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UK launches new Trade Enforcement Body

London, England
From October, the Office of Trade Sanctions Implementation (OTSI) will be empowered to investigate breaches of trade sanctions and impose corresponding civil monetary penalties. We examine the powers OTSI will have, how it will interact with other UK sanctions authorities and what impact it may have.

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Sanctions Guidance Updated by G7
The G7 published joint guidance for industry on preventing evasion of the export controls and sanctions imposed on Russia. The guidance document contains items which pose a heightened risk of being diverted to Russia, updated red flag indicators of potential export control and/or sanctions evasion,  Best practices for industry to address these red flags, and screening tools and resources to assist with due diligence.
Connected Vehicle Rule Published
The Commerce Department proposed prohibiting the sale or import of connected vehicles integrating specific pieces of hardware and software, or those components sold separately, with a sufficient nexus to the People’s Republic of China (PRC) or Russia.     Published by the Bureau of Industry and Security, the rule focuses on hardware and software integrated into the Vehicle Connectivity System (VCS) and software integrated into the Automated Driving System (ADS). These are the critical systems that, through specific hardware and software, allow for external connectivity and autonomous driving capabilities in connected vehicles.
Voluntary Self Disclosure Changes Codified
The Commerce Department’s Bureau of Industry and Security (BIS) issued a final rule making changes to the Export Administration Regulations (EAR) related to BIS’s policies and practices regarding voluntary self-disclosures (VSDs) and to the BIS Penalty Guidelines. The rule revises the BIS Penalty Guidelines to change how the Office of Export Enforcement (OEE) calculates the base penalty in administrative cases and how OEE applies various factors to the base penalty to determine the final penalty.
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Welcome to your new Export Practitioner

The Export Practitioner introduces a web-based format for easier review, research and sharing.  

In addition to your monthly print or e-edition, we can furnish mid-month updates for our readers. 

We seek your input as we make this transition. Please send your suggestions to fruffing@traderegs.com or call 703.283.5220.   

– Frank Ruffing, Editor 

September, 2024 Export Practitioner

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BIS Issues GP 10 Guidance to Financial Institutions

The Commerce Department's Bureau of Industry and Security (BIS) published guidance for financial institutions containing best practice recommendations for complying with the Export Administration Regulations (EAR).  The guidance focuses on General Prohibition 10 (GP 10), which prohibits financial institutions (and other persons) from financing or otherwise servicing any item subject to the EAR with knowledge that a violation of EAR has occurred, is about to occur, or is intended to occur.

DDTC Settles with Precision Castparts

Precision Castparts Corp. settled allegations that it violated the International Traffic in Arms Regulations (ITAR) in connection with unauthorized exports of technical data to foreign-person employees from Bhutan, Burundi, El Salvador, Honduras, Mexico, and Peru pertaining to tools (specifically, wax pattern and core dies) and wax patterns consumed in the subsequent production of casting blades used in gas turbine engines

OFAC May 2024 Reporting Rule Final

OFAC is amending the Reporting, Procedures and Penalties Regulations (RPPR). the May 2024 Interim Final Rule requiring reports witin 10 business days of when blocked property is unblocked or transferred, This final rule adds three exceptions to the reporting requirement for any blocked property that is unblocked or transferred.

DOJ, Microsoft Target Russian Hackers

The Justice Department announced the unsealing of a warrant authorizing the seizure of 41 internet domains used by Russian intelligence agents and their proxies to commit computer fraud and abuse in the United States. As an example of public-private operational collaboration the Department acted concurrently with a Microsoft civil action to restrain 66 internet domains used by the same actors

FCPA Enforcement Up Some, Still Down

After a particularly slow second quarter, FCPA enforcement activity picked up between July and September of 2024, with the DOJ initiating one new FCPA-related enforcement action, unsealing two previously filed actions, and issuing one declination letter, according to a tally from Stanford University's FCPA Clearinghouse. "Enforcement activity through Q3 of this year remained well below even the last three years of lower than average enforcement" the report notes

Exim Minerals Initiative

The Board of Directors at the Export-Import Bank of the United States (EXIM) last week voted to approve a Non-Binding Resolution in Support of Critical Minerals and Rare Earths Financings to reaffirm its support for critical minerals transactions. The resolution amplifies EXIM’s current efforts to utilize its lending and underwriting tools to support critical minerals and rare earths projects. 

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Enforcement
The Department of Commerce’s Bureau of Industry and Security (BIS) published its second quarterly update of the boycott Requester List October 1st.  This list notifies companies, financial institutions, freight forwarders, individuals, and other U.S. persons of potential sources of certain boycott-related requests they may receive during the regular course of business. Of note, many recent reports come from customers outside the Arab world, including Japan, Brazil, Hong Kong, and the United Kingdom.   The greatest number of non-arab boycott requests originated in Bangladesh, Malaysia and Pakistan. 
The Commerce Department's Bureau of Industry and Security (BIS) imposed a civil penalty of $151,875 against Quantum Corporation, a data storage, management, and protection company  to resolve 45 alleged violations of the antiboycott provisions of the Export Administration Regulations (EAR).  Between July 2018 and December 2019, Quantum received 45 requests from its customer, a distributor located in the United Arab Emirates (UAE), to refrain from importing goods of Israeli origin into the UAE in fulfillment of purchase orders from that customer. Quantum failed to report to BIS the receipt of these requests.  
The firm is an authorized parts distributor for several prominent aerospace and defense manufacturers
The Commerce Department's Bureau of Industry and Security (BIS) announced an administrative settlement against a Texas aviation supply firm, for the submission of a backdated document to make it appear that a transaction complied with the Export Administration Regulations (EAR) and for exporting military parts without BIS authorization.  

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Sanctions
Aeroflot Boeing 737-8MC

Aircraft MRO Smuggler Appeal Denied

BIS Chief Alan Estevez dismissed an appeal of a Temporary Denial Order issued in June against Russian national Alexey Sumchenko for his activities smuggling aircraft parts through Hong Kong to Russian airline customers.  Sumchenko argued that the alleged misconduct outlined in the TDO occurred after he relinquished ownership of the entities, reasoning Judge Tommy Cantrell found unpersuasive.

Royal Australian Navy Collins Class Submarines joined in formation by United States Navy Los Angeles Class Submarine USS Santa Fe..

AUKUS Anniversary Statement

In a statement to mark the third anniversary of AUKUS, the leaders of Australia, the United Kingdom, and the United States, reaffirmed their commitment to this historic partnership and acknowledged progress to date.   

Treasury Targets DPRK-Russia Banking Ties

The Treasury Department has designated a network of five entities and one individual – based in Russia and in the Russia-occupied Georgian region of South Ossetia – that have enabled and supported ongoing efforts to establish illicit payment mechanisms between Russia and North Korea.

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Policy Briefs
Determinedly beating the drum for steelworker votes and economic populism, two of the leading Senate opponents of the purchase of US Steel by a Japanese rival drew attention to the executive compensation of the Pittsburgh steelmaker. Elizabeth Warren (D-Mass) sent a letter to US Steel CEO David Burritt outlining their concerns. with plans for the firm's current and former top executives to receive payments totaling over $156 million – not including $40.8 million in payments to non-employee board members.
Aerial view land clearing at oil palm estate at Kedah, Malaysia
Developing and developed members applauded the EU decision to postpone the implementation of its new Regulation on Deforestation-Free Products (EUDR) for twelve months.   This regulation, which was set to take effect on 30 December 2024, will require a variety of agricultural products sold in the EU market to be "deforestation-free," meaning they must not result from recent (post-31 December 2020) deforestation, forest degradation, or breaches of local environmental and social laws.
The Financial Crimes Enforcement Network (FinCEN) has updated some of its Beneficial Ownership Information Frequently Asked Questions and issued several additional ones. The topics covered are: …

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Supply Chain
GSweet produces 8,000 mt annually of aspartame.
For the first time,  steel and artificial sweetener companies have been added to the UFLPA Entity List.  Customs and Border Protection (CBP) will apply a rebuttable presumption that goods produced by Baowu Group Xinjiang Bayi Iron and Steel Co., Ltd. and Changzhou Guanghui Food Ingredients Co., Ltd.
On 25 September 2024, the EU and US held an in-depth technical discussion with transatlantic social partner stakeholders under the Trade and Labour Dialogue (TALD), focused on ways to eradicate forced labour from supply chains and ensure a successful, just and inclusive green transition.
Four Commissioners from the bipartisan and bicameral Congressional-Executive Commission on China (CECC) released a letter to the trade representatives of the U.S., Canada, and Mexico, urging robust implementation of existing forced labor import prohibitions in the United States-Mexico-Canada Agreement (USMCA) and asking for greater cooperation to prevent goods denied in one country being re-exported to another within the USMCA.

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Licensing
AUKUS - Australia, United Kingdom, United States security alliance pact.
House Republican national security leadership called for the White House to expand license-free defense trade among the U.S., U.K., and Australia to ensure the success of AUKUS Pillar Two and "unleash the combined potential of the three countries’ defense industrial bases to counter the Chinese Communist Party." The lawmakers contend the Excluded Technologies List (ETL) "jeopardizes the viability of Pillar Two."
The Department of Commerce has expanded the Validated End User (VEU) program with additional controls for data center items destined for China and India. Data Center VEU adopts much of the framework of the existing VEU program, with additional requirements. This expansion of eligibility is intended to update the VEU program to recognize the advancement and benefits of artificial intelligence.
In response to requests from the public, The Departments of State and Commerce extended the comment period for their rule changes proposed 29 July impacting ITAR definitions of "defense services," and EAR restrictions on end user and Commerce Control List-based controls. Comments are now due by 15 October.
Richard Marles MP, Deputy Prime Minister and Minister for Defence, Australia; United Kingdom Secretary of State for Defence, John Healey; and Secretary of Defense Lloyd Austin
AUKUS Defense ministers met in London Thursday to review the partnership and "reiterate their shared commitments for the decades to come," according to a readout of the conference.  
Beijing, China
The Chairs of the House China and Education Committees raised concerns that decades of federally funded research has benefited the defense and security establishments of the PRC.  

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