. Barbara Eisenbeiss, PM/DDTC, SA-1, 12th Floor, Directorate of Defense Trade Controls, Bureau of Political-Military Affairs, U.S. Department of State, Washington, DC 20522-0112; telephone (202) 663-2835 or email DTAG@state.gov.

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

(Source: State/DDTC)
 
The Defense Export Control and Compliance System (DECCS) Registration and Licensing applications will be unavailable to industry from 6:00 AM (EDT) through 8:00 AM (EDT) Tuesday, September 22 for scheduled system maintenance. Please ensure work in progress is saved prior to the scheduled

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

Rana’s targeting has been both internal to Iran and global in scale, including hundreds of individuals and entities from more than 30 different countries across Asia, Africa, Europe, and North America. Rana has used malicious cyber intrusion tools to target or compromise approximately 15 U.S. companies primarily in the travel sector. MOIS cyber actors targeted a wide range of victims, including global airlines and foreign intelligence services. The unauthorized access obtained by the individuals designated today allow the MOIS to track individuals whom it considers a threat.

(Source: Treasury/OFAC, 17 Sep 2020)
 
Today, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) imposed sanctions on Iranian cyber threat group Advanced Persistent Threat 39 (APT39), 45 associated individuals, and one front company. Masked behind its front company, Rana Intelligence Computing Company (Rana), the Government of Iran (GOI) employed a years-long malware campaign that targeted Iranian dissidents, journalists, and international companies in the travel sector. Concurrent with OFAC’s action, the U.S. Federal Bureau of Investigation (FBI) released detailed information about APT39 in a public intelligence alert.
 
“The Iranian regime uses its Intelligence Ministry as a tool to target innocent civilians and companies, and advance its destabilizing agenda around the world,” said Treasury Secretary Steven T. Mnuchin. “The United States is determined to counter offensive cyber campaigns designed to jeopardize security and inflict damage on the international travel sector.”
These individuals and entities were designated pursuant to Executive Order (E.O.) 13553.
 
Rana advances Iranian national security objectives and the strategic goals of Iran’s Ministry of Intelligence and Security (MOIS) by conducting computer intrusions and malware campaigns against perceived adversaries, including foreign governments and other individuals the MOIS considers a threat. APT39 is being designated pursuant to E.O. 13553 for being owned or controlled by the MOIS, which was previously designated on February 16, 2012 pursuant to Executive Orders 13224, 13553, and 13572, which target terrorists and those responsible for human rights abuses in Iran and Syria, respectively.
Rana is being designated pursuant to E.O. 13553 for being owned or controlled by MOIS. Forty-five cyber actors are also being designated pursuant to E.O. 13553 for having materially assisted, sponsored, or providing financial, material, or technological support for, or goods or services to or in support of the MOIS. The identification of these individuals and their roles related to MOIS and APT39 comes as the result of a long-term investigation conducted by the FBI Boston Division.
 
The 45 designated individuals served in various capacities while employed at Rana, including as managers, programmers, and hacking experts. These individuals provided support for ongoing MOIS cyber intrusions targeting the networks of international businesses, institutions, air carriers, and other targets that the MOIS considered a threat.
 
The FBI advisory, also being released today, details eight separate and distinct sets of malware used by MOIS through Rana to conduct their computer intrusion activities. This is the first time most of these technical indicators have been publicly discussed and attributed to MOIS by the U.S. government. By making the code public, the FBI is hindering MOIS’s ability to continue their campaign, ending the victimization of thousands of individuals and organizations around the world.  … 
 

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

(Source: Treasury/OFAC, 17 Sep 2020) [Excerpts]
 
Comtech Telecommunications Corp. (“Comtech”), based in Melville, New York, and its wholly owned subsidiary, Comtech EF Data Corp. (“EF Data”), headquartered in Tempe, Arizona, which sell advanced communications systems, software, and services, have agreed to pay $894,111 to settle their potential civil liability for their sales and services to Sudan. These companies indirectly exported warrantied satellite equipment and facilitated services and training to a government-owned entity in Sudan, despite OFAC’s Sudan sanctions program that prohibited such transactions at the time.

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

(Source: European Commission/Directorate-General Trade, 16 Sep 2020) [Excerpts]
 
Since 1 February 2020, the United Kingdom has withdrawn from the European Union and has become a “third country”.1The Withdrawal Agreement2provides for a transition period ending on 31 December 2020. Until that date, EU law in its entirety applies to and in the United Kingdom.During the transition period, the EU and the United Kingdom will negotiate an agreement on a new partnership, providing notably for a free trade area. However, it is not certain whether such an agreement will be concluded andwill enter into force at the end of the transition period. In any event, such an agreement would create a relationship which in terms of market access conditions will be very different from the United Kingdom’s participation in the internal market,in the EU Customs Union, and in the VAT and excise duty area. In any case, all interested parties, and especially economic operators, are reminded ofthe legal situation applicable after the endof the transition period. …

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

COM NEWS

(Source: EU Sanctions, 18 Sep 2020)
 
The Special Representative for Venezuela and Iran, Elliott Abrams, has announced that “virtually all UN sanctions on Iran will come back into place this weekend, at 8:00pm Eastern Time on Saturday [19 September 2020]. The arms embargo will now be re-imposed indefinitely and other restrictions will return, including the ban on Iran engaging in enrichment and reprocessing-related activities, the prohibition on ballistic missile testing and development, and sanctions on the transfer of nuclear and missile-related technologies to Iran.”
Mike Pompeo, the US Secretary of State, said at a press conference, in response to a question on secondary sanctions, that the US will ensure that UN member states enforce these measures.
On 20 August, the US notified the UN Secretary General of its intention to initiate the snapback mechanism under Resolution 2231. Under the Resolution, sanctions will be re-applied in 30 days unless the Security Council votes to continue sanctions relief (see post).
However, as previously reported, 2 draft resolutions to extend the Iran conventional arms embargo were defeated by the UN Security Council in August 2020. The E3 have affirmed on multiple occasions that, in their view, the US cannot rely on the snapback mechanism provided for under Resolution 2231 because it ceased to be a participant in the nuclear deal following its withdrawal in May 2018. See post and post.

(Source: WSJ, 17 Sep 2020) [Excerpts]
 
The need for Beijing to approve any transaction adds uncertainty to already-convoluted talks.
 
TikTok owner ByteDance Ltd. and Oracle Corp. are waiting to learn whether President Trump will give his blessing to their deal, but another hurdle remains: Beijing still has to sign off too.

Chinese authorities will have to approve the terms of the deal, Bytedance reiterated Thursday, illustrating the tricky path ahead for the deal, even if the Trump administration gives its assent. …

COM COMMENTARY

(Source: Holland & Knight, 17 Sep 2020)
 
* Principal Author: Ronald A. Oleynik, Esq., 1-202-457-7183, Holland & Knight
 
A lawsuit filed with the U.S. Court of International Trade (CIT) on Sept. 10, 2020, seeks to upend the Trump Administration’s authority to levy and collect certain of the tariffs imposed under Section 301 of the Trade Act of 1974 (the Act).[FN/1] The plaintiffs,[FN/2] U.S. importers of goods captured by List 3 (the third tranche of additional duties against Chinese-origin goods that became effective on Aug. 24, 2018), contend the U.S. Trade Representative failed to meet a timeliness of action obligation under the Act and otherwise violated the Administrative Procedure Act.
 
Timeliness of action, ironically, is precisely the issue that many in the importer community are struggling with as they decide whether they too wish to challenge the Trump Administration’s Section 301 authority. Some in the legal community invoke Sept. 18, 2020 (this Friday) as “the” final day to file an action with the CIT or risk losing any right to seek refunds of duties already paid, while others pronounce it is Sept. 21.
 
However, both proposals are overly conservative, fail to account for individual importers’ unique circumstances and do not properly analyze the relevant statutory language. Specifically, the CIT’s residual jurisdiction provision – 28 U.S.C. § 1581(i) – imposes a two-year statute of limitations. The relevant question then is: What event starts the clock? Section 1581(i) explains it is when the “cause of action first accrues,”[FN/3] that is, when an importer is actually injured by the Section 301 tariffs. The U.S. government did not begin assessing additional tariffs on items appearing on List 3 until Sept. 24, 2018,[FN/4] and on List 4A until Sept. 1, 2019.[FN/5]The proverbial clock, as such, does not strike 12 for all importers on the same day. Instead, the relevant question is when your goods made entry.
 
Nonetheless, anyone who imported merchandise subject to List 3 duties on or immediately after Sept. 24, 2018, should be prepared to file by next week (Sept. 24, 2020) or risk the statute of limitations foreclosing their ability to seek refunds for some of those entries.
 
Notes
[FN/1]The case is HMTX Industries LLC v. United States, Case No. 20-00177 (USCIT filed Sept. 10, 2020).
[FN/2] Plaintiffs in the action are HMTX Industries LLC and its wholly owned family companies Halstead New England Corp. and Metroflor Corp., each a supplier of vinyl tiles.
[FN/3] 28 U.S.C. § 2636(i).
[FN/4] China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 83 Fed. Reg. 47,974 (notice of modification of Section 301 action) (U.S. Trade Representative, Sept. 21, 2018).
[FN/5] China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 84 Fed. Reg. 43,304 (notice of modification of Section 301 action) (U.S. Trade Representative, Aug. 20, 2019). Although the aforementioned notice also establishes an effective date for imposition of tariffs on goods covered by List 4B, collection thereof remains suspended at this time. Consequently, it is unlikely that importers of goods on List 4B will have standing to sue, as no cause of action has yet to accrue.

(Source: Kelley Drye, 16 Sep 2020)
 
* Principal Author: Eric McClafferty, Esq., 1-202- 342-8841, Kelley Drye
 
On September 14, 2020, the U.S. Department of Treasury, as Chair of the Committee on Foreign Investment in the United States (CFIUS), published final regulations changing the mandatory CFIUS declaration requirements for transactions involving U.S. businesses that produce, design, test, manufacture, or develop  critical technologies. Previously, the regulations provided that a CFIUS declaration was mandatory for certain critical technology transactions where the U.S. business involved was part of a listed industry.  The new regulations provide that a CFIUS declaration is mandatory where the critical technology would require a “U.S. regulatory authorization” for export, re-export, transfer (in-country), or re-transfer of such technology to certain parties or foreign persons in the ownership chain.  In short, if a U.S. company would need an export license to transfer technology (know how required to develop, produce or use an export controlled product) to a foreign purchaser of the U.S. company, CFIUS review is mandatory.
 
The new regulations follow Treasury’s issuance of a proposed rule on May 21, 2020, as discussed in greater detail in our previous blog post.  These final regulations take effect October 15, 2020, and would not apply to transactions completed before October 15, 2020.
 
The new regulations will result in an increased number of mandatory CFIUS filings for certain countries, especially China and Russia, that have stringent export control requirements.  Companies will need to shift from conducting due diligence based on the industry of the target business to analyzing whether an export license would be required to release the U.S. business’s critical technology either to the non-U.S. company acquirer or to a person with 25 percent or more voting interest in the acquirer.  CFIUS notes that this voting percentage can apply in certain cases to the acquirer’s general partner, or equivalent.
 
Where a mandatory declaration is required, it must be filed prior to the completion of the transaction.  Failure to timely file can result in significant penalties – up to the transaction value.

(Source: Kirkland & Ellis, 17 Sep 2020)
 
* Principal Author: Mario Mancuso, Esq., 1-202-389-5070, Kirkland & Ellis
 
On September 2, 2020, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) and the Delaware Department of Justice (“Delaware DOJ”) signed a Memorandum of Understanding designed to enhance oversight of Delaware-regulated parties by both agencies (“the MOU”). The MOU provides notice of OFAC’s intent to leverage state-level collaboration to further U.S. economic sanctions compliance objectives, and of Delaware DOJ’s intent to leverage federal intelligence to prevent abuse of its renowned business entity registry by illicit actors. 
The View from Washington
 
The MOU highlights the interconnectivity between federal and state enforcement activities when national security and foreign policy concerns are at issue. OFAC’s Director stated “[t]he MOU will allow OFAC and the State of Delaware to work together to shut down or otherwise disrupt the illicit activities of entities that should not be operating in the United States,” and it “will help OFAC to enforce its sanctions programs by more quickly identifying parties with an interest in blocked property.” [FN/1]
 
OFAC administers a list of thousands of Specially Designated Nationals or Blocked Persons (“SDN List”), individuals and entities with whom U.S. persons may not do business. Valuable information regarding corporate ownership and operations available to state-level regulators may be critical to making and enforcing those designations.
 
For Delaware, which in December 2018 promulgated regulations requiring registration agents in the state to confirm that customers seeking to form Delaware corporations are not on the SDN List, the MOU represents another step toward preventing abuse of its favorable incorporation laws by “unscrupulous business entities.” [FN/2]
 
Five Key Features of the MOU
The stated purpose of the MOU is “to maximize and improve compliance with and enforcement of the laws administered by OFAC and by Delaware DOJ.” The MOU contains five key elements: partnership coordination, joint investigations and enforcement, information exchange, personnel cross training, and assertion of common interest to protect privilege.
 
Partnership Coordination
Points of contact from both OFAC and Delaware DOJ will meet annually, or as necessary, to review “areas of mutual concern” and assess the terms of the MOU partnership. Designated representatives will include leadership from both agencies, as well as from OFAC’s Global Targeting Division. Including the Global Targeting Division in these meetings may suggest the potential for addition of persons to the SDN List based on information from Delaware DOJ investigations.
 
Joint Investigations and Enforcement
Under the MOU, OFAC and Delaware DOJ may collaborate in joint investigations, coordinate enforcement activities and provide mutual enforcement assistance to the extent permissible by law, and make referrals for potential violations of OFAC or Delaware statutes, as appropriate. [FN/3]
 Notably, the introduction to the MOU references “support of litigation against entities placed on [the SDN List]” as a priority of the partnership.
 
Information Exchange
In furtherance of the joint investigations noted above, OFAC and Delaware DOJ will establish “a methodology for exchanging investigative leads, complaints, information in support of investigations, and referrals of possible violations, to the extent allowable by law or policy.” [FN/4] This process may include the exchange of investigation files in certain cases as determined by agency policy, which could include information included in voluntary self-disclosures or administrative subpoena responses to OFAC.
 
Notably, OFAC and Delaware DOJ have also agreed to establish a methodology for allocation of assets of Delaware limited liability entities where Delaware courts have revoked their certificates of formation or incorporation. The MOU further contemplates notice to OFAC of such revocations and asset allocation procedures, and OFAC involvement in establishment of receiverships following such actions. [FN/5]This could contemplate the revocation of certificates of formation or incorporation by Delaware courts based on sanctions issues, potentially under recent amendments to Delaware law that provide for such revocation based on abuse or misuse of an entity’s powers, privileges, or existence. [FN/6] Notably, in at least four cases, Delaware DOJ has sought revocation of an entity’s formation based on its designation on the SDN List. [FN/7]
 
Cross Training
The MOU memorializes OFAC and Delaware DOJ’s agreement to cross train investigators and staff of both agencies on the laws and regulations that each agency enforces, and to review matters of “common concern” to both agencies. These trainings, which will occur at least annually, suggest a commitment to ongoing collaboration and leveraging of the overlap between the OFAC and Delaware DOJ mandates, particularly in the area of preventing bad actors from leveraging corporate registrations to further activities contrary to U.S. sanctions.
 
Common Interest
The MOU also notes that sharing of information between OFAC and Delaware DOJ is done on the basis they share a common legal interest. This is intended to make clear that such information sharing will not constitute a waiver of privilege over otherwise protected materials, and will not constitute a public disclosure for purposes of the Freedom of Information Act (“FOIA”) or the Delaware Freedom of Information Act. Therefore, parties who have furnished information to OFAC or Delaware DOJ should be aware that they may not be notified prior to transfer of such information to the other agency.
Key Takeaways
 
  • The MOU between OFAC and Delaware DOJ puts the public on notice that sanctions compliance and enforcement is a priority not only for the principal federal agency tasked with their administration, but also for the state prosecutor for one of the most widely used jurisdictions for corporate registration in the country.
  • Delaware’s heightened focus on preventing misuse of its corporate business entity registry by malign actors likely signals increased oversight of Delaware-registered corporations. 
  • Increased coordination between OFAC and Delaware DOJ may lead to joint enforcement actions similar to OFAC’s relationship with the New York Department of Financial Services, which has led to prominent enforcement actions, including against non-United States headquartered financial institutions.
  • For parties that disclose information to OFAC or Delaware DOJ, there is an increased likelihood that such information may be shared with the other agency, and could lead to parallel actions for potential violations of both federal and state laws. 
 

[FN/1] U.S. Dep’t of the Treasury, Treasury Announces MOU with the State of Delaware to Strengthen Information Sharing, Press Release (Sept. 2, 2020) https://home.treasury.gov/news/press-releases/sm1113.

 
[FN/2] Del. Dep’t of State, New Regulations Mandate Enhanced Screening of Business Entities Formed in Delaware, Press Release (Dec. 13, 2018) https://news.delaware.gov/2018/12/13/new-regulations-mandate-enhanced-screening-business-entities-formed-delaware/

 
[FN/3] U.S. Dep’t of the Treasury, Office of Foreign Assets Control and Del. Dep’t of Justice, Memorandum of Understanding (Sept. 2, 2020) at 3, https://home.treasury.gov/system/files/126/state_de_doj_mou.pdf

 
[FN/4] Id. at 3.

 
[FN/5] Id. at 3.

 
[FN/6] 6 Del. C. § 18-112; 8 Del. C. § 284.

 
[FN/7] See Jennings v. Masters International Inc., C.A. No. 2019-0756-AGB; Jennings v. Oyster Investments LLC, C.A. No. 2019-0758-AGB; Jennings v. Agusta Grand I LLC, C.A. No. 2019-0759-AGB; Jennings v. 200G PSA Holdings LLC, C.A. 2019-0760-AGB.

TE EX/IM TRAINING EVENTS & CONFERENCES

(Source: ECS)
 
*What:  ECS ITAR/EAR Webinar Series
*When:  Webinars Each Week Through December 2020
*Where:  Your Computer
*Sponsor: Export Compliance Solutions & Consulting (ECS)
*ECS Speakers:  Suzanne Palmer
*Register: here for individual webinars, here for a 4-pack, here for an 8-pack, or write to liz@exportcompliancesolutions.com or call 1-866-238-4018
* * * * * * * * * * * * * * * * * * * *

The ABC of Foreign Military Sales (FMS)
Tuesday, 29 September 2020

More Info

Designing and Implementing
an ICP
Tuesday, 6 October 2020 More Info
Wednesday, 7 October
* * * * * * * * * * * * * * * * * * * *

(Sources: Event sponsors)  
 

Submit your event in the Submission section at the end of this newsletter.  
 
[Editor’s note:  This Daily Bugle Event List has grown so large that we have run out of space to display it, so we are displaying here only the new events in the Daily Bugle, while maintaining a LINK HERE to the full list.]
 

Published every Friday or last publication day of the week. Send events to events@fullcirclecompliance.eu, composed in the below format:
 
# * Date: (Location;) “Event Title”; <Weblink>” Event Sponsor;
 
On-Line:
 
* 22 Sep: “2020 Encryption Regulations Update with Felice Laird“; Export Control Webinars
* 29 Sep: “The ABC of Foreign Military Sales (FMS); FCC Academy
* 6 Oct: “Designing an Internal Compliance Program for Export Controls & Sanctions“; Full Circle Compliance (FCC) Academy
* 7 Oct: “Implementing an Internal Compliance Program for Export Controls & Sanctions “; Full Circle Compliance (FCC) Academy
* 14 – 16 Oct: “CUSECO Training and Exam“; KAZAKIS INTERNATIONAL/DL EXPORTS/DUNLAP STONE

 

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EN EDITOR’S NOTES

EN_a119. Bartlett’s Unfamiliar Quotations

(Source: Editor)

 

Samuel Johnson (18 Sep 1709 – 13 Dec 1784; often referred to as Dr Johnson, was an English writer who made lasting contributions to English literature as a poet, playwright, essayist, moralist, literary critic, biographer, editor, and lexicographer. The Oxford Dictionary of National Biography describes Johnson as “arguably the most distinguished man of letters in English history”. He is the subject of James Boswell’s The Life of Samuel Johnson, described by Walter Jackson Bate as “the most famous single work of biographical art in the whole of literature”.)
  – “Promise, large promise, is the soul of an advertisement.”
  – “Almost every man wastes part of his life attempting to display qualities which he does not possess.”
  – “What is easy is seldom excellent.” 
 
Friday Funnies
Tomorrow, 19 September, is International Talk Like a Pirate Day, a parodic holiday created in 1995 by John Baur (Ol’ Chumbucket) and Mark Summers (Cap’n Slappy), of Albany, Oregon, who proclaimed September 19th of each year as the day everyone in the world should talk like a pirate. Here are some examples: 
* What did the pirate say when he turned 80 years old? “Aye matey.”
* Why couldn’t the nine-year-old go see the pirate movie? Because it was rated ARRRR! 
* Why did the pirate have trouble sitting still?  He had restless peg syndrome. 
* What are a pirate’s favorite musical instruments?  The sitarrrr and the guitarrrr. 
* What are the pirate vowels?  A, E, I, O, U, and ARRRR!  
* How much is a pirate willing to pay for corn? A buccaneer.
* What is a pirate’s favorite letter? You may think it be R, but I say it be the C !
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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.
 
Agency 
Regulations 
Latest Update 
DHS CUSTOMS REGULATIONS: 19 CFR, Ch. 1, Pts. 0-199.

 

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. 
27 Aug 2020: 85 FR 52898Additions of Entities to the Entity List and Revisions of entries on the Entity List.

DOC FOREIGN TRADE REGULATIONS (FTR): 15 CFR Part 30.   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.  

15 Nov 2017, 82 FR 52823: miscellaneous corrections include correcting references, an address and a misspelling.

 
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. 

29 Jul 2020: 85 FR 45513 Extension to Certain Temporary Suspensions, Modifications, and Exceptions due to Corona Virus.  The latest edition of the BITAR is 29 July 2020.  

 
DOT FOREIGN ASSETS CONTROL REGULATIONS (OFAC FACR): 31 CFR, Parts 500-599, Embargoes, Sanctions, Executive Orders
Inflation Adjustment of Civil Monetary Penalties Related to Reporting and Recordkeeping.
 
 
USITC HARMONIZED TARIFF SCHEDULE OF THE UNITED STATES (HTS, HTSA or HTSUSA), Revision 8.

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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