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:
- Commerce/BIS Amends EAR, Restricts Export of Aircraft and Vessels to Cuba; The Daily Bugle; Wednesday 5 June 2019, Item #1;
- Treasury/OFAC Amends Cuban Assets Control Regulations; The Daily Bugle; Wednesday 5 June 2019, Item #2;
- Justice: “Two Indictments Unsealed Charging Iranian Citizen with Violating U.S. Export Laws and Sanctions against Iran”; The Daily Bugle; Wednesday, 5 June 2019, Item #6;
- EU Council Negotiates Mandate Dual-Use Goods; The Daily Bugle; Wednesday, 5 June 2019, Item #8;
- State Debars 23 Individuals for Violating or Conspiring to Violate the AECA; The Daily Bugle; Thursday, 6 June 2019, Item #2;
- Western Union Financial Services to Pay $401,697 to Settle OFAC Charges of Sanctions Regulations; The Daily Bugle; Friday, 7 June 2019, Item #7;
1. Commerce/BIS Amends EAR, Restricts Export of Aircraft and Vessels to Cuba
(Source: Federal Register, 5 June 2019.) [Excerpts.]
84 FR 25986-25989: Restricting the Temporary Sojourn of Aircraft and Vessels to Cuba
* AGENCY: Bureau of Industry and Security, Commerce.
* ACTION: Final Rule.
*SUMMARY:In this final rule, the Bureau of Industry and Security (BIS) further limits the types of aircraft that are Start Printed Page 25987authorized to fly to Cuba and the types of vessels that are authorized to sail to Cuba on temporary sojourn. Specifically, this rule amends License Exception Aircraft, Vessels and Spacecraft (AVS) in the Export Administration Regulations (EAR) to remove the authorization for the export or reexport to Cuba of most non-commercial aircraft and passenger and recreational vessels on temporary sojourn. Additionally, this rule amends the licensing policy for exports and reexports to Cuba of aircraft and vessels on temporary sojourn to establish a general policy of denial absent a foreign policy or national security interest as determined by the U.S. Government. Consequently, private and corporate aircraft, cruise ships, sailboats, fishing boats, and other similar aircraft and vessels generally will be prohibited from going to Cuba. BIS is making these amendments to support the Administration’s national security and foreign policy decision to restrict non-family travel to Cuba to prevent U.S. funds from enriching the Cuban regime, which continues to repress the Cuban people and provides ongoing support to the Maduro regime in Venezuela. These amendments are consistent with the National Security Presidential Memorandum on Strengthening the Policy of the United States Toward Cuba. signed by the President on June 16, 2017.
* DATES: This rule is effective June 5, 2019.
* FOR FURTHER INFORMATION CONTACT: Alan Christian, Foreign Policy Division, Office of Nonproliferation and Treaty Compliance, Bureau of Industry and Security, by email at Alan.Christian@bis.doc.gov, or by phone at (202) 482-4252.
* SUPPLEMENTARY INFORMATION: … On April 17, 2019, the White House announced that the Administration is holding the Cuban regime accountable for repressing the Cuban people and supporting the Maduro regime in Venezuela through multiple actions, including by restricting non-family travel to Cuba, or in other words, “veiled tourism.” Consequently, BIS is amending License Exception Aircraft, Vessels and Spacecraft (AVS) in § 740.15 of the EAR and the licensing policy for Cuba in § 746.2 to generally prohibit non-commercial aircraft from flying to Cuba and passenger and recreational vessels from sailing to Cuba.
Amendments To License Exception Aircraft, Vessels and Spacecraft (AVS)
Consistent with the embargo of Cuba, BIS authorization in the form of a license or license exception is required for the export or reexport to Cuba of all items subject to the EAR. § 746.2(a)(1) of the EAR identifies the license exceptions, or portions thereof, that are available for exports and reexports to Cuba, including paragraphs (a) and (d) of License Exception AVS in § 740.15 for, respectively, certain aircraft and vessels on temporary sojourn. Paragraph (a)(2) of License Exception AVS contains the terms and conditions that are specific to U.S. registered aircraft. This rule removes Cuba from eligibility for paragraph (a)(2)(ii), making general aviation (e.g., private and corporate aircraft) and certain other aircraft ineligible for License Exception AVS when destined for Cuba. The only civil aircraft of U.S. registry that remain eligible for License Exception AVS when destined for Cuba are commercial aircraft operating under Air Carrier Operating Certificates or certain other Federal Aviation Administration certificates or specifications identified in paragraph (a)(2)(i). Making non-commercial aircraft ineligible for License Exception AVS when destined for Cuba supports the President’s policy to restrict non-family travel to Cuba.
Additionally, this rule amends paragraph (a)(2)(i) of § 740.15 to make air ambulances operating under 14 CFR part 135 eligible for License Exception AVS. BIS routinely approved license applications for air ambulances to fly to Cuba on temporary sojourn before Cuba became eligible for paragraph (a)(2)(ii) in 2015. Given their use in evacuating individuals in medical distress with minimal advanced notice, air ambulances will remain eligible for the license exception when destined to Cuba.
Paragraph (d)(6) of License Exception AVS contains Cuba-specific terms and conditions for the temporary sojourn of vessels to Cuba. This rule amends paragraph (d)(6) to remove passenger and recreational vessels from eligibility for temporary sojourn to Cuba. Now only cargo vessels for hire for use in the transportation of separately authorized items are eligible for export or reexport to Cuba on temporary sojourn provided all of the other terms and conditions of License Exception AVS are met. This rule also simplifies and makes conforming changes to paragraph (d)(6) of License Exception AVS. Making passenger and recreational vessels ineligible for License Exception AVS when destined for Cuba also supports the President’s policy to restrict non-family travel to Cuba.
Amendment to Cuba Licensing Policy
When a license exception is not available, § 746.2(b) of the EAR explains that license applications for the export or reexport of items to Cuba are subject to a general policy of denial unless otherwise specified in that paragraph. This rule redesignates paragraph (b)(3)(ii) as (b)(4) and revises the text of the new paragraph (b)(4) to explain that applications for the export or reexport of most aircraft or vessels on temporary sojourn to Cuba are subject to a general policy of denial unless the export or reexport is consistent with the foreign policy or national security interests of Start Printed Page 25988the United States. Applications for the temporary sojourn of aircraft operated by certificated air carriers or cargo vessels for hire that are not eligible for License Exception AVS will be reviewed on a case-by-case basis, such as cargo vessels that may need to remain in Cuba beyond the 14-day limit in paragraph (d) of License Exception AVS due to port congestion. A note to paragraph (b)(4) explains that applications for private and corporate aircraft, cruise ships, sailboats, fishing vessels, and other similar aircraft and vessels will generally be denied. As a licensing policy of denial indicates, BIS will only issue licenses for the temporary sojourn to Cuba of non-commercial aircraft or non-cargo vessels if such action is consistent with the national security and foreign policy interests of the United States, such as the temporary sojourn of vessels for use in oil spill response. Given the Administration’s stated objectives of holding the Cuban regime accountable for its repression of the Cuban people, including by restricting non-family travel to Cuba, such licenses will be issued only in extraordinary circumstances. Thus, non-commercial aircraft and non-cargo vessels generally will be prohibited from going to Cuba.
List of Subjects
– Administrative practice and procedure
– Reporting and recordkeeping requirements
– Reporting and recordkeeping requirements
Dated: May 31, 2019.
Richard E. Ashooh, Assistant Secretary for Export Administration.
2. Treasury/OFAC Amends Cuban Assets Control Regulations
(Source: Federal Register, 5 June 2019.) [Excerpts.]
84 FR 25992-25993: Cuban Assets Control Regulations
* AGENCY:Office of Foreign Assets Control, Treasury.
* ACTION:Final rule.
* SUMMARY:The Department of the Treasury’s Office of Foreign Assets Control (OFAC) is amending the Cuban Assets Control Regulations to implement portions of the President’s foreign policy toward Cuba. This amendment removes an authorization for group people-to-people educational travel and provides a “grandfathering” provision to authorize certain group people-to-people educational travel that previously was authorized where the traveler has already completed at least one travel-related transaction (such as purchasing a flight or reserving accommodation) prior to June 5, 2019.
* DATES:Effective: June 5, 2019.
* FOR FURTHER INFORMATION CONTACT: OFAC: Assistant Director for Licensing, 202-622-2480, Assistant Director for Regulatory Affairs, 202-622-4855, Assistant Director for Sanctions Compliance & Evaluation, 202-622-2490; or the Department of the Treasury’s Office of the Chief Counsel (Foreign Assets Control), Office of the General Counsel, 202-622-2410.
*SUPPLEMENTARY INFORMATION:… Public Participation
Because the amendments of the Regulations involve a foreign affairs function, the provisions of Executive Order 12866 and the Administrative Procedure Act (5 U.S.C. 553) requiring notice of proposed rulemaking, opportunity for public participation, and delay in effective date, as well as the provisions of Executive Order 13771, are inapplicable. Because no notice of proposed rulemaking is required for this rule, the Regulatory Flexibility Act (5 U.S.C. 601-612) does not apply.
Paperwork Reduction Act
The collections of information related to the Regulations are contained in 31 CFR part 501 (the “Reporting, Procedures and Penalties Regulations”) and § 515.572 of this part. Pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3507), those collections of information are covered by the Office of Management and Budget under control numbers 1505-0164, 1505-0167, and 1505-0168. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid control number.
List of Subjects in 31 CFR Part 515
– Administrative practice and procedure
– Blocking of assets
– Financial transactions
– Reporting and recordkeeping requirements
– Travel restrictions
Dated: May 30, 2019.
Andrea Gacki, Director, Office of Foreign Assets Control.
3. Justice: “Two Indictments Unsealed Charging Iranian Citizen with Violating U.S. Export Laws and Sanctions against Iran”
(Source: Justice, 4 June 2019.)
Peyman Amiri Larijani, 33, a citizen of Iran and former resident of Istanbul, Turkey, was charged in the United States District Court for the District of Columbia in two separate indictments. The announcement was made by Assistant Attorney General for National Security John C. Demers, U.S. Attorney Jessie K. Liu for the District of Columbia and Assistant Secretary Nazak Nikakhtar of the U.S. Department of Commerce.
A 34-count indictment returned on April 22, 2015, charges Larijani and a Turkish based company, Kral Havacilik IC VE DIS Ticaret Sirketi (Kral Aviation), with conspiracy to acquire U.S. origin aircraft parts and goods to supply to entities and end-users in Iran, to conceal from United States companies and the U.S. government that the U.S.-origin goods were destined for Iranian aviation business end users, to make financial profit for defendants and other conspirators, and to evade the regulations, prohibitions, and licensing requirements of the International Emergency Economic Powers Act (IEEPA), the Iranian Transactions and Sanctions Regulations (ITSR), and the Export Administration Regulations (EAR).
“The Department is committed to vigorous enforcement of the sanctions placed on Iran for its oppressive and destabilizing behavior,” said Assistant Attorney General Demers. “The indictment charges the defendant with conspiring to equip an Iranian airline that has been designated for supporting the Islamic Revolutionary Guard Corp, a key instrument of the Iranian regime’s belligerent activity. Sanctions evasion weakens the power of sanctions to change Iran’s behavior and makes us all less safe.”
“Our export laws are in place to prevent the shipment of goods to hostile countries and to keep items out of the hands of people who intend to harm the United States,” said U.S. Attorney Jessie K. Liu. “We will continue to aggressively prosecute those who violate our export control laws to protect the national security of the United States.”
“The Trump Administration will apply maximum pressure on Iran to end its promotion of instability and terrorism worldwide,” said Assistant Secretary Nikakhtar. “Mahan Air represents a continuing significant threat against United States and its allies. We will use all of the tools at our disposal to bring to justice those who threaten our way of life and violate our laws.”
According to the indictment, beginning around December 2010 through July 2012, Larijani was the Operations Manager for Kral Aviation. Larijani and his co-conspirators purchased U.S.-origin aircraft parts and accessories from U.S. companies. Larijani and his co-conspirators wired money to banks in the United States as payment for these parts and concealed from U.S. sellers the ultimate end use and end users of the purchased parts. Larijani and his co-conspirators caused these parts to be exported from the United States to Istanbul, Turkey, before shipping to airlines in Iran including Mahan Air, Sahand Air, and Kish Air.
Mahan Air has been designated by the U.S. Department of the Treasury as a Specially Designated National (SDN) for providing financial, material and technological support to Iran’s Islamic Revolutionary Guard Corps-Qods Force. The Department of Commerce has placed Mahan on its Denied Parties List and Kral Aviation on the Entity List.
On March 15, 1995, the President, pursuant to IEEPA, issued Executive Order No. 12957, finding that “the actions and policies of the Government of Iran constitute an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States” and declaring “a national emergency to deal with the threat.” In subsequent Executive Orders, the President imposed economic sanctions, including a trade embargo, on Iran. The Executive Orders and the ITSR prohibit the exportation, re-exportation, sale, or supply, directly or indirectly, to Iran of any goods, technology, or services from the United States or by a United States person without prior authorization or license from the United States Department of the Treasury, the Office of Foreign Assets Control, located in Washington, D.C.
A four-count indictment returned on Oct. 6, 2016, charges Larijani along with Mahan Air, Kral Havacilik IC VE DIS Ticaret Sirketi (Kral Aviation), Toufan Amiri Larijani, Javad Rajabi, Mehdi Bahrami, and Ghodratollah Zarei with conspiracy to export U.S. goods to Iran, specifically U.S. origin commercial aircraft engines, and provide services to a Mahan Air, a SDN, and to defraud the United States; and the U.S. Department of the Treasury and the U.S. Department of Commerce; unlawful exports and attempted exports to embargoed country and provision of services to an SDN; willful violation of denial order; and conspiracy to commit money laundering for purchasing a U.S. origin aircraft engine to supply to Mahan Air in Iran without obtaining an export license.
According to the indictment, beginning around April 2012 through September 2012, Larijani and his co-conspirators attempted to acquire U.S. origin aircraft engines to supply to Mahan Air in Iran without obtaining a license or other authorization from the United States. Larijani and his co-conspirators caused the shipment of an aircraft engine from the United States with the express purpose of re-exporting the aircraft engine to Iran.
If convicted, Larijani faces a maximum of 20 years imprisonment.
The investigation was conducted by special agents from the U.S. Department of Commerce, Bureau of Industry and Security Office of Export Enforcement, Miami Field Office/Atlanta Resident Office and Washington Field Office.
The details contained in an indictment are mere allegations. All defendants are presumed innocent unless and until proven guilty in a court of law.
4. EU Council Negotiates Mandate Dual-Use Goods
(Source: Council of the European Union, 5 June 2019.) [Excerpts.]
The EU wants to modernize the current EU regime for the control of exports, transfer, brokering, technical assistance and transit of dual-use items. The objective is to further strengthen the non-proliferation of weapons of mass destruction and their means of delivery, regional peace, security and stability as well as respect for human rights and international humanitarian law.
EU ambassadors today agreed the Council’s negotiating position on a proposed recast of the regulation setting up a regime for the controls of exports, brokering, technical assistance, transit and transfer of dual-use items. On the basis of this mandate, the Council Presidency will start negotiations with the European Parliament.
The new rules will introduce a number of changes to the EU export control system of dual-use items to adapt it to the changing technological, economic and political circumstances. They will also simplify and improve the current rules and optimize the EU licensing architecture.
In particular, new provisions include:
– further harmonizing licensing processes, through the introduction of new general export authorizations (EU GEAs), which are authorizations for exports to certain countries of destination available to all exporters who respect the conditions;
– harmonization of the control of supplying the technical assistance related to sensitive items
– a new mention of cyber surveillance items highlighting that the competent authorities have the possibility to control such items using the current regulation as for all non-listed dual-use items that could be used for directing or committing serious violation of human rights. …
5. State Debars 23 Individuals for Violating or Conspiring to Violate the AECA
(Source: Federal Register, 6 June 2019.) [Excerpts.]
84 FR: 26500-26501; Bureau of Political-Military Affairs; Statutory Debarment Under the Arms Export Control Act and the International Traffic in Arms Regulations
* AGENCY: Department of State.
* SUMMARY: Notice is hereby given that the Department of State has imposed statutory debarment under the International Traffic in Arms Regulations (“ITAR”) on persons convicted of violating, or conspiracy to violate, section 38 of the Arms Export Control Act (AECA).
* DATES: Debarment imposed as of June 6, 2019.
* FOR FURTHER INFORMATION CONTACT: Jae E. Shin, Director, Office of Defense Trade Controls Compliance, Bureau of Political-Military Affairs, Department of State. (202) 632-2107.
* SUPPLEMENTARY INFORMATION: Section 38(g)(4) of the AECA, 22 U.S.C. 2778(g)(4), restricts the Department of State from issuing licenses for the export of defense articles or defense services where the applicant, or any party to the export, has been convicted of violating certain statutes, including section 38 of the AECA. The Department refers to this restriction as a limitation on “export privileges,” and implements it through section 127.11 of the ITAR. The statute and regulations permit the President to make certain exceptions to the restriction on export privileges on a case-by-case basis. Section 127.7(b) of the ITAR also provides for “statutory debarment” of any person who has been convicted of violating or conspiring to violate the AECA. Under this policy, persons subject to statutory debarment are prohibited from participating directly or indirectly in any activities that are regulated by the ITAR.
Statutory debarment is based solely upon conviction in a criminal proceeding, conducted by a United States court, and as such the administrative debarment procedures outlined in part 128 of the ITAR are not applicable.
It is the policy of the Department of State that statutory debarment as described in section 127.7 of the ITAR lasts for a three year period following the date of conviction. Reinstatement from the policy of statutory debarment is not automatic, and in all cases the debarred person must submit a request to the Department of State and be approved for reinstatement from statutory debarment before engaging in any activities subject to the ITAR.
Department of State policy permits debarred persons to apply to the Director, Office of Defense Trade Controls Compliance, for reinstatement from statutory debarment beginning one year after the date of the debarment. In response to a request for reinstatement from statutory debarment, the Department may determine to rescind the statutory debarment pursuant to section 127.7(b), or rescind the statutory debarment policy pursuant to section 127.7(b) and reinstate export privileges as described in section 127.11 of the ITAR. See 84 FR 7,411 for discussion on the Department’s policy regarding reinstatement of export privileges and rescission of statutory debarment. The reinstatement of export privileges can be made only after the statutory requirements of section 38(g)(4) of the AECA have been satisfied.
Certain exceptions, known as transaction exceptions, may be made to this debarment determination on a case-by-case basis. However, such an exception would be granted only after a full review of all circumstances, paying particular attention to the following factors: Whether an exception is warranted by overriding U.S. foreign policy or national security interests; whether an exception would further law enforcement concerns that are consistent with the foreign policy or national security interests of the United States; or whether other compelling circumstances exist that are consistent with the foreign policy or national security interests of the United States, and that do not conflict with law enforcement concerns. Even if exceptions are granted, the debarment continues until subsequent reinstatement from statutory debarment. …
Debarred persons are generally ineligible to participate in activity regulated under the ITAR (see e.g., sections 120.1(c) and (d), and 127.11(a)). Also, under section 127.1(d) of the ITAR, any person who has knowledge that another person is subject to debarment or is otherwise ineligible may not, without disclosure to and written approval from the Directorate of Defense Trade Controls, participate, directly or indirectly, in any ITAR-controlled transaction where such ineligible person may obtain benefit therefrom or have a direct or indirect interest therein.
This notice is provided for purposes of making the public aware that the persons listed above are prohibited from participating directly or indirectly in activities regulated by the ITAR, including any brokering activities and any export from or temporary import into the United States of defense articles, technical data, or defense services in all situations covered by the ITAR. Specific case information may be obtained from the Office of the Clerk for the U.S. District Courts mentioned above and by citing the court case number where provided.
Stanley L. Brown, Senior Bureau Official, Bureau of Political Military Affairs, U.S. Department of State.
6. Western Union Financial Services to Pay $401,697 to Settle OFAC Charges of Sanctions Regulations
(Source: Treasury/OFAC), 7 June 2019.)
The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) today announced a $401,697 settlement with Western Union Financial Services, Inc. (“Western Union”), of Denver, Colorado. Western Union has agreed to settle its potential civil liability for 4,977 apparent violations of the Global Terrorism Sanctions Regulations, 31 C.F.R. part 594 (GTSR). Between December 9, 2010, and March 13, 2015, Western Union processed 4,977 transactions totaling approximately $1.275 million, which were paid out to third-party, non-designated beneficiaries who chose to collect their remittances at a Western Union Sub-Agent in The Gambia, Kairaba Shopping Center (KSC), an entity that was designated by OFAC pursuant to the GTSR on December 9, 2010. OFAC determined that Western Union voluntarily self-disclosed the apparent violations and that the apparent violations constitute a non-egregious case.
For more information, please visit the following web notice.