Archive for the ‘Export License’ Category

ACE, AES and AESDirect…Confused Yet?

Thursday, November 5th, 2015 by Danielle McClellan

By: Danielle McClellan

The ACE, AES and AESDirect system is a bit of a convoluted puzzle of applications that are intertwined. If you understood them before, be prepared to change what you thought you knew. In early 2016 changes will be taking place to the systems. Before we look at the changes, let’s look at each one individually.

ACE (Automated Commercial Environment): this is the primary system that the trade community reports import and export shipments. ACE is a single window that will continue to change and adapt so that it can automate more processes and eliminate paper.

AES (Automated Export System): this is the central point where export shipment data is filed and sent to the US Customs and Border Protection. AES collects, processes and stores all Electronic Export Information (EEI). AES creates Internal Transaction Numbers (ITNs) and provides exporter’s with messages such as “Fatal Errors” and “Compliance Alerts.” AES is housed in ACE.

AESDirect is the online system for Electronic Export Information (EEI) maintained by the US Census Bureau. AES filers can register their accounts in AESDirect and file their export shipments to the AES for processing. Basically AESDirect is just another way to file your export shipment data…50% of exports are processed directly thru AES and the other half are processed thru AESDirect.

So, in early 2016, the current AESDirect (also known as Legacy AESDirect) will transition into ACE. This means that AESDirect filers need to sign up for an ACE account if they do not already have one. If you have an ACE Importer account you should contact your Trade Account Owner (TAO) to request the export functionality be added to your account.

Specific Details:

  • The current AESDirect application available at, referred to as Legacy AESDirect, will transition completely into ACE in:
    • early 2016 for web, EDI and AESPcLink filers
    • mid-2016 for Weblink filers (specifications are forthcoming in October)
  • The ACE AESDirect application is referred to as Refactored AESDirect.
  • The online portal filing capability for the Refactored AESDirect will be available in late October 2015.

You must transition to the Refactored AESDirect based on the time frames noted above!!!

AESDirect filers are strongly encouraged to sign up for ACE Exporter accounts if they are completely new to the ACE system (brief how-to video).

Filers who have ACE Importer accounts should contact their Trade Account Owner (TAO) designated by their company and request that export functionality is added to their account (brief how-to video).

ALL legacy AESDirect account holders (regardless of filing method) will need an ACE account to access the Refactored AESDirect application because the legacy application will be retired in 2016!!! Sign up in advance and be prepared!

The videos referenced are accessible on CBP’s website.

For further information or questions, contact the U.S. Census Bureau’s Data Collection Branch.

Slackers Rejoice! DDTC Extends ITAR Authorizations Expiration Dates for ECR Shifted Items

Thursday, November 5th, 2015 by Danielle McClellan

By: Danielle McClellan

Maybe you are not an ECR slacker.  Most likely, despite your great plan and diligent efforts, you are one of the many exporters who haven’t quite figured out yet which of your hardware, materials, software and technical data shifted from the USML to the CCL as a result of Export Control Reform (ECR).  On paper, the task of reclassifying everything sounds easy.  In practice, it requires a lot of resources and time.  No one ever said ECR would make your life easier in the short term.

Enter DDTC to make things easier for some exporters for a bit longer—not something DDTC is well known for doing.  DDTC certainly knows from its experience processing license applications that sometimes it takes longer to get something done than outsiders would first expect.  Regardless of it’s motives, DDTC has extended the transition period for ITAR authorizations involving items that shifted from USML to CCL jurisdiction.

When ECR went into full force in 2013, DDTC published a final rule that provided a “Transition Plan” for exporter’s to follow regarding ITAR licenses, authorizations, and agreements. At that time, DDTC stated that all ITAR licenses, authorizations, and agreements would remain valid for a period of two years from the effective date of the rule (October 15, 2013) for  items that shifted from the USML to the CCL—there was no change to the validity period authorizations for items that did not shift.   Authorizations that covered both USML and CCL items remained valid until the expiration as long as simple amendments were made to agreements to add the USML x paragraph designation for non-USML items.

DDTC recently decided to give more flexibility for authorizations covering only items that shifted to the CCL.   On its website, DDTC recently added revisions to the various expiration dates  by adding an Updated Guidance paragraph after the previously issued guidance:

“A license or authorization issued by the Department will be effective for up to two years from the effective date of the revised USML category if all the items on the license or authorization have transferred to the export jurisdiction of the Department of Commerce.” (78 Fed. Reg. 67,752)

Updated guidance: Licenses or authorizations that would otherwise expire at the conclusion of the referenced two-year period will remain valid for 48 months from the date of issuance, or as otherwise indicated on the license or authorization.

“Approvals issued for agreements submitted prior to the effective date of the relevant revised USML category that contain transitioning and non-transitioning items will remain valid until expired, unless they require an amendment, or for a period of two years from the effective date of the relevant final rule, whichever occurs first, unless otherwise revoked, suspended, or terminated.” (78 Fed. Reg. 67,752)

Updated guidance: For agreements that would otherwise expire at the conclusion of the referenced two-year period, DDTC is extending the period of validity by one year.

“Approvals issued for agreements submitted prior to the effective date of the relevant revised USML category that contain solely transitioning items will remain valid for a period of two years from the effective date of the relevant USML category, unless revoked, suspended, or terminated.” (78 Fed. Reg. 67,752)

Updated guidance: For agreements that would otherwise expire at the conclusion of the referenced two-year period, DDTC is extending the period of validity by one year.

Justice is Blind…Unless You’re a Native of China—In That Case, Assume the Position!

Thursday, October 1st, 2015 by Danielle McClellan

By: Danielle McClellan

Earlier this year (May 2015) a Chinese-American Physics Professor at Temple University was dragged from his home in handcuffs accused of emailing design schematics for a pocket heater to a colleague in China.  This pocket heater is not the device you put in your coat pocket at chilly November football games but is a sensitive piece of equipment used in superconductor research.  Dr. Xiaoxing Xi, Chairman of the Physics Department, was arrested in front of his daughters, stripped of his professional position, and restricted from having any communications with anyone at Temple University. DOJ Press Release:

Fast forward to last week…the government has dropped all charges against Dr. Xiaoxing Xi after finding out that the design schematics that they thought were for a pocket heater were actually for something else. Apparently, the prosecutors and FBI agents did not understand the design and jumped the gun when they saw the email with the blueprints. The US government is aggressively combating against outside and inside employees trying to steal government and corporate secrets…but that doesn’t excuse this.

Dr. Xi said this to the New York Times: I don’t expect them to understand everything I do. … But the fact that they don’t consult with experts and then charge me? Put my family through all this? Damage my reputation? They shouldn’t do this. This is not a joke. This is not a game.

Dr. Xi’s lawyer, according to the Times, went further and suggested that the prosecution targeted Dr. Xi because he was Chinese. If he was Canadian-American or French-American, or he was from the U.K., would this have ever even got on the government’s radar? I don’t think so.

It should also be noted that a similar case was dismissed a few months ago…seems that following the rules may not keep you out of trouble anymore if you are an American citizen of Chinses ancestry.

More Information:

Census Bureau Tips for Resolving AES Fatal Errors

Thursday, October 1st, 2015 by Danielle McClellan

When a shipment is filed to the AES, a system response message is generated and indicates whether the shipment has been accepted or rejected. If the shipment is accepted, the AES filer receives an Internal Transaction Number (ITN) as confirmation. However, if the shipment is rejected, a Fatal Error notification is received.

To help you resolve AES Fatal Errors, here are some tips on how to correct the most frequent errors that were generated in AES for this month.

*Fatal Error Response Code: 110

*Narrative: State of Origin Unknown

*Reason: The U.S. State of Origin indicated is not valid in AES.

*Resolution: The U.S. State of Origin Code must be a valid two-character U.S. state, territory, or possession code (i.e., any USPS code). Verify the State of Origin, correct the shipment, and resubmit.

*Fatal Error Response Code: 146

*Narrative: US to PR Requires PR Port of Unlading

*Reason: The Port of Unlading Code reported is not a port in Puerto Rico.

*Resolution: A valid Port of Unlading Code must be reported for all vessel and air shipments between the U.S. and Puerto Rico. Verify the Port of Unlading and/or Mode of Transportation correct the shipment, and resubmit.

For a complete list of Fatal Error Response Codes, their reasons, and resolutions, see Appendix A – Commodity Filing Response Messages.

It is important that AES filers correct Fatal Errors as soon as they are received in order to comply with the Foreign Trade Regulations. These Errors must be corrected prior to export for shipments filed pre departure and as soon as possible for shipments filed post departure, but not later than five calendar days after departure.

For further information or questions, contact the U.S. Census Bureau’s Data Collection Branch: Tel. (800) 549-0595, select option 1 for AES; Email:; Online:

No Means No…and So Does a TDO!

Thursday, October 1st, 2015 by Danielle McClellan

By: Danielle McClellan

On March 19, 2015, a Temporary Denial Order (TDO) was put in place for Flider Electronics LLC, d/b/a Trident International Corporation, Pavel Semenovich Flider (President of Trident), and Gennadiy Flider (Trident office manager) for 180 days. The TDO denied the export privileges of the above mentioned parties as well as prohibited them from participating in any way, in any transaction involving any item subject to the EAR that is to be exported from the US, including carrying on negotiations concerning, ordering or buying any such items…this is important to this story.

Beginning in 2013, Flider and/or Trident repeatedly exported Xilinx field programmable gate array (FPGA) circuits (ECCN 3A001.a.2.c) to Russia without the required export license. CBP ultimately seized some of the shipments. After additional seizures, another detained shipment and interviews by Pavel Flider and Gennadiy Flider, OEE had reason to believe that Trident had been making transshipments to Russia. In addition, Trident and Pavel Flider were indicted for smuggling and money laundering. There is much more to this story…but I have kept it short for the purposes of this article. View more details at:

Now comes the interesting part of the story. The TDO denies negotiations concerning, and ordering items subject to the EAR as mentioned above. After laying low for a few months after the initial TDO, on July 10, 2015, Trident, via Pavel Flider, contacted employees of their previous electronics distributor requesting their account to be reestablished so that additional purchases could be made. The distributor declined to accept or fill any orders following several solicitations by Pavel Flider, including a phone call by him to the company where he was strictly informed that the company’s corporate policy was that they could not conduct business with a company such as Trident.

After this information came to light, OEE requested the TDO be renewed on August 21, 2015.

View both TDO’s:

BIS Nails Mid and High Level Company Officials (But Not Export Administrator) in Addition to Company

Thursday, October 1st, 2015 by Danielle McClellan

By: Danielle McClellan

Quote of the day not to make in writing prior to violating the EAR:  “if we follow the rules…we have to stop sales.”

Be warned.  That recent promotion, in addition to giving you a nice office and a raise,  makes you a more likely target of BIS penalties when BIS nails your company for export compliance violations.   Two officials of Streit found out the hard way that BIS is happy to penalize mid-level and higher company officials while not going after lower level export administrators.

Gurman Goutorov, chairman, chief executive officer, and sole/majority owner of the Streit Group entities (Streit Middle East, Streit USA Armoring LLC (Streit USA), and Streit Group FZE) has been fined $250,000 for the unlawful reexports of armored vehicles. Streit USA’s vice president, Eric Carlson, was fined $50,000 for his involvement with Goutorov. Streit USA Armoring, LLC was penalized $1.6 million and Streit Group FZE and Streit Group FSCO were fined $850,000. All parties involved above have also been debarred for 3 years beginning on September 1, 2015.

These violations begin with an approved BIS license for the reexport of US-origin vehicles that were retrofitted with ballistic steel and bullet proof glass (ECCN 9A018). The vehicles were exported to Streit Middle East (located in UAE) by Streit USA pursuant to a BIS License dated December 7, 2007. The license stated that Streit Middle East was designated as the authorized intermediate and ultimate consignee and specified the maximum number of armored vehicles that could be exported. The license also included a condition that the vehicles could not be resold, transferred or reexported without US government approval. Goutorov was aware of this license condition.

In July 2009 (the license expired December 31, 2009) the Streit USA’s export licensing coordinator sent out an email  asking that a “Streit USA Armoring End User Request Form” be completed and read:

“Please provide the following information to Streit USA Armoring for submission to the DOC (Department of Commerce), and wait for approval prior to any sale, transfer, or reexport of US produced armored SUVs. Only after approval has been given, in writing, to Streit USA Armoring from the DOC for an approved sale, may the sale proceed.”

Not long after this email, the export licensing coordinator sent another email stating that there were no exceptions to this condition.

In August 2009, Streit Group FZE reexported 8 armored vehicles to Iraq. The Streit USA’s export licensing coordinator once again reiterated via email to Goutorov, as well as to Eric Carlson, Streit USA’s Vice-President, and to Streit Group FZE’s director of sales and marketing that, “The license states that the resale/reexport of these vehicles must be approved by the Department of Commerce in the USA.” The export licensing coordinator applied for a reexport license for the transaction but it had not yet been approved as of August 2009. Streit Group FZE’s director of sales and marketing replied to Carlson and Goutorov via email, “Eric, Guerman – if we follow the rules…we have to stop sales.”

A few days after the sale to Iraq, Streit Middle East reexported two armored vehicles to Nigeria and then in September 2009 Streit Group FZE reexported a vehicle to the Philippines. In September 2009 Streit Group FZE contracted for the sale of 4 vehicles for reexport to Singapore. Finally on November 2009, Streit Middle East reexported six of the vehicles to the Philippines.

At no time was US government authorization ever obtained for any of the above transactions which is why the companies, along with Goutorov, have been debarred for 3 years and fined over million dollars amongst them.

Charging letter:

If OFAC Denies Your License Application…Stop!

Friday, September 11th, 2015 by Danielle McClellan

By: Danielle McClellan

Great Plains Stainless Co. (GPS) of Tulsa, Oklahoma has agreed to pay $214,000 to settle allegations that it violated the Office of Foreign Assets Controls (OFAC) regulations in 2009. GPS sold goods that its Chinese vendor shipped from Shanghai to GPS’s customer in Dubai via MN Sahand, a vessel that is considered blocked property (EO 13382). GPS also created new bogus trade documents, with references to the blocked vessel to be removed and then transferred these altered documents to its Dubai customer to facilitate the release of the goods that were held at the port in Dubai.

GPS did not voluntarily disclose these violations to OFAC, the maximum penalty could have been $500,000. The settlement amount is reflective of the following:

  • GPS acted willfully since they altered the bill of lading
  • They disregarded verbal and written guidance from OFAC stating that the company should consult with OFAC’s Licensing Division before engaging in the transaction
  • GPS had submitted a license application to OFAC seeking authorization for this transaction and was denied but followed thru with the transaction
  • They did not have a compliance program in place at the time of the alleged violations.
  • The company has not received a penalty notice or Finding of Violation from OFAC in the past five years
  • GPS had no reason to know that the blocked vessel was to be used for the shipment until the vessel’s sailing date
  • They are a small company
  • GPS took remedial measures to prevent future violations

Read the full document at:

$500,000 Penalty for Illegal Pump Exports

Friday, September 11th, 2015 by Danielle McClellan

By: Danielle McClellan

Lewis Pumps Division d/b/a Weir Minerals Lewis Pumps (Envirotech) has been fined $500,000 for exporting globe, gate, and butterfly valves (ECCN 2B350) to China, Russia, and other illegal destinations without licenses. The charging letter indicates that between December 2007 and July 2011 the company exported these items on 32 occasions at an approximate value of $1.4 million.

The $500,000 fine isn’t as bad as it may seem. Envirotech must pay $150,000 up front and the remaining $350,000 will be suspended and waived after two years as long as the company doesn’t commit any violations during those two years. What may be much more painful than the $150,000 fine, the company has agreed to two audits of their export compliance program. The results of the audit must be submitted to the Department of Commerce. The first audit will cover the 12 month period prior to the Order (July 2015) and must be received by BIS no later than 3 months from the Order. That’s a quick turnaround for a comprehensive audit not to mention that the Order states that the audit will be, “substantial with the Export Management and Compliance Program (ECMP) sample audits module, and shall include an assessment of Envirotech’s compliance with the regulations.”

Order and Charging Letter:

DDTC Provides Average Licensing Processing Times

Friday, September 11th, 2015 by Danielle McClellan

The Directorate of Defense Trade Controls (DDTC) is now providing a monthly update on the current license processing times. For electronic cases, the average is based on the date the case was signed by the applicant until the date of final action. In the case of hardcopy cases, the time is determined by the date the case enters the Directorate until the time it is signed out of the Directorate. The processing time below include all cases except for Commodity Jurisdictions (CJs), Government Jurisdictions (GJs), and Electronic Rejections.

The monthly licensing update can be accessed at:

Company Fined $75,000 for Exports to End User of Entity List

Friday, September 11th, 2015 by Danielle McClellan

By: Danielle McClellan

Teledyne LeCroy, Inc. of Chestnut Ridge, NY has been charged with two violations of the Export Administration Regulations (EAR) and fined $75,000. On two separate occasions between January 27 and April 14, 2010 the company exported oscilloscopes (ECCN 3A292.d) to Beihang University of Aeronautics and Astronautics (BUAA) in Beijing without a license. BUAA was added to the Entity List on September 16, 2005 and Teledyne LeCroy was aware of this listing when they sold and exported the oscilloscopes.

Teledyne LeCroy not only failed to obtain a BIS license they also failed to file accurate Shipper’s Export Declarations which is no surprise, why would they indicate an ultimate consignee that is on the Entity List. The company was assessed a penalty of $75,000 for the two charges.

Charging Letter: