20-0923 Wednesday “Daily Bugle”

20-0923 Wednesday “Daily Bugle”

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Wednesday, 23 September 2020

(No items of interest posted) 

  1. Items Scheduled for Future Federal Register Edition
  2. Commerce/BIS: “Order Denying Export Privileges: Walid Chehade”
  3. State/DDTC: (No new postings)
  4. Treasury/OFAC Continues Pressure on Illegitimate Regime Officials Undermining Democracy in Venezuela
  5. Treasury/OFAC: “Reminder for the Annual Report of Blocked Property”
  1. EU Sanctions: “US Issues New Iran Executive Order & Designates 27”
  1. Baker Donelson: “CFIUS Update: Expanded Emphasis on U.S. Export Control Regulations”
  2. Squire: “The Commerce Department Announces Prohibitions on TikTok and WeChat”
  3. Thompson Hine: “Walmart and Oracle Deal with TikTok and WeChat Lawsuit Delay Commerce’s Ban on Transactions with WeChat and TikTok”
  1. Ankura Presents: 24 Sep; “Section 889 Compliance Update”
  2. FCC Academy Presents 3 Webinars: The ABC of FMS | Designing an ICP | Implementing an ICP
  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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[No relevant items for today] 

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* Commerce; 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: 24 Sep 2020] (PDF)
* Treasury/OFAC; RULES; Cuban Assets Control Regulations; [Pub. Date: 24 Sep 2020] (PDF)
* Treasury/OFAC; NOTICES; Blocking or Unblocking of Persons and Properties; [Pub. Date: 24 Sep 2020] (PDF)
* Commerce/BIS; NOTICES;Order Denying Export Privileges:Walid Chehade; [Pub. Date: 24 Sep 2020] (PDF)

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(Source: Commerce/BIS, 21 Sep 2020) [Excerpts]
On May 8, 2019, in the U.S. District Court for the Western District of Michigan, Walid Chehade (“Chehade”), was convicted of violating 18 U.S.C. § 371. Specifically, Chehade was convicted of knowingly and willfully conspiring to export from the United States to Lebanon guns and gun parts designated as defense articles on the United States Munitions List, without first obtaining the required licenses from the U.S. Department of State. … Pursuant to Section 1760(e) of the Export Control Reform Act (“ECRA”), the export privileges of any person who has been convicted of certain offenses, including, but not limited to, 18 U.S.C. § 371, may be denied for a period of up to ten years from the date of his/her conviction. …
Based upon my review of the record, including Chehade’s written submission from Counsel, and consultations with BIS’s Office of Export Enforcement, including its Director, and the facts available to BIS, I have decided to deny Chehade’s export privileges under the Regulations for a period of seven years from the date of Chehade’s conviction. I have also decided to revoke any BIS-issued licenses in which Chehade had an interest at the time of his conviction. …

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(Source: Treasury/OFAC, 22 Sep 2020) [Excerpts]
Today, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated five key figures that have facilitated the illegitimate Maduro regime’s efforts to undermine democracy in Venezuela. These individuals, including Maduro-supporting members of the Venezuelan National Assembly (Asamblea Nacional or AN), have acted as part of a broader scheme to manipulate parliamentary elections taking place in December 2020 by placing control of Venezuela’s opposition parties in the hands of politicians affiliated with Nicolas Maduro’s regime, undermining any credible opposition challenge to that regime.
“The United States remains committed to holding the Maduro regime and its supporters accountable for their blatant corruption to ensure that the Venezuelan people secure the free and fair election they deserve,” said Secretary Steven T. Mnuchin.  These individuals are being designated pursuant to Executive Order (E.O.) 13692, as amended. …

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(Source: Treasury/OFAC, 22 Sep 2020)
On July 1, 2020, the Office of Foreign Assets Control (OFAC) issued a recent action notice, reminding holders of property blocked pursuant to OFAC sanctions regulations published in Chapter V of Title 31 of the Code of Federal Regulations (C.F.R.) of the requirement to provide OFAC with an Annual Report of Blocked Property (ARBP).  Persons subject to this reporting requirement must submit a comprehensive report, as outlined in 31 C.F.R. § 501.603, of all blocked property held as of June 30 of the current year by September 30.   
The annual reports must be filed using the mandatory spreadsheet form TD F 90-22.50. Please send the completed form to OFACReport@treasury.gov.  Failure to submit a required report by September 30 constitutes a violation of the Reporting, Procedures and Penalties Regulations, 31 C.F.R. part 501. 
For more information please review OFAC’s Guidance on Filing the ARBP.

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(Source: EU Sanctions, 22 Sep 2020)
The US has announced a new Executive Order, and the designation of 27 individuals and entities to target Iran’s nuclear, ballistic missile and conventional arms programmes. The announcement follows the US’ recent decision to restore UN sanctions on Iran (see post). Many entities/individuals below were UN-designated prior to the nuclear deal of 2015, and in the US’ view, these measures have now been re-imposed under the snapback. See OFAC Noticepress release, and the State Dept press release and press conference.
Arms embargo
The Executive Order, “Blocking Property of Certain Persons with Respect to the Conventional Arms Activities of Iran”, aims to enforce the UN arms embargo against Iran. It authorises asset freezing measures (secondary sanctions) and a travel ban to be imposed on those contributing to the “supply, sale, or transfer of conventional arms to or from Iran, as well as those who provide technical training, financial support and services, and other assistance related to these arms”. See White House statement. …

The Department of Commerce has added 5 Iranian nuclear scientists to the Entity List “for enabling or assisting Iran’s nuclear development programme, which is contrary to the national security and foreign policy interests of the United States”. Press release here.


(Source: Baker Donelson, 20 Sep 2020)
* Principal Author: Alan F. Enslen, Esq., 1-205-250-8369, Baker Donelson
The Committee on Foreign Investment in the United States (CFIUS or the Committee), an inter-agency government body tasked with reviewing certain types of foreign direct investment in the United States for national security concerns, has undergone significant regulatory changes in 2020, and U.S. export control regulations have become increasingly integrated into the Committee’s jurisdiction and review process. In May and August 2020, key definitional changes were respectively proposed based on U.S. export controls that will significantly alter the types of U.S. technology companies that are within the Committee’s purview to actively regulate.
The 2018 Foreign Investment Risk Review Modernization Act (FIRRMA), which replaced existing CFIUS regulations that authorize national security reviews of foreign investments in U.S. businesses, was fully implemented in February 2020, building off of a pilot program that had been in effect since late 2018. FIRRMA overhauled CFIUS to more effectively address modern U.S. national security concerns, including by broadening the authorities of the Committee to review and take action to address national security concerns arising from certain non-controlling foreign direct investments in U.S. companies that manufacture critical technologies, critical infrastructure, or that maintain and collect sensitive personal data of U.S. citizens.
The focus on U.S. critical technologies has been a focal point of FIRRMA implementation. Under the CFIUS pilot program that began in 2018 (as subsumed into the February 2020 final regulations), parties to a covered transaction are required file a mandatory declaration with the Committee if the foreign investment transaction involves a U.S. business that produces, designs, tests, manufactures, fabricates, or develops one or more critical technologies that are used by the U.S. business in one of 27 industries, identified by reference to their North American Industry Classification System (NAICS) code. CFIUS has the authority to impose penalties on parties who fail to file a mandatory covered transaction.
Proposed “Critical Technology” Mandatory Filing Criteria
On May 21, 2020, the Department of Treasury (which chairs the inter-agency Committee) issued a proposed rule that would overhaul these mandatory filing requirements by abandoning the NAICS code-based criteria in response to industry concerns that they were difficult to accurately and consistently apply, and that would instead base the filing requirements on U.S. export control regulations.
The new rules propose to require the mandatory declaration filing for foreign investment in a “critical technology” company when that company produces, designs, tests, manufactures, fabricates, or develops a technology that would require “U.S. regulatory authorization” to otherwise export, re-export, transfer (in-country), or retransfer such technology to certain transaction parties and foreign persons in the ownership chain. “U.S. regulatory authorization” is defined to include the four main U.S. export control licensing regimes, including:
  • The International Traffic in Arms Regulations (ITAR) administered by the Department of State;
  • The Export Administration Regulations (EAR) administered by the Department of Commerce;
  • The Department of Energy licensing regulations at 10 CFR Part 810; and
  • The Nuclear Regulatory Commission licensing regulations at 10 CFR Part 110.
While the proposed rule does not modify the definition of “critical technologies,” the expanded focus on U.S. export control regulations stands to fundamentally change the types of transactions within the Committee’s jurisdiction to review. When considering foreign investment, U.S. technology companies would have to consider whether a license from one of the four regulators referenced above would be required for an export, re-export, transfer (in-country), or retransfer to the foreign party of any one of the critical technologies it produces, manufactured, fabricates, or develops.
Eliminating the NAICS-code based system will bring more clarity to what types of critical technologies are impacted. However, it will be more important than ever for U.S. technology companies to evaluate and identify the export jurisdiction and classification for their products, particularly those considering foreign investment. Because of the broad reach of U.S. export control regulations, especially within the EAR, classifying products for export and understanding the implications of the nationality of the end-user and destination of the end-use will be a necessary part of any due diligence process for considering the impact of a potential foreign investor. The proposed rules do take into consideration certain license exceptions within the EAR that would limit mandatory filing requirements, again underscoring the importance of having a working knowledge of U.S. export control regulations in connection with any CFIUS analysis.
Export Control Reform and “Emerging” and “Foundational” Technologies
FIRRMA was passed simultaneously with the Export Control Reform Act of 2018 (ECRA), and both acts sought to reinforce and enhance U.S. export controls and investment restrictions to address national security concerns regarding U.S. critical technologies. ECRA required the Department of Commerce’s Bureau of Industry and Security (BIS) to identify and establish additional export controls for certain “emerging” and “foundational” technologies through an interagency determination process. Importantly, these emerging and foundational technologies will be included under the “critical technologies” definition that subject companies that produce such products to CFIUS’ jurisdiction when a covered foreign investment is involved.
BIS initially published certain proposed criteria for identifying “emerging” technologies in late 2018. On August 27, 2020, BIS published an advance notice of proposed rulemaking seeking public comment on how to identify, define, and describe “foundational technologies” essential to U.S. national security, highlighting the “security importance” of U.S. leadership in science, technology, engineering, and manufacturing. BIS is seeking industry input on how to define commodities and software that should fall under the “foundational” technology definition and warrant increased export controls, including items that are currently subject to control by BIS for military end use or military end user reasons, such as semiconductor manufacturing equipment and associated software tools, lasers, sensors, and underwater systems, as well as items that are being utilized in developing conventional weapons, enabling foreign intelligence collection activities, or weapons of mass destruction applications.
The implementation of FIRRMA and ECRA is part of a series of measures by the U.S. in recent years to protect U.S. national security and economic interests through a variety of statutory mechanisms. While many of the updated policies and prohibitions are China-focused, the integration of U.S. export control regulations and foreign investment restrictions is indicative of broader efforts by U.S. regulators to synthesize overlapping regulatory regimes in order to maximize their efficiency and efficacy.
Ultimately, U.S. technology companies contemplating foreign investment must understand how regulatory licensing regimes and export controls affect their products, as well whether or not such investment will potentially trigger the mandatory filing requirements of the CFIUS review process.

(Source: Squire, 20 Sep 2020)
* Principal Author: George N. Grammas, Esq., 1-202-626-6234, Squire
Pursuant to Executive Orders 13942 and 13943, the US Department of Commerce (Commerce) published regulations identifying prohibited transactions related to TikTok and WeChat by any person, or with respect to any property, subject to the jurisdiction of the United States. The final rules provided that as of midnight on Sunday, September 20, both apps will cease to be available for download in the US, and future patches and updates will not be available. The existing WeChat functionality in the US will start to degrade starting Monday, September 21. The TikTok application will begin to degrade on November 12 (unless a deal is reached with ByteDance to divest the US TikTok business before then). Although WeChat Pay is not currently available in the US, the current Commerce rule signals that no payments may be initiated in the US over WeChat today or in the future. The timeline for the implementation of the WeChat prohibitions is delayed because of a lawsuit filed by users in California. On September 19, 2020, the United States District Court in San Francisco issued an Order Granting Motion for Preliminary Injunction (the “Order”) concerning the WeChat Executive Order 13943. Ultimately, the Order “grants the plaintiffs’ motion for a nationwide injunction against the implementation of Executive Order 13943 (limited to the Secretary of Commerce’s Identification of Prohibited Transactions 1 through 6).” This Order effectively puts the WeChat prohibitions on hold for the time being. The timeline for implementation of the TikTok prohibitions also is delayed in part because of progress with Bytedance on the resolution of the Committee on Foreign Investment in the United States (CFIUS) case with Bytedance and the ultimate divesture or other acceptable mitigation of the US TikTok business. Commerce announced that in light of recent positive developments, Commerce will delay the prohibition of identified transactions pursuant to Executive Order 13942, related to the TikTok mobile application that would have been effective on Sunday, September 20, 2020, until midnight on Sunday, September 27, 2020. The exchange between or among TikTok and WeChat mobile application users of personal or business information using the TikTok or WeChat mobile applications, to include the transferring and receiving of funds over the WeChat application is not prohibited. Specifically, Commerce announced the following: As of September 20, 2020, for WeChat and September 27, 2020, for TikTok, 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 US;
(ii) Any provision of services through the WeChat mobile application for the purpose of transferring funds or processing payments within the US.
As of September 20, 2020, for WeChat and as of November 12, 2020, for TikTok, the following transactions are prohibited:
(1) Any provision of internet hosting services enabling the functioning or optimization of the mobile application in the US;
(2) ny provision of content delivery network services enabling the functioning or optimization of the mobile application in the US;
(3) Any provision directly contracted or arranged internet transit or peering services enabling the function or optimization of the mobile application within the US;
(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 US.
Any other prohibitive transaction relating to WeChat or TikTok may be identified at a future date. Should the US 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 as to TikTok.

(Source: Thompson Hine, 22 Sep 2020)
* Principal Author: Joyce Rodriguez, Esq., 1-202-973-2724, Thompson Hine
On September 18, 2020, the U.S. Department of Commerce announced prohibitions on transactions relating to mobile applications, WeChat and TikTok, in order to “safeguard the national security of the United States” that were to become effective on September 20, 2020 and November 12, 2020.  This announcement followed President Trump’s August 6, 2020 Executive Orders against TikTok and WeChat, which declared these applications a national security threat and directed Commerce to define the scope of prohibited “transactions” by September 20, 2020.  (For more information on these executives orders, see update of August 7, 2020.)  However, the Federal Register notices that were meant to be published with respect to the TikTok and WeChat orders listing the scope of prohibited transactions were subsequently withdrawn by Commerce following the Walmart and Oracle deal with TikTok and the Northern District Court of California’s preliminary injunction order enjoining implementation of the August 6 executive order against WeChat. The next day, on September 19, 2020, Commerce announced that it would “delay the prohibition of identified transactions related to TikTok,”  that would have been effective on September 20, 2020, until September 27, 2020.
Commerce Actions on Hold
In the September 18 announcement, Commerce stated that it would no longer allow certain transactions between U.S. parties and the Chinese parent companies ByteDance Ltd. and Tencent Holdings or their subsidiaries.  Specifically, as of September 20, 2020, the following transactions were to be 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.; and
(ii) Any provision of services through the WeChat mobile application for the purpose of transferring funds or processing payments within the U.S.
Pursuant to the delay announcement on September 19 by Commerce, these prohibitions against TikTok will instead become effective on September 27, 2020.  Additionally, as of September 20, 2020, for WeChat and as of November 12, 2020, for TikTok, the following transactions were to be 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.; and
(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.
CFIUS and theTikTok Deal
Commerce’s 7-day delay of the prohibitions against TikTok, followed the September 19, 2020 announcements of Walmart and Oracle’s deal with TikTok to form a new entity called TikTok Global, which will be headquartered in the United States.  This deal was given President Trump’s “blessing” at a White House news briefing.  The new deal comes after a unanimous recommendation by the Committee on Foreign Investment in the United States (CFIUS) and President Trump’s August 14, 2020 Executive Order directing that the already completed transaction that resulted in the acquisition of Musical.ly, now known as TikTok, by the Chinese company ByteDance Ltd. be unwound.  This order directed ByteDance to divest all interests and rights in any assets or property used to enable or support the operation of TikTok in the United States, and any data obtained or derived from TikTok or Musical.ly users in the United States.  (For more information on the CFIUS action, see update of August 17, 2020.)  Although a deal has been announced, there are likely many steps to be taken to finalize an agreement that will satisfy CFIUS’s national security concerns with respect to TikTok.
WeChat Lawsuit
Commerce has been enjoined by a federal court in California from implementing these prohibitions against WeChat.  On August 21, 2020, U.S. WeChat Users Alliance and other individual users of WeChat (“WeChat Plaintiffs”) filed a complaint in the Northern District of California seeking declaratory and injunctive relief against Trump, Secretary of Commerce Wilbur Ross and Commerce in an effort to prevent the government from banning its mobile application pursuant to the August 6, 2020 Executive Order against WeChat. On September 19, 2020, the Northern District Court of California issued an order granting WeChat Plaintiffs’ motion for a nation-wide preliminary injunction enjoining the implementation of the August 6 Executive Order against WeChat, including enforcement of Commerce’s September 18 list of prohibited transactions.
TikTok Lawsuit
Like the WeChat Plaintiffs, on August 24, 2020, TikTok Inc. and its Chinese parent, ByteDance, Ltd., filed a separate complaint in the Central District of California against the same parties seeking the same relief in order to prevent the government from using the August 6, 2020 Executive Order against TikTok to ban its application.  Following the Walmart and Oracle deal announcement, on September 20, 2020, the TikTok complaint was voluntarily dismissed without prejudice and on September 21, 2020, TikTok and ByteDance filed a similar complaint for injunctive and declaratory relief against Trump and Commerce in U.S. District Court for the District of Columbia alleging that the administration’s proposed ban on transactions violated due process rights and freedom of speech.


(Source: Ankura)

* When: Thursday, 24 Sep 2020 | 12:00-1:30 pm EDT

* Where: Webinar
* Sponsor: Ankura Consulting Group 
* Ankura Moderator: Joseph Moyer, Senior Director
* Speakers: Alan Levesque, Senior Managing Director, Ankura;  Angela Styles, Partner, Akin Gump; Bob Huffman, Partner, Akin Gump;  Andrei Quinn-Barabanov, former supply chain compliance executive; Steve Gilmer, Senior Director, Ankura (former CISO)
* Register here or contact Ankura at events@ankura.com
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The ABC of Foreign Military Sales (FMS)
Tuesday, 29 September 2020

More Info

Designing and Implementing
  an ICP
Tuesday, 6 October More Info
Wednesday, 7 October More Info
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EN_a112. Bartlett’s Unfamiliar Quotations

(Source: Editor)

* Jeremy Collier (23 Sep 1650 – 26 Apr 1726; was an English theatre critic, “non-juror” bishop and theologian.)
“Belief gets in the way of learning.”
– “Idleness is an inlet to disorder, and makes way for licentiousness. People who have nothing to do are quickly tired of their own company.”
* Robert Bosch (23 Sep 1861 – 12 Mar 1942; was a German industrialist, engineer and inventor, founder of Robert Bosch GmbH. The invention of the first commercially viable high-voltage spark plug as part of a magneto-based ignition system by Robert Bosch’s firm in 1902 was a key stage in the development of the internal combustion engine.)
– “I don’t pay good wages because I have a lot of money; I have a lot of money because I pay good wages.”

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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.
Latest Update 


5 Apr 2019: 84 FR 13499:

Civil Monetary Penalty Adjustments for Inflation. 
22 Sep 2020: 85 FR 59419Additions of Entities to the Entity List and Corrections 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 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. 

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.


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.

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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