The Daily Bugle Weekly Highlights: Week 12 (18 – 22 Mar 2019)

Every Monday we post the highlights out of last week’s FCC Export/Import Daily Update (“The Daily Bugle”). Send out every business day to approximately 6,500 readers of changes to defense and high-tech trade laws and regulations, The Daily Bugle is a free daily newsletter from Full Circle Compliance, edited by James E. Bartlett III, Alexander P. Bosch, Vincent J.A. Goossen, and Alex Witt.

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Last week’s highlights of The Daily Bugle included in this edition are:

  1. President Takes Additional Steps Concerning National Emergency with Respect to Transnational Criminal Organizations; The Daily Bugle; Tuesday, 19 Mar 2019, Item #1;
  2. State Publishes Final Rule on Civil Monetary Penalties Inflationary Adjustment; Amends ITAR Part 127; The Daily Bugle; Tuesday, 19 Mar 2019, Item #2;
  3. German BAFA Publishes Preliminary Information on Renewal and Amendment of Multiple General Authorizations; The Daily Bugle; Tuesday, 19 Mar 2019, Item #10;
  4. Canada GA Publishes Information Concerning the Strengthening of Canada’s Export Controls; The Daily Bugle; Wednesday, 20 Mar 2019, Item #7;
  5. EU Posts Regulation on Framework for the Screening of Foreign Direct Investment into the EU; The Daily Bugle; Friday, 21 Mar 2019, Item #6;
  6. Justice: “Australian National Sentenced to Prison Term For Exporting Electronics to Iran”; The Daily Bugle; Friday, 22 Mar 2019, Item #5;

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President Takes Additional Steps Concerning National Emergency with Respect to Transnational Criminal Organizations

(Source: Federal Register, 19 Mar 2019.)

84 FR 10255: Taking Additional Steps to Address the National Emergency with Respect to Significant Transnational Criminal Organizations

By the authority vested in me as President by the Constitution and the laws of the United States of America, including the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.), the National Emergencies Act (50 U.S.C. 1601 et seq.), and section 301 of title 3, United States Code;

I, DONALD J. TRUMP, President of the United States of America, in order to take additional steps to deal with the national emergency with respect to significant transnational criminal organizations declared in Executive Order 13581 of July 24, 2011 (Blocking Property of Transnational Criminal Organizations), in view of the evolution of these organizations as well as the increasing sophistication of their activities, which threaten international political and economic systems and pose a direct threat to the safety and welfare of the United States and its citizens, and given the ability of these organizations to derive revenue through widespread illegal conduct, including acts of violence and abuse that exhibit a wanton disregard for human life as well as many other crimes enriching and empowering these organizations, hereby order:

Section 1. Subsection (e) of section 3 of Executive Order 13581 is hereby amended to read as follows:

‘‘(e) the term ‘‘significant transnational criminal organization’’ means a group of persons that includes one or more foreign persons; that engages in or facilitates an ongoing pattern of serious criminal activity involving the jurisdictions of at least two foreign states, or one foreign state and the United States; and that threatens the national security, foreign policy, or economy of the United States.’’

Sec. 2. (a) Nothing in this order shall be construed to impair or otherwise affect:

  (i) the authority granted by law to an executive department or agency, or the head thereof; or

  (ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.

  (b) This order shall be implemented consistent with applicable law and subject to the availability of appropriations.

  (c) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.

    The White House,

    March 15, 2019.

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State Publishes Final Rule on Civil Monetary Penalties Inflationary Adjustment; Amends ITAR Part 127

(Source: Federal Register, 19 Mar 2019.) [Excerpts.]

84 FR 9957-9959: Department of State 2019 Civil Monetary Penalties Inflationary Adjustment

* AGENCY: Department of State.

* ACTION: Final rule.

* SUMMARY: This final rule is issued to adjust the civil monetary penalties (CMP) for regulatory provisions maintained and enforced by the Department of State. The revised CMP adjusts the amount of civil monetary penalties assessed by the Department of State based on the December 2018 guidance from the Office of Management and Budget. The new amounts will apply only to those penalties assessed on or after the effective date of this rule, regardless of the date on which the underlying facts or violations occurred.

* DATES: This final rule is effective on March 19, 2019.

* FOR FURTHER INFORMATION CONTACT: Alice Kottmyer, Attorney-Adviser, Office of Management, kottmyeram@state.gov. ATTN: Regulatory Change, CMP Adjustments, (202) 647–2318. 

* SUPPLEMENTARY INFORMATION: … On December 14, 2018, OMB notified agencies that the annual cost-of-living adjustment multiplier for 2019, based on the Consumer Price Index, is 1.02522. Additional information may be found in OMB Memorandum M–19–04. This final rule amends Department CMPs for fiscal year 2019.

Overview of the Areas Affected by This Rule

Within the Department of State (title 22, Code of Federal Regulations), this rule affects four areas:

  (1) Part 35, which implements the Program Fraud Civil Remedies Act of 1986 (PFCRA), codified at 31 U.S.C. 3801–3812;

  (2) Part 103, which implements the Chemical Weapons Convention Implementation Act of 1998 (CWC Act);

  (3) Part 127, which implements the penalty provisions of sections 38(e), 39A(c), and 40(k) of the Arms Export Control Act (AECA) (22 U.S.C. 2778(e), 2779a(c), 2780(k)); and

  (4) Part 138, which implements Section 319 of Public Law 101–121, codified at 31 U.S.C. 1352, and prohibits recipients of Federal contracts, grants, and loans from using appropriated funds for lobbying the Executive or Legislative Branches of the Federal government in connection with a specific contract.

Specific Changes to 22 CFR Made by This Rule

(I) Part 35

  The PFRCA, enacted in 1986, authorizes agencies, with approval from the Department of Justice, to pursue individuals or firms for false claims. Applying the 2019 multiplier (1.02522), the new maximum liabilities are as follows: $11,463, up to a maximum of $343,903.

(II) Part 103

  The CWC Act provided domestic implementation of the Convention on the Prohibition of the Development, Production, Stockpiling, and Use of Chemical Weapons and on Their Destruction. The penalty provisions of the CWC Act are codified at 22 U.S.C. 6761. Applying the 2019 multiplier (1.02522), the new maximum amounts are as follows: Prohibited acts related to inspections, $38,549; for Recordkeeping violations, $7,710.

(III) Part 127

  The Assistant Secretary of State for Political-Military Affairs is responsible for the imposition of CMPs under the International Traffic in Arms Regulations (ITAR), which is administered by the Directorate of Defense Trade Controls (DDTC).

  (1) AECA section 38(e): Applying the 2019 multiplier (1.02522), the new maximum penalty under 22 U.S.C. 2778 (22 CFR 127.10(a)(1)(i)) is $1,163,217.

  (2) AECA section 39A(c): Applying the multiplier, the new maximum penalty under 22 U.S.C. 2779a (22 CFR 127.10(a)(1)(ii)) is $845,764, or five times the amount of the prohibited payment, whichever is greater.

  (3) AECA section 40(k): Applying the multiplier, the new maximum penalty under 22 U.S.C. 2780 (22 CFR 127.10(a)(1)(iii)) is $1,006,699.

(IV) Part 138

  Section 319 of Public Law 101-121, codified at 31 U.S.C. 1352, provides penalties for recipients of Federal contracts, grants, and loans who use appropriated funds to lobby the Executive or Legislative Branches of the Federal government in connection with a specific contract, grant, or loan. Any person who violates that prohibition is subject to a civil penalty. The statute also requires each person who requests or receives a Federal contract, grant, cooperative agreement, loan, or a Federal commitment to insure or guarantee a loan, to disclose any lobbying; there is a penalty for failure to disclose.

  The maximum penalties for both improper expenditures and failure to disclose, is: For first offenders, $19,809; for others, not less than $20,134, and not more than $201,340.

Summary

Effective Date of Penalties

The revised CMP amounts will go into effect on the date this rule

is published. All violations for which CMPs are assessed on or after the effective date of this rule, regardless of whether the violation occurred before the effective date, will be assessed at the adjusted penalty level. …

  Dated: February 27, 2019.

Alicia Frechette, Executive Director, Office of the Legal Adviser and Bureau of Legislative Affairs, Department of State.

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German BAFA Publishes Preliminary Information on Renewal and Amendment of Multiple General Authorizations

(Source: BAFA, 19 Mar 2019.)

The German Federal Office for Economic Affairs and Export Control published preliminary information on the renewal and amendment of General Authorizations No. 12 to 14, 16 and 17 and the publication of General Authorization No. 15 concerning the export of dual-use items listed in the Annex I of the EC dual-use regulation regarding the possible exit of Great Britain from the European Union.

The update (in German) can be read here.

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Canada GA Publishes Information Concerning the Strengthening of Canada’s Export Controls

(Source: Canada GA, 20 Mar 2019.)

Global Affairs (GA) Canada has published a document that answers questions asked during the on-line and in-person consultationson strengthening Canada’s export controls. It is intended to provide further clarity on the new processes and obligations stemming from Canada’s accession to the Arms Trade Treaty (ATT).The questions are grouped according to themes identified during the public consultations.

  – General

  – Arms trade treaty assessment criteria and substantial risk test

  – Brokering controls

  – Exports to the U.S.

  – Firearms

  – Next steps following the consultations

  – The export permit process

  – Compliance

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EU Posts Regulation on Framework for the Screening of Foreign Direct Investment into the EU

(Source: Official Journal of the European Union, 21 Mar 2019.)

Regulations:

* Regulation (EU) 2019/452of the European Parliament and of the Council of 19 March 2019 establishing a framework for the screening of foreign direct investments into the Union

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Justice: “Australian National Sentenced to Prison Term For Exporting Electronics to Iran”

(Source: Justice, 21 Mar 2019.) [Excerpts.]

An Australian man was sentenced today to 24 months in prison on four counts of violations of the International Emergency Economic Powers Act, which criminalizes knowing transactions with Iranian entities without a license from the U.S. Department of Treasury.

David Russell Levick, 57, of Cherrybrook NSW, Australia, pled guilty to the charges on Feb. 1, 2019, in the U.S. District Court for the District of Columbia.  He was sentenced by the Honorable James E. Boasberg.  In addition to the prison term, Levick must pay a forfeiture amount of $199,227, which represents the total value of the goods involved in the illegal transactions. Following completion of his prison term, Levick will be subject to deportation proceedings. …

According to the plea documents, Levick was the general manager of ICM Components, Inc., located in Thornleigh Australia. He solicited purchase orders and business for the goods from a representative of a trading company in Iran.  This person in Iran, referenced in court documents as “Iranian A,” also operated and controlled companies in Malaysia that acted as intermediaries for the Iranian trading company.

Levick then placed orders with U.S. companies on behalf of “Iranian A” for the goods, which were aircraft parts and other items that “Iranian A” could not have directly purchased from the United States without the permission of the U.S. government.

The defendant admitted to procuring or attempting to procure the following items for transshipment to Iran, each of which required a license from the Treasury Department prior to any export to Iran:

– Precision Pressure Transducers.  These are sensor devices that have a wide variety of applications in the avionics industry, among others, and can be used for altitude measurements, laboratory testing, measuring instrumentations and recording barometric pressure.

– Emergency Floatation System Kits.  These kits contained a landing gear, float bags, composite cylinder and a complete electrical installation kit.  Such float kits were designed for use on Bell 206 helicopters to assist the helicopter when landing in either water or soft desert terrain.

– Shock Mounted Light Assemblies.  These items are packages of lights and mounting equipment designed for high vibration use and which can be used on helicopters and other fixed wing aircraft.

When necessary, Levick used a broker in Tarpon Springs, Florida, through whom orders could be placed for the parts to further conceal the fact that the parts were intended for transshipment to “Iranian A” in Iran. Levick intentionally concealed the ultimate end-use and end-users of the parts from manufacturers, distributors, shippers, and freight forwarders located in the United States and elsewhere. In addition, Levick and others structured their payments between each other for the parts to avoid trade restrictions imposed on Iranian financial institutions by other countries. Levick and ICM wired money to companies located in the United States as payment for the parts.

The activities took place in 2007 and 2008. Levick was indicted in February 2012.  At the request of the United States, Australia arrested him for the purposes of extradition, and Australia extradited him to the United States in December 2018. He has remained in custody here. …

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