1. Skip to navigation
  2. Skip to content
  3. Skip to sidebar

Jason Silverman to moderate free webinar on screening facts, fiction and essential ingredients in a dynamic global marketplace

On November 17, 2015, from 1 – 2:30 pm ET, our colleague Jason Silverman will moderate a panel discussing screening as a compliance tool. Screening is intended to prevent government contractors from doing business with debarred, denied, prohibited, proscribed, restricted and sanctioned entities. Adequate screening diligence means checking the appropriate lists for such entities and not transacting business with them. However, this is more complicated than many realize and carries substantial risk, including fines and penalties. Recent estimates count more than 400 lists globally.

This 90-minute webinar will focus on practical application and “how to,” and will provide answers to a variety of important and timely questions. It will conclude with 30 minutes for questions. Other panelists include Jill Williamson, Chief Compliance Officer of Liquidity Services, Jim Van Eenenaam, Deputy Director of International Trade Compliance and Empowered Official of General Atomics and Affiliated Companies, and Kay Ellis, Director of Export Compliance and Empowered Official of the University of Arizona. Register for this free and engaging webinar here.

Jason Silverman to moderate free webinar on screening facts, fiction and essential ingredients in a dynamic global marketplace

BIS Issues Guidance on Due Diligence to Prevent Unauthorized Transshipment to Russia

Since the Bureau of Industry and Security (“BIS”) – as well as the Office of Foreign Assets Control (“OFAC”) – began imposing restrictions on Russia in response to the situation in Crimea, U.S. exporters have wrestled with what those restrictions mean for their businesses and how to comply with them.  In March 2014, BIS announced that it was placing an indefinite hold on the processing of license applications to Russia.  Following this, BIS imposed additional restrictions on exports to certain industry sectors in Russia, as well as additional end use and end user restrictions.  For instance, BIS imposed restrictions on the export of certain items destined for Russian deep water, Arctic offshore, or shale energy exploration or production in August 2014.  In September 2014, BIS imposed restrictions on exporting specified items if they will be used by a military end user or for a military end use. Then in December 2014, BIS added certain microprocessors to the military end user and end use restrictions.

The restrictions on exports to Russia do not only affect U.S. businesses that have dealings with Russia.  They also increase the risk that other parties to an export transaction may seek to illegally divert goods to Russia.

BIS recently published guidance on its website to help exporters conduct due diligence to prevent such unauthorized diversions or transshipments to Russia.  Exporters with sophisticated compliance programs will likely notice that the guidance itself is familiar: it largely references existing BIS guidance on red flags and knowing one’s customer (see also EAR Part 732, Supp. 3).  For instance, BIS reiterates its admonition concerning the “red flag” that an exported item will not be used for its intended purpose or by its intended recipient.  It advises researching all parties to a transaction with a watchful eye for indications of planned diversion.  This includes researching freight forwarders and distributors to understand which countries and industries they service.  The new guidance also points readers to the consolidated export screening list as well as the list-based and end-user and end-use based controls that may apply to Russia.

The familiar substance of this “new” guidance does not so much suggest that BIS believed additional guidance was necessary.  Rather, it suggests that BIS believes exporters could be doing more to prevent unlawful diversion of items – explicitly including those items controlled for national security (NS) reasons – to Russia.  While it provides information that should aid exporters in compliance, it also suggests an increased likelihood of enforcement action against companies who neglect to conduct appropriate due diligence and whose exports wind up in Russia. Finally, it serves as a reminder that even (and, perhaps, particularly) exporters who believe they do not conduct business in Russia should carefully examine their end user and end use due diligence processes to ensure that their shipments arrive at the intended destination.

BIS Issues Guidance on Due Diligence to Prevent Unauthorized Transshipment to Russia

Cuba’s Doors Begin To Open To U.S. Government Contractors

On December 17, 2014, President Obama announced that the United States would establish diplomatic relations with Cuba and reduce the travel and trade restrictions that have been in place for more than five decades.  Today, the Department of the Treasury’s Office of Foreign Assets and Control (OFAC) and the Department of Commerce’s Bureau of Industry and Security (BIS) took the first steps toward making that a promise a reality.  OFAC and BIS each issued final rules to implement President Obama’s new Cuba policy.

BIS’s new rule amends the Export Administration Regulations (EAR) (15 C.F.R. Parts 730-774 ) to broaden an existing license exception regarding personal communications devices.  Additionally, the rule establishes a new license exception permitting a set of narrowly-described transactions designed to further civil society in Cuba.

OFAC’s new rule amends the Cuban Assets Control Regulations (CACR) (31 C.F.R. Part 515) to facilitate travel to Cuba for authorized purposes, the provision by travel agents and airlines of authorized travel services and the forwarding by certain entities of authorized remittances.  The rule also raises the limit on remittances to Cuba, allows U.S. financial institutions to open correspondent accounts at Cuban financial institutions and authorizes certain transactions with Cuban nationals outside of Cuba.  Additionally, the rule authorizes transactions that establish mechanisms to provide commercial telecommunications services linking third countries and Cuba in Cuba and allows persons subject to U.S. jurisdiction to provide additional services incident to internet-based communications and related to certain exports and re-exports of communications items.

Although these new rules are a significant step, there are several others that must be taken before U.S. government contractors can fully take advantage of the shift in U.S.-Cuba trade policy.  These steps include revisiting Cuba’s designation as a state sponsor of terrorism and publishing a list of independent Cuban entrepreneurs with whom the new OFAC rules permit trade.  U.S. government contractors interested in pursuing contracting opportunities in Cuba will  therefore need to carefully assess the amendments to the CACR and the EAR to determine the permissible scope of activities and transactions in Cuba and continue to monitor developments regarding the implementation of the President’s policy.

Cuba’s Doors Begin To Open To U.S. Government Contractors

Final Rule issued for USML Category XI (Military Electronics)

Export control reform took another step forward earlier this month, with the publication of the State and Commerce final rules relating to military electronics (USML Category XI).  As with previous reform initiatives, the changes make the USML list of controlled items a positive one rather than a catch-all and moves certain formerly ITAR-controlled items to the Commerce Control List.  Most of the changes will take effect December 30, 2014.  The State Department rule also makes certain changes to Category VIII (Aircraft) that will take effect in August.  These relate to wing folding systems.  Links to the new rules are below.

https://www.federalregister.gov/articles/2014/07/01/2014-14683/revisions-to-the-export-administration-regulations-ear-control-of-military-electronic-equipment-and

https://www.federalregister.gov/articles/2014/07/01/2014-14681/amendment-to-the-international-traffic-in-arms-regulations-united-states-munitions-list-category-xi

Final Rule issued for USML Category XI (Military Electronics)