Archive for the ‘Libya’ Category

Florida Company Fined $27 Million for 150 Intentional EAR Violations

Thursday, March 30th, 2017 by Danielle McClellan

By: Danielle McClellan

Access USA Shipping, LLC (Access) of Sarasota, Florida was charged with 150 violations beginning in April 2011 and spanning to February 2013. The company went out of its way to conceal the fact that foreign customers were purchasing products through them without their US merchants knowing who the end users of their items were. Access mis-described, undervalued, and destroyed and/or altered export control documents to conceal the illegal exports. They also made sure that their foreign customers had a direct employee to order through to avoid any export scrutiny. They went as far as allowing foreign customers to send “wish lists” to Access employees who would then purchase the products from their US merchants with US credit cards and PayPal accounts in the name of Eric Baird, Access’s founder and then-owner and CEO or cards opened in the name of the employee making the order. The foreign customer would then reimburse Access or the employee; there were even situations when the shipments were delivered to the homes of Access employees to ensure that the US merchants would not become suspicious of the order and the end user.

Access also exported (or attempted to) items classified as ECCN 0A987 which are controlled for Crime Control reasons to Argentina, Austria, Hong Kong, Indonesia, Libya, South Africa, and Sweden without a BIS export license. It was also found that the company exported (or attempted to) items classified as ECCN 5A990 and controlled for anti-terrorism reasons as well as EAR99 items to Transsphere Oy, a company on the Entity List.

The company is ordered to pay $10 million right away and the other $17 million will be suspended for two years and waived if the company does not commit any violations during the two year probationary period.

Charging Letter: https://efoia.bis.doc.gov/index.php/documents/export-violations/export-violations-2015/1102-e2490/file

U.S. Antiboycott Compliance: New Federal List Published

Tuesday, January 31st, 2017 by Danielle McClellan

By: Melissa Proctor, Polsinelli PC

Companies doing business in the Middle East take note: The Treasury Department recently published its quarterly list of countries that currently require participation or cooperation with an international boycott, such as the Arab League‘s boycott of Israel.

Even though many of these countries are WTO members and were required to shut down their Arab League offices as a condition of membership, many boycott-related requests are still being issued by government agencies and companies in these countries. The countries that are designated on this list, which by the way are the very same countries that were listed in the Third Quarter list, are:

  • Iraq
  • Kuwait
  • Lebanon
  • Libya
  • Qatar
  • Saudi Arabia
  • Syria
  • United Arab Emirates
  • Yemen

To view the list, click here.

If you are not familiar with U.S. antiboycott requirements, Part 750 of the Export Administration Regulations (EAR) prohibits U.S. companies and their foreign affiliates from complying with requests related to a foreign boycott that is not sanctioned by the U.S. Government. Specifically, U.S. companies and their overseas affiliates are prohibited from agreeing to:

  1. Refuse to do business with or in Israel or with blacklisted companies
  2. Discriminate against other persons based on race, religion, sex, national origin or nationality
  3. Furnish information about business relationships with or in Israel or with blacklisted companies, or
  4. Furnish information about the race, religion, sex, or national origin of another person

Foreign boycott-related requests can take many forms, and can be either verbal or written. They can appear in bid invitations, purchase agreements, letters of credit and can even be seen in emails, telephone conversations and in-person meetings. Some recent examples of boycott-related requests include:

  • “Provide a certificate of origin stating that your goods are not products of Israel.”
  • “Provide the religion and nationality of your officers and board members.” 
  • “Suppliers cannot be on the Israel boycott list published by the central Arab League.”  
  • “Provide a signed statement from the shipping company or its agent containing the name, flag and nationality of the carrying vessel and its eligibility to enter Arab ports “

In addition, implementing letters of credit that contain foreign boycott terms or conditions is also prohibited under the EAR.

Antiboycott compliance is a key issue for U.S. companies doing business in the Middle East, and personnel on the front lines with customers and supply chain partners in these countries should be trained to identify potential foreign boycott-related requests and escalate them to senior compliance personnel or in-house counsel to determine the applicable OAC and IRS reporting requirements.

Companies that receive boycott-related requests must submit quarterly reports to the Office of Antiboycott Compliance (OAC) unless an exemption applies. Failing to timely report a boycott request or complying with the request itself can lead to the imposition of civil penalties by the OAC. The IRS also requires U.S. taxpayers to report their operations in countries that require participation or cooperation with an international boycott on IRS Form 5713 (International Boycott Report) – the forms are submitted annually with U.S. tax returns.  Failure to comply with the Internal Revenue Code’s antiboycott requirements can lead to the revocation of certain international tax credits and benefits.

© Polsinelli PC, Polsinelli LLP in California

Treasury Identifies Countries Requiring Cooperation With an International Boycott

Thursday, January 17th, 2013 by Danielle McClellan

By: John Black

Once again the Treasury Department has identified the countries cooperating with an international boycott that raises issues related to claiming foreign tax credits under the Internal Revenue Service (IRS), specifically section 999(a)(3) of the IRS Code of 1986. The countries are:

  • Iraq
  • Kuwait
  • Lebanon
  • Libya
  • Qatar
  • Saudi Arabia
  • Syria
  • United Arab Emirates
  • Yemen

The IRS antiboycott rules come into play in many of the same situations in which the antiboycott provisions in Part 760 of the Export Administration Regulations (EAR) come into play. While the Commerce Department does not publish a list of countries for its EAR Part 760 antiboycott rules, as a practical matter the IRS list certainly represents many of the highest risk countries for EAR purposes so it is a good starting point for the focus of your EAR antiboycott compliance program. For EAR compliance purposes, US persons should also be aware that certain other Moslem countries cooperate with the Arab League boycott of Israel and present antiboycott compliance issues. These other countries include Bangladesh, Malaysia, Indonesia and Pakistan.

For the actual Federal Register notice go to http://www.gpo.gov/fdsys/pkg/FR-2012-11-16/html/2012-27737.htm

Illegal Stripping at Standard Chartered Bank Nets $327 Million for OFAC+ Violations

Thursday, January 17th, 2013 by Danielle McClellan

By: John Black

(Editor’s Note: That is perhaps one of the most attention grabbing export control headlines ever.)

On December 10, 2012 the Office of Foreign Assets Control (OFAC) in the US Treasury Department announced a $132 million settlement agreement with Standard Chartered Bank (SCB) to settle alleged violations of US trade embargoes and sanctions. The $132 million OFAC settlement is part of a combined global settlement of $327 million with federal and local government partners. The settlement is related to alleged violations by the London and Dubai offices of SCB of a number of U.S trade embargoes and sanctions programs, including those relating to Iran, Burma, Libya and Sudan and the Foreign Narcotics Kingpin Sanctions Regulations.

“Today’s settlement is the result of an exhaustive interagency investigation into Standard Chartered Bank’s attempts to violate U.S. sanctions programs through the ‘stripping’ from payment messages of critical information,” said OFAC Director Adam J. Szubin. “We remain committed to working with our partners in the regulatory and law enforcement community to ensure that the U.S. financial systems are protected from the risks associated with this type of illicit financial behavior.”

According to OFAC, from 2001 to 2007, SCB’s London head office and its Dubai branch engaged in stripping practices that interfered with the implementation of U.S. economic sanctions by financial institutions in the United States, including SCB’s New York branch. In London, those practices included omitting or removing references to US-sanctioned locations or entities from payment messages sent to U.S. financial institutions. SCB replaced the names of ordering customers on payment messages with special characters, effectively obscuring the true originator and sanctioned party in the transaction; and forwarding payment messages to US financial institutions that falsely referenced SCB as the ordering institution. In Dubai, the practices included sending payment messages to or through the United States without references to locations or entities that the US banks would have spotted as creating US sanctions issues. As a result, millions of dollars of payments were routed through U.S. banks for or on behalf of sanctioned parties in apparent violation of U.S. sanctions.

In addition, SCB’s New York branch settled charges related to eight apparent violations of the Foreign Narcotics Kingpin Sanctions Regulations (FNKSR).

Under the settlement agreement, SCB is required to put in place and maintain policies and procedures to minimize the risk of the recurrence of such conduct in the future. SCB is also required to provide OFAC with copies of submissions to the Board of Governors of the Federal Reserve System (Board of Governors) relating to the OFAC compliance review that it will be conducting as part of its settlement with the Board of Governors.

Treasury Department Announces Countries Requiring Compliance with Arab Boycott of Israel

Tuesday, September 4th, 2012 by John Black

In the August 13, 2012 Federal Register the Treasury Department announces, that for purposes of compliance with the antiboycott provisions of the IRS code, the list of countries which “require or may require participation in, or cooperation with, an international boycott.   This notice refers to the countries that require cooperation with the Arab League’s secondary and tertiary boycotts of Israel.  Under  the IRS rules a company may not claim foreign tax credits if it cooperates with such boycotts.

Part 760 of the Export Administration Regulations (EAR) also prohibits US persons from complying with certain aspects of unsanctioned foreign boycotts.  It has been a long time since the Commerce Department announced which countries require cooperation with boycotts for EAR purposes.  Even though the IRS list is not officially endorsed by the Commerce Department, it certainly makes a good list to use as a basis for deciding how to spend your antiboycott compliance resources.

The countries are:

  • Iraq
  • Kuwait
  • Lebanon
  • Libya
  • Qatar
  • Saudi Arabia
  • Syria
  • United Arab Emirates
  • Yemen

http://www.gpo.gov/fdsys/pkg/FR-2012-08-17/html/2012-20182.htm

Treasury Lists Countries Requiring Cooperation With an International Boycott

Tuesday, January 3rd, 2012 by Holly Thorne

The Department of the Treasury published a current list of countries which require or may require participation in, or cooperation with, an international boycott (within the meaning of section 999(b)(3) of the Internal Revenue Code of 1986).  The purpose of this list is to provide guidance regarding compliance with the antiboycott compliance aspects of the US tax code.  While this advice is not technically specific to the antiboycott provisions in Part 760 of the Export Administration Regulations (EAR), it certainly is a reasonable basis for a company to use when it decides how to allocate its compliance resources for compliance with the EAR antiboycott rules.

Treasury identified the following countries that “require or may require participation in, or cooperation with, an international boycott (within the meaning of section 999(b)(3) of the Internal Revenue Code of 1986),” e.g., the Arab boycott of Israel:

– Kuwait

– Lebanon

– Libya

– Qatar

– Saudi Arabia

– Syria

– United Arab Emirates

– Yemen

Iraq is not included in this list, but its status with respect to future lists remains under review by the Department of the Treasury.

Amendment to the International Traffic in Arms Regulations: Libya and UNSCR 2009

Tuesday, January 3rd, 2012 by Holly Thorne

The Department of State is amending the International Traffic in Arms Regulations (ITAR) to update the policy regarding Libya to reflect the additional modifications to the United Nations Security Council arms embargo of Libya adopted in September 2011.   This rule was effective November 4, 2011.

Click here for full amendment and supplementary information.

Treasury Lists – Countries Requiring Cooperation with an International Boycott

Wednesday, October 5th, 2011 by Holly Thorne

The Department of the Treasury has published a current list of countries which require or may require participation in, or cooperation with, an international boycott (within the meaning of section 999(b)(3) of the Internal Revenue Code of 1986).

The countries are:

  • Kuwait
  • Lebanon
  • Libya
  • Qatar
  • Saudi Arabia
  • Syria
  • United Arab Emirates
  • Yemen

Republic of Iraq is not included in this list, but its status with respect to future lists remains under review by the Department of the Treasury.

While this list officially applies to the Internal Revenue Service (IRS) antiboycott rules, it is a reasonable indicator of the high risk countries for the EAR antiboycott regulations.

State Amends ITAR to Reflect UN Sanctions on Libya

Monday, June 27th, 2011 by Anna Barone

In the May 24, 2011 Federal Register the Department of State amended the International Traffic in Arms Regulations (ITAR) to update the policy regarding Libya to reflect the United Nations Security Council arms embargoes adopted in February and March.  This does not make a significant change to US export control policy because Libya is already an ITAR 126.1 prohibited country and because State has already cancelled previously approved.

Treasury Identifies Countries Participating in the Secondary and Tertiary Arab League Boycotts of Israel

Monday, June 27th, 2011 by Anna Barone

By: Anna Barone

In accordance with section 999(a)(3) of the Internal Revenue Code of 1986, the Department of the Treasury is publishing the following list of countries which require or may require participation in, or cooperation with, an international boycott:

Kuwait, Lebanon, Libya, Qatar, Saudi Arabia, Syria, United Arab Emirates, and Yemen (more…)