Archive for the ‘BIS’ Category

Chinese National Pleads Guilty to Attempting to Export “Bananas”

Thursday, May 11th, 2017 by Danielle McClellan

2017/05/11

By: Danielle McClellan

For the past 6 years, 53 year old Fuyi Sun has attempted to purchase carbon fiber for the Chinese military (according to court records). A few years ago Sun contacted what he thought was a US company that distributed carbon fiber, but was, in fact, an undercover entity created by Homeland Security Investigations (HSI) and staffed by undercover agents. The company, “UC Company,” was asked by Sun to supply M60 Carbon Fiber which is a high-grade carbon fiber that is used in sophisticated aerospace and defense applications, specifically for drones and other government defense applications. M60 Carbon Fiber requires a license for export to China for nuclear non-proliferation and anti-terrorism reasons.

During the course of the relationship between UC Company and Sun, he often suggested various security measures they should take to make sure they would both remain protected from the “U.S. Intelligence.” He instructed the undercover agents to use the word “banana” instead of “carbon fiber” in all communications…he inquired about purchasing 450 kilograms of banana in one email. He also instructed agents to remove identifying barcodes for the carbon fiber, prior to transshipment,  and instructed them to identify it as “acrylic fiber” in customs documentation.

On April 11, 2016, Sun traveled from China to New York to purchase the M60 Carbon Fiber from UC Company. On April 11th and 12th Sun met with undercover agents and suggested to them that the Chinese military was the ultimate end-user for the carbon fiber, he also explained that he personally worked in the Chinese missile program. He further asserted that he had a close relationship with the Chinese military, and would be supplying the M60 Carbon Fiber to the Chinese military or to institutions closely associated with it. He agreed to purchase two cases of the carbon fiber on the 12th from UC Company and provided them with $23,000 in cash for the carbon fiber and then provided an additional $2,000 as compensation for the risk that he believed they were taking to illegally export the carbon fiber to China without a license. Sun was arrested the next day.

Sun pled guilty to attempting to violate the International Emergency Economic Powers Act (IEEPA), which carries a maximum sentence of 20 years in prison. The maximum sentence in this case will be prescribed by Congress. Sun will be sentenced on July 26, 2017.

Details: https://www.justice.gov/opa/pr/chinese-national-pleads-guilty-attempting-illegally-export-high-grade-carbon-fiber-china

Exporting to Hong Kong? Don’t Forget Your Written Proof for Hong Kong!

Thursday, May 11th, 2017 by Danielle McClellan

2017/05/11

By: John Black

Effective April 19, 2017, the Bureau of Industry and Security (BIS) has new documentation requirements for export and reexports under licenses and license exceptions to and from Hong Kong.

BIS will  require persons planning on exporting and reexporting to Hong Kong any items subject to the Export Administration Regulations (EAR) and controlled on the Commerce Control List (CCL) for national security (NS), missile technology (MT), nuclear nonproliferation (NP column 1), or chemical and biological weapons (CB) reasons to obtain, prior to the export or reexport, a copy of a Hong Kong import license or a written statement from the Hong Kong Government that such a license is not required. The purpose of this change is to require that the Hong Kong Government issue an import license as an acknowledgement that sensitive EAR-controlled items are entering Hong Kong and as an agreement to prevent unauthorized reexport or transfer of those items to prohibited destinations. Interestingly, the prohibited destination that most concerns the US is the People’s Republic of China (PRC). The EAR treats Hong Kong as a separate “country” from the PRC even though the PRC, the United Nations, and nearly everybody else in the world considers Hong Kong to be part of the PRC because Hong Kong is part of the PRC.

Leaving behind the interesting point that the EAR treats Hong Kong as if it is not part of the PRC, there are a lot of details in this new rule. In addition what was described above, this rule will also require persons planning on reexporting from Hong Kong any item subject to the EAR and controlled for NS, MT, NP column 1, or CB reasons to obtain a Hong Kong export license or a statement from Hong Kong government that such a license is not required.

View full details of the rule at http://www.learnexportcompliance.com/News/The-Export-Control-Update-February-2017.aspx#EAR

BIS FAQs Related to Rule: https://bis.doc.gov/index.php/policy-guidance/foreign-import-export-license-requirements/hong-kong

Federal Register: https://www.gpo.gov/fdsys/pkg/FR-2017-01-19/pdf/2017-00446.pdf

BIS Extends Temporary General License for ZTE Corporations & ZTE Kangxun

Thursday, March 30th, 2017 by Danielle McClellan

2017/03/30

On February 21, 2017 the Bureau of Industry and Security (BIS) extended a temporary general license that restored, for a specified time period, the licensing requirements and policies under the EAR for exports, reexports, and transfers (in-country) to ZTE Corporation and ZTE Kangxun that were added to the Entity List on March 8, 2016. The rule extends the general license to March 29, 2017.

Federal Register: https://www.gpo.gov/fdsys/search/pagedetails.action?granuleId=2017-03664&packageId=FR-2017-02-24&acCode=FR&collectionCode=FR

Florida Company Fined $27 Million for 150 Intentional EAR Violations

Thursday, March 30th, 2017 by Danielle McClellan

2017/03/30

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

ZTE Pleads Guilty to Criminal Charges and Settles Civil Charges with BIS and OFAC

Thursday, March 30th, 2017 by Danielle McClellan

2017/03/30

(Source: Thomsen & Burke, LLP)

Authors: Roszel C. Thomsen, Esq., Roz@t-b.com; Antoinette D. Paytas, Esq., Toni@t-b.com; and Maher M. Shomali, Esq., maher@t-b.com, Wesley A. Demory, Esq. All of Thomsen & Burke, LLP.

Earlier today, ZTE Corporation and the Departments of Justice, Commerce and Treasury announced a global settlement of charges that ZTE violated the International Emergency Economic Powers Act (IEEPA), the Export Administration Regulations (EAR) and the Office of Foreign Assets Control (OFAC) Regulations.

In total, ZTE has agreed to pay the U.S. Government $892,360,064 and agreed to a significant conduct remedy, in the various plea and settlement agreements described below.
CRIMINAL VIOLATIONS OF IEEPA

ZTE agreed (contingent on the court’s approval) to plead guilty to three criminal charges, including:

  1. Conspiracy to unlawfully export, re-export and transship U.S.-origin servers, switches, routers and other components of a cellular network infrastructure to Iran;
  2. Obstruction of justice by hiding data regarding its sales to Iran, causing its defense counsel to unwittingly provide false information to the Department of Justice, and deleting all communications related to its cover-up; and
  3. Making a materially false statement that it was complying with the laws and regulations of the United States.

The criminal penalties include a fine in the amount of $286,992,532, which represents the largest criminal fine in the history of IEEPA prosecutions, and a criminal forfeiture in the amount of $143,496,266, as well as a conduct remedy discussed below. Because a conduct remedy in a case involving the violation of IEEPA, EAR and OFAC regulations is unusual, a summary of the conduct remedy and its implications is included, below the discussion of ZTE’s settlement agreements with the Departments of Commerce and Treasury.
SETTLEMENT OF CHARGES WITH COMMERCE DEPARTMENT

ZTE also agreed to settle charges with the Commerce Department’s Bureau of Industry and Security (“BIS”) of 380 violations of the EAR, including (1) Conspiracy (2) Acting with Knowledge of a violation in Connection with Unlicensed Shipments of Telecommunications Items to North Korea via China and (3) Evasion. As part of the settlement:

  1. ZTE agreed to pay a penalty of $661 million to BIS, with $300 million suspended during a seven-year probationary period to deter future violations. This is the largest civil penalty ever imposed by BIS.
  2. ZTE agreed to active audit and compliance requirements designed to prevent and detect future violations.
  3. ZTE agreed to a seven-year suspended denial of export privileges, which could be activated by BIS if any aspect of this deal is not met.
  4. BIS will recommend that ZTE be removed from the Entity List.

SETTLEMENT OF CHARGES WITH TREASURY DEPARTMENT

OFAC administers a comprehensive embargo on Iran as set forth in the Iranian Transactions and Sanctions Regulations (“ITSR”; 31 CFR part 560), including prohibitions on the indirect supply of goods from the United States to Iran, the re-exportation of U.S.-origin goods with knowledge that those items are intended for Iran, and any activity designed to evade or cause a violation of the ITSR. OFAC identified at least 251 ZTE transactions that violated these prohibitions.

ZTE ultimately settled with OFAC for $100,871,266, which was 95% of the maximum statutory civil penalty. As a condition to settlement, ZTE agrees that it has terminated all conduct leading to the apparent violations and will maintain internal policies and procedures that are designed to minimize the risk of future occurrences. Should ZTE willfully violate this condition, the settlement can become null and void, subjecting ZTE to additional OFAC enforcement activity.

Key takeaways for U.S. companies include the need to identify red flags when a customer refuses to disclose the ultimate destination of goods and when a customer involves an unknown intermediary without an adequate explanation.
CONDUCT REMEDY

The conduct remedy imposed on ZTE includes some of the elements addressed in the recently updated BIS Export Compliance Guidelines – The Elements of an Effective Compliance Program and elements that are above and beyond the guidelines. In addition, ZTE’s press release regarding the Settlement includes additional compliance elements that the company implemented in its effort to implement an improved export compliance program.   The standard elements of a compliance program that are addressed in the conduct remedy are:

  1. Issuance of a statement of corporate policy of export control compliance from the chief executive officers of ZTE Corporation and ZTE Kangxun to ensure compliance with the EAR which will be distributed no less than annually to all relevant employees of ZTE Corporation and ZTE Kangxun and their subsidiaries and affiliates.
  2. Implementation of a training program on applicable export control requirements to be provided to (a) its leadership, management, and employees and (b) the leadership, management and employees of its affiliates, subsidiaries, and other entities worldwide over which it has ownership or control.
  3. Record retention as required by the EAR.

The elements that are above and beyond the BIS guidelines are:

  • Submission of six annual audit reports regarding export compliance.
  • Hiring an initial independent compliance monitor that is approved by the U.S. government for a three-year term. The duties of the monitor include preparing the initial three annual audit reports.
  • Hiring an independent compliance auditor, also approved by the U.S. government, for an additional three years to prepare the remaining three annual audit reports.
  • The audit reports must include a certification to BIS, executed under penalty of perjury, from the chief executive officer and chief legal officer of ZTE that to the best of their knowledge, after reasonable inquiry, ZTE and its subsidiaries and affiliates are in compliance with the terms of the Agreement including the compliance program obligations.
  • An affirmative duty to report potentially unlawful transactions to the U.S. government during the probationary period.
  • A requirement to meet at least annually with BIS to discuss any suggestions, comments or proposals for improvement ZTE may wish to discuss with BIS.
  • A requirement to provide copies of training materials, the training schedule and training locations to BIS on a quarterly basis until January 1, 2020.

In its press release, ZTE noted that it has:

  • Appointed a new Chairman and Chief Executive Officer and made major changes to the senior management team, all of whom have a mandate of leading a new ZTE with a best-in-class export compliance program.
  • Created a Chief Executive Officer-led Compliance Committee with the authority and remit to significantly change the company’s policies and procedures, and provide greater oversight of support for the compliance initiatives.
  • Hired a new Chief Export Compliance Officer with responsibility for overseeing the continued development and improvement of the global export compliance program.
  • Created a separate compliance department with increased headcount to build the compliance program with full independence.
  • Issued a new Export Control Compliance Manual created in conjunction with the review of BIS to provide more detailed guidance to the employees. ZTE also now requires an annual Compliance Commitment Agreement from all employees.
  • Implemented a software automation tool which screens shipments from ZTE Corporation and certain subsidiaries for export control obligations. The system is used to determine which items are subject to the Export Administration Regulations (EAR), provides embargo and restricted party screening on the transactions, and places shipments on hold that require detailed classification analysis, application of license exceptions, or application of licenses when necessary.

CONCLUSION

The penalties assessed by Justice, Commerce and Treasury are significant.  Cumulatively, they comprise the largest global settlement involving violations of IEEPA, the EAR and OFAC regulations in history.

Nevertheless, these announcements most likely are not the end of the ZTE saga.  In its plea agreement with the Justice Department, ZTE specifically agreed to cooperate with the Justice Department regarding any criminal investigation it may undertake with respect to the activities of third parties.  In its settlement agreement with the Commerce Department, that agency merely agreed to recommend removal of ZTE from the Entity List.  Removal of ZTE from the Entity List will require the agreement of other agencies (including State and Defense, which are not parties to the global settlement) and publication of a new rule in the Federal Register.

Source Documents:

Company Fined $301K for Exporting Thermal Imaging Cameras to Hong Kong, Colombia, Ecuador, El Salvador and Mexico

Thursday, March 2nd, 2017 by Danielle McClellan

2017/03/02

By: Danielle McClellan

Milwaukee Electric Tool Corporation (Milwaukee Electric) of Brookfield, WI has settled with the Bureau of Industry and Security (BIS) on 25 charges of Engaging in Prohibited Conduct (764.2(a)). The company has agreed to pay a fine of $301,000 and will not be debarred.

Between April 2012 and May 2014 Milwaukee Electric exported thermal imaging cameras classified as 6A003.b.4 (controlled for NS and RS) to Hong Kong, Colombia, Ecuador, El Salvador and Mexico without obtaining the required Department of Commerce export licenses. The total value of all shipments was approximately $129,284…nearly half of the fine that the company will pay.

Settlement Agreement: https://efoia.bis.doc.gov/index.php/documents/export-violations/1099-e2489/file

EAR Expands License Application Support Document Requirements for Hong Kong

Thursday, March 2nd, 2017 by Danielle McClellan

2017/03/02

By: John Black

Effective April 19, 2017, the Bureau of Industry and Security (BIS) will  require persons planning on exporting and reexporting to Hong Kong any items subject to the Export Administration Regulations (EAR) and controlled on the Commerce Control List (CCL) for national security (NS), missile technology (MT), nuclear nonproliferation (NP column 1), or chemical and biological weapons (CB) reasons to obtain, prior to the export or reexport, a copy of a Hong Kong import license or a written statement from the Hong Kong Government that such a license is not required.   The purpose of this change is to require that the Hong Kong Government issue an import license as an acknowledgement that sensitive EAR-controlled items are entering Hong Kong and as an agreement to prevent unauthorized reexport or transfer of those items to prohibited destinations.  Interestingly, the prohibited destination that most concerns the US is the People’s Republic of China (PRC).  The EAR treats Hong Kong as a separate “country” from the PRC even though the PRC, the United Nations, and nearly everybody else in the world considers Hong Kong to be part of the PRC because Hong Kong is part of the PRC.

Leaving behind the interesting point that the EAR treats Hong Kong as if it is not part of the PRC, there are a lot of details in this new rule.  In addition what was described above, this rule will also require persons planning on reexporting from Hong Kong any item subject to the EAR and controlled for NS, MT, NP column 1, or CB reasons to obtain a Hong Kong export license or a statement from Hong Kong government that such a license is not required. This final rule will be effective April 19, 2017.

The following amendments have been made:

  • In § 740.2, add paragraphs (a)(19) and (20) to read as follows:

(a) *  *  *

(19) The exporter or reexporter to Hong Kong of any item subject to the EAR and controlled on the CCL for NS, MT, NP Column 1, or CB reasons has not received one of the following with respect to the item:

(i) A copy of an import license issued to the Hong Kong importer by the Government of the Hong Kong Special Administrative Region, pursuant to the Hong Kong Import and Export (Strategic Commodities) Regulations, that covers all items to be exported or reexported pursuant to that license exception for which a Hong Kong import license is required and that is valid on the date of the export or reexport that is subject to the EAR; or

(ii) A copy of a written statement issued by the Government of the Hong Kong Special Administrative Region that no import license is required to import into Hong Kong the item(s) to be exported or reexported. The statement may have been issued directly to the Hong Kong importer or it may be a written statement available to the general public. The statement may be used for more than one export or reexport to Hong Kong so long as it remains an accurate statement of Hong Kong law.

(20) The reexporter from Hong Kong of any item subject to the EAR controlled on the CCL for NS, MT, NP column 1, or CB reasons has not received one of the following with respect to the item:

(i) An export license issued by the Government of the Hong Kong Special Administrative Region, pursuant to the Hong Kong Import and Export (Strategic Commodities) Regulations, that covers all items to be reexported pursuant to that license exception for which a Hong Kong export license is required and that is valid on the date of the reexport that is subject to the EAR; or

(ii) A copy of a written statement issued by the Government of the Hong Kong Special Administrative Region that no Hong Kong export license is required for the item(s) to be rexported.

The statement may have been issued directly to the Hong Kong reexporter or it may be a written statement available to the general public. The statement may be used for more than one reexport from Hong Kong so long as it remains an accurate statement of Hong Kong law.

  • 748.9(b) is amended by revising the section heading, revising paragraph (b) and all notes to paragraph (b), and adding two sentences to the end paragraph of (e)(1), to read as follows:

§ 748.9    Support documents for evaluation of foreign parties in license applications and/or for promoting compliance with license requirements.

(b) Requirements to obtain support documents for license applications. Unless an exception in paragraph (c) of this section applies, a support document is required for certain license applications for:

(1) The People’s Republic of China (PRC) other than the Hong Kong Special Administrative Region (see §§ 748.10 and 748.11(a)(2));

(2) ‘‘600 Series Major Defense Equipment’’ (see § 748.11);

(3) Firearms and related commodities to member countries of the Organization of American States (see § 748.12); and

(4) The Hong Kong Special Administrative Region of the People’s Republic of China (see § 748.13).

Note 1 to Paragraph (b): On a case-by-case basis, BIS may require license applicants to obtain a support document for any license application.

Note 2 to Paragraph (b): For End-Use Certificate requirements under the Chemical Weapons Convention see § 745.2 of the EAR.

*       *       *       *       *

(e) *  *  *

(1) *  *  * The documents issued by the Government of the Hong Kong Special Administrative region that are required pursuant to § 748.13 are not used to evaluate license applications. They must be obtained before shipment and need not be obtained before submitting a license application.

  • Redesignate § 748.13 as § 748.14 and add new § 748.13 to read as follows:

§ 748.13    Hong Kong import and export licenses.

(a) Requirement to obtain the document—(1) Exports and reexports to Hong Kong. An exporter or reexporter must obtain the documents described in paragraph (a)(1)(i) or (a)(1)(ii) of this section before using a license issued by BIS to export or reexport to Hong Kong any item subject to the EAR and controlled on the CCL for NS, MT, NP column 1, or CB reasons. Collectively, the documents issued by Hong Kong must cover all of the items to be exported or reexported pursuant to a license.

(i) A copy of an import license issued to the Hong Kong importer by the Government of the Hong Kong Special Administrative Region, pursuant to the Hong Kong Import and Export (Strategic Commodities) Regulations, that covers the items to be exported or reexported pursuant to that BIS license for which a Hong Kong import license is required and that is valid on the date of the export or reexport that is subject to the EAR; or

(ii) A copy of a written statement issued by the Government of the Hong Kong Special Administrative Region that no import license is required to import into Hong Kong the item(s) to be exported or reexported to Hong Kong. The statement may have been issued directly to the Hong Kong importer or it may be a written statement available to the general public. The statement may be used for more than one export or reexport to Hong Kong so long as it remains an accurate statement of Hong Kong law.

(2) Reexports from Hong Kong. No license issued by BIS may be used to reexport from Hong Kong any item subject to the EAR controlled on the CCL for NS, MT, NP column 1, and/or CB reasons unless the reexporter has received either:

(i) An export license issued by the Government of the Hong Kong Special Administrative Region, pursuant to the Hong Kong Import and Export (Strategic Commodities) Regulations, that covers all items to be rexported pursuant to that BIS license for which a Hong Kong export license is required and that is valid on the date of the reexport that is subject to the EAR; or

(ii) A copy of a written statement issued by the Government of the Hong Kong Special Administrative Region that no export license is required from Hong Kong for the item(s) to be reexported. The statement may have been issued directly to the Hong Kong reexporter or it may be a written statement available to the general public. The statement may be used for more than one reexport from Hong Kong so long as it remains an accurate statement of Hong Kong law.

(b) Recordkeeping. The documents required to be obtained by paragraph (a) of this section must be retained and made available to the U.S. Government upon request in accordance with part 762 of the EAR.

  • In § 762.2 remove the word ‘‘and’’ from the end of paragraph (b)(52); remove the period from the end of paragraph (b)(53) and add in its place a semicolon followed by the word ‘‘and’’; add paragraph (b)(54) to read as follows:

§ 762.2    Records to be retained.

*       *       *       *       *

(b) *  *  * (54) § 748.13, Certain Hong Kong import and export licenses.

 

Federal Register: https://www.gpo.gov/fdsys/pkg/FR-2017-01-19/pdf/2017-00446.pdf

BIS Announces Favorable Export License Approval Policy for India

Thursday, March 2nd, 2017 by Danielle McClellan

2017/03/02

By: John Black

Effective January 19, 2017, the Bureau of Industry and Security (BIS) amended the Export Administration Regulations (EAR) to put in place a favorable export license approval policy for military items destined for India.  BIS stated that it generally will approve license applications subject to national security controls or regional stability controls to implement state that the US commitments related to the US and India becoming Major Defense Partners (according to the India-US Joint Statement of June 7, 2016).

More specifically, the following amendments have been made:

  • PART 742
    • 742.4 is amended by adding paragraph (b)(8) to read as follows:

§ 742.4 National security.

(b) * * *

(8) For India, there is a general policy of approval for license applications to export, reexport, or transfer items, including ‘‘600 series’’ items, for civil or military end uses in India, for ultimate end use by the Government of India, for reexport to countries in Country Group A:5, or for return to the United States, so long as such items are not for use in nuclear, ‘‘missile,’’ or chemical or biological weapons activities.

*       *       *       *       *

  • 742.6 is amended by adding paragraph (b)(7) to read as follows: § 742.6    Regional Stability.

(b) *  *  *

(7) For India, there is a general policy of approval for license applications to export, reexport, or transfer items, including ‘‘600 series’’ items, for civil or military end uses in India, for ultimate end use by the Government of India, for reexport to countries in Country Group A:5, or for return to the United States, so long as such items are not for use in nuclear, ‘‘missile,’’ or chemical or biological weapons activities.

  • PART 748
    • 748.15 is amended by revising paragraphs (a)(2) and (d) introductory text to read as follows:

§ 748.15    Authorization Validated End-User (VEU).

(a) *  *  *

(2) In evaluating an end user for eligibility under authorization VEU, the ERC will consider a range of information, including such factors as: The entity’s record of exclusive engagement in appropriate end-use activities; the entity’s compliance with U.S. export controls; the need for an on- site review prior to approval; the entity’s capability of complying with the requirements of authorization VEU; the entity’s agreement to on-site reviews by representatives of the U.S. Government to ensure adherence to the conditions of the VEU authorization; and the entity’s relationships with U.S. and foreign companies. In addition, when evaluating the eligibility of an end user, the ERC will consider the status of export controls and the support and adherence to multilateral export control regimes of the government of the eligible destination.

(d) End-use restrictions. Items obtained under authorization VEU in China may be used only for civil end uses and may not be used for any activities described in part 744 of the EAR. Items obtained under authorization VEU in India may be used for either civil or military end uses and may not be used for any activities described in part 744 of the EAR. Exports, reexports, or transfers made under authorization VEU may be made to an end user listed in Supplement No. 7 to this part only if the items will be consigned to and for use by the validated end user. Eligible end-users who obtain items under VEU may only:

*       *       *       *       *

Paragraph (7)(ii) of the section titled Required Information for Validated End-User Authorization Requests in Supplement No. 8 to part 748 is revised to read as follows:

Supplement No. 8 to Part 748— Information Required in Requests for Validated End-User (VEU) Authorization

* * * * *

Required Information for Validated End-User Authorization Requests

* * * * *

(7) * * *

(ii) Understands and will abide by all authorization VEU end-use restrictions, including the requirement that items received under authorization VEU will only be used for authorized end-uses and may not be used for any activities described in part 744 of the EAR;

* * * * *

Federal Register: https://www.gpo.gov/fdsys/pkg/FR-2017-01-19/pdf/2017-00439.pdf

BIS Removes Certain Nuclear Nonproliferation Column 2 Controls

Tuesday, January 31st, 2017 by Danielle McClellan

2017/01/31

This rule removes remove nuclear nonproliferation (NP) Column 2 license requirements from certain pressure tubes, pipes, fittings, pipe valves, pumps, numerically controlled machine tools, oscilloscopes, and transient recorders on the Commerce Control List (CCL).

As a result of the changes made by this rule, some of these items are no longer listed under an Export Control Classification Number (ECCN) on the CCL. However, such items remain subject to the EAR under the designation EAR99. This rule also creates four new ECCNs to maintain anti-terrorism (AT) controls on certain affected commodities and related ‘‘software’’ and ‘‘technology.’’ All items subject to the EAR, regardless of whether they are listed on the CCL, may require a license for reasons described elsewhere in the EAR (e.g., license requirements based on end-user/end-use controls, embargoes, or other special controls).

The Bureau of Industry and Security (BIS) published this final rule on November 25, 2016, however, ‘software’’ ‘‘specially designed’’ for the ‘‘development,’’ ‘‘production,’’ or ‘‘use’’ of items previously controlled under ECCN 3A292 will continue to be classified and licensed by BIS under the designation EAR99 through January 31, 2017. As of February 1, 2017, such ‘‘software’’ will be classified and licensed by BIS under ECCN 3D991.

Federal Register: https://www.gpo.gov/fdsys/pkg/FR-2016-11-25/pdf/2016-28039.pdf

BIS Adds 23 Russian Entities to Entity List & Explains License Review Policy

Tuesday, January 31st, 2017 by Danielle McClellan

2017/01/31

On December 27, 2016 the Bureau of Industry and Security published a final rule adding 23 Russian Entities to the Entity list and revises the licensing policy in three sections of part 742 of the EAR to clarify that BIS’s review of license applications for exports, reexports and transfers (in- country) to Russia.

BIS revised the CCL based controls sections of the EAR to clarify that it will review license applications to export or reexport to Russia items subject to the EAR and controlled for chemical and biological weapons proliferation (CB), nuclear nonproliferation (NP) or national security (NS) reasons under a presumption of denial, if the items proposed for export or reexport would make a direct and significant contribution to Russia’s military capabilities.

This final rules revises 742.2 and 742.3 of the EAR to clarify that license applications for items controlled for CB and NP reasons will be reviewed in accordance with the revised licensing policies in paragraph (b)(4) of both 742.2 and 742.3 and with the revised licensing policy in paragraph (b)(7) of 742.4 of the EAR. This rule revises 742.4(b)(7) of the EAR to clarify that license applications for items controlled for NS reasons will be reviewed under a presumption of denial if the items would make a direct and significant contribution to Russia’s military capabilities, including but not limited to, the major weapons systems described in Supplement No. 7 to part 742 of the EAR.

This final rule adds the following twenty-three entities to the Entity List:

Crimea Region of Ukraine:

  1. Crimean Ports, a.k.a., the following three aliases:
  • State Unitary Enterprise of the
  • Republic of Crimea ‘Crimean Ports’;
  • Sue RC ‘KMP’;
  • Sue RK ‘Crimean Ports’

28 Kirov Street, Kerch, Crimea Region of Ukraine 98312

 

  1.  Crimean Railway, a.k.a., the following three aliases:
  • Federal State Unitary Enterprise ‘Crimean Railway’;
  • Krymzhd;
  • The Railways of Crimea

34 Pavlenko Street, Simferopol, Crimea Region of Ukraine 95006.
Russia:

  1.  DJSC Factory Krasnoe Znamya, a.k.a., the following five aliases:
  • OJSC Factory Krasnoe Znamya;
  • OAO Zavod Krasnoe Znamya;
  • AO Krasnoye Znamya;
  • Krasnoye Znamya Plant OAO;
  • Krasnoye Znamya Plant JSC.

Shabulina Travel 2a, Ryazan, 390043, Russia

  1.  Ekran Scientific Research Institute, FSUE, a.k.a., the following one alias:
  • FGUP Ekran.

Kirov Avenue 24, Samara 443022, Russia; and Krzhizhanovskogo Street 20/30, Moscow, 117218, Russia;

  1. ElTom Research and Production Company, a.k.a., the following one alias:
  • NPP ElTom

Garshin Street 11, Tomilino, Lyuberetsky, Moscow, 140070, Russia

  1.  FSUE FNPC Nizhegorodsky Scientific Research Institute of Radiotechnics (NNIIRT),

Shaposhnikov Street 5, Nizhny Novgorod, 603950, Russia

  1.  Institut Stroiproekt, AO, a.k.a., the following six aliases:
  • Aktsionernoe Obshcestvo Institut Stroiproekt;
  • AO Institut Stroiproekt;
  • AO Institute Stroyproekt (f.k.a., Institut Stroiproekt Zakrytoe Aktsionernoe Obshchestvo);
  • Institute Stroyproect;
  • Stroyproekt;
  • Stroyproekt Engineering Group

D. 13 Korp. 2 LiteraA Prospekt Dunaiski, St. Petersburg 196158, Russia; and 13/2 Dunaisky Prospect, St. Petersburg 196158, Russia

  1. JSC GOZ Obukhov Plant, a.k.a., the following one alias:
  • GOZ Obukhov Plant

Prospekt Obukhovskoi Oboroni 120, Saint Petersburg, 192012, Russia

  1. JSC Institute of Instrumentation— Novosibirsk Plant Comintern (NPO NIIP–NZIK), Planetnaya Street 32, Novosibirsk, 630015, Russia
  2.  JSC Scientific Research Institute of Aircraft Equipment (NIIAO), a.k.a., the following three aliases:
  • SRIAE;
  • NIIAO;
  • Aviation Instrument Scientific Research Institute

Tupoleva 18, Zhukovsky, Moscow, 140182, Russia

  1.  Kaluga Scientific Research Radio Technology Institute (KRRTI), a.k.a., the following two aliases:
  • KNIRTI;
  • KRRTI

Lenin Street 2, Zhukov, Kaluga Oblast, 249192, Russia

  1.  Karst, OOO, a.k.a., the following four aliases:
  • Construction Holding Company Old City—Karst;
  • Karst Ltd.;
  • LLC Karst;
  • Obshcestvo S Ogranichennoi Otvetstvennostyu Karst

D. 4 Litera A Pomeshchenie 69 ul. Kapitanskaya, St. Petersburg 199397, Russiaand 4 Kapitanskaya Street, Unit A, Office 69–N, St. Petersburg 199397, Russia

  1. LLC Ruschemtrade, St. Mashinostroitelnyj, 3, Rostov-on- Don 344090, Russia; and 86/1, Temryuk, Krasnodar 353500, Russia
  2.  OAO All-Russia Research Institute of Radio Equipment (JSC VNIIRA), a.k.a., the following three aliases:
  • OJSC VNIIRA;
  • OAO All-Russia Research Institute of Radio Technology;
  • All-Russian Scientific Research Institute of Radio Equipment

Shkipersky Protok 19, V.I. St. Petersburg, 199106, Russia

  1.  OJSC Ural Production Company Vector (UPP Vector), a.k.a., the following two aliases:
  • JSC ‘SCP’ Vector;
  • JSC PPM Vector

Gagarin Street 28, Ekaterinburg, 620078, Russia

  1.  Olid Ltd., a.k.a., the following one alias:
  • OOO Solid

ul Mira 4, Novorossiysk, Krasnodarskiy kray 630024, Russia

  1.  Research and Production Association KVANT, a.k.a., the following one alias:
  • NPO Kvant

Bolshaya Saint Petersburg 73, Velikii- Novgorod 173003, Russia

  1.  Research and Production Association M.V. Frunze, a.k.a., the following two aliases:
  • NNPO Frunze;
  • NZIF

Gagarin Prospect 174, Nizhny Novgorod, 606950, Russia

  1.  Ryazan State Instrument Enterprise (RSIE), a.k.a., the following two aliases:
  • RSIE;
  • GRPZ

Seminarskaya Street 32, Ryazan, 390000, Russia

  1.  Scientific and Production Association ‘‘Lianozovo Electromechanical Plant’’ (NPO LEMZ), a.k.a., the following four aliases:
  • JSC LEMZ R&P Corporation;
  • OAO Design Bureau Lianozovsky Radars Moscow;
  • Lianozovsky Electromechanical factory;
  • OAO Design Bureau Lianozovsky

Radars Moscow. Dmitrovskoye Shosse 110, Moscow, 127411, Russia

  1.  Svyaz Design Bureau, OJSC, a.k.a., the following one alias:
  • KB Svyaz. Prospect Sokolova 96

Rostov-on-Don 344010, Russia

  1.  Trans-Flot JSC, a.k.a., the following one alias:
  • JSC Trans-Flot

ul Ventseka 1/97, Samara 443099, Russia

  1.  Transpetrochart Co. Ltd., Prospekt Engelsa 30, St. Petersburg 194156, Russia.

 

Federal Register: https://www.gpo.gov/fdsys/pkg/FR-2016-12-27/pdf/2016-31124.pdf