ECJU ISSUES NOTICE TO EXPORTERS 2023/08: RUSSIA SANCTION – TRADE SANCTIONS CIRCUMVENTION
On 22nd May 2023 ECJU issued Notice to Exporters (NTE) 2023/08, providing guidance on the tactics often used by illicit procurement agents to obtain sanctioned and/or otherwise restricted items.
The full NTE may be viewed at: https://www.gov.uk/government/publications/notice-to-exporters-202308-russia-sanctions-trade-sanctions-circumvention/nte-202308-russia-sanctions-trade-sanctions-circumvention
Comment – This is a timely reminder of the risks associated with illicit procurement and the need for robust due diligence.
HMG PUBLISHES UPDATED GUIDANCE ON RUSSIAN SANCTIONS
On 17th May 2023, His Majesty’s Government published updated guidance on the UK’s sanctions against Russia.
This guidance assists people in implementing and complying with the Russia (Sanctions) (EU Exit) Regulations 2019. It covers the prohibitions and requirements imposed by the regulations. It also provides guidance on best practice for:
- complying with the prohibitions and requirements
- enforcing them
- circumstances where they do not apply
This guidance should be read alongside more detailed sanctions guidance published by departments including the Department for Business and Trade (DBT), Department for Transport (DfT), Home Office and HM Treasury, through the Office of Financial Sanctions Implementation (OFSI).
The full guidance may be found at:
ECJU ISSUES NOTICE TO EXPORTERS 2023/07 UPDATING RUSSIA SANCTIONS
On 21st April 2023 ECJU issued Notice to Exporters (NTE) 2023/07 updating sanctions against Russia.
Full details of the new measures, which augment the sanctions measures introduced in 2014, can be found in The Russia (Sanctions) (EU Exit) (Amendment) Regulations 2023.
New measures to prohibit the export, supply and delivery, and making available to, or for use in, Russia of a range of goods, as well as the provision of related ancillary services.
This includes a range of goods that Russia has been found using on the battlefield.
Schedules in the Regulations where newly scheduled items have been added are:
- 2A (critical-industry goods and critical-industry technology)
- 2E (quantum computing and advanced materials goods and technology)
- 3C (defence and security goods and defence and security technology)
- 3E (G7 dependency and further goods) and 3I (Russia’s vulnerable goods)
Appropriate licences can continue to be sought for prohibited activity.
The full NTE may be viewed at: https://www.gov.uk/government/publications/notice-to-exporters-202307-sanctions-against-russia-introduced-in-april-2023/nte-202307-sanctions-against-russia-introduced-in-april-2023
ECJU UPDATES END-USE CONTROL GUIDANCE
On 14th April 2023 ECJU updated its guidance on military end-use controls.
The updated guidance may be found at:
Comment – this is helpful against a background of increased border checks and military end-use control licence refusals, across multiple sectors, in relation to China.
A DIFFERENT BIT OF NEWS!
David’s fundraiser for Alex’s Wish – JustGiving
I have (foolishly!!) agreed to take part in the fundraising challenge for Alex’s Wish, to raise funds for a really good cause and a charity that has made great leaps in treating this condition, which is life limiting and affects children, mostly boys.
Alex’s Wish is a parent led charity joining the fight to end Duchenne for all children. Today, huge advances in science and medicine mean a cure for Duchenne is no longer a pipedream, with funding and awareness we can achieve our goal to cure Duchenne. More details can be found at: https://alexswish.co.uk/
Any and all contributions from my network would be greatly appreciated – via my Just Giving page linked below:
Thank You in Advance for any and all contributions.
ECJU ISSUES NOTICE TO EXPORTERS 2023/05: OGEL REVISIONS
On 1st March 2023 ECJU issued Notice to Exporters (NTE) 2023/05 concerning revisions to the following OGELs:
The following OGELs have been updated to take into account changes to the military list. See NTE 2022/26
Export After Exhibition or Demonstration Military Goods
Export After Repair/Replacement Under Warranty Military Goods
Exports Under the US-UK Defence Trade Cooperation Treaty
The following OGELs have been updated to take into account changes to the military list. Typographical errors have also been corrected.
Military Goods and Technology: India
Technology for Military Goods
The following OGEL has been updated to permit 2 additional export customer destinations.
Military Goods A400M Collaborative Programme
The full NTE may be viewed at: https://www.gov.uk/government/publications/notice-to-exporters-202305-6-open-general-export-licences-ogels-updated/nte-202305-6-open-general-export-licences-ogels-updated
UK EXPORTERS ISSUED COMPOUND SETTLEMENTS TOTALLING OVER £3.6 MILLION FOR UNLICENSED STRATEGIC EXPORTS
On 14th February 2023 ECJU issued Notice to Exporters (NTE) 2023/03, announcing that during November and December 2022, HM Revenue and Customs (HMRC) issued compound settlement offers to 4 UK exporters totalling over £3.6 million (ranging from £1000 to £1.84 million).
The full NTE may be found at: https://www.gov.uk/government/publications/notice-to-exporters-202303-compound-settlements-issued-for-unlicensed-exports/nte-202303-uk-exporters-issued-compound-settlements-totalling-over-36-milion-for-unlicensed-strategic-exports
Comment: This may be viewed as an indication that a previous compound in the millions was not an aberration and that significantly higher penalties may in the future be quite common.
US DEPARTMENT OF ENERGY ISSUES FINAL RULE ON CIVIL PENALTIES FOR VIOLATIONS OF 10 C.F.R 810
On January 12, 2023, the Department of Energy (“DOE”) issued the Final Rule establishing procedures for assessing civil penalties for violations for 10 CFR Part 810. The Final Rule provides for a maximum civil penalty, adjusted annually for inflation. The Final Rule is issued to comply with an amendment to the Atomic Energy Act of 1954 which the U.S. Congress enacted as part of the FY2019 National Defense Authorization Act. It is intended to bring Part 810 enforcement in line with enforcement for violation of export controls by other U.S. federal agencies.
Only violations that occur after the effective date of the Final Rule may be subject to civil penalties, with continuing violations also eligible for civil penalties. In assessing a civil penalty, the DOE will consider the following factors:
- The nature, circumstances, and gravity of the violation or violations;
- The violator’s ability to pay;
- The effect of the civil penalty on the person’s ability to do business;
- Any history of prior violations;
- The degree of culpability;
- Whether the violator self-disclosed the violation;
- The economic significance of the violation; and
- Such other factors as justice may require.
Prior to assessing a penalty, the DOE will provide written notice to the alleged violator; the alleged violator may provide a written response before a civil penalty is imposed. If the alleged violator disagrees with DOE’s determination regarding violation of Part 810, it may request a hearing with an administrative judge.
The effective date of the Final Rule is on or about February 13, 2023. The Rule and announcement are below.
Department of Energy issues final rule on Part 810 Civil Penalties | Department of Energy
Comment: Given the near ubiquity of 10 CFR 810 technology in civil nuclear supply chains, this is of particular significance for non-US companies in this industry. Civil penalties are a commonly used mechanism for penalising non-US parties in cases of breaches of US extraterritorial controls.
ECJU ISSUES NOTICE TO EXPORTERS 2022/34: OGEL REVOCATIONS, FIRST NOTIFIED IN NTE 2022/25
On 30th December 2022 ECJU issued Notice to Exporters (NTE) 2022/34.
This NTE confirmed that several mirror OGELs, created to address specific circumstances relating to registration for the original versions, have been revoked.
Registration for the corresponding original OGELs is NOT automatic and this NTE sets out clearly the action exporters need to take for each affected OGEL in order to ensure continued ability to make relevant exports.
Full details may be found at: https://www.gov.uk/government/publications/notice-to-exporters-202234-open-general-licences-revoked/nte-202234-open-general-licences-revoked
ECJU UPDATES COMPLIANCE CODE OF PRACTICE AND PROVIDES CHECKLIST AND CASE STUDIES
On 13th December 2022 ECJU published an update Compliance Code of Practice:
This is supplemented by a Checklist of Internal Compliance Procedures:
and by examples of compliance practices in different sizes and complexities of business:
ECJU ISSUES NOTICE TO EXPORTERS 2022/31: UK EXPORTERS ISSUED COMPOUND PENALTIES FOR UNLICENSED STRATEGIC EXPORTS
On 9th December 2022 ECJU issued Notice to Exporters (NTE) 2022/31.
The NTE stars that, “Between May 2022 and October 2022, HM Revenue & Customs (HMRC) issued compound settlement offers between £1,000 and £271,700.25 to 12 UK exporters totalling £510,670.13.” and goes on to provide a breakdown of the penalties.
The full NTE may be found at: https://www.gov.uk/government/publications/notice-to-exporters-202231-uk-exporters-issued-compound-settlements-for-unlicensed-strategic-exports/nte-202231-uk-exporters-issued-compound-settlements-for-unlicensed-strategic-exports
ECJU ISSUES NOTICE TO EXPORTERS 2022/29: REVISED LICENCE UNDERTAKINGS AND NOTICE OF EXPIRY OF PREVIOUS UNDERTAKING TEMPLATES
On 29th November 2022 ECJU issued Notice to Exporters (NTE) 2022/29.
Revised undertakings have been issued for SIELs (End-User and Stockist), OIELs and for the OGEL Military Goods Software and Technology.
A key point to note is:
You should start having users use the new undertakings immediately. Previous versions of the undertakings will only be valid if signed and dated on or before the 31 December 2022. These can then be used up to their date of expiry, which is 6 months for end user and stockist undertakings to support a licence application, and 12 months for OIEL and OGEL undertakings to comply with open licence conditions.
Exporters will be required to use undertakings in the new format if signed after the 31 December 2022.
The Full NTE may be found at: https://www.gov.uk/government/publications/notices-to-exporters-202229-revised-licence-undertakings-and-notice-of-expiry-of-previous-undertaking-templates/nte-202229-revised-licence-undertakings-and-notice-of-expiry-of-previous-undertaking-templates
ECJU ISSUES UPDATED NOTICE TO EXPORTERS 2022/03: CHANGES TO UK MILITARY LIST
On 21st November 2022 ECJU issued an amendment to Notice to Exporters 2022/03.
The main impacts of this are:
- Under article 32 of the Export Control Order 2008, the Secretary of State for International Trade has suspended all extant export licences for dual-use items to Russia. This will include licences with Russia as a final destination.
- In addition the approval of new export licences for dual-use items to Russia has been suspended with immediate effect.
- A number of dual-use OGELs which had Russia as a permitted destination have been amended to remove Russia.
The Full NTE may be found at: https://www.gov.uk/government/publications/notice-to-exporters-202203-licence-suspensions-and-ogels-revised/nte-202203-licence-suspensions-and-ogels-revised
COMMITTEES ON ARMS EXPORT CONTROL PUBLISHES 2022-23 REPORT
The House of Commons Committees on Arms Export Control (CAEC) has published a report, Developments in UK Strategic Export Controls: First Joint Report of Sessions 2022-23.
The report states that the Committees “have seen a continued reluctance from Government in engaging with Parliament, stakeholders, and the public on these changes. The new UK Strategic Export Licensing Criteria were implemented without consultation or warning and came into immediate effect; there was no consultation on the Export Control Joint Unit (ECJU) transformation programme; and disappointingly neither the Foreign Secretary nor the International Trade Secretary were available to provide oral evidence to this inquiry.”
The report also finds that the U.K. government’s Export Control Joint Unit “appears inadequately resourced,” which the report maintains has resulted in delays in processing licence applications that have resulted in firms losing orders and suffering https://www.gov.uk/government/publications/notice-to-exporters-202203-licence-suspensions-and-ogels-revised/nte-202203-licence-suspensions-and-ogels-revised damage.
The full report is at: https://committees.parliament.uk/publications/30529/documents/176077/default/
ECJU ISSUES NOTICE TO EXPORTERS 2022/26: CHANGES TO UK MILITARY LIST
On 19th October 2022 ECJU issued Notice to Exporters (NTE) 2022/26, reproduced below:
The Export Control Joint Unit (ECJU) has amended the Export Control Order 2008.
There are changes to Schedule 2 (military goods, software and technology).
The new Order
The Export Control (Amendment) (No. 2) Order 2022 (SI 2022 No. 1042), comes into force on 3 November 2022.
The Order implements changes to the list of defence-related products. These reflect changes to the Wassenaar Arrangement munitions list.
The Order also implements changes to the European Common Military List, in accordance with the United Kingdom’s commitments under the Protocol on Ireland/Northern Ireland in the EU Withdrawal Agreement (“the NI Protocol”). These changes reflect recent amendments to Directive 2009/43/EC of 6 May 2009 made by Commission Delegated Directive (EU) 2021/1047 of 5 March 2021. The 2009 Directive, as amended, applies to and in the United Kingdom in respect of Northern Ireland by virtue of NI Protocol.
The Order also fixes minor drafting errors.
Changes to Schedule 2 include amendments to definitions and to the control entries ML1, ML5, ML6, ML8, ML9, ML10, ML13, ML17, ML18 and ML21.
ECJU will update the consolidated list of strategic military and dual-use items that require export authorisation in due course.
ECJU ISSUES NOTICE TO EXPORTERS 2022/25: OGEL REGISTRATION REOPENED FOR SEVERAL “ORIGINAL” OGELs
On 30th September 2022 ECJU issued Notice to Exporters (NTE) 2022/25, reinstating registration for twenty-six OGELs, new registrations for which were suspended as a consequence of legal action relating to licensing.
Parallel versions of then existing licences were created, with certain countries removed.
Registrants for these parallel licences may now register for the original, broader licences and gain OGEL access to more destinations.
The parallel licences will be revoked on 30 December 2022.
The Full NTE may be found at: https://www.gov.uk/government/publications/notice-to-exporters-202225-open-general-licences-updated/nte-202225-open-general-licences-updated
ECJU ISSUES NOTICE TO EXPORTERS 2022/19: NEW OGELs TO INDIA
On 28th June 2022 ECJU issued Notice to Exporters (NTE) 2022/19, implementing two new OGELs, one military the other dual-use, for exports to India.
The full Notice may be accessed at: https://www.gov.uk/government/publications/notice-to-exporters-202219-new-open-general-export-licences-published/nte-202219-new-open-general-export-licences-published
ECJU ISSUES NOTICE TO EXPORTERS 2022/17: MILITARY END-USE CONTROLS UPDATE
On 19th May 2022 ECJU issued Notice to Exporters (NTE) 2022/17, referring to the implementation of changes announced in a Ministerial Statement of 8 December 2021 (see below and Notice to Exporters 2021/14).
The key points are:
Military end-users now include:
- military forces, para-military forces, police forces, security services or government intelligence organisations
- or an entity involved in the procurement, research, development, production or use of items on behalf of the entities above
Destinations covered by the control now include China (including Hong Kong & Macau).
The control is triggered (“invoked”) when informed by government. However, if an exporter in aware of such and end-use, there is a requirement to notify ECJU, who will then determine whether to invoke the control.
The control may be invoked only where the export would be capable of having a “relevant consequence”, which is defined in the relevant Schedule to the Export Control Order 2008 as:
- a threat to the UK’s national security
- having an adverse effect on peace, security or stability
- an act threatening international peace and security
- an act contravening the international law of armed conflict
- an act of internal repression
- an act that breaches human rights
- an act of carrying out (or of acts which facilitate) acts of terrorism or serious crime
The full NTE may be found at: https://www.gov.uk/government/publications/notice-to-exporters-202217-military-end-use-controls-update/nte-202217-military-end-use-controls-update
The relevant guidance may be found at: https://www.gov.uk/guidance/end-use-controls-applying-to-military-related-items
ECJU ISSUES NOTICE TO EXPORTERS 2022/12: UK EXPORTERS FINED FOR UNLICENSED STRATEGIC EXPORTS
On 4th April 2022 ECJU issued the below Notice to Exporters (NTE).
Of particular note is the single penalty of £2.7 million, relating to unlicensed exports of military goods. The highest such penalty was previously £575k, which was in 2009. This latest sum represents a significant step change in the penalty levels sought by HMRC as an alternative to prosecution in export control cases. It is also worth noting that the overall level of enforcement activity remains high.
The full NTE is below:
Between December 2021 and February 2022, HM Revenue & Customs (HMRC) issued compound settlement offers between £1,000 and circa £2.7 million to 8 UK exporters.
In December 2021, £22,308.96 was paid relating to the unlicensed exports of military goods controlled by The Export Control Order 2008.
In December 2021, £5,200.00 was paid relating to the unlicensed exports of military goods controlled by The Export Control Order 2008.
In January 2022, £60,000 was paid relating to the unlicensed exports of dual-use goods controlled by Council Regulation (EC) No 428/2009, as amended, without the appropriate licence.
In January 2022, £3,200 was paid for breaches of licence conditions in relation to the export of dual use goods controlled by Council Regulation (EC) No 428/2009, as amended.
In January 2022, £1,000 was paid relating to the unlicensed exports of military goods controlled by The Export Control Order 2008.
In February 2022, £4,340 was paid relating to the unlicensed exports of military goods controlled by The Export Control Order 2008.
In February 2022, £1,500 was paid for offences in relation to the export of goods controlled by The Export Control Order 2008.
In February 2022, circa £2.7 million was paid relating to the unlicensed exports of military goods controlled by The Export Control Order 2008.
All these settlements related to unlicensed exports of dual use goods, military goods and related activity controlled by The Export Control Order 2008.
HMRC has policy responsibility for enforcing export controls on strategic goods and sanctions and investigating breaches of those controls. Where appropriate, HMRC can use their powers to offer a compound penalty in lieu of a file being prepared and sent to the Crown Prosecution Service.
For further information about the content of this notice you can contact the HMRC News Desk at email@example.com.
FOREIGN, COMMONWEALTH & DEVELOPMENT OFFICE (FCDO) PUBLISHES GUIDANCE ON RUSSIAN SANCTIONS
On 1st March 2022, the FCDO published guidance on the UK’s sanctions against Russia.
As required by section 43 of the Sanctions and Anti-Money Laundering Act 2018 (‘the Sanctions Act’), the Secretary of State for Foreign, Commonwealth and Development Affairs has provided this guidance to assist in the implementation of, and compliance with, the Russia (Sanctions) (EU Exit) Regulations 2019 (the ‘Regulations’), as amended from time to time.
The following instruments have made amendments to this instrument. If a consolidated version is not yet available on legislation.gov.uk, these instruments should be read alongside the original instrument:
The full guidance may be accessed at: https://www.gov.uk/government/publications/russia-sanctions-guidance/russia-sanctions-guidance
ECJU ISSUES NOTICE TO EXPORTERS 2022/03 ON RUSSIAN LICENSE SUSPENSIONS AND OGEL REVISIONS
On 28th February 2022 ECJU issued the following NTE
Following the Prime Minister’s oral statement to Parliament on 24 February 2022 and the Written Statement made by the Minister for International Trade on 25 February 2022; and under article 32 of the Export Control Order 2008, the Secretary of State for International Trade has suspended all extant export licences for dual-use items to Russia. This will include licences with Russia as a final destination.
In addition the approval of new export licences for dual-use items to Russia has been suspended with immediate effect.
If you have licences in scope, Export Control Joint Unit (ECJU) will contact you to confirm the decision and advise about actions you will need to take.
Changes to open general export licences
Following the above statements, ECJU has removed Russia as a permitted destination from the following open general export licences:
This notice should be read alongside the:
For any guidance on exporting or doing business in Russia, contact the Export Support Service on 0300 303 8955.
For enquiries related to export controls, contact firstname.lastname@example.org or +44 (0) 20 7215 4594.
For enquiries related to Russia sanctions, contact Foreign Commonwealth and Development Office (FCDO) [email] [tel number]. For general information on sanctions, contact the FCDO’s Sanctions Unit on email@example.com.
For information on financial sanctions, contact the Office of Financial Sanctions Implementation (OFSI) at OFSI@hmtreasury.gov.uk or subscribe to OFSI’s e-alerts.
The Notice may be viewed at: https://www.gov.uk/government/publications/notice-to-exporters-202203-licence-suspensions-and-ogels-revised/nte-202203-licence-suspensions-and-ogels-revised
UK ECJU TO SUSPEND, REVIEW & POSSIBLY REVOKE ALL EXPORT LICENCES TO RUSSIA
As at 25 February 2022 the Export Control Joint Unit (ECJU) is contacting licence holders in the UK with the following message:
Following the Prime Minister’s oral statement in Parliament on 24 February 2022, the Written Ministerial Statement on 25 February 2022; and under article 33 of the Export Control Order 2008, all extant export licences for dual-use items to Russia are to be suspended with immediate effect. This will include licences with Russia as a final destination.
It is our intention to therefore suspend with immediate effect your licence [REDACTED]. In the coming days, ECJU will be reviewing all of these suspended extant licences and may revoke those captured under the new sanctions.
Please consider very carefully if you believe your licence does not contravene the new sanctions before contacting us. You will appreciate ECJU is exceptionally busy at the moment so please only contact us if you have strong grounds as to why your licence should not be revoked. I would like to thank you in advance for your patience and understanding.
The situation in Ukraine and Russia will continue to change over the coming days and weeks. This may involve further sanctions which could affect your business. You should continue to check the guidance pages listed below to ensure your business activities are compliant with the current sanctions against Russia. If in the meantime you wish to surrender your licence we can provide advice on how to do so via SPIRE.
If you are planning to export, you should check if your product is on the export ban list which can be found in the Russian Sanctions: Guidance document: https://lnkd.in/eyj2ufuH
You can stay up to date with the latest government notifications on export controls by signing up to the Export Control Joint Unit (ECJU) e-alert service.
Notice to Exporters e-alerts: https://lnkd.in/ef–ZzFE
You may also wish to consult the links below, which refer to 2019 and the latest 2022 financial sanctions relating to Russia.
UK Sanctions Relating to Russia: https://lnkd.in/eDWjwjdX
Russian Sanctions: Guidance: https://lnkd.in/eyj2ufuH
Financial Guidance, Russia: https://lnkd.in/eAHTZmJv
Companies doing business with countries subject to sanctions must accept the risks of doing so, just as they accept other political and market risks. We suggest you take legal advice if you suspect your business could be impacted.
UPDATED 1 March 2022 – Existing licence holders are now being contacted by ECJU and invited to surrender licences.
INDICTMENT AND GUILTY PLEA BY UK NATIONAL ENTERED IN US- IRANIAN EXPORT CASE
On 27 January 2022 the United States Department of Justice (DoJ) issued a press release regarding the above. The release reads (in part) as follows:
Defendants Attempted to Procure High-Powered Microwave System for Iran
A U.K. man pleaded guilty Tuesday in federal court in the District of Columbia to violations of the International Emergency Economic Powers Act (IEEPA) and Iranian Transactions and Sanctions Regulations. At the same time, an indictment was unsealed charging four individuals with the same offense, as well as related offenses.
According to his plea, Saber Fakih, 46, of the United Kingdom, conspired with Bader Fakih, 41, of Canada, Altaf Faquih, 70, of the United Arab Emirates, and Alireza Taghavi, 46, of Iran, to export and attempt to export an Industrial Microwave System (IMS) and counter-drone system from the United States to Iran, without first obtaining the requisite license from the Department of Treasury’s Office of Foreign Assets Control (OFAC). Saber Fakih pleaded guilty to count two of the indictment.
Saber Fakih faces up to 20 years of incarceration and/or a fine of $1 million for violating the IEEPA. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
The full press release may be accessed at: https://www.justice.gov/opa/pr/indictment-and-guilty-plea-entered-iranian-export-case
NOTICE TO EXPORTERS 2022/01: COMPOUND PENALTIES IN 2021
On 10 January 2022 ECJU issued Notice to Exporters 2022/015 regarding compound penalties issued in 2021 The Notice reads (in part) as follows:
Between March and November 2021, HM Revenue & Customs (HMRC) issued compound penalties between £1,000 and £54,000 to 10 UK exporters.
The 10 settlements were:
- in March 2021, £31,355.28 was paid for offences in relation to the export of dual-use goods without the appropriate licence.
- in March 2021, £8,000.00 was paid for offences in relation to the export of military rated goods without the appropriate licence.
- in May 2021, £16,062.50 was paid for offences in relation to the export of military rated goods without the appropriate licence.
- in July 2021, £54,000.00 was paid for offences in relation to the export of military rated goods without the appropriate licence.
- in July 2021, £25,000.00 was paid for offences in relation to the export of military rated goods without the appropriate licence.
- in July 2021, £13,274.56 was paid for offences in relation to the export of military rated goods without the appropriate licence.
- in August 2021, £1,000.00 was paid for a breach of licence conditions in relation to the export of military rated goods.
- in September 2021, £7,000.00 was paid for a breach of licence conditions in relation to the export of military rated goods.
- in November 2021, £9,000.00 was paid for offences in relation to the export of dual-use goods without the appropriate licence.
- in November 2021, £34,499.88 was paid for offences in relation to the export of dual-use goods without the appropriate licence.
These related to unlicensed exports of dual use goods, military goods and related activity controlled by The Export Control Order 2008.
NOTICE TO EXPORTERS 2021/15: UPDATES ON LICENSING TO TURKEY
On 13 December 2021 ECJU issued Notice to Exporters 2021/15 regarding licences to Turkey. The Notice reads as follows:
“Having considered the factual position and the information available, the government is now satisfied that decisions on all licence applications to Turkey can be taken following a careful assessment against the Strategic Export Licensing Criteria on a case-by-case basis.
All existing and new export and trade licence applications for Turkey will now be assessed on a case-by-case basis against the Strategic Export Licensing Criteria.
The Export Control Joint Unit (ECJU) is working with advisory government departments to clear through the backlog of existing applications as quickly as possible. We expect it will take around 8 weeks to clear the backlog of existing applications for Turkey.
Exporters will be informed of the decision on their applications as soon as possible.”
COMPANY OFFICER LIABILITY FOR SANCTIONS BREACHES
In a cautionary tale for directors a Danish fuel supply company, Bunker Holding, and a subsidiary have been convicted by a court in Odense, Denmark of breaching international sanctions by selling jet fuel for end-use by the Russian military in Syria.
Significantly, Dan Bunkering’s CEO, Keld Rosenbaek Demant, was also convicted of involvement in certain of the trades and given a suspended prison sentence.
Both the company and the CEO are understood to be considering appeals.
Court reports reveal the international enforcement cooperation behind the case, which was said to be based on information originally provided by US authorities.
NOTICE TO EXPORTERS 2021/14 – UPDATES TO THE EXPORT CONTROL REGIME
On 8 December 2021 ECJU issued Notice to Exporters 2021/14. The key aspects covered are:
Revised UK Strategic Export Licensing Criteria
The new UK Strategic Export Licensing Criteria are effective immediately and may be read in full at: https://questions-statements.parliament.uk/written-statements/detail/2021-12-08/hcws449
Revised Military End-Use Control
The military end-use control will be extended in scope to cover exports intended for use by the military, paramilitary, security forces or police forces of a destination subject to an arms embargo, only where the exporter has been informed by government. The change is expected to take effect in Spring 2022 under an amendment to the Export Control Order 2008.
Addition of China to Destinations Subject to Military End-Use Control
This change will address the anomaly whereby China was not rendered subject to the military end-use control when the EU imposed the 1989 embargo. This will not change the extent of the partial arms embargo on China, as applied by the UK, and is also expected to take effect in Spring 2022 under an amendment to the Export Control Order 2008.
DEPUTY ATTORNEY GENERAL LISA O. MONACO GIVES KEYNOTE ADDRESS AT ABA’S 36TH NATIONAL INSTITUTE ON WHITE COLLAR CRIME
On 28 October 2021 the United States Department of Justice (DoJ) published the above address, part of which reproduced below, is highly relevant to executives and companies outside the US but who may be affected by US export controls.
This information may help to inform Internal Compliance Programmes (ICPs) and corporate risk assessments more broadly.
In the relevant part, the address reads:
Since returning to the Justice Department this year, I’ve spent time considering the current enforcement landscape. That landscape has evolved in some noticeable ways from my last tour. Corporate crime has an increasing national security dimension — from the new role of sanctions and export control cases to cyber vulnerabilities that open companies up to foreign attacks. Second, data analytics plays a larger and larger role in corporate criminal investigations, whether that be in healthcare fraud or insider trading or market manipulation. Third, criminals are taking advantage of emerging technological and financial industries to develop new schemes that exploit the investing public.
At the same time, these developments are changes of degree and not of kind. We have long had corporate criminal cases with national security implications. We have been using data to assist investigations for well over a decade. And prosecutors have always had to grapple with evolutions in corporate fraud —whether that be the junk bond firms of the 1980s, the various fraud schemes created by the so-called “smartest guys in the room” at Enron, or the prolific mortgage fraud of the 2000s, or cryptocurrency schemes today.
But throughout, our mission must remain the same — enforce the criminal laws that govern corporations, executives, officers and others, in order to protect jobs, guard savings and maintain our collective faith in the economic engine that fuels this country. We will hold those that break the law accountable and promote respect for the laws designed to protect investors, consumers and employees.
Accountability starts with the individuals responsible for criminal conduct. Attorney General Garland has made clear it is unambiguously this department’s first priority in corporate criminal matters to prosecute the individuals who commit and profit from corporate malfeasance.
I recognize that cases against corporate executives are among some of the most difficult that the department brings, and that means the government may lose some of those cases. But I have and will continue to make clear to our prosecutors that, as long as we act consistent with the Principles of Federal Prosecution, the fear of losing should not deter them. As set forth in the Justice Manual, a prosecutor should commence a case if he or she believes that a putative defendant’s conduct constitutes a federal offense, and that the admissible evidence will probably be sufficient to obtain and sustain a conviction. So long as those principles are followed, we will urge prosecutors to be bold in holding accountable those who commit criminal conduct.
We are also going to find ways to surge resources to the department’s prosecutors. As one example, a new squad of FBI agents will be embedded in the Department’s Criminal Fraud Section. This team model has a proven track record and is one we’ve used in numerous high-profile cases. As I’ve seen personally, putting agents and prosecutors in the same foxhole can make all the difference, particularly in complex cases.
While the priority remains individual accountability, where appropriate, we will not hesitate to hold companies accountable.
The address in full may be found at: https://www.justice.gov/opa/speech/deputy-attorney-general-lisa-o-monaco-gives-keynote-address-abas-36th-national-institute
UPDATED GUIDANCE – EXPORT CONTROLS: MILITARY GOODS, SOFTWARE AND TECHNOLOGY
On 13 October 2021 the Export Control Joint Unit (ECJU) published useful guidance summarising requirements and restrictions for trade control and the export of controlled military goods, software and technology.
Of particular note is the updated address and contact details for voluntary disclosures, which should now be submitted by email to:
The address details are:
Enforcement of Strategic Exports, Sanctions & Intellectual Property Rights
Customs Debt, Enforcement & Law
Customs & Border Design
HMRC | 14 Westfield Avenue, Stratford, London, E20 1HZ
The guidance in full may be found at: https://www.gov.uk/guidance/export-controls-military-goods-software-and-technology?utm_medium=email&utm_campaign=govuk-notifications&utm_source=cb4ef2d5-3f53-436b-aa6f-876488278e31&utm_content=daily
NOTICE TO EXPORTERS 2021/13 – MANDATORY USE OF EORI NUMBERS IN LICENCE APPLICATION/REGISTRATION
On 27 September 2021 ECJU issued the following Notice to Exporters Listed as 2021/13:
An Economic Operators Registration and Identification number (EORI) is a unique reference identifying a business, trader or individual, issued by Her Majesty’s Revenue and Customs (HMRC). It is required on your declaration, to move goods into or out of the UK.
The Export Control Joint Unit (ECJU) will introduce the mandatory inclusion of your EORI number on most licence applications and registrations in late autumn 2021.
The mandatory requirement on SPIRE will apply to applications for export control licences where a declaration is made to HMRC’s Customs Handling of Import, Exports Freight (CHIEF) or the new Customs Declaration Service (CDS), replacing CHIEF.
It is important that you ensure the correct EORI number is included, as it will be provided as part of your licence information to HMRC.
You will need to provide an EORI that has been issued by HMRC. The reference will begin with GB followed by 12 digits. You will be required to enter only the 12 digits in SPIRE.
Action for SPIRE users
If you have registered your company on SPIRE, please ensure the EORI number is included.
From the left-hand menu, click on ‘Manage my registration’. Under the first tab ‘Organisation details’, provide your company EORI number. There is no action on the ‘Sites’ tab, as in future, there will no longer be an option to add the EORI at site level.
If you are using more than one number in your SPIRE account, for example old TURN numbers, please check that only the EORI number is included for future reference.
If you have any questions regarding the use of Company and Subsidiary EORI numbers within SPIRE, please contact your compliance officer.
Individuals and sole traders should ensure they obtain an EORI and provide these details when functionality is available in SPIRE.
No action is currently required on extant licences.
Another NTE will be issued to inform you when the mandatory requirement is applied to SPIRE, estimated for November 2021.
OFFICE OF FOREIGN ASSETS CONTROL (OFAC) ANNOUNCES PENALTIES AGAINST UK BANKS FOR BREACHES OF US SANCTIONS
First Bank SA, located in Romania, and its U.S. parent company, JC Flowers & Co., have agreed to remit $862,318 to settle potential civil liability for First Bank’s processing of transactions in apparent violation of OFAC’s Iran and Syria sanctions programs. Specifically, First Bank processed 98 commercial transactions totalling $3,589,189 through U.S. banks on behalf of parties located in Iran and Syria. In 2018, after JC Flowers acquired a majority ownership interest in First Bank, First Bank processed Euro-denominated payments for persons located in Iran. The settlement amount reflects OFAC’s determination that the apparent violations were voluntarily self-disclosed and non-egregious.
The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) today (26 August 2021)announced a $2,329,991 settlement with Bank of China (UK) Limited, a financial institution located in London, United Kingdom. BOC UK has agreed to remit $2,329,991 to settle its potential civil liability for processing transactions in apparent violation of OFAC’s now-repealed Sudan sanctions program, which prohibited the exportation, directly or indirectly, to Sudan of any goods, technology, or services from the United States. Specifically, between September 4, 2014 and February 24, 2016, BOC UK exported financial services from the U.S. by processing 111 commercial transactions totalling $40,599,184 through the U.S. financial system on behalf of parties in Sudan. This settlement amount reflects OFAC’s determination that BOC UK’s self-identified apparent violations were voluntarily self-disclosed and constitute a non-egregious case.
NOTICE TO EXPORTERS 2021/10
On 18 August 2021 ECJU issued the following Notice to Exporters Listed as 2021/10:
Further to the situation in Afghanistan, the Export Control Joint Unit (ECJU) has removed Afghanistan as a permitted destination from 5 open general export licences.
You are no longer able to use these licences to export to Afghanistan. You should apply for standard individual licences (SIELs) instead.
The affected licences are:
The full NTE may be accessed at: https://www.gov.uk/government/publications/notice-to-exporters-202110-ogels-amended-to-exclude-afghanistan/nte-202110-ogels-amended-to-exclude-afghanistan
UPDATED GUIDANCE – INTERCEPTION AND MONITORING PROHIBITIONS IN SANCTIONS MADE UNDER THE SANCTIONS AND ANTI-MONEY LAUNDERING ACT 2018: TECHNICAL GUIDANCE
On 9 August 2021 the Export Control Joint Unit (ECJU) published guidance relating to the meaning of specific terms used in the UK sanctions regulations relating to Belarus, Myanmar, Iran, Syria and Venezuela when addressing items that could be used to intercept communications, as listed in the respective schedules.
The full guidance may be found at: https://www.gov.uk/government/publications/interception-and-monitoring-prohibitions-in-sanctions-technical-guidance/interception-and-monitoring-prohibitions-in-sanctions-made-under-the-sanctions-and-anti-money-laundering-act-2018-technical-guidance
NOTICE TO EXPORTERS 2021/08
On 2 August 2021 ECJU issued the following Notice to Exporters Listed as 2021/08:
The Export Control Joint Unit (ECJU) has published a Notice to Exporters concerning the timeline and implementation plan for the LITE system, intended to replace SPIRE for electronic licensing.
Read the Notice to Exporters.
UPDATED GUIDANCE – COMPLIANCE WITH CYBER SECURITY REQUIREMENTS FROM OTHER NATIONS
Industry Security Notice (ISN) 2021/03 provides an update regarding IT security requirements of foreign governments, which will be of interest to those considering DFARS and CCMC in particular:
Industry Security Notice Number 2021/03
1. The UK Defence Supply Base (DSB) is required to comply with the Information and Cyber Security requirements of the UK Ministry of Defence (MOD).
2. This ISN provides interim instructions for the DSB as to how to address contractual requirements, in order to:
a) assess or certify compliance with the Information and Cyber Security requirements of other nations (such as those set out in the US Defense Federal Acquisition Regulation Supplement (DFARS)/ Cybersecurity Maturity Model Certiﬁcation (CMMC) requirements); and
b) provide representatives of other nations with access to information or equipment on DSB information systems and IT networks, in order to investigate cyber security incidents.
3. This ISN 2021/03 replaces ISN 2018/04 (Interpretation of US DFARS Clauses in relation to CDI and Cyber Reporting).
The full ISN may be found at: https://www.gov.uk/government/publications/industry-security-notices-isns/compliance-with-cyber-security-requirements-from-other-nations
UPDATED ECJU GUIDANCE –USE OF OPEN LICENCES FOR EXPORTING STRATEGICALLY CONTROLLED ITEMS
On 11th June 2021 ECJU published updated guidance regarding delays at the UK border arising from incorrect licence references being provided on export documentation for dual-use items.
The updated guidance in full may be found at:
UPDATED ECJU GUIDANCE – F680 EXPRESS APPLICATIONS
On 8th June 2021 ECJU published updated guidance regarding F680 express applications.
The updated guidance in full may be found at:
UPDATED ECJU GUIDANCE – CHANGES TO EXPORT CONTROL ORDER 2008
On 8th June 2021 ECJU published updated guidance regarding changes to the Export Control Order 2008.
There are changes to:
- Schedule 2 (military goods, software and technology)
- Schedule 3 (UK controlled dual-use goods, software and technology)
The new order, The Export Control (Amendment) Order 2020 (SI 2021 No.586) comes into force on 7 June 2021. The order implements changes to the list of defence-related products. These reflect changes to the Wassenaar Arrangement munitions list.
The Order also fixes minor drafting errors.
Changes to Schedule 2:
- changes to definitions, changes to ML1, ML2, ML6, ML8, ML10, ML11, ML13, ML15, ML17, ML18, and ML21
Changes to Schedule 3:
- changes to definitions, changes to PL9009
ECJU will update the consolidated list of strategic military and dual-use items that require export authorisation in due course.
UPDATED ECJU GUIDANCE ON STANDARD INDIVIDUAL EXPORT LICENCES (SIELs)
On 22nd April 2021 ECJU published updated guidance regarding SIEL applications and utilisation. There are no substantial changes.
The updated guidance in full may be found at: https://www.gov.uk/guidance/standard-individual-export-licences?utm_medium=email&utm_campaign=govuk-notifications&utm_source=56c5e336-36ff-4103-b0e7-21ef7055fcf6&utm_content=daily#supporting-documentation
UPDATED ECJU GUIDANCE ON EXPORT CONTROLS APPLYING TO ACADEMIC RESEARCH
On 31st March 2021 ECJU updated the long standing guidance regarding exports of technology applying to academic research.
The guidance is summarised as:
This guidance is for academics or those doing postgraduate research in fields where there is a high risk it could be used for military purposes. This includes the development, production, use or delivery of weapons of mass destruction (WMD).
- how to assess if the UK’s export controls apply
- when your research might be exempt
- how to check whether you need an export licence
UK strategic export controls focus on high risk activities, such as applied research and could affect your activities if you:
- work with colleagues overseas on research projects
- take your research overseas
- export your technology
The guidance in full may be found at: https://www.gov.uk/guidance/export-controls-applying-to-academic-research#overview
PRINCETON UNIVERSITY SETTLES WITH BIS FOR UNLICENSED EXPORTS OF PATHOGENS – INCLUDING TO UK
According to a Settlement Agreement in the amount of $54,000 published by the Bureau of Industry and Security in February 2021, “On 37 occasions between on or about November 11, 2013, and on or about March 5, 2018, Princeton University engaged in conduct prohibited by the Regulations when it exported various strains and recombinants of an animal pathogen, items subject to the Regulations, from the United States to various overseas research institutions, without the BIS licenses required by Section 742.2 of the Regulations. The items were classified under Export Control Classification Number (” ECCN” ) 1C351, 1C352 or 1C353, controlled for Chemical and Biological Weapons reasons, and valued in total at approximately $27,000.” Several of these exports were to UK recipients.
This is likely to increase the recent focus by UK authorities on export control compliance in academia, particularly in the area of potentially WMD related activities.
UPDATED GUIDANCE ON SANCTIONS & EMBARGOES
On 18 February 2021 ECJU published updated guidance on trade sanctions, arms embargoes and trade restrictions, including trade controls, transit controls and restrictions on terrorist organisations.
Full details at the link below:
NOTICE TO EXPORTERS 2020/22 GENERAL TRADE LICENCE RUSSIA SANCTIONS
On 8 January 2021 ECJU issued the following Notice to Exporters Listed as 2020/22:
The Export Control Joint Unit (ECJU) has published a General Licence permitting the provision of certain technical assistance, financial services and funds, and brokering services otherwise prohibited under regulations 43, 44 or 45 of the Russia (Sanction) (EU Exit) Regulations 2019 (the “Regulations”) in relation to energy-related goods. The licence only permits these activities where the goods are not for use in Russia.
Read the general trade licence.
The licence comes into force at 11pm on 31 December 2020. Any person seeking to rely on the licence must register online via SPIRE within 30 days of their first use of the licence.
Where the assistance, services or funds are provided in relation to energy-related goods for use in Russia then the service provider will need to apply for an individual licence.
The licence does not permit the export or supply of any goods and does not permit the provision of funds prohibited under Part 3 of the Regulations.
UPDATED CONSOLIDATED EXPORT CONTROL LIST EFFECTIVE FROM TODAY (15 DEC 2020)
The UK consolidated list of strategic military and dual-use items that require export authorisation is republished following amendments to the EU dual-use export control list in Annex I to Regulation (EC) No 428/2009, which comes into force today, 15 December 2020.
The full list may be found at: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/944003/UK_strategic_export_control_lists_20201215.pdf
UK GOVERNMENT ISSUES NOTICE TO EXPORTERS 2020/19: EU Transition and SPIRE
At 11pm on 31 December 2020 the transition periods ends and EU export control law ceases to apply in Great Britain (England, Scotland and Wales).
EU regulations and directives relating to strategic export controls will continue to apply in Northern Ireland. This is as a result of the Northern Ireland Protocol which forms part of the Withdrawal Agreement between the UK and the EU.
The rules that will apply to controlled exports will depend on whether the items are exported from Great Britain or from Northern Ireland.
1. What you need to know
In preparation for the end of transition changes, SPIRE, the online export licensing system will be unavailable on 31 December 2020 to allow for essential system updates.
In connection with these changes, you may receive Requests for Further Information regarding current licence applications in order to ensure that we are able to issue the correct licence from 1 January 2021.
The Export Control Joint Unit (ECJU) will issue further guidance on export controls and the end of transition period in due course.
2. Action to take
With immediate effect and in order to ensure that we are able to issue the correct licence from 1 January 2021, a response to the following questions on your current application are/is required.
Where stated on your application form that the location of your items is the ‘UK’, please could you confirm if the items are located in either ‘Northern Ireland’ or ‘Great Britain’.
Where stated on your application form that a third party is located in the ‘UK’, please could you confirm that the third party is located in either ‘Northern Ireland’ or ‘Great Britain’.
Where stated on your application form that an ‘Ultimate End User’ is in the UK, please could you confirm that the Ultimate End User is located in either ‘Northern Ireland’ or ‘Great Britain’.
Where stated on your application form that the item recipient (consignee or End User) is located in the UK, please could you confirm if the recipient is located in either ‘Northern Ireland’ or ‘Great Britain’.
If possible, please provide this information within SPIRE via Supplementary Information, and E-Mail your case officer once this has been done. If you do not take this action when applying, we will have to write to you separately and this might cause delays to processing your application.
In providing this information you give permission for ECJU to update your application on your behalf.
These actions will be put in place regardless of the EU negotiations outcome.
UK GOVERNMENT ISSUES NOTICE TO EXPORTERS 2020/16: UK Exporters Fined for Unlicensed Exports
Between March and September 2020, HM Revenue and Customs (HMRC) received compound settlements totalling £700,368.01. The 19 settlements were between £1,000 and £211,250. These related to unlicensed exports of dual use goods, military goods and related activity controlled by the Export Control Order 2008.
HMRC have policy responsibility for enforcing export controls on strategic goods and sanctions and investigating breaches of those controls. Where appropriate, HMRC can use their powers to offer a compound settlement in lieu of prosecution.
UK GOVERNMENT ISSUES NOTICE IN RELATION TO POST-BREXIT “BLOCKING STATUTE”
After the end of the transition period, the Blocking Regulation (Council regulation (EC) 2271/96) and Implementing Regulation (Commission Implementing Regulation (EU) 2018/1101) will form part of the retained EU law applying in the UK. This is by virtue of the European Union (Withdrawal) Act 2018. It is intended that the Protecting against the Effects of the Extraterritorial Application of Third Country Legislation (Amendment) (EU Exit) Regulations 2019 will come into force on 1 January 2021.
These regulations amend the domestic legislation implementing the Blocking Regulation (the Protection of Trading Interests Order), the retained Blocking Regulation and the retained Implementing Regulation. This is so that they are legally operable in the UK. The retained EU regulations and the domestic implementing legislation, as amended, together form the UK’s ‘Protection of Trading Interests Legislation’. Until 11pm on 31 December 2020, EU law applies.
The full Notice may be found at: https://www.gov.uk/guidance/protection-of-trading-interests-retained-blocking-regulations-from-1-january-2021
UK GOVERNMENT ISSUES NOTICE TO EXPORTERS 2020/15: Contacting the MOD Team in ECJU
Some exporters are sending correspondence to out of date team contacts and email addresses. As a result, the Ministry of Defence (MOD) team in Export Control Joint Unit (ECJU) are not receiving these requests, which means that a response cannot be sent.
With immediate effect all requests from exporters for open general export licence (OGEL) approval letters, Crown Exemption letters and all enquiries of a general nature about MOD Form 680 applications should only be sent to:
Enquiries will be acknowledged and actioned by a named Desk Officer in the MOD Team.
There are 3 types of OGEL that require UK exporters to obtain an approval letter from the MOD. These are:
- UK government defence contracts, military goods
- collaborative Project Typhoon and military goods
- collaborative project A400M
If exporters continue to encounter difficulties in contacting the MOD Team, then please telephone the ECJU Helpline on 020 7215 4594.
UK GOVERNMENT ISSUES REMINDER OF CURRENT AND POST-TRANSITION SANCTIONS
UK Sanctions Regimes
EU sanctions will continue to apply in the UK until 11pm on 31 December 2020.
The UK has also established a new global human rights sanctions regime which is now in force.
This page will be updated if legislation or guidance is changed.
Information on other trade restrictions that don’t fall under the Sanctions and Anti-Money Laundering Act 2018 (SAMLA) can be found on the Department for International Trade pages.
Find out who is subject to UK sanctions under the Sanctions Act
Find out who is subject to financial sanctions under the Sanctions Act, EU legislation and other UK legislation.
UK sanctions regimes currently in operation under the Sanctions Act.
Global human rights
UK sanctions regimes which will come into force at the end of the transition period.
ISIL (Da’esh) and Al-Qaida
Bosnia and Herzegovina
Central African Republic
Democratic People’s Republic of Korea
Democratic Republic of the Congo
Iran (human rights)
Lebanon (Assassination of Rafiq Hariri and others)
For more information on financial sanctions, contact the Office of Financial Sanctions Implementation at OFSI@hmtreasury.gov.uk or subscribe to OFSI’s e-alerts.
EU ANNOUNCES 2020 UPDATES TO DUAL-USE LIST
On 7 October 2020, the European Commission adopted the annual Delegated Regulation that updates the EU dual-use export control list in Annex I to Regulation (EC) No 428/2009. This brings it in line with the decisions taken within the framework of the international non-proliferation regimes and export control arrangements in 2019 and until end of February 2020 (in order to take into account the decisions taken in the Australia Group in February 2020). The majority of the changes result from amendments agreed at the Wassenaar Arrangement, but important changes also reflect the decisions taken in the Australia Group in February 2020.
The European Parliament and Council have two months in which to object to the delegated act before it enters into force.
Exporters should take this opportunity to review their exports of goods, software and technology to ensure future compliance.
Of particular note, those UK companies who currently transfer Annex I dual-use items to other EU member states without the need for export licences will require licences after the Brexit transition period ends.
The Comprehensive Change Note detailing these pending changes can be viewed at: https://trade.ec.europa.eu/doclib/docs/2020/october/tradoc_158972.pdf
BRITISH NATIONAL ARRESTED AT PENSACOLA INTERNATIONAL AIRPORT PLEADS GUILTY TO NATIONAL SECURITY OFFENSES
United States Attorney Lawrence Keefe, of the Northern District of Florida, announced on 1st September 2020 that Colin Fisher, a citizen of the United Kingdom, pleaded guilty to federal charges of violating the International Emergency Economic Powers Act (“IEEPA”) and attempted smuggling in relation to exporting power generating equipment to Iran. Fisher was arrested by federal agents when he arrived in Pensacola from the United Arab Emirates earlier this month to consummate the illegal transaction and get equipment for a buyer in Iran.
Fisher, 45, admitted in United States District Court in Pensacola that from October 1, 2017, to August 7, 2020, he worked to violate the Iranian embargo by attempting to export a Solar Mars 90 S turbine core engine and parts from the United States for delivery to an end user in Iran. This included participating in fraudulent invoicing and using coded language with conspirators to communicate about the illegal transactions. Despite these efforts, law enforcement authorities discovered the plan and were able to seize the turbine before its transatlantic journey to the end user in Iran, a conspirator in Iran who is linked to an Iranian energy company. The intercepted turbine, which was valued at half a million dollars, could be used to provide needed energy to the oil fields of Iran.
“Exporting technology to Iran is prohibited for a very good reason, yet this defendant chose to put his own self-interest above global and national security,” U.S. Attorney Keefe said. “This case should send a clear signal that the United States cannot and will not look the other way when persons endanger the safety of our nation and its people. We will enforce these laws, which are vital to our national security, against those both within the United States and abroad.”
James Meharg, CEO and president of Turbine Resources International, LLC, in Pensacola, was previously convicted of conspiring with Fisher to export a large turbine and parts from the United States to an Iranian recipient in violation of the Iranian Transactions and Sanctions Regulations. Meharg is currently serving a 40-month sentence in federal prison.
“The commitment of the Bureau of Industry and Security to protect our nation’s security against terrorist procurement networks in State Sponsors of Terrorism countries such as Iran remains unwavering,” said P. Lee Smith, Performing the Non-exclusive Functions and Duties of the Assistant Secretary for Export Enforcement in the Department of Commerce’s Bureau of Industry and Security. “These continued efforts to bring all conspirators to justice are demonstrated in this most recent guilty plea.”
Assistant United States Attorney David L. Goldberg has prosecuted the case following a joint investigation by the United States Department of Commerce’s Bureau of Industry and Security along with the Federal Bureau of Investigation.
Fisher faces up to 20 years imprisonment for violating the International Emergency Economic Powers Act and up to 10 years imprisonment for attempted smuggling. A sentencing date has been set for November 10, 2020, at 9:00 a.m. at the United States Courthouse in Pensacola.
UK ECJU PUBLISHES UPDATED GUIDANCE ON TRADING WITH IRAN
Changes to OGELs/OGTCLs
On 2 September 2020, the Department for International Trade issued updated guidance for companies trading or wishing to trade with Iran.
UK ECJU PUBLISHES NOTICE TO EXPORTERS 2020/13
Changes to OGELs/OGTCLs
On 4 August 2020, the Department for International Trade issued Notice to Exporters (NTE) 2020/13.
The following licences are no longer available for exports to or trade with Hong Kong.
The following open general licences have been revoked as Hong Kong was the only permitted destination:
Standard individual licence (SIL) applications should be submitted for future exports to or trade with Hong Kong.
U.S. UPDATES CAATSA SEC 232 TO INCLUDE NORD STREAM 2 AND TURKSTREAM SECOND LINE
On 15th July 2020, the US updated the Countering America’s Adversaries Through Sanctions Act (CAATSA) to include two additional Russian pipeline projects.
The announcement reads:
The Department of State is updating the public guidance for Section 232 on July 15, 2020, to expand the focus of implementation of Section 232 to address certain growing threats to U.S. national security and foreign policy interests related to Russian energy export pipelines, particularly with respect to Nord Stream 2 and the second line of TurkStream. Russia uses its energy export pipelines to create national and regional dependencies on Russian energy supplies and leverages these dependencies to expand its political, economic, and military influence and undermine U.S. national security and foreign policy interests.
In this context, Nord Stream 2 and the second line of TurkStream – both of which are under construction – could undermine Europe’s energy security by maintaining Russia’s dominant share in Europe’s gas markets for decades, discouraging investment in critical diversification projects, and limiting the ability of European countries to gain leverage over Russia on issues of price, commercial transparency, and the environment. These projects could destabilize the Ukrainian economy and government by severely limiting gas transit through Ukraine, thereby depriving the Ukrainian government of significant transit revenues and reducing a large deterrent against further Russian aggression against Ukraine. The development of these projects also provides Russia with vehicles to further spread its malign influence in Europe.
U.S. GOVERNMENT ENDING CONTROLLED DEFENSE EXPORTS TO HONG KONG
The Chinese Communist Party’s decision to eviscerate Hong Kong’s freedoms has forced the Trump Administration to re-evaluate its policies toward the territory. As Beijing moves forward with passing the national security law, the United States will today end exports of U.S.-origin defense equipment and will take steps toward imposing the same restrictions on U.S. defense and dual-use technologies to Hong Kong as it does for China.
The United States is forced to take this action to protect U.S. national security. We can no longer distinguish between the export of controlled items to Hong Kong or to mainland China. We cannot risk these items falling into the hands of the People’s Liberation Army, whose primary purpose is to uphold the dictatorship of the CCP by any means necessary.
It gives us no pleasure to take this action, which is a direct consequence of Beijing’s decision to violate its own commitments under the U.N.-registered Sino-British Joint Declaration. Our actions target the regime, not the Chinese people. But given Beijing now treats Hong Kong as “One Country, One System,” so must we. The United States is reviewing other authorities and will take additional measures to reflect the reality on the ground in Hong Kong.
DoJ ANNOUNCES ITALIAN NATIONAL SENTENCED TO FEDERAL PRISON FOR ATTEMPTING TO EVADE U.S. NATIONAL SECURITY TRADE SANCTIONS
Investigation continues against Russian, U.S. defendants
SAVANNAH, GA: An Italian national has been sentenced to federal prison after his conviction for violating national security laws.
Gabriele Villone of Italy was sentenced to 28 months in prison for conspiring to violate the International Emergency Economic Powers Act (IEEPA) and the Export Control Reform Act of 2018 (ECRA), said Bobby L. Christine, U.S. Attorney for the Southern District of Georgia.
“The defendant tried to obtain industrial equipment from the United States on behalf of a Russian energy company in violation of U.S. sanctions,” said U.S. Attorney Christine. “We will prosecute to the fullest extent of the law those who threaten our national security.”
As described in court documents and testimony, Villone, along with two Russian nationals, an Italian national, a U.S. citizen and various companies, conspired to obtain a power turbine from the United States without a license on behalf of a Russian energy company based in St. Petersburg. Villone and some of his co-defendants were arrested in Savannah, Ga., while attempting to complete the illegal transaction.
According to the indictment, the conspiracy began when an unnamed Russian government-controlled business contracted with Oleg Nikitin, a Russian national, and KS Engineering (“KSE”), the Russian-based energy company, to purchase a power turbine from a U.S.-based manufacturer for approximately $17.3 million. Evidence in the case established the intent of the Russian company to use the turbine on a Russian Arctic deepwater drilling platform. For reasons of national security, the U.S. Department of Commerce expressly prohibited any unlicensed shipment or transfer of the turbine to the Russian company for that purpose.
The indictment further alleged that Nikitin, KSE, and another KSE employee, Anton Cheremukhin, hired Villone, Bruno Caparini and GVA International to obtain the turbine on their behalf. Villone, Caprini and GVA then employed the services of Dali Bagrou and World Mining and Oil Supply (“WMO”) of Dacula, Ga., to procure the turbine from a U.S.-based manufacturer and to have the turbine shipped overseas. The parties conspired to conceal the true end user of the turbine from both the U.S. manufacturer and the U.S. government by submitting false documentation that stated it would be used by a U.S. company in and around Atlanta.
EU COMMISSION CONFIRMS THAT UNLISTED ENTITIES THAT ARE CONTROLLED BY A LISTED PERSON OR PERSONS MAY BE SUBJECT TO SANCTIONS
On 19 June 2020 the EU Commission issued an opinion confirming that entities controlled by listed persons are also subject to sanctions measures, even if such entities are not listed.
To quote the opinion, “In the Commission’s view, if the designated person is determined to have control over the Entity, it can be presumed that the control extends to all assets nominally owned by the latter. Such assets must be frozen pursuant to Article 2(1) of the Regulation. Otherwise, designated persons could circumvent the asset freeze imposed on them by continuing to have access to funds or economic resources through the non-designated third parties that they control.”
The opinion may be viewed at:
UK UPDATES POST-BREXIT RUSSIAN SANCTIONS
The Russia (Sanctions) (EU Exit) Regulations 2019 are intended to ensure that certain sanctions relating to Russia, which are currently in force in the UK under EU legislation and related UK regulations, continue to operate effectively after the UK leaves the EU.
You should also review The Sanctions (EU Exit) (Miscellaneous Amendments) (No. 2) Regulations 2020 to find out any amendments made to the Regulations.
This sanctions regime is aimed encouraging Russia to cease actions destabilising Ukraine or undermining or threatening the territorial integrity, sovereignty or independence of Ukraine. When these regulations come into force they will replace, with substantially the same effect, relevant existing EU legislation and related UK regulations.
FOUNDER AND CEO OF IRANIAN FINANCIAL SERVICES FIRM EXTRADITED FROM UK ON MONEY LAUNDERING, WIRE FRAUD, AND CONSPIRACY CHARGES
Assistant Attorney General for National Security John C. Demers and U.S. Attorney Erica H. MacDonald today (18 May 2020) announced the unsealing of a six-count federal indictment against SEYED SAJJAD SHAHIDIAN, 33, VAHID VALI, 33, and PAYMENT24 for conducting financial transactions in violation of U.S. sanctions against Iran. The defendants were charged with conspiracy to commit offenses against and to defraud the United States, wire fraud, money laundering, and identity theft. SHAHIDIAN, who was arrested and extradited from the United Kingdom, made his initial appearance earlier today before Magistrate Judge David T. Schultz in U.S. District Court in Minneapolis, Minnesota. VALI remains at large.
According to the allegations in the indictment, PAYMENT24 was an internet-based financial services company with approximately 40 employees and offices in Tehran, Shiraz, and Isfahan, Iran. The primary business of PAYMENT24 was helping Iranian citizens conduct prohibited financial transactions with businesses based in the United States, including the unlawful purchase and exportation of computer software, software licenses, and computer servers from United States companies. According to PAYMENT24’s website, the company charged a fee to circumvent “American sanctions,” and claimed to have brought in millions of dollars of foreign currency into Iran.
ARE YOU A DISTRIBUTOR OF CIVIL AIRCRAFT PARTS AND/OR ELECTRONICS TO CHINA?
If so, the United States Department of Commerce has published a rule change, effective from 27 June 2020, which will have a significant impact.
In addition to the license requirements for items specified on the Commerce Control List (CCL), you may not export, reexport, or transfer (in-country) any item subject to the Export Administration Regulations (EAR) listed in Supplement No. 2 to part 744 to the People’s Republic of China (China), Russia, or Venezuela without a license if, at the time of the export, reexport, or transfer (in-country), you have “knowledge,” as defined in § 772.1 of the EAR, that the item is intended, entirely or in part, for a ‘military end use,’ in China, Russia, or Venezuela, or for a ‘military end user’ in Russia or Venezuela.
The rule change does not amend the definition of ‘military end user’ but adds ‘military end user’ controls for China.
The new rule broadens the definition of “military end use” beyond any item for the “use,” “development,” or “production” to include any item that supports or contributes to the operation, installation, maintenance, repair, overhaul, refurbishing, “development,” or “production,” of military items.
As amended, the definition of “military end use” in § 744.21(f) will include any item that supports or contributes to the operation, installation, maintenance, repair, overhaul, refurbishing, “development,” or “production,” of military items described on the United States Munitions List (International Traffic in Arms Regulations (22 CFR 126.1)), or items classified under ECCNs ending in “A018” or under “600 series” ECCNs.
In terms of additional product scope, the new rule will add to Supplement 2 to Part 744 ECCNs electronics in 3A991; 3A992 (currently only 3A992.g); and 9A991 aerospace parts and components (currently only aircraft and engines.
These are items that generally do not require export licences in the UK/EU and are often, incorrectly, regarded as posing little or no risk to the exporter.
This expansion will require increased diligence with respect to the evaluation of end-users in China, particularly in view of China’s widespread civil-military integration. A particular area of risk will be MROs who support both civil and military aircraft.
Remember, EAR applies extraterritorially and you can be prosecuted by US authorities for breaches of these rules.
DUTCH SUPREME COURT UPHOLDS EXTRADITION TO UNITED STATES FOR BREACH OF US SANCTIONS LEGISLATION
The Dutch Supreme Court has ruled that a Dutch national accused of breaching US sanctions relating to exports to Iran may be extradited to the United States. Further appeal to the European Court of Justice was refused.
Part of the defence case relied on the so-called “blocking statute” – Council Regulation (EC) No 2271/96, as amended by Delegated Regulation 2018/1100.
The Supreme Court ruled that the blocking statute had no applicability, stating, “The court has also ruled that, since the export of “dual-use” goods to Iran is also punishable in the Netherlands, the Regulation, referred to by the court as the “blocking statute”, cannot be invoked. To this end, the court has considered, among other things, that the Regulation does not protect persons and companies that trade that may contribute to Iran’s military capabilities on the grounds that such trade has also been criminalized in the European Union, namely in the Iran Sanctions Scheme 2012″.
The ruling (in English) may be found at: https://uitspraken.rechtspraak.nl/inziendocument?id=ECLI:NL:HR:2020:623
ECJU PROCESSING OF LICENCE APPLICATIONS DURING CORONAVIRUS
On 9 April 2020, the Department for International Trade issued Notice to Exporters (NTE) 2020/10.
The main changes are:
Interim arrangements by ECJU
The following arrangements will stay in place until further notice:
- the response time for RFIs has been increased from 20 to 40 working days
- ECJU do not require exporters to obtain original copies of end user and stockist undertakings – and will accept digital/electronic signatures on supporting documentation (including pdf versions of end user undertakings and stockist undertakings)
- for exporting firearms and ammunition to EU member states, ECJU is amending the EC3 and EC4 forms on GOV.UK to an ‘unlocked’ Word document to enable them to add the details in box 9 and 10 electronically – ECJU will email the completed signed/stamped EC3, but you will not receive a hard copy by post
- Applicants should upload Word versions of EC3 and EC4 forms into SPIRE, not PDFs
- For dual use goods located in another EU member state, and for which ECJU are required to consult those licensing authorities, ECJU will no longer be issuing a hard copy of the licence for presentation to EU member state’s customs – exporters should print a copy of the licence from SPIRE (with the green tick) for presentation
ECJU will accept the following types of electronic signatures:
- simple electronic signatures – these include scanned signatures and tick box, plus declarations
- advanced electronic signatures – these are uniquely linked to the signatory, are capable of identifying the signatory, and are linked to data within the signature that can detect any changes made
- qualified electronic signatures – an advanced electronic signature created by a qualified electronic signature creation device, based on a qualified certificate for electronic signatures
Please also see notice to exporters 2020/08 for further information on export licence handling and notice to exporters 2020/07 about temporary closure of the classroom based training courses.
The full NTE can be found at: https://www.gov.uk/government/publications/notice-to-exporters-202010-processing-licence-applications-during-coronavirus-covid-19/notice-to-exporters-202010-processing-licence-applications-during-coronavirus-covid-19
CHANGES TO ECJU INSPECTION PROCEDURES
On 6 February 2020, the Department for International Trade issued Notice to Exporters (NTE) 2020/04.
The main change is that “businesses will now be informed of the exact date when an inspection of their records will take place. Please note that this means we are no longer able to offer alternative dates. We will still try to give businesses between 4 and 6 weeks’ notice of the inspection date.”
The full NTE can be found at: https://www.gov.uk/government/publications/notice-to-exporters-202004-changes-to-inspection-procedures/notice-to-exporters-202004-changes-to-inspection-procedures
EU DUAL-USE LIST UPDATED – EFFECTIVE 31 DECEMBER 2019
On 17 October 2019, the European Commission adopted the annual Delegated Regulation that updates the EU dual-use export control list in Annex I to Regulation (EC) No 428/2009.
The new Regulation, Commission Delegated Regulation 2019/2199, was published in the Official Journal on 30 December and comes into force on 31 December 2019.
The Regulation can be found at: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:L:2019:338:FULL&from=EN