Every Monday we post the highlights out of last week’s FCC Export/Import Daily Update (“The Daily Bugle”). Send out every business day to approximately 8,500 readers of changes to defense and high-tech trade laws and regulations, The Daily Bugle is a free daily newsletter from Full Circle Compliance, edited by James E. Bartlett III, Salvatore Di Misa, and Elina Tsapouri.
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Last week’s highlights of The Daily Bugle included in this edition are:
- Canada TID: “Canada Takes Action Following Passage Of National Security Legislation for Hong Kong; Monday, 6 July 2020; Item #6
- UK ECJU: “Guidance on How to Request a Variation or Revocation in case of Designation under the Sanctions Act”; Tuesday, 7 July 2020; Item #5
- EU External Action: “Arms control: Statement by the Spokesperson on the Ratification of the Arms Trade Treaty by China”; Wednesday, 8 July 2020; Item #6
- Treasury/OFAC Settles with Amazon.com, Inc. for $134,523 with Respect to Potential Civil Liability for Apparent Violations of Multiple Sanctions Programs; Thursday, 9 July 2020; Item #5
- UK ECJU: “Export Licences and Certificates from 1 January 2021”; Friday, 10 July 2020; Item #7
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Canada TID: “Canada Takes Action Following Passage Of National Security Legislation for Hong Kong”
(Source: Canada TID, 3 Jul 2020)
Statement
July 3, 2020 – Ottawa, Ontario – Global Affairs Canada
The Honourable François-Philippe Champagne, Minister of Foreign Affairs, today issued the following statement:
“Canada joins the international community in reiterating its serious concern at the passage of national security legislation for Hong Kong by the Standing Committee of the National People’s Congress of China.
“This legislation was enacted in a secretive process, without the participation of Hong Kong’s legislature, judiciary or people, and in violation of international obligations.
“This process demonstrated disregard for Hong Kong’s Basic Law and the high degree of autonomy promised for Hong Kong under the ‘one country, two systems’ framework. Hong Kong’s role as a global hub was built on that foundation. Without it, Canada is forced to reassess existing arrangements.
“Effective immediately, Canada will treat exports of sensitive goods to Hong Kong in the same way as those destined for China. Canada will not permit the export of sensitive military items to Hong Kong.
“Canada is also suspending the Canada-Hong Kong extradition treaty.
“Finally, we have updated our travel advice for Hong Kong in order to advise Canadians of the potential impacts of the new national security legislation.
“The Government of Canada will continue to work with partners to protect human rights and the rule of law around the world.
“Canada will continue to support the many meaningful exchanges between Canada and Hong Kong, while standing up for the people of Hong Kong.”
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UK ECJU: “Guidance on How to Request a Variation or Revocation in case of Designation under the Sanctions Act”
(Source: UK ECJU, 6 Jul 2020) [Excerpts]
Section 23 of the Sanctions and Anti-Money Laundering Act 2018 (c.13) (‘the Sanctions Act’) enables certain persons to request a variation or revocation of a designation that has been applied through regulations made under section 1 of the Sanctions Act.
This guidance sets out how to request a variation or revocation if you have been designated under the Sanctions Act. In addition to this guidance, you can also read the Sanctions Review Procedure (EU Exit) Regulations 2018. …
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EU External Action: “Arms control: Statement by the Spokesperson on the Ratification of the Arms Trade Treaty by China”
(Source: European Union External Action, 8 Jul 2020)
China has become the 107th State Party to the Arms Trade Treaty (ATT).
By acceding to the ATT, China, an important arms exporter, contributes to the advancement of the Treaty’s objectives to regulate the international trade in conventional arms, to prevent and eradicate the illicit trade in conventional arms and ammunition, and to prevent their diversion. Increased transparency in international arms trade is another important objective of the Treaty.
As with all international treaties, full implementation and universal adherence is essential. This is an important development as a more responsible global arms trade would contribute to peace, security and stability, reduce human suffering, and promote cooperation, transparency and increased confidence. It would also create better conditions for sustainable development. The European Union supports the universalisation and implementation of the Treaty by sharing expertise with countries around the world on how to set up or improve their arms export control systems in accordance with the Treaty. The European Union calls upon all Signatory States to advance their ratification processes.
The European Union encourages other States, especially major arms exporters, importers and transit States, to become State Parties to the ATT before the next Conference of States Parties, thus strengthening the multilateral framework.
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Treasury/OFAC Settles with Amazon.com, Inc. for $134,523 with Respect to Potential Civil Liability for Apparent Violations of Multiple Sanctions Programs
(Source: Civil Penalties and Enforcement Information, 8 Jun 2020) [Excerpts]
Enforcement Release: July 8, 2020 OFAC Settles with Amazon.com, Inc. with Respect to Potential Civil Liability for Apparent Violations of Multiple Sanctions Programs Amazon.com, Inc. (“Amazon”), a Seattle, Washington-based company that provides retail, ecommerce, and digital services to millions of customers worldwide, has agreed to pay $134,523 to settle its potential civil liability for apparent violations of multiple OFAC sanctions programs. As a result of deficiencies related to Amazon’s sanctions screening processes, Amazon provided goods and services to persons sanctioned by OFAC; to persons located in the sanctioned region or countries of Crimea, Iran, and Syria; and to individuals located in or employed by the foreign missions of countries sanctioned by OFAC.
Amazon also failed to timely report several hundred transactions conducted pursuant to a general license issued by OFAC that included a mandatory reporting requirement, thereby nullifying that authorization with respect to those transactions.
The settlement amount reflects OFAC’s determination that Amazon’s apparent violations were non-egregious and voluntarily self-disclosed, and further reflects the significant remedial measures implemented by Amazon upon discovery of the apparent violations. Description of the Apparent Violations and the Conduct Leading to the Apparent Violations From on or about November 15, 2011, to on or about October 18, 2018, persons located in Crimea, Iran, and Syria placed orders or otherwise conducted business on Amazon’s websites for consumer and retail goods and services where the transaction details demonstrated that the goods or services would be provided to persons in Crimea, Iran, or Syria.
Amazon also accepted and processed orders on its websites for persons located in or employed by the foreign missions of Cuba, Iran, North Korea, Sudan, and Syria. Additionally, Amazon accepted and processed orders from persons listed on OFAC’s List of Specially Designated Nationals and Blocked Persons (the “SDN List”) who were blocked pursuant to the Narcotics Trafficking Sanctions Regulations, the Weapons of Mass Destruction Proliferators Sanctions Regulations, the Transnational Criminal Organizations Sanctions Regulations, the Democratic Republic of the Congo Sanctions Regulations, the Venezuela Sanctions Regulations, the Zimbabwe Sanctions Regulations, the Global Terrorism Sanctions Regulations, and the Foreign Narcotics Kingpin Sanctions Regulations.
Overall, the apparent violations consisted primarily of transactions involving low-value retail goods and services for which the total transaction value of the apparent violations was approximately $269,000. These apparent violations occurred primarily because Amazon’s automated sanctions screening processes failed to fully analyze all transaction and customer data relevant to compliance with OFAC’s sanctions regulations. In some instances, orders specifically referenced a sanctioned 2 jurisdiction, a city within a sanctioned jurisdiction, or a common alternative spelling of a sanctioned jurisdiction, yet Amazon’s screening processes did not flag the transactions for review. For example, Amazon’s screening processes did not flag orders with address fields containing an address in “Yalta, Krimea” for the term “Yalta,” a city in Crimea, nor for the variation of the spelling of Crimea. In another example, Amazon failed to interdict or otherwise flag orders shipped to the Embassy of Iran located in third countries. Moreover, in several hundred instances, Amazon’s automated sanctions screening processes failed to flag the correctly spelled names and addresses of persons on OFAC’s SDN List.
Amazon previously identified and reported to OFAC 245 transactions involving Crimea undertaken pursuant to GL 5 on February 13, 2015 (within the required reporting period), but did not report an additional 362 such transactions until well after the required reporting period had expired. Because of this reporting failure, the authorization in GL 5 is nullified with respect to those 362 transactions. …
Compliance Considerations
This case demonstrates the importance of implementing and maintaining effective, risk-based sanctions compliance controls, including sanctions screening measures appropriate for eCommerce and other internet-based businesses that operate on a global scale. Such large and sophisticated businesses should implement and employ compliance tools and programs that are commensurate with the speed and scale of their business operations. In particular, global companies that rely heavily on automated sanctions screening processes should take reasonable, risk-based steps to ensure that their processes are appropriately configured to screen relevant customer information and to capture data quality issues, such as common misspellings.
Routine testing of these processes to ensure effectiveness and identify deficiencies may also be appropriate. Moreover, companies that learn of a weakness in their internal compliance controls may benefit by taking immediate and effective action, to the extent possible, to identify and implement compensating controls until the root cause of the weakness can be determined and remediated.
This case also demonstrates the importance of compliance with all aspects of the terms of OFAC’s general licenses, including the timely fulfillment of any reporting obligations pursuant to those licenses. 5 OFAC Enforcement and Compliance Resources On May 2, 2019, OFAC published A Framework for OFAC Compliance Commitments in order to provide organizations subject to U.S. jurisdiction, as well as foreign entities that conduct business in or with the United States or U.S. persons, or that use U.S.-origin goods or services, with OFAC’s perspective on the essential components of a sanctions compliance program.
The Framework also outlines how OFAC may incorporate these components into its evaluation of apparent violations and resolution of investigations resulting in settlements. The Framework includes an appendix that offers a brief analysis of some of the root causes of apparent violations of U.S. economic and trade sanctions programs OFAC has identified during its investigative process. Information concerning the civil penalties process can be found in the OFAC regulations governing each sanctions program; the Reporting, Procedures, and Penalties Regulations, 31 C.F.R. Part 501; and the Economic Sanctions Enforcement Guidelines, 31 C.F.R. Part 501, app. A.
These references, as well as recent final civil penalties and enforcement information, can be found on OFAC’s website at www.treasury.gov/ofac/enforcement. For more information regarding OFAC regulations, please go to: www.treasury.gov/ofac.
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UK ECJU: “Export Licences and Certificates from 1 January 2021”
(Source: UK ECJU, 10 Jul 2020) [Excerpts]
The UK ECJU releases a Guidance for Licences, certificates and special rules for taking goods out of the UK from 1 January 2021.
Click here to see the complete list.