2016 – Export Compliance Training Institute

Archive for 2016

US Oil & Gas Company Fined $25 Million from BIS & OFAC

2016/12/20

National Oilwell Varco, Inc., a Delaware corporation, and its Canadian subsidiaries, Dreco Energy Services, Ltd (Dreco) and NOV Elmar (NOV) have agreed to pay a combined $25 Million for violations of the Cuban Assets Control Regulations, the Iranian Transactions and Sanctions Regulations, and the Sudanese Sanctions Regulations.

The charges are as follows:

Between 2002 and 2005, National Oilwell Varco approved four Dreco commission payments to a UK based entity related to the sale and exportation of goods from Dreco to Iran. The four commission payments had a combined value of $2,630,091.
Between 2006 and 2008 National Oilwell Varco was involved in two transactions involving the sale and exportation of goods to Iran that totaled $13,596,980.
Between 2003 and 2007, Dreco knowingly exported (indirectly) goods from the US to fill seven orders from Iranian customers. The transactions totaled $526,480.
During 2007 and 2009, Dreco engaged in 45 transactions involving the sale of goods to Cuba totaling $1,707,964.
NOV engaged in two transactions between 2007 and 2008 involving the sale of goods or services to Cuba that totaled $103,119.
Finally, between 2005 and 2006 NOV engaged is a $20,928 transaction involving the exportation of goods from the US to Sudan.

OFAC considered the violations to be egregious since senior-level executives approved the commission payments and the NOV “willfully blinded” itself of the regulation violations by continuing to approve payments and communications. NOV will pay OFAC a settlement of $5,976,028, this will be deemed satisfied with its payment of $25,000,000 in relation to its settlement agreement between OFAC, BIS, and a Non-Prosecution Agreement (NPA).

OFAC considered the following to be aggravating factors:

NOV’s conduct that gave rise to the Apparent Violations demonstrated at least reckless disregard for U.S. sanctions requirements;
Senior managers at National Oilwell Varco, Inc. and Dreco knew or had reason to know that their respective business transactions giving rise to the ITSR-related apparent violations involved Iran;
NOV’s conduct caused harm to sanctions program objectives by providing a significant and sustained economic benefit to the petroleum industries in Cuba, Iran, and Sudan;
NOV is a large and sophisticated company that is engaged in the business of providing oilfield services around the world, including regions with high sanctions risk; and
NOV’s compliance program at the time of the Apparent Violations was wholly inadequate.

OFAC considered the following to be mitigating factors:

NOV had not received a Penalty Notice or Finding of Violation in the five years preceding the date of the earliest transaction giving rise to the Apparent Violations;
NOV cooperated with OFAC’s investigation, including by agreeing to toll the statute of limitations for more than 2,600 days; and
NOV has made efforts to remediate its compliance program and agreed to further compliance enhancements.

More Information: https://www.treasury.gov/resource-center/sanctions/CivPen/Documents/20161114_varco.pdf

Posted in Canada, Cuba, Iran, OFAC, Sanctions, Sudan, Violations & Fines

New Changes to EAR and ITAR Related to Military Aircraft and Gas Turbine Engines

2016/12/20

On November 21, 2016, DDTC published a final rule revising USML paragraphs VII(h)(29) and XIX (f) (12). This rule mainly affects a narrow range of articles related to next-generation platforms that were previously subject to the Export Administration Regulations (EAR) and will soon become subject to the International Traffic in Arms Regulations (ITAR) as of December 31, 2016.

It’s important to remember the following related to this rule beginning December 31, 2016:

Articles subject previously to the EAR but now subject to the ITAR under this rule, any unshipped balance under a Department of Commerce authorization will be null and void
The ITAR will regulate the reexport or retransfer of articles subject previously to the EAR but now subject to the ITAR under this rule

ITAR regulation Changes:

VIII(h)(29) Any of the following equipment if specially designed for a defense article described in paragraph (h)(1): (i) Scale test models; (ii) Full scale iron bird ground rigs used to test major aircraft systems; or (iii) Jigs, locating fixtures, templates, gauges, molds, dies, or caul plates.
(i) Technical data (see § 120.10 of this subchapter) and defense services (see § 120.9 of this subchapter) directly related to the defense articles described in paragraphs (a) through (h) of this category and classified technical data directly related to items controlled in ECCNs 9A610, 9B610, 9C610, and 9D610 and defense services using classified technical data. (See § 125.4 of this subchapter for exemptions.) (MT for technical data and defense services related to articles designated as such.)

XIX (f)(12) Any of the following equipment if specially designed for a defense article described in paragraph (f)(1): Jigs, locating fixtures, templates, gauges, molds, dies, caul plates, or bellmouths.
(g) Technical data (see § 120.10 of this subchapter) and defense services (see § 120.9 of this subchapter) directly related to the defense articles described in paragraphs (a) through (f) of this category and classified technical data directly related to items controlled in ECCNs 9A619, 9B619, 9C619, and 9D619 and defense services using the classified technical data. (See § 125.4 of this subchapter for exemptions.) (MT for technical data and defense services related to articles designated as such.)

The Bureau of Industry and Security (BIS) simultaneously published a rule related to this rule that adds clarifying text to the descriptions of the types of military aircraft controlled by the CCL (items subject only to the anti-terrorism reason for control). T

BIS Changes:

This rule updates the text of ECCN 9A610.w to reflect amendments made to that paragraph since the February 9 rule was published by adding references to ‘‘pneumatic’’ and ‘‘fly-by-light’’ flight control systems (see 81 FR 19026, April 4, 2016). These additions were made to align the descriptions in ECCN 9A610.w with the description of such systems in the current Equipment, Software And Technology Annex Technology Annex of the MTCR.
Section 770.2 is amended by adding paragraph (n)
ECCN 0A604—[Amended] 4. In in Supplement No. 1 to part 774, ECCN 0A604, remove Note 1 to 0A604.x and redesignate Note 2 to 0A604.x as Note to 0A604.x.
ECCN 0A614—[Amended]
In ECCN 0A614, remove Note 3 to 0A614.
In ECCN 3A611, in the ‘‘List of Items Controlled’’ section, ‘‘Items’’ paragraph, revise paragraph .x and revise paragraph .y, introductory text
In ECCN 8A992, revised the related controls paragraph
Revise ECCN 9A115
In ECCN 9A604, remove Note 1 to 9A604.x and redesignate Note 2 to 9A604.x as Note to 9A604.x.
In ECCN 9A610, revise the ‘‘Control(s)’’ table in the ‘‘License Requirements’’ section and the ‘‘List of Items Controlled”
In ECCN 9A619, the List of Items Controlled section is amended by:
- Revising the ‘‘Related Controls’’ paragraph;
- Revising the ‘‘Related Definitions’’ paragraph;
- Removing the note that immediately follows paragraph .e in the ‘‘Items’’ paragraph;
- Revising paragraph .x in the ‘‘Items’’ paragraph; and
- Revising paragraph .y in the ‘‘Items’’ paragraph.
In ECCN 9A620, remove the note to 9A620.b that immediately follows paragraph .x.
In ECCN 9B610, revise the ‘‘Related Controls’’ paragraph in the List of Items Controlled section
In ECCN 9B619, revise the ‘‘Related Controls’’ paragraph in the List of Items Controlled section
In ECCN 9C610, revise the heading, and the ‘‘Items’’ paragraph of the ‘‘List of Items Controlled’’ section
In ECCN 9C619, revise the heading, and the ‘‘Items’’ paragraph of the ‘‘List of Items Controlled’’ section
In ECCN 9E610, in the ‘‘List of Items Controlled’’ section, the ‘‘Items’’ paragraph is amended by:
- Removing the word ‘‘or’’ from the end of paragraph .b.13;
- Removing the period from the end of paragraph .b.14 and adding in its place a semicolon followed by the word ‘‘or’’; and
- Adding paragraph .b.15.
In ECCN 9E619, the ‘‘List of Items Controlled’’ section is amended by revising the ‘‘Related Controls’’ paragraph, and in the ‘‘Items’’ paragraph:
- Revising the Note that immediately follows paragraph .a;
- Removing the word ‘‘or’’ from the end of paragraph .b.8;
- Removing the period from the end of paragraph .b.9 and adding in its place a semicolon followed by the word ‘‘or’’; and
- Adding paragraph b.10.

State Federal Register Notice: http://pmddtc.state.gov/documents/1400_AD89.pdf

BIS Federal Register Notice: https://www.gpo.gov/fdsys/pkg/FR-2016-11-21/pdf/2016-27777.pdf

Posted in BIS, DDTC, Defense Trade Controls, EAR, State Dept

Update on Cote d’Ivoire, Liberia, Sri Lanka and Vietnam Embargoes

2016/12/20

Effective November 4, 2016 the Bureau of Industry and Security (BIS) has amended the Export Administration Regulations (EAR) to implement changes in controls on the arms and related material to Cote d’Ivoire, Liberia, Sri Lanka, and Vietnam. Cote d’Ivoire, Liberia, Sri Lanka, and Vietnam will be removed from Country Group D, this change means that the countries will no longer be subject to additional restrictions including de minimis US content, license exception availability, and licensing policies for specific items.

This final ruling has also added the addition of India as a member of the Missile Technology Control Regime (MTCR) which occurred on June 27, 2016.

The changes are:

Supplement No. 1 to part 738 ‘‘Commerce Country Chart’’ is amended by removing the footnote notation number 1 from ‘‘Cote d’Ivoire’’ and ‘‘Liberia’’
Supplement No. 1 to part 740, Country Group D, is amended by:
- Removing the entries for ‘‘Cote d’Ivoire’’, ‘‘Liberia’’ and ‘‘Sri Lanka’’; and
- Removing the ‘‘X’’ under column D:5 ‘‘U.S. Arms Embargoed Countries’’ for ‘‘Vietnam’’
Section 742.5 is amended by removing the clause ‘‘, and India as an MTCR adherent,’’ from the first sentence of paragraph (d)
Section 746.1 is amended by removing ‘‘Cote d’Ivoire (Ivory Coast),’’ and ‘‘Liberia,’’ from the list of countries in paragraph (b)(2)

Federal Register Notice: https://www.gpo.gov/fdsys/pkg/FR-2016-11-04/pdf/2016-26535.pdf

Posted in Sri Lanka, Vietnam

Tips on Setting up an Account in the Automated Commercial Environment

2016/12/20

(Source: Global Reach Blog)

This blog provides a few tips to address some common questions and issues for those who set-up exporter accounts in ACE on behalf of a client, authorized agents and freight forwarder roles, as well as with existing ACE importer accounts. Exporter accounts and the AESDirect filing system now reside in the Automated Commercial Environment (ACE).

Exporter Roles

“Exporter” is an account type within the ACE account structure used for all export related roles including:

Authorized agent
Freight forwarder
Exporting company (U.S. Principal Party in Interest)

When you register in the ACE, you will also be registering for an ACE Exporter Account, regardless of your role in the export transaction.

Filing on Behalf of a Client

When filing on behalf of another company, the U.S. Principal Party in Interest (USPPI) section in ACE should be completed the same way it was for the legacy AESDirect system. An additional USPPI Employee Identification Number (EIN) should only be added to a top account for company subsidiaries. Authorized agents and freight forwarders should not add an USPPI EIN to their account.

Account Structure for Authorized Agents and Freight Forwarders

A USPPI will not be able to register in ACE if a forwarder or agent added the USPPI’s EIN to their ACE Top Account. The USPPI will not be able to get access to AESDirect or their ACE Export Reports. If you notice this issue, the forwarder or agent must call the ACE Account Service Desk at 1-866-530-4172, option 1, then option 2 to submit a service ticket to solve this issue.

Existing ACE Importer Accounts

Any company with an existing ACE Importer Account needs to add the exporter role to their account to get instant access to their export reports. No vetting would be required in this case.

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

Telephone: (800) 549-0595; select option 1 for AES.
Email: askaes@census.gov
International Trade Management Division Website

Posted in AES

New Changes to EAR and ITAR Related to Military Aircraft and Gas Turbine Engines

2016/12/20

It’s important to remember the following related to this rule beginning December 31, 2016:

Articles subject previously to the EAR but now subject to the ITAR under this rule, any unshipped balance under a Department of Commerce authorization will be null and void
The ITAR will regulate the reexport or retransfer of articles subject previously to the EAR but now subject to the ITAR under this rule

ITAR regulation Changes:

VIII(h)(29) Any of the following equipment if specially designed for a defense article described in paragraph (h)(1): (i) Scale test models; (ii) Full scale iron bird ground rigs used to test major aircraft systems; or (iii) Jigs, locating fixtures, templates, gauges, molds, dies, or caul plates.
(i) Technical data (see § 120.10 of this subchapter) and defense services (see § 120.9 of this subchapter) directly related to the defense articles described in paragraphs (a) through (h) of this category and classified technical data directly related to items controlled in ECCNs 9A610, 9B610, 9C610, and 9D610 and defense services using classified technical data. (See § 125.4 of this subchapter for exemptions.) (MT for technical data and defense services related to articles designated as such.)

XIX (f)(12) Any of the following equipment if specially designed for a defense article described in paragraph (f)(1): Jigs, locating fixtures, templates, gauges, molds, dies, caul plates, or bellmouths.
(g) Technical data (see § 120.10 of this subchapter) and defense services (see § 120.9 of this subchapter) directly related to the defense articles described in paragraphs (a) through (f) of this category and classified technical data directly related to items controlled in ECCNs 9A619, 9B619, 9C619, and 9D619 and defense services using the classified technical data. (See § 125.4 of this subchapter for exemptions.) (MT for technical data and defense services related to articles designated as such.)

BIS Changes:

This rule updates the text of ECCN 9A610.w to reflect amendments made to that paragraph since the February 9 rule was published by adding references to ‘‘pneumatic’’ and ‘‘fly-by-light’’ flight control systems (see 81 FR 19026, April 4, 2016). These additions were made to align the descriptions in ECCN 9A610.w with the description of such systems in the current Equipment, Software And Technology Annex Technology Annex of the MTCR.
Section 770.2 is amended by adding paragraph (n)
ECCN 0A604—[Amended] 4. In in Supplement No. 1 to part 774, ECCN 0A604, remove Note 1 to 0A604.x and redesignate Note 2 to 0A604.x as Note to 0A604.x.
ECCN 0A614—[Amended]
In ECCN 0A614, remove Note 3 to 0A614.
In ECCN 3A611, in the ‘‘List of Items Controlled’’ section, ‘‘Items’’ paragraph, revise paragraph .x and revise paragraph .y, introductory text
In ECCN 8A992, revised the related controls paragraph
Revise ECCN 9A115
In ECCN 9A604, remove Note 1 to 9A604.x and redesignate Note 2 to 9A604.x as Note to 9A604.x.
In ECCN 9A610, revise the ‘‘Control(s)’’ table in the ‘‘License Requirements’’ section and the ‘‘List of Items Controlled”
In ECCN 9A619, the List of Items Controlled section is amended by:
- Revising the ‘‘Related Controls’’ paragraph;
- Revising the ‘‘Related Definitions’’ paragraph;
- Removing the note that immediately follows paragraph .e in the ‘‘Items’’ paragraph;
- Revising paragraph .x in the ‘‘Items’’ paragraph; and
- Revising paragraph .y in the ‘‘Items’’ paragraph.
In ECCN 9A620, remove the note to 9A620.b that immediately follows paragraph .x.
In ECCN 9B610, revise the ‘‘Related Controls’’ paragraph in the List of Items Controlled section
In ECCN 9B619, revise the ‘‘Related Controls’’ paragraph in the List of Items Controlled section
In ECCN 9C610, revise the heading, and the ‘‘Items’’ paragraph of the ‘‘List of Items Controlled’’ section
In ECCN 9C619, revise the heading, and the ‘‘Items’’ paragraph of the ‘‘List of Items Controlled’’ section
In ECCN 9E610, in the ‘‘List of Items Controlled’’ section, the ‘‘Items’’ paragraph is amended by:
- Removing the word ‘‘or’’ from the end of paragraph .b.13;
- Removing the period from the end of paragraph .b.14 and adding in its place a semicolon followed by the word ‘‘or’’; and
- Adding paragraph .b.15.
In ECCN 9E619, the ‘‘List of Items Controlled’’ section is amended by revising the ‘‘Related Controls’’ paragraph, and in the ‘‘Items’’ paragraph:
- Revising the Note that immediately follows paragraph .a;
- Removing the word ‘‘or’’ from the end of paragraph .b.8;
- Removing the period from the end of paragraph .b.9 and adding in its place a semicolon followed by the word ‘‘or’’; and
- Adding paragraph b.10.

State Federal Register Notice: http://pmddtc.state.gov/documents/1400_AD89.pdf

BIS Federal Register Notice: https://www.gpo.gov/fdsys/pkg/FR-2016-11-21/pdf/2016-27777.pdf

Posted in BIS, DDTC, EAR, ITAR

BIS revises License Exceptions Related to Cuba

2016/11/15

This rule amends a license exception to allow cargo aboard aircraft to transit Cuba when that cargo is bound for destinations other than Cuba. This rule also authorizes export and reexport of certain items sold directly to individuals in Cuba under a license exception. Finally, this rule revises the lists of ineligible Cuban officials for purposes of certain license exceptions. BIS is publishing this rule to further implement the administration’s policy of increasing engagement and commerce that benefits the Cuban people.

This final ruling is in conjunctions with OFAC (Office of Foreign Assets Controls) recent amendments to the Cuban Assets Control Regulations (CACR) (31CRF Part 515). Although the changes below revise the licensing policy for certain types of exports, the United States continues to maintain a comprehensive embargo on trade with Cuba. The export and reexport to Cuba of all items subject to the EAR still requires a BIS license, unless authorized by a license exception specified in §746.2(a)(1) of the EAR or exempted from license requirements in §746.2(a)(2) of the EAR.

The following changes will be made:

PART 740

Section 740.12 is amended by revising paragraphs (a)(2)(v)(A) and (B) to read as follows: § 740.12 Gift parcels and humanitarian donations (GFT).

(a) * * *

(2) * * *

(v) * * *

(A) No gift parcel may be sent to any member of the Council of Ministers or flag officer of the Revolutionary Armed Forces.

(B) No gift parcel may be sent to any member of the Politburo.

Section 740.15 is amended by revising the introductory text and paragraph (d)(6), removing the second (duplicate) ‘‘note to paragraph (d),’’ redesignating paragraph (e) as paragraph (f), and adding a new paragraph (e) to read as follows:
- § 740.15 Aircraft, vessels and spacecraft (AVS). This License Exception authorizes departure from the United States of foreign registry civil aircraft on temporary sojourn in the United States and of U.S. civil aircraft for temporary sojourn abroad; the export of equipment and spare parts for permanent use on a vessel or aircraft; exports to vessels or planes of U.S. or Canadian registry and U.S. or Canadian Airlines’ installations or agents; the export or reexport of cargo that will transit Cuba on an aircraft or vessel on temporary sojourn; and the export of spacecraft and components for fundamental research. Generally, no License Exception symbol is necessaryfor export clearance purposes; however, when necessary, the symbol ‘‘AVS’’ may be used.
- (d) * * *
- (6) Cuba, eligible vessels and purposes. Only the types of vessels listed in this paragraph (d)(6) departing for Cuba for the purposes listed in this paragraph (d)(6) may depart for Cuba pursuant to this paragraph (d). Vessels used to transport both passengers and items to Cuba may transport automobiles only if the export or reexport of the automobiles to Cuba has been authorized by a separate license issued by BIS (i.e., not authorized by license exception).
- (i) Cargo vessels for hire for use in the transportation of items;
- (ii) Passenger vessels for hire for use in the transportation of passengers and/ or items; and
- (iii) Recreational vessels that are used in connection with travel authorized by the Department of the Treasury, Office of Foreign Assets Control (OFAC).
- Note to paragraph (d)(6)(iii): Readers should also consult U.S. Coast Guard regulations at 33 CFR part 107 Subpart B— Unauthorized Entry into Cuban Territorial Waters.
- (e) Intransit cargo. Cargo laden on board an aircraft or vessel may transit Cuba provided:
  - (1) The aircraft or vessel is exported or reexported on temporary sojourn to Cuba pursuant to paragraph (a) or (d) of this section or a license from BIS; and
  - (2) The cargo departs with the aircraft or vessel at the end of its temporary sojourn to Cuba, is not removed from the aircraft or vessel for use in Cuba and is not transferred to another aircraft or vessel while in Cuba.

Section 740.19 is amended by revising paragraphs (c)(2)(i) and (ii) to read as follows: § 740.19 Consumer communications devices (CCD).
- (c) * * *
- (2) * * *
- (i) Ineligible Cuban Government Officials. Members of the Council of Ministers and flag officers of the Revolutionary Armed Forces.
- (ii) Ineligible Cuban Communist Party Officials. Members of the Politburo.
Section 740.21 is amended by:
- a. Removing the word ‘‘or’’ from the end of paragraph (b)(2);
- b. Removing the period from the end of paragraph (b)(3) and adding in its place ‘‘; or’’;
- c. Adding paragraph (b)(4) and;
- d. Revising paragraphs (d)(4)(ii) and (iii).
- The addition and revisions read as follows: § 740.21 Support for the Cuban People (SCP).
  - (b) * * *
  - (4) Items sold directly to individuals in Cuba for their personal use or their immediate family’s personal use, other than officials identified in paragraphs (d)(4)(ii) or (iii) of this section.
  - (d) * * *
  - (4) * * *
  - (ii) Members of the Council of Ministers and flag officers of the Revolutionary Armed Forces; and
  - (iii) Members of the Politburo.

Section 746.2 is amended by revising paragraph (a)(1)(x) to read as follows:
- § 746.2 Cuba.
  - (a) * * *
  - (1) * * *
  - (x) Aircraft, vessels and spacecraft (AVS) for certain aircraft on temporary sojourn; equipment and spare parts for permanent use on a vessel or aircraft, and ship and plane stores; vessels on temporary sojourn; or cargo transiting Cuba on aircraft or vessels on temporary sojourn (see § 740.15(a), (b), (d), and (e) of the EAR).

Federal Register Notice: https://www.gpo.gov/fdsys/pkg/FR-2016-10-17/pdf/2016-25034.pdf

For additional information, please review the rule, the Department of Commerce and Department of the Treasury’s joint fact sheet, and BIS’s updated Frequently Asked Questions, For any specific questions regarding exports or reexports to Cuba, please contact the Foreign Policy Division at (202) 482-4252.

Posted in BIS, Cuba, EAR, OFAC

OFAC Amends Cuban Assets Control Regulations

2016/11/15

Effective October 17, 2016 OFAC has made the following changes to the Cuban Assets Control Regulations.

Health: Joint medical research

OFAC is amending section 515.547 to authorize persons subject to U.S. jurisdiction to engage in joint medical research projects with Cuban nationals. This general license expands the scope of joint research projects that are authorized to include both non-commercial and commercial medical research. Cuban-origin pharmaceuticals.
OFAC is also amending section 515.547 to add new authorizations related to Cuban- origin pharmaceuticals. Specifically, section 515.547 now authorizes transactions incident to obtaining approval from the U.S. Food and Drug Administration (FDA) of Cuban-origin pharmaceuticals. The general license includes discovery and development, pre-clinical research, clinical research, regulatory review, regulatory approval and licensing, regulatory post-market activities, and the importation into the United States of Cuban-origin pharmaceuticals.
Section 515.547 also now authorizes the importation into the United States, and the marketing, sale, or other distribution in the United States, of FDA-approved Cuban-origin pharmaceuticals.
In addition, revised section 515.547 authorizes persons subject to U.S. jurisdiction who are engaging in such authorized activities to open, maintain, and close bank accounts at Cuban financial institutions as long as such accounts are used solely for the authorized activities.
The statement of licensing policy previously contained in section 515.547 for the importation of Cuban-origin commodities for bona-fide research purposes in sample quantities remains in effect for items that would not be authorized by the new general license in section 515.547(b).

Trade and Commerce: Transactions incident to exports and reexports to Cuba

Section 515.533(a) of the Regulations authorizes transactions ordinarily incident to certain exportations of items from the United States, as well as certain reexportations of items from a third country, to Cuba, provided that the exportations or reexportations are authorized by the Department of Commerce.
OFAC is removing references to ‘‘100% U.S.- origin items’’ in this section for clarity and to minimize the circumstances under which persons authorized by Commerce to export or reexport items to Cuba are required to obtain a specific license from OFAC.
Consistent with Section 1706 of the Cuban Democracy Act of 1992 (22 U.S.C. 6005) (CDA), this general license does not authorize any transaction between a U.S.-owned or -controlled firm in a third country and Cuba for the exportation to Cuba of commodities produced in a country other than the United States or Cuba. Such transactions must be specifically licensed pursuant to section 515.559 in addition to any required authorization from the Department of Commerce. There are also restrictions imposed by the CDA on the types of transactions that may be licensed pursuant to that section.
OFAC is also making a technical correction to section 515.533(a) to remove references to ‘‘agricultural items’’ so that only ‘‘agricultural commodities,’’ as defined in 15 CFR part 772, are subject to the limitations on payment and financing terms required by the Trade Sanctions Reform and Export Enhancement Act of 2000, 22 U.S.C. 7207(b)(1). OFAC is making a conforming edit with respect to section 515.584(f) and also expanding that authorization to apply to any banking institution.
Finally, OFAC is adding a note to section 515.533(a) to clarify that this paragraph authorizes the importation into the United States of items from a third country for exportation to Cuba pursuant to a license or other authorization by the Department of Commerce.
OFAC is making additional technical and conforming changes to remove certain obsolete language and consolidate all of the conditions applicable to this general license in a single paragraph. Importation of certain items previously exported or reexported to Cuba and servicing and repair of such items.
OFAC is further amending section 515.533 to add a new general license authorizing the importation into the United States or a third country of items previously exported or reexported to Cuba pursuant to section 515.533 or 515.559. This authorization will allow recipients of authorized exports or reexports to Cuba to return the items to the United States or a third country, including for service and repair. Irrespective of involvement in the importation of these items, persons subject to U.S. jurisdiction are authorized to service and repair such items. The exportation or reexportation of serviced, repaired, or replacement items to Cuba, however, must be separately authorized pursuant to section 515.533(a) or 515.559, in addition to any Department of Commerce authorization that may be required.
Certain vessel transactions:
- Section 515.207(a) prohibits foreign vessels that call on Cuban ports for trade purposes from entering U.S. ports for the purpose of loading or unloading freight for 180 days from the date they depart Cuba, absent OFAC authorization.
- OFAC is amending section 515.550 to add an additional exception to the prohibition in section 515.207(a) for foreign vessels that have carried from a third country to Cuba only items that, were they subject to the Export Administration Regulations (15 CFR parts 730 through 774) (EAR), would be designated as EAR99 or would be controlled on the Commerce Control List only for anti- terrorism reasons.
Contingent contracts.
- OFAC is adding a new general license in section 515.534 authorizing persons subject to U.S. jurisdiction to enter into certain contingent contracts for transactions prohibited by the Regulations and to engage in transactions ordinarily incident to negotiating and entering into such contracts. The performance of such contracts—making deposits, receiving payments, providing certain services or goods, etc.—must be made contingent on OFAC authorizing the underlying transactions or authorization no longer being required. Furthermore, if the transaction implicates another Federal agency’s licensing requirements, then the contract must make obtaining the necessary license(s) from such agency or the removal of that licensing requirement an additional precondition of performance.
- OFAC is making a conforming change to section 515.533 to remove a provision in that section authorizing certain contingent contracts that are now authorized by this new general license.

Civil Aviation Safety: Civil aviation safety-related services.

OFAC is amending section 515.572 to add a new general license authorizing persons subject to U.S. jurisdiction to provide Cuba and Cuban nationals, wherever located, with services aimed at ensuring safety in civil aviation and the safe operation of commercial aircraft.

Travel and Related Transactions: OFAC is making several changes to rules related to the importation of Cuban-origin merchandise as accompanied baggage and certain travel- related authorizations.

Importation of Cuban Merchandise
- Section 515.560 previously authorized persons subject to U.S. jurisdiction engaging in authorized travel to Cuba to acquire merchandise in Cuba and import it into the United States as accompanied baggage, provided that the merchandise was for personal use only and had a value of $400 or less (with no more than $100 of such merchandise consisting of alcohol or tobacco products).
- OFAC is now removing these monetary value limits, which means that the normal limits on duty and tax exemptions for merchandise imported as accompanied baggage and for personal use will apply. OFAC will continue to require that such merchandise be imported as accompanied baggage and for personal use. Certain transactions in third countries.
- Previously, section 515.585 authorized persons who are subject to U.S. jurisdiction but located in countries other than the United States or Cuba to, among other things, purchase or acquire merchandise subject to the prohibitions in section 515.204 provided that the merchandise was for personal consumption while in a third country.
- OFAC is amending section 515.585 to remove the limitation that the merchandise be consumed while abroad, to authorize the importation of such merchandise into the United States as accompanied baggage provided that the merchandise is for personal use only, and to clarify that this authorization is applicable to persons subject to U.S. jurisdiction who are present in a third country, such as when traveling in or through the third country. Foreign passengers’ baggage.
- Previously, section 515.569 authorized foreign passengers to import Cuban- origin goods, excluding Cuban-origin alcohol and tobacco products, as accompanied baggage, provided that the goods were not in commercial quantities and not imported for resale.
OFAC is now removing the exclusion for alcohol and tobacco products while retaining the conditions that the goods not be in commercial quantities and not be imported for resale.

Professional research and professional meetings in Cuba: Section 515.564 includes a general license authorizing persons subject to U.S. jurisdiction to travel to Cuba for purposes of attending or organizing professional meetings or conferences in Cuba.
- OFAC is removing the restriction in section 515.564(a)(2)(i) that the purpose of such meeting or conference not be for the promotion of tourism in Cuba, and making additional conforming edits.
- OFAC is also taking this opportunity to clarify section 515.564 by removing paragraphs (a)(1)(ii) and (a)(2)(iii), which included language inconsistent with adjacent paragraphs. Remittances for third-country national travel.
- OFAC is amending section 515.570 to authorize persons subject to the jurisdiction of the United States to make remittances to third- country nationals for travel by third- country nationals to, from, and within Cuba, provided that such travel would be authorized by a general license if the traveler were a person subject to U.S. jurisdiction.
- OFAC is also making a clarifying change in section 515.420 to make clear that the interpretation in that section relates only to persons subject to U.S. jurisdiction.
Recordkeeping requirements for providers of travel and carrier services: In the case of customers traveling pursuant to a specific license, in order to ease the burden on persons subject to U.S. jurisdiction that provide authorized travel or carrier services pursuant to section 515.572.
- OFAC is amending section 515.572(b)(1) to make clear that such service providers may collect and retain either a copy of the traveler’s specific license or the traveler’s specific license number.

Humanitarian-Related Transactions Additional grants, scholarships, and awards

Sections 515.565 and 515.575 previously authorized the provision of grants, scholarships, and awards in which Cuba or Cuban nationals have an interest (including as recipients) with respect to educational and humanitarian activities, respectively.
- OFAC is now expanding that authorization to authorize the provision of grants, scholarships, and awards in two additional categories of activities: scientific research and religious activities. OFAC is consolidating these authorizations in new section 515.590 and making conforming edits to sections 515.565 and 515.575.
Services related to developing Cuban infrastructure. OFAC is adding section 515.591 to authorize persons subject to the jurisdiction of the United States to provide Cuba or Cuban nationals with services related to developing, repairing, maintaining, and enhancing Cuban infrastructure, consistent with the export or reexport licensing policy of the Department of Commerce. ‘‘Infrastructure’’ in this case means systems and assets used to provide the Cuban people with goods and services produced by the public transportation, water management, waste management, non-nuclear electricity generation, and electricity distribution sectors, as well as hospitals, public housing, and primary and secondary schools.

Other Amendments

Definition of prohibited officials of the Government of Cuba and prohibited members of the Cuban Communist Party.
- OFAC is amending sections 515.337 and 515.338 to narrow the definitions in these sections.
Additional technical and conforming edits.
- OFAC is also making several technical and conforming edits, including adjusting a cross-reference in the note to section 515.421(a)(4) to reflect that the payment and financing terms for agricultural commodities are now located in section 515.533(a)(4);
  - Removing sections 515.531 and 515.803 as obsolete; adding the word ‘‘repair’’ to the general licenses for certain travel- related transactions in sections 515.533 and 515.559 to clarify that travel for such purposes has been within the scope of the existing authorizations;
  - Removing paragraphs (a) and (b) of section 515.536, as all activities described in such paragraphs are authorized by the general license in section 515.562 relating to official business of the U.S. government;
  - Correcting the cross-reference in section 515.560(c)(6)(ii) to the definition of depository institution to be section 515.333; adding the words ‘‘paragraphs (a)(1) through (a)(4)’’ in the first sentence of section 515.572(b)(1) to clarify that records pertaining to passengers do not need to be maintained for transactions authorized pursuant to paragraph (a)(5) of section 515.572;
  - Removing a duplicative ‘‘subject’’ from Note 1 to section 515.578(a); and adding the word ‘‘authorized’’ to complete the sentence in section 515.584(c).

Federal Register Notice: https://www.gpo.gov/fdsys/pkg/FR-2016-10-17/pdf/2016-25032.pdf

Posted in Cuba, Embargoes, OFAC

Tips on How to Resolve AES Fatal Errors

2016/11/15

(Source: census@subscriptions.census.gov, 24 Oct 2016)

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: 572

Narrative: DDTC Registrant Expired
Reason: The DDTC Registration Number reported is not valid in the AES at the time of export.
Resolution: When the License Code/License Exemption Code indicates a Department of State – Directorate of Defense Trade Controls (DDTC) license (SAG, SCA, S00, S05, S61, S73, S85 or S94), the DDTC Registration Number must be reported. The DDTC Registration Number must be valid in the AES and cannot be expired at the time of export. Verify the DDTC Registration Number and the Estimated Date of Export, correct the shipment and resubmit. For further assistance, contact the licensing agency. The Department of State – Directorate of Defense Trade Controls / DDTC Help Desk can be reached on 202-663-2838.

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 predeparture and as soon as possible for shipments filed postdeparture, but not later than five calendar days after departure.

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

Telephone: (800) 549-0595, select option 1 for AES.
Email: askaes@census.gov
Online: www.census.gov/trade
Blog: blogs.census.gov/globalreach

Posted in AES, FTS/Census

Annotating an Export Shipment: Filing Citations, Exemption and Exclusion Legends

2016/11/15

(Source: Global Reach Blog)

The U.S. Census Bureau often receives questions on how to annotate commercial documents for export shipments to minimize potential delays at the port of export. In a previous blog on Filing Citations and Exemption Legends, we provided an overview of filing citations and exemption legends. In this blog, I would like to expand upon the information previously provided. We will discuss the use of exclusion legends and give a snap shot of the different types of citations and legends that must be clearly stated on the commercial loading documents.

Exclusion legends are used for shipments that fall outside the scope of the Foreign Trade Regulations (FTR). The types of shipments that are excluded from filing requirements are identified in Section 30.2(d) of the FTR. It is important to remember that whether you are required to file the Electronic Export Information (EEI) or not, the correct annotation must be displayed on the commercial loading document or in a prominent location on the shipment package. Below is a snapshot describing the citations and legends that must be provided prior to exportation.

Citations / Legends	Description	Annotation
Proof of Filing Citation	Parties to the transaction file the EEI and receive their Internal Transaction Number (ITN) before the exportation of the shipment.	Automated Export System (AES) ITN. Example: AES X20160523777777
Postdeparture Citation	Postdeparture approved U.S. Principal Party in Interest (USPPI) have the privilege of filing EEI within five days after exportation rather than obtaining the ITN in advance.	USPPI Filed: AESPOST followed by the USPPI ID and followed by the DATE OF EXPORT. Example: AESPOST 123456789 05/23/2016 Agent Filed: AESPOST followed by the USPPI ID – FILER ID and followed by the DATE OF EXPORT. Example: AESPOST 123456789 – 987654321 05/23/2016
AES Downtime Filing Citation	When the AES experiences a major failure, the AES Downtime Filing Citation is used in place of a proof of filing citation. The downtime filing citation is not to be used when the filer’s system is down, experiencing delays or for shipments subject to the International Traffic in Arms Regulations.	AESDOWN followed by the FILER ID and followed by DATE OF EXPORT. Example: AESDOWN 123456789 05/23/2016
Exemption Legends	These transactions are within the scope of the FTR, but certain details make them exempt from filing EEI in the AES. The exemptions are located in 30.36 – 30.40. Below are two of the most commonly used exemptions: Ø 30.36 – Exemption for shipments destined to Canada. Ø 30.37(a) – Exemption for shipments that are valued $2,500 or less per Schedule B.	NO EEI followed by the corresponding FTR Exemption. Example: NO EEI 30.37(a)
Exclusion Legends	These transactions are outside the scope of the FTR and shall be excluded from filing EEI in the AES. Exclusions: Ø 30.2(d)(1) – Good transiting the U.S. under U.S. Customs and Border Protection bond from one foreign country to another.	NO EEI followed by the corresponding FTR Exclusion. Example: NO EEI 30.2(d)(1)
	Ø 30.2(d)(2) – Except Puerto Rico and the U.S. Virgin Islands, goods shipped from the U.S. territories and goods shipped between the U.S. and these territories do not require EEI filing. Ø 30.2(d)(3) – Electronic transmissions and intangible transfers. Ø 30.2(d)(4) – Goods shipped to Guantanamo Bay Naval Base from the U.S., Puerto Rico, or the U.S. Virgin Islands and from Guantanamo Bay Naval Base to the U.S., Puerto Rico, or the U.S. Virgin Islands. Ø 30.2(d)(5) – Goods licensed by a federal agency where the country of ultimate destination is the U.S. or goods destined to international waters where the entity assuming control of the goods is a U.S. entity.

Posted in Export License, FTS/Census

Lebanon Company Fined $450,000 for Reexporting Items to Syria

2016/11/15

By: Danielle McClellan

Tecnoline SAL (Tecnoline )of Sin El Fil, Beirut, Lebanon pled guilty to 7 charges of Causing, Aiding, or Abetting a Violation of the Regulations and will pay a civil penalty of $450,000. Tecnoline reexported US-origin mass spectrometers, gas chromatographs and consumables, liquid chromatograph-mass spectrometer systems, and liquid chromatograph modules (ECCN 3A999), controlled for anti-terrorism reasons, to Syria. There is a long standing US Embargo against Syria which makes a BIS license required for all exports/reexports subject to the EAR with the only exception being food and certain medicines).

The items were manufactured by Agilent Technologies (Agilent), a US company, and Technoline was an authorized distributor and reseller of Agilent’s products. In 2004, Technoline signed an agreement with Agilent that acknowledged their awareness of US export control laws and regulations and agreed to comply with them as a reseller and distributor of controlled products. Between August 2009 and October 2010, Technoline negotiated price discounts on the items with Agilent and eventually ordered the items for the Syrian Government ministries or entities. Technoline falsely identified the ultimate destination of the items as being Iraq or Lebanon (BIS license not required) and on one or more occasions they failed to disclose the ultimate destination of the items. Agilent shipped the items to TEchnoline in Beirut, Lebanon via Agilent’s German subsidiary. Once Technoline received the items they transferred them to Syria, there they were installed at Syrian Government ministries within a month or so. There were never any authorizations from BIS to export the items from the US to Syria, or to reexport them from Germany to Syria.

View Order: https://efoia.bis.doc.gov/index.php/documents/export-violations/export-violations-2015/1080-e2474/file

Posted in BIS, CCL, Denied & Restricted Parties, EAR, Embargoes, Export License, Lebanon, Syria, Violations & Fines