BIS Adds 15 Parties to Entity List; Justice Department Indicts Five Individuals for Export Control Violations

Today the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) today announced that it will add fifteen parties to the Entity List. The parties, which are located in China, Hong Kong, Iran and Singapore, were added to the Entity List for their alleged roles in a procurement network involving products subject to the jurisdiction of the Export Administration Regulations and International Traffic in Arms Regulations.

The following eight parties will be added to the Entity List since it was determined that they have engaged in actions that could enhance Iran's military capability and because their conduct and deceptive practices pose a risk of ongoing violations of the Export Administration Regulations: 

• Corezing International
• Hia Soo Gan Benson
• Hossein Ahmad Larijani
• Lim Kow Seng
• Lim Yong Nam
• NEL Electronics Pte. Ltd.
• Paya Electronic Complex
• Wong Yuh Lan.

According to BIS these parties participated in a network that engaged in schemes to divert U.S.-origin items to Iran and/or to China by using shifting/circuitous routes and false or omitted information on shipping documentation in an attempt to conceal their activities. These parties are also alleged to have obtained ITAR-controlled antennas designed for use in military radars and aircraft, and exported them to Singapore and Hong Kong. The individuals named above were indicted today by the Justice Department for their alleged roles in conspiring to export U.S.-origin components to Iran that were later found in IEDs in Iraq.

The following seven parties will be added to the Entity List based on evidence that they aided and/or facilitated the activities of the procurement network.

• Action Global, Amaze International and OEM Hub Co., Ltd., all Hong Kong entities, allegedly served as front companies and are otherwise related to the other entities named today.

• Ms. Luo Jie, director of Corezing International, Action Global and Amaze International, is being added on the basis of information indicating that she was involved in the procurement and attempted procurement of U.S. power amplifiers intended for end-users in China, as well as in the diversion of various U.S.-origin goods through Hong Kong to Iran.

• Parto Systems Tehran, an Iranian freight forwarder, is being added based on information indicating that it was involved in the diversion of U.S.-origin items to Iran and is closely associated with Hossein Ahmad Larijani.

• Surftech Electronics, a Singapore corporation established by Hia Soo Gan Benson, is co-located with Corezing International and allegedly sought to purchase certain U.S.-origin items for shipment to Iran.

• Mr. Zhou Zhenyong, director of Corezing International, is being added based on information that he was specifically involved in the procurement and attempted procurement of U.S.-origin items, including U.S.-origin munitions items destined for end-users in China and/or Iran.

While a BIS license is required to export, reexport or transfer any item subject to the EAR to any of the persons listed above, BIS has established a policy of a presumption of denial for all license applications.

The BIS Entity List, found in Supplement Number 4 to Part 744 of the Export Administration Regulations, includes the names of businesses, research institutions, government organizations and individuals that have been identified as being involved in activities that merit additional scrutiny and licensing requirements.

The entries on the Entity List specify the license requirements and license review policy that are applicable to shipments to each listed entity. In some cases, a license will be required to ship items classified as EAR99 to the customer, even when a license would not normally be required. In other cases, all items subject to the Export Administration Regulations will require a license. The export license review policy also varies from entity to entity. In some cases, there is a presumption of approval or denial and, in other cases, the license will be reviewed by BIS on a case-by-case basis. Significant penalties can be imposed against parties that engage in transactions with parties on the Entity List without the appropriate license.

Update: The final rule associated with this announcement was published in the Federal Register on October 31, 2011 and is effective on that date.

Read More

OFAC Issues General Licenses to Export Food Products to Iran and Northern Sudan

The Treasury Department's Office of Foreign Assets Control (OFAC) recently made changes to the Iran and Sudan sanctions regulations that will have a favorable impact on U.S. exporters of food and nutritional products.

Specifically, OFAC issued a final rule amending the Iranian and Sudanese Transactions Regulations by adding a general license authorizing the exportation or reexportation of “food” products to the Governments of Iran or Northern Sudan, individuals or entities in Iran or Northern Sudan, or persons in third countries purchasing specifically for resale to any of the foregoing parties in Iran and Northern Sudan, and the conduct of related transactions. No military or law enforcement purchasers or importers are authorized.

A general license is preexisting legal authority to conduct a transaction and does not require the submission of any license application to OFAC in order to utilize the authority. As a result, U.S. exporters no longer need to obtain a specific license from OFAC to sell food products to authorized customers in Iran or Northern Sudan.

The term “food” is broadly defined in OFAC's regulations as “items that are intended to be consumed by and provide nutrition to humans or animals in Iran, including vitamins and minerals, food additives and supplements, and bottled drinking water, and seeds that germinate into items that are intended to be consumed by and provide nutrition to humans or animals in Iran.” The term “food” does not include alcoholic beverages, cigarettes, gum, or fertilizer. In addition, there are several types of food products that are specifically excluded from eligibility for this general license.

It is important to note that OFAC only authorizes the following payment options for exports made under these general licenses:

1. Payment of cash in advance (i.e., wire transfer);
2. Sales on open account, provided that the account receivable may not be transferred by the person extending the credit; or
3. Financing by third-country financial institutions that are neither U.S. persons nor Government of Iran entities. Such financing may be confirmed or advised by U.S. financial institutions.

Payments by letter of credit (L/C) issued by a bank in Iran or Northern Sudan still requires a specific license to be issued by OFAC. Therefore, if the only way to obtain payment for the products is a L/C issued by an Iranian bank the exporter/beneficiary will still have to apply to OFAC for a specific license.

As with all licensed transactions involving Iran or Northern Sudan, banks included on OFAC’s Specially Designated Nationals List (SDN List) may not be involved in the payment transaction, even if cash in advance or one of the three payment mechanisms listed above is used.

While these new general license will be a useful tool for U.S exporters, exports to Iran and Northern Sudan present a number of logistical and compliance issues. As a result, exporters must closely coordinate these transactions with their freight forwarders, banks and export compliance counsel in order to prevent delays.

Read More

State Department Finally Publishes Notice Regarding Iran Sanctions Announced in May and Admits Sanctioning Wrong Entity

The State Department will finally publish in tomorrow’s Federal Register a formal notice regarding the sanctions imposed on seven non-U.S. companies announced on May 24, 2011 for engaging in activity that violated the Iran Sanctions Act of 1996 (ISA), as amended by the Comprehensive Iran Sanctions, Accountability and Divestment Act of 2010 (CISADA).

The sanctioned companies included in the May 24, 2011 announcement were: Associated Shipbroking, Petróleos de Venezuela S.A. (PDVSA); Petrochemical Commercial Company International (PCCI), Royal Oyster Group, Speedy Ship FZC, Tanker Pacific Management (Singapore) Pte. Ltd. and Ofer Brothers Group.

This Notice provides a list of the specific sanctions imposed on each of the named companies. In addition, the Notice specifies, in relation to each sanctioned entity, whether the penalties apply "with respect to [the named company] and not to any subsidiary, affiliate, or shareholder thereof unless separately identified", or alternatively specify that the penalties "also apply with respect to any person in which [the named company] has an interest of fifty percent or more." The two prior Federal Register notices announcing ISA sanctions did not contain this language. This new language is useful to clear up confusion among commercial counterparties, and especially among financial institutions, dealing with affiliates of designated persons.

An important aspect of the formal notice is that the State Department eliminated the sanctions on Israel’s Ofer Brothers Group and replaced them with Allvale Maritime Inc. (based in Liberia) and Société Anonyme Monégasque D’Administration Maritime Et Aérienne (SAMAMA) (based in Monaco), companies that are owned by the Ofer Brothers Group.

A State Department official today admitted that it sanctioned the wrong entity in its May 24th announcement, stating:

"In issuing this clarification, our intent was to sanction the specific entities in the Sammy Ofer shipping organization that were responsible for providing a tanker to Iran. The use of the name ‘Ofer Brothers Group,’ a commonly used trade name, caused confusion for some banks and companies that were trying to comply with U.S. sanctions. The complex nature of the conglomerate's business structure necessitated that we take the time to look closely at these companies in order to ensure that we were identifying the precise legal names of the entities directly responsible for the sanctionable transaction."

The sanctions imposed on PDVSA, Associated Shipbroking, PCCI, Royal Oyster Group, Speedy Ship FZC, and Tanker Pacific Management (Singapore) Pte. Ltd. remain unchanged from the original notice.

Depending on the sanctioned company, these sanctions include a prohibition on: U.S. financial institutions from making loans or providing credits totaling more than $10 million in any 12-month period, obtaining U.S. government contracts, from receiving financing from the Export-Import Bank of the U.S. and from being a part to U.S. export licenses. Crude oil exports from PDVSA to the U.S. are not affected by these sanctions.

To date, the Treasury Department's Office of Foreign Assets Control (OFAC) has not yet provided guidance to financial institutions on how to interpret and apply the prohibition on loans or credits over $10 million in any 12-month period, which has been imposed on five different sanctioned companies since October 2010.

In addition, the Commerce Department's Bureau of Industry and Security (BIS) has not made any public statement on how it intends to implement the export sanctions on PDVSA and other companies. Under ISA export sanctions, the U.S. Government may not issue any specific license and shall not grant any other specific permission or authority to export any goods or technology to the sanctioned companies.

In another interesting development, Tanker Pacific Management (Singapore) Pte. Ltd. (TPM) today issued a press release stating that the ISA sanctions were a result of PM’s role in managing the 2010 sale of the tanker Raffles Park to Coral Light Asset Corp (Panama), an company nominated by the buyers. The statement indicates that due diligence carried out by TPM at the time of the sale included checking OFAC’s SDN List and the buyers did not appear on the list and the company’s due diligence uncovered no evidence that the buyers had any links to Iran. TPM noted that it was later informed by the U.S. Government that the buyers acted as front companies for the Islamic Republic of Iran Shipping Lines (IRISL). The statement also indicates that had TPM been aware that “the buyers were acting on behalf of Iranian interests, this sale would never have gone ahead.”

To address this issue and improve the company’s internal compliance procedures, TPM announced that it has implemented the following enhanced due diligence measures:

• comprehensive risk assessment: we will continue our ongoing comprehensive risk assessment to identify and mitigate areas of potential risk;
• enhanced counterparty screening procedures: we have instituted new procedures including additional pre-transaction due diligence and independent third party screening to assess the profile of potential counterparties more effectively;
• compliance manager: we have recruited a dedicated compliance manager;
• mandatory training programs: we are putting in place robust training programs for all relevant personnel;
• regular compliance procedure reviews: we will conduct ongoing compliance reviews to update our procedures, reflecting changing business operations and evolving legal requirements.

These additional measures serve as a useful guide to other companies on the need to performing additional due diligence on prospective buyers and helping to ensure compliance with ISA/CISADA and other U.S. sanctions programs.

The last page of the Federal Register notice contains a complete list of companies that have been sanctioned under the Iran Sanctions Act. The complete list is as follows:

• Allvale Maritime Inc.
• Associated Shipbroking (a.k.a. SAM)
• Belarusneft (see 76 Fed. Reg. 18821, April 5, 2011);
• Naftiran Intertrade Company (see 75 Fed. Reg. 62916, Oct. 13, 2010).
• Petrochemical Commercial Company International (a.k.a. PCCI)
• Petróleos de Venezuela S.A.
• Royal Oyster Group
• Société Anonyme Monégasque D’Administration Maritime Et Aérienne (a.k.a. S.A.M.A.M.A., a.k.a. SAMAMA)
• Speedy Ship (a.k.a. SPD)
• Tanker Pacific Management (Singapore) Pte. Ltd.

 More information on the Iran Sanctions Act sanctions announced on  May 24, 2011 can be found here.

Read More

Flurry of New Iran-Related Sanctions Imposed by U.S. Government

There has been a flurry of sanctions activity under the Iran Sanctions Act, as amended by the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (CISADA).

Yesterday President Obama issued an Executive Order that authorizes OFAC to implement ISA and CISADA related sanctions on parties and individuals that have been determined by the Secretary of State to have violated ISA/CISADA.

Today OFAC announced several sets of ISA/CISADA sanctions on a number of companies. Because ISA and CISADA authorize a wide variety of sanctions to be imposed, the sanctions that are imposed under ISA/CISADA can vary from entity to entity.

ISA/CISADA sanctioned parties are now designated on OFAC's SDN List as [ISA].

As for the specific sanctions, OFAC has added the following three shipping companies to the SDN List for providing shipping services in violation of CISADA:

• ASSOCIATED SHIPBROKING (a.k.a. ASSOCIATED SHIPBROKING S.A.M.; a.k.a. "SAM"), Gildo Pastor Center - Block C 4.20, 7 rue du Gabian, Fontvieille MC 98000, Monaco [ISA]

• ROYAL OYSTER GROUP, ROG Corporate Office, Royal Oyster General Trading LLC, P.O. Box 34299, Dubai, United Arab Emirates [ISA]

• SPEEDY SHIP FZC (a.k.a. SEPAHAN OIL COMPANY; a.k.a. "SPD"), Room 206, 2nd Floor, Building W5B, Dubai Airport Free Zone, P.O. Box 54916, Dubai, United Arab Emirates [ISA]

OFAC also added PETROCHEMICAL COMMERCIAL COMPANY INTERNATIONAL (PCCI) to the SDN List for CISADA violations, but that company was already on the SDN List due to other Iran-related sanctions.

In the event that any U.S. accounts need to be blocked as a result of these designations, the procedures in the Iran Financial Sanctions Regulations (31 CFR Part 561) need to be followed.

In addition, for the first time OFAC is implementing targeted sanctions under CISADA on the following two companies located in Singapore and Israel:

• Ofer Brothers Group, Ramat Aviv Tower, 40 Einstein St., P.O.B #11, Tel Aviv, 69102 Israel; MATAM Haifa, 9, Andre Saharov St., P.O.B #5090, Haifa, 31905 Israel

• Tanker Pacific Ship Management (a.k.a Tanker Pacific), Headquarters (Singapore), Tanker Pacific Management (Singapore) Pte Ltd, 1 Temasek Avenue, #38-01,Millenia Tower, Singapore 039192

U.S. financial institutions are now prohibited from making loans or providing credits totaling more than $10,000,000 in any 12-month period to these two companies unless the activity is associated with the relief of human suffering and the loans or credits are provided for such activities. However, it is important to note that these companies are not being added to the SDN List and there is no need to block any property or funds in U.S. accounts.

Finally, today the U.S. imposed sanctions on the Venezuelan state-owned oil company PDVSA for shipping refined petroleum to Iran. However, the sanctions are limited in scope and prohibit PDVSA from competing for U.S. government procurement contracts, from getting financing from the Export-Import Bank of the U.S. and from obtaining U.S. export licenses. Crude oil exports by PDVSA to the U.S. are not affected.

This new “mix and match” sanctions approach under ISA/CISADA will make it difficult for banks and companies to monitor the type of activity that is permissible or not.

Read More

U.S. Imposes Sanctions Pursuant to Iran, North Korea and Syria Nonproliferation Act

Yesterday the U.S. imposed sanctions on a number of entities and indviduals under the Iran, North Korea and Syria Nonproliferation Act (INKSNA).

The sanctioned entities are:

• Belarusian entities – Belarusian Optical Mechanical Association and BelTechExport;
• Chinese entities and individuals – Mr. Karl Lee, Dalian Sunny Industries, Dalian Zhongbang Chemical Industries Company, and Xian Junyun Electronic
• Iranian entities and individuals – Milad Jafari, Defense Industries Organization, Islamic Republic of Iran Shipping Lines (IRISL), Islamic Revolutionary Guard Corps Qods Force, SAD Import-Export Company, and Shahid Bakeri Industries Group
• North Korean entity – Tangun Trading
• Syrian entities – Industrial Establishment of Defense and Scientific Studies and Research Center
• Venezuelan entity – Venezuela Military Industries Company

Sanctions were imposed on these entities as provided in the INKSNA because there was credible information indicating that they had transferred to or acquired from Iran, North Korea, or Syria equipment and technology listed on multilateral export control lists (Australia Group, Chemical Weapons Convention, Missile Technology Control Regime, Nuclear Suppliers Group, Wassenaar Arrangement) or otherwise having the potential to make a material contribution to WMD or cruise or ballistic missile systems.

The sanctions apply to the specific entities above and will be in effect for two years. The sanctions do not apply to these entities’ respective countries or governments.

The sanctions that will be imposed on the entities and individuals listed above consist of the following:

• No department or agency of the U.S. Government may procure, or enter into any contract for the procurement of, any goods, services or technology from these entities;
• No department or agency of the U.S. Government may provide any assistance to these entities and they shall not be eligible to participate in any assistance program of the U.S. Government;
• U.S. Government sales of any item on the U.S. munitions list (USML) to any of these entities are prohibited, and sales of any defense articles, defense services or design and construction services controlled under the Arms Export Control Act are terminated; and
• New licenses will be denied and any existing licenses suspended, for transfer to these entities of items controlled under the Export Administration Act of 1979 or Export Administration Regulations.

Read More

State Department Sanctions Belarussian Energy Company For Doing Business With Iran

Yesterday, the U.S. Department of State announced that the U.S. will impose sanctions on Belarusneft, a state-owned Belarusian energy company, under the Iran Sanctions Act (ISA) of 1996 as amended by the Comprehensive Iran Sanctions, Accountability, and Divestment Act (CISADA) of 2010, for its involvement in the Iranian petroleum sector. According to the State Department, Belarusneft entered into a $500 million contract with the NaftIran Intertrade Company in 2007 for the development of the Jofeir oilfield in Iran.

The sanctions that will be imposed on Belarusneft include:

1. Denial of U.S. Export-Import Bank assistance in approving, guaranteeing, insuring, extending credit, or participating in the extension of credit regarding the export of any goods or services to Belarusneft;

2. Denial of U.S. government licenses or other approvals required to export or reexport goods or services to Belarusneft;

3. Prohibition of loans or credits to Belarusneft by U.S. financial institution totaling more than $10 million in any twelve-month period, unless the loans or credits are provided to relieve human suffering; and

4. Prohibition on the U.S. Government procuring, or entering into any contract for the procurement of, any goods or services from Belarusneft.

Because Belarusneft is a subsidiary of Belneftekhim and was already to subject to OFAC sanctions, the sanctions imposed under the ISA and CISADA are not likely to impact most U.S. companies. However, as a State Department spokesman indicated, this announcement "sends a message to our partners in Europe as well that this is a company that we've decided to sanction. And I'm sure they have access or would seek access into European markets." 

Because several members of Congress have expressed concern over the Obama Administration's implementation of CISADA, the State Department is likely to announce further Iran-related sanctions in the coming months.

For example, in response to the State Department's announcement Representative Ileana Ros-Lehtinen (R-FL), Chair of the House Foreign Affairs Committee, said that that "the conspicuous absence of any sanctions on Russian and Chinese companies, despite their longstanding involvement in Iran, is deeply troubling." She also noted that in addition "to going after the low-hanging fruit like Belarusneft, the State Department must impose sanctions against energy giants that continue to do business with Iran.”

Read More

OFAC Adds Additional Entities Affiliated With Iran's Shipping Line and Aerospace Industry to SDN List

Last week the U.S. Department of the Treasury Office of Foreign Assets Control (OFAC) announced the addition to the List of Specially Designated Nationals (SDN List) 24 shipping companies affiliated with the Islamic Republic of Iran Shipping Lines (IRISL) and two entities that are subordinates of Iran’s Aerospace Industries Organization (AIO) because of their alleged role in proliferation activities.

The following entities were added to the SDN List pursuant to the authority of Executive Order 13382, which is aimed at freezing the assets of proliferators of weapons of mass destruction and their supporters:

• Four Hong Kong based shipping companies – Starry Shine International Limited, Ideal Success Investments Limited, Top Glacier Company Limited, and Top Prestige Trading Limited – for being owned and managed by Ahmad Sarkandi and Ghasem Nabipour, two individuals designated by Treasury in October 2010 for acting for or on behalf of IRISL.

• Sixteen shipping companies, each based at the same address in Hong Kong, for being owned or controlled by IRISL or affiliated entities. In late 2009, these sixteen companies became the owners of a series of vessels, each of which is already identified on OFAC's SDN List, that were previously owned by the four Hong Kong companies listed above.

• Four shipping companies in the Isle of Man that that share the same address with eight previously-designated shipping companies wholly-owned by IRISL, for being owned or controlled by IRISL or IRISL front companies.

• Shahid Ahmad Kazemi Industries Group, a subordinate to AIO that is responsible for the development and production of surface-to-air missiles. It is suspected of soliciting foreign technology for Iran’s missile programs and participating in North Korea's missile-related programs. North Korea has provided significant assistance to Iran in its development of ballistic missiles and missile technology.

• M. Babaie Industries, also linked to Iran’s WMD proliferation efforts and suspected of soliciting foreign technology for Iran’s missile programs, was designated for being owned or controlled by, or acting for or on behalf of AIO.

In September 2008 the U.S. added IRISL and its fleet of vessels to the SDN List because of its role in supplying Iran’s weapon programs. In an effort to evade these sanctions IRISL started renaming the vessels and changing their ownership. The Wisconsin Project on Nuclear Arms Control's Iran Watch program has issued a report describing IRISL's renaming efforts and containing a chart showing the old and new name and owner of IRISL's vessels.

Read More

CNBC Running Series Called "Forbidden Zone: Investing in Iran"

CNBC is running a series entitled "Forbidden Zone: Investing in Iran" that discusses business in Iran.

Yesterday's first report discussed the wide availability of American products available in Iran's Kish Island, despite U.S. sanctions.

Today's report discusses some U.S. companies that are still operating legally in Iran via non-U.S. subsidiaries or through specific licenses issued by OFAC. The report includes an interview with Stuart Levey, Undersecretary of Treasury for Terrorism and Financial Intelligence, who oversees the Treasury Department's sanctions efforts.

Read More

U.S. Export Controls/Sanctions Programs to be Held in Frankfurt, Germany on January 17-18, 2011

The AWA Foreign Trade Academy is holding two one-day programs on U.S. export controls and sanctions on January 17 and 18, in Frankfurt, Germany.

The first day of the program will focus on what European companies need to know about ITAR and U.S. defense trade controls.

The second day of the program will feature information on U.S. dual-use export/reexport controls and economic sanctions programs and their impact on European companies, including information on recent export controls and sanctions developments from BIS and OFAC.

Further information on these programs, including the agenda for each day, speaker bios and registration information, can be found below.
AWA ITAR-Export Controls Programs

Read More

Redesign of Treasury's Website Changes Links to SDN List and Other OFAC Sites

This weekend the Treasury Department unveiled a redesigned website. While that is not exactly news, the redesign process has changed the way that the website's files are structured, leading to some significant changes in the web address (URL) of commonly used websites, including the Office of Foreign Assets Control (OFAC) and the Specially Designated Nationals (SDN) List. As a result of these changes, it will be necessary for exporters, financial institutions and others that refer to the OFAC website to update their bookmarks and links to common OFAC resources.

Access to OFAC's main website and related information now appears in the "Resource Center" tab at the top of the page. After scrolling to "Resource Center" click "Financial Sanctions" on the drop down menu. This will take you the main OFAC website here:

Direct links to the SDN List and other OFAC resources can be accessed from this page.

Here is a list of the new URLs for common OFAC resources:


SDN List: http://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx

Information on OFAC's Sanctions Programs: http://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx

Civil Penalties and Enforcement Information: http://www.treasury.gov/resource-center/sanctions/CivPen/Pages/civpen-index2.aspx

As a result of these changes, it will be necessary for BIS to update the link to the SDN List that is included on the agency's "List to Check" page.

Note that the links to information on OFAC's Iran sanctions program are not correct and currently lead to information on sanctions imposed on the Democratic Republic of the Congo. Treasury's web development team should be updating the Iran-related links soon.

Update: OFAC has now corrected the links and other information on the Iran sanctions program page.

Read More

OFAC Issues Final Rule Prohibiting Importation into U.S. of Iranian Origin Food and Carpets

The Department of the Treasury's Office of Foreign Assets Control (OFAC) published a final rule in today's Federal Register amending the Iranian Transactions Regulations (ITR) to prohibit the importation into the U.S. of foodstuffs and carpets of Iranian origin starting tomorrow, September 29, 2010.

As we previously reported, this final rule is required to implement the import prohibitions contained in section 103 of the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 that was enacted by Congress on July 1, 2010.

Prior U.S. law authorized the importation into the U.S. of foodstuffs from Iran that are classified under chapters 2-23 of the Harmonized Tariff Schedule of the United States (HTS) (such as pistachios and non-beluga caviar). In addition, the importation of carpets and other textile floor coverings of Iranian origin that are classified under chapter 57 or heading 9706.00.0060 of the HTS were also authorized.

However, as a result of the change to the ITRs issued today any Iranian food or carpets must be entered by U.S. Customs and Border Protection by midnight tonight. OFAC has stated that the agency will not issue any specific licenses authorizing any imports after that date, even if the goods were in transit or were at the port.

Efforts to import Iranian origin foodstuffs and carpets on or after September 29, 2010 can lead to significant civil and criminal penalties. For example, civil penalties of up to $250,000 or twice the amount of the transaction that is the basis of the violation can be imposed administratively. Criminal penalties of up to $1,000,000 in fines and imprisonment for up to 20 years can be imposed for willful violations of the Iranian Transaction Regulations.

Read More

U.S. Representatives Send Letter Asking President to Enforce Iran Sanctions Act

Citing news reports outlining apparent violations of the recently enacted Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (CISADA), U.S. Reps. Mark Kirk (R-Ill.) and Ron Klein (D-Fla.) recently sent a letter to President Obama asking the Administration to immediately enforce the law.

The letter noted that "Although we are encouraged by recent reports of international companies voluntarily exiting the Iranian energy market, it appears that a number of firms -- such as Russia's LUKOIL -- continue to supply Tehran with refined petroleum products." The letter indicates that LUKOIL has a significant business presence in the U.S. and concludes by stating that no "company should be allowed to skirt the Iran Sanctions Act. Therefore, we ask you to enforce the law and hold companies like LUKOIL accountable without delay."

A copy of the Kirk/Klein letter to President Obama can be found here.

Representative Kirk is the Republican nominee for President Obama's former Senate seat in Illinois.

Read More

OFAC Issues Guidance on Implementation of Restrictions on Iranian Origin Food and Carpets

U.S. persons and companies that currently import food and carpets from Iran should be aware of the guidance reprinted below that was issued today by the Office of Foreign Assets Control (OFAC) concerning a change in U.S. law made by the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 ("CISADA").

OFAC's Iranian Transactions Regulations currently contain a general license authorizing the importation into the U.S. of foodstuffs from Iran that are classified under chapters 2-23 of the Harmonized Tariff Schedule of the United States (HTS) (such as pistachios and non-beluga caviar (which is prohibited by other aspects of law). In addition, the importation of carpets and other textile floor coverings of Iranian origin that are classified under chapter 57 or heading 9706.00.0060 of the HTS are also authorized.

However, due to the additional Iran sanctions recently passed by Congress, OFAC will soon issued a regulation amending the Iranian Transaction Regulations to eliminate the general license and such imports will be no longer permitted starting on September 29, 2010. OFAC has also indicated that any authorized Iranian products must be imported by September 28, 2010 and it will not issue any specific licenses authorizing any imports after that date. As a result, importers must move quickly to ensure that any pending orders are entered for consumption by their customs brokers by September 28, 2010.

Attempts to import Iranian origin foodstuffs and carpets after September 28th can lead to significant civil and criminal penalties. For example, civil penalties of up to $250,000 or twice the amount of the transaction that is the basis of the violation can be imposed administratively. Criminal penalties of up to $1,000,000 in fines and imprisonment for up to 20 years can be imposed for willful violations of the Iranian Transaction Regulations.

Guidance Regarding Import Prohibitions Imposed by the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010

On July 1, 2010, the President signed into law the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (the “Act”), which, among other things, prohibits the importation of Iranian-origin goods and services into the United States, effective 90 days after the Act’s date of enactment. No exception to this prohibition may be made for the commercial importation of Iranian-origin goods described in section 560.534(a) of the Iranian Transactions Regulations (31 C.F.R. Part 560). The Office of Foreign Assets Control cannot authorize by general or specific license the commercial importation of such Iranian-origin goods (which include certain foodstuffs and carpets) on or after September 29, 2010. Consequently, the general license in section 560.534 of the ITR will be eliminated by September 29, 2010, and any such goods for commercial importation into the United States must be entered for consumption before that date.

Read More

House Members Form Bipartisan Working Group on Iran Sanction Implementation

Congressman Howard L. Berman (D-CA), Chairman of the House Foreign Affairs Committee, and Congresswoman Ileana Ros-Lehtinen (R-FL), the Ranking Republican Member of the Committee, today announced that they have initiated a bipartisan Working Group on Iran Sanction Implementation.

The purpose of the working group is to help ensure that U.S. and international sanctions on Iran are fully implemented, effectively enforced and, ultimately, have the intended effect of bringing about Iran’s termination of all activities contributing to its pursuit of a nuclear weapons capability.

The bipartisan Working Group on Iran Sanctions Implementation will meet on a regular basis with Obama Administration officials, foreign ambassadors and outside experts to oversee and verify enforcement of Iran sanctions implementation.

The House Foreign Affairs Committee will hold a hearing this fall on Iran sanctions implementation. Last Thursday, July 29, 2010, the House Committee on Oversight and Government Reform held a similar hearing entitled, "Implementation of Iran Sanctions" The hearing examined the implementation of Iran sanctions, including efforts to discourage companies from doing business with Iran as long as Iran continues to work on developing nuclear weapons and supports terrorism.
 

Read More

Treasury Identifies and Designates 21 Entities Determined to be Owned or Controlled by the Government of Iran

The U.S. Department of the Treasury today added 21 entities to the Specially Designated Nationals List that were determined by the U.S. to be owned or controlled by the Government of Iran.

These 21 entities, which included including banks, insurance firms, mining concerns, investment firms and technology companies, are located in Japan, Germany, Italy, Belarus, Luxembourg and Iran.

According to the Treasury Department, "today's identifications will mitigate the risk that such entities pose to legitimate transactions." This is because OFAC's Iranian Transactions Regulations (31 CFR Part 560) prohibit transactions between U.S. persons and the Government of Iran.

The complete list of entities identified today as owned or controlled by the Government of Iran can be found here.

Read More

Today's News and Notes

The Government of Japan today enacted new sanctions on Iran. A summary of the new sanctions can be found here. 

Registration is now open for SIA's Fall ITAR Conference to be held in Washington, DC on November 15 and 16, 2010.

Danish and Japanese companies deny violating U.S. sanctions on Iran.

Reuters: Iran feels sanctions heat at UAE ports.

Texas resident arrested for attempting to export night vision sights to Russia. Further details on this unusual case can be found here and here.

Educational Testing Service (ETS) announced last week that resumed registrations in Iran for its TOEFL® and GRE® tests. The brief suspension was the indirect result of tighter U.N. Security Council restrictions on financial transactions involving Iran, which resulted in ETS's banking arrangements being discontinued. Students wishing to take the tests may register through Iran's National Organization of Educational Testing, or with credit/debit cards issued by banks that are not prohibited under U.N. or U.S. sanctions. ETS has permission from the Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury to conduct its testing business in Iran.

Bangkok Post: Thailand is in the process of implementing a dual-use export control regime. 

FCPA Professor: The FCPA's Long Tentacles (discusses impact of FCPA investigations on mergers and acquisitions).

The U,K.'s Financial Services Authority today fined members of the Royal Bank of Scotland Group £5.6m for failing to have adequate systems and controls in place to prevent breaches of UK financial sanctions.

Read More

Today's News and Notes

Miscellaneous Tariff Bill - The House of Representatives is expected to consider the Miscellaneous Tariff Bill (now known as the U.S. Manufacturing Enhancement Act) (HR 4380) today. The bill will be considered under the suspension of the rules provision, which means that the bill may not be amended and requires a two-thirds vote for passage. The National Association of Manufacturers has sent a Key Vote letter to House members urging passage of the bill.

AM Update: After 40 minutes of debate this morning, the final vote on HR 4380 was postponed due to request for recorded vote. Under the suspension rules, any request for the yeas and nays results in a postponement of the final vote.

PM Update: In a surprise move the House passed the Miscellaneous Tariff Bill (HR 4380) this afternoon by a vote of 378 to 43. AP story here. NAM statement on passage here.

Iran Sanctions - The Washington Post reports that Iran's ability to ship vital goods has been significantly curtailed due to the insurance and other sanctions contained in the recently enacted Comprehensive Iran Sanctions, Accountability, and Divestment Act (CISADA) of 2010 (H.R. 2194).

North Korea Sanctions - While no details have been released, Secretary Gates and Secretary Clinton announced today that the U.S. will impose additional sanctions on North Korea. The sanctions are likely aimed at disrupting North Korea's weapons and contraband trade and targeting the finances of the Pyongyang regime.

Update: The State Department announced that the additional sanctions will include:

• Further State and Treasury designations of North Korean entities and individuals supporting proliferation, subjecting them to an asset freeze; 
• New efforts with key governments to stop North Korean trading companies engaged in illicit activities from operating in those countries and prevent their banks from facilitating these companies’ illicit transactions; 
• Expanding cooperation to prevent the travel of individuals designated under the Security Council resolutions, as well as other key North Korea proliferators; 
• Greater emphasis on North Korea’s repeated abuse of its diplomatic privileges in order to engage in activities banned by the Security Council, and expanding cooperation with countries so that they will not choose to purchase banned items from North Korea or to sell North Korea proliferation-related goods.

Export Controls/Diversion Hearing - The House Foreign Affairs Committee's Subcommittee on Terrorism, Nonproliferation and Trade will hold a hearing tomorrow on "Transshipment and Diversion: Are U.S. Trading Partners Doing Enough to Prevent the Spread of Dangerous Technologies?"  The witnesses include Assistant Secretary for Export Administration Kevin Wolf and Vann H. Van Diepen, Acting Assistant Secretary at the State Department's Bureau of International Security and Nonproliferation.
  
Foreign Manufacturers Legal Accountability Act of 2010 - The House Committee on Energy and Commerce reported favorably an amended version of H.R. 4678 by a vote of 31 to 22. The bill requires foreign manufacturers of certain products imported into the U.S. to establish registered agents to accept service of process. While the amendments passed today addressed a number of industry concerns with the bill, the bill is likely to be opposed by a number of trade associations. The full text of the amended version of the bill can be found here.

Conflict Minerals Disclosure and Certification - Section 1502 of the the financial reform bill (H.R. 4173) signed into law by President Obama today included a provision aimed at trying to reduce the use of conflict minerals mined in the Democratic Republic of the Congo. The provision states that the SEC must issue regulations requiring publicly traded companies to disclose annually whether conflict minerals are necessary to the functionality or production of their product and to certify that the measures taken by the company to verify the source of those minerals is not the Democratic Republic of the Congo or adjoining countries. The provision defines "conflict minerals" as columbite-tantalite (coltan), cassiterite, gold, wolframite, or their derivatives. This provision will impact a wide range of publicly traded manufacturing companies, including those using Congolese tantulum to produce electronics products, and those using tin and gold.

Read More

New Charges Filed by U.S. Grand Jury Against Irish Trading Company and its Executives for Exporting Military Aircraft Parts to Iran

The Justice Department announced today that a federal grand jury in Washington, D.C., has charged Mac Aviation Group, a Sligo, Ireland-based trading company, and two of its officers in a 27-count superseding indictment with purchasing F-5 fighter aircraft parts, helicopter engines and other aircraft components from U.S. firms illegally exporting them to Iran via companies in Malaysia and the United Arab Emirates.

Among the alleged recipients of the aircraft parts was a company was designated by the U.S. for being owned or controlled by entities involved in Iran’s nuclear and ballistic missile program.

The defendants, Thomas and Sean McGuinn, were originally charged in July 2008 in a sealed 25-count indictment with two counts of conspiracy, 19 counts of violating the International Emergency Economic Powers Act (IEEPA) and Iranian Transactions Regulations, four counts of false statements and forfeiture allegations.

According to the original indictment, beginning in 2005 and continuing through 2008, the defendants solicited purchase orders from customers in Iran for U.S.-origin aircraft engines and parts and then sent requests for aircraft components to U.S. companies. These parts included helicopter engines, aircraft bolts and vanes, and canopy panels for the F-5 fighter aircraft. The defendants wired money to banks in the U.S. as payment for these parts and concealed from U.S. sellers the ultimate end-use and end-users of the purchased parts. The defendants caused these parts to be exported from the United States to Iran via third countries, including Malaysia.
The superseding indictment alleges that from 2005 and continuing until 2006, the defendants caused canopy panels designed for the F-5 fighter aircraft to be exported from the United States to Iran in violation of the Arms Export Control Act (AECA). The defendants allegedly stated that the end user for the F-5 panels was Nigeria. Instead, the panels were sold by the defendants to a company in Tehran, Iran. The purchase was allegedly arranged through the Iran Aircraft Manufacturing Industrial Company (HESA), which was added to OFAC's SDN List in September 2008 for providing support to the Iranian Revolutionary Guard Corps.

The defendants were previously charged with purchasing 17 helicopter engines from Rolls Royce Corporation in Indiana for $4.27 million dollars on behalf of an Iranian trading company, some of which were ultimately sent to HESA, and also causing U.S.-origin airplane vanes and bolts to be exported from the United States to Iran.

If convicted, the defendants face a maximum sentence of 10-20 years in prison for each of the IEEPA counts, 10 years in prison for the AECA charge, 5-20 years in prison for each of the conspiracy counts, and five years in prison for each of the false statement counts.

Read More

Today's News and Notes

• President Obama will deliver remarks tomorrow morning at the White House on export promotion and the President's Export Council. He is also expected to name Ford Motor Co.'s President and CEO to the President's Export Council.

•  Reuters: "Iran says planes get fuel; EU bans some for safety" (refutes earlier reports that U.S. sanctions were causing countries not to refuel Iranian commercial aircraft)

• An Iranian-Canadian has been convicted of violating Canadian laws for attempting to export goods to Iran that could be used in nuclear technology. Case marks first time that someone in Canada has been prosecuted for violating Canadian laws implementing U.N. sanctions. Canadian Government press release on this conviction can be found here.
  

• New York Times' lead Op/Ed today: Waiting for a Trade Policy from Obama Administration

• Reuters: China denounces new unilateral U.S. sanctions on Iran

• Heritage Foundation Report- "Unfinished Business: The U.S.-U.K. Defense Trade Cooperation Treaty"
  

Read More

President Obama Signs Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010

This evening President Obama signed into law H.R. 2194, the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010. The text of the President's remarks made at the signing ceremony are as follows:

Good evening everyone. As President, one of my highest national security priorities is to prevent the spread of nuclear weapons. That is why my Administration has aggressively pursued a comprehensive agenda on non-proliferation and nuclear security.

Leading by example, we agreed with Russia to reduce our own nuclear arsenals through the new START Treaty—and I’ve urged the Senate to move forward with ratification this year. And with allies and partners, we’ve strengthened the global non-proliferation regime, including the cornerstone of our efforts—the Nuclear Non-Proliferation Treaty.

Now, in the entire world, there is only one signatory to the NPT—only one—that has been unable to convince the International Atomic Energy Agency that its nuclear program is for peaceful purposes. That nation is Iran. For years, the Iranian government has violated its commitments, defied United Nations Security Council resolutions, and forged ahead with its nuclear program—all while supporting terrorist groups and suppressing the aspirations of the Iranian people.

Since taking office, I have made it clear that the United States was prepared to begin a new chapter of engagement with the Islamic Republic of Iran. We offered the Iranian government a clear choice. It could fulfill its international obligations and realize greater security, deeper economic and political integration with the world, and a better future for all Iranians. Or, it could continue to flout its responsibilities and face even more pressure and isolation.

To date, Iran has chosen the path of defiance. That is why we have steadily built a broader and deeper coalition of nations to pressure the Iranian government. Last month, we joined with our partners at the U.N. Security Council to pass the toughest and most comprehensive multilateral sanctions that the Iranian government has ever faced. And I want to thank our tireless Ambassador to the U.N.—Susan Rice.

As I said last month, we will ensure that these sanctions are vigorously enforced. At the same time, we will work with allies and friends to refine and enforce our own sanctions on Iran. And that is exactly what we have been doing. Here in the United States—and thanks to the efforts of Treasury Secretary Tim Geithner—we have imposed sanctions against more institutions and individuals involved with Iran’s nuclear and missile programs.

Other nations are taking action alongside us, such as Australia, which announced new sanctions, including those against a major Iranian bank and Iran’s shipping company. The European Union is moving ahead with additional strong measures against Iran’s financial, banking, insurance, transportation, and energy sectors, as well as Iran’s Revolutionary Guards. Other countries, such as Canada, have indicated they will also be taking action. In other words, we are ratcheting up the pressure on the Iranian government for its failure to meet its obligations.

Today, we’re taking another step—a step that demonstrates the broad and bipartisan support for holding Iran accountable. I am pleased to sign into law the toughest sanctions against Iran ever passed by the United States Congress—the Comprehensive Iran Sanctions, Accountability, and Divestment Act.

I want to thank all the Members of Congress who worked on behalf of this legislation, including Speaker Nancy Pelosi and Representatives Steny Hoyer and Eric Cantor. Although they weren’t able to join us, I want to acknowledge Senators Harry Reid, Jon Kyl and Richard Shelby. And I want to thank those who led the effort to forge a final bill that received overwhelming bipartisan support—Senator Chris Dodd and Representative Howard Berman.

Consistent with the Security Council mandate, this legislation strengthens existing sanctions, authorizes new ones and supports our multilateral diplomatic strategy to address Iran’s nuclear programs. It makes it harder for the Iranian government to purchase refined petroleum and the goods, services and materials to modernize Iran’s oil and natural gas sector. It makes it harder for the Revolutionary Guards and banks that support Iran’s nuclear programs and terrorism to engage in international finance. It says to companies seeking procurement contracts with the United States government—if you want to do business with us, you first have to certify that you’re not doing prohibited business with Iran.

In short, with these sanctions—along with others—we are striking at the heart of the Iranian government’s ability to fund and develop its nuclear programs. We are showing the Iranian government that its actions have consequences. And if it persists, the pressure will continue to mount, and its isolation will continue to deepen. There should be no doubt—the United States and the international community are determined to prevent Iran from acquiring nuclear weapons.

Finally, even as we increase pressure on the Iranian government, we are sending an unmistakable message that the United States stands with the Iranian people as they seek to exercise their universal rights. This legislation imposes sanctions on individuals who commit serious human rights abuses. And it exempts from our trade embargo technologies that allow the Iranian people to access information and communicate freely. In Iran and around the world, the United States of America will continue to stand with those who seek justice and progress and the human rights and dignity of all people.

So, again, this is not a day that we sought—but it is an outcome that was chosen by the Iranian government when it repeatedly failed to meet its responsibilities. The government of Iran still has a choice. The door to diplomacy is still open. Iran can prove that its intentions are peaceful. It can meet its obligations under the NPT and achieve the security and prosperity worthy of a great nation. It can have confidence in the Iranian people and allow their rights to flourish.

Indeed, Iranians are heirs to a remarkable history. They are renowned for their talents and contributions to humanity. Here in the United States, Iranian-Americans have thrived. And within Iran, there is great potential for the Iranian people to forge greater prosperity through deeper integration with the international community, including the United States. That is the future we seek – one where Iran’s leaders do not hold their own people back by failing to live up to Iran’s international obligations; one where Iran can reclaim its place in the community of nations, and find greater peace and prosperity.

That is the Iranian government’s choice. And it remains our hope that they choose this path, even as we are clear-eyed about the difficult challenges ahead. With that, I will sign this legislation into law.

Read More