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Greetings!
We hope you enjoyed your 4th of July holiday weekend! June's import/export highlights include: BIS demands a $7.2M penalty payment from Balli Group; BIS implements STA license exception; individuals from 4 countries indicted for illegal exports to Iran; BIS publishes changes to high speed computer export controls; DDTC posts an updated commodity jurisdiction form; CBP e-Allegation leads to criminal conviction; CBP seeks comments on changes to CBP Form 4069, Petition for Remission or Mitigation of Forfeitures and Penalties Incurred. As always, thank you for reading! Jennifer Kessinger, Tammie Krauskopf
& Ruta Riley
globaltradeexpertise
info@globaltradeexpertise.com
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BIS Revokes the Suspension of a $2M Penalty and Accelerates Payment of Outstanding $5.2 Penalty for Balli Group
BIS Demands $7.2M Payment within 15 Days
 On June 13, 2011, the Bureau of Industry and Security (BIS) announced that in response to a May 20, 2011 order revoking the suspension of a $2M civil penalty and invoking the acceleration clause for the two remaining $2.6M installment payments, Balli Group PLC and Balli Aviation paid a total of $7.2M in civil penalties.
BIS and the Treasury Department's Office of Foreign Assets Control (OFAC) had entered into an agreement with Balli Group PLC and Balli Aviation Ltd. (collectively "Balli") in February 2010, with civil penalties totaling $15M, originally suspending $2M, regarding allegations that Balli conspired to export or reexport commercial aircraft from the United States to Iran in violation of the Export Administration Regulations (EAR) and the Iranian Transactions Regulations (ITR). This case represented the largest civil penalty ever imposed by BIS.
In his revocation order, BIS Assistant Secretary Mills stated: "[Balli] failed in my judgment to arrange its business and financial affairs in such a manner as to ensure compliance with its civil penalty payment obligations - obligations that were imposed, moreover, as a result of Balli's egregious conduct that violated U.S. export control laws and provided support to Iran and its proliferation efforts."
BIS previously had charged that between 2005 and 2008 Balli conspired with an Iranian airline to export or reexport U.S.-origin Boeing 747 aircraft to Iran without the required U.S. Government authorization. Specifically, three of the aircraft were flying on routes in and out of Iran using Iranian flight numbers while under the operational control of the Iranian airline. Balli allowed the aircraft to continue to be operated contrary to U.S. export control laws, despite warnings from BIS and the manufacturer. Additionally, Balli misled and concealed information from BIS regarding the role the Iranian airline played in the acquisition and financing of the aircraft via funds from the Iranian Foreign Exchange Reserve Fund.
BIS also had charged that from July 2008, through September 2008, Balli took actions prohibited by a BIS order temporarily denying its export privileges. Balli conducted negotiations with persons, including another person subject to the Temporary Denial Order, concerning financing, receiving and/or using three additional U.S.-origin aircraft that had been exported from the United States and are subject to the EAR.
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BIS Implements Strategic Trade Authorization License Exception
Rule Effective June 16, 2011
On June 16, 2011, the Bureau of Industry and Security (BIS) posted a final rule in the Federal Register that adds the Strategic Trade Authorization (STA) license exception to the Export Administrations Regulations (EAR). STA authorizes the export, reexport, and transfer (in- country) of specified items to destinations that pose relatively low risk that those items will be used for a purpose that licensing requirements were designed to prevent.
To use the STA license exception, parties to the transaction must exchange notifications and statements designed to provide assurance against diversion of such items to other destinations. The exception is only relevant to exports, reexports, and transfers for which a license is required under the EAR. Thus, if the EAR do not impose an obligation to apply for and receive a license before exporting, reexporting, or transferring an item subject to the EAR, STA is not relevant to the transaction.
STA license exception is expected to facilitate exports between the U.S. and partner countries while enhancing the competitiveness of U.S.'s key industrial base sectors.
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Nationals of Four Countries Indicted for Supplying Iran with U.S. Military Aircraft Components
On June 23, 2011, the U.S. Department of Justice announced that seven individuals and five companies based in the U.S., France, the UAE, and Iran have been indicted in the Middle District of Georgia for their alleged roles in a conspiracy to illegally export military components for fighter jets and attack helicopters from the U.S. to Iran. Specifically, eight of the defendants were charged with conspiring to violate and violating the Arms Export Control Act (AECA), the International Emergency Economic Powers Act (IEEPA) and the Iranian Transactions Regulations, as well as conspiracy to defraud the United States, money laundering and false statement violations.
One of the defendants and his company were sentenced on June 22, 2011, with the individual receiving almost five years in prison. Another defendant and his company have admitted their illegal conduct and also pleaded guilty in the investigation.
The indictment alleges that the defendants conspired to export components for attack helicopters and fighter jets to Iran without the required U.S. export licenses. These components included military parts for the Bell AH-1 attack helicopter, the UH-1 Huey attack helicopter, as well as the F-5 and F-4 fighter jets.
One of the defendants and his company in the U.A.E. are alleged to have placed orders and purchased military aircraft parts, including those for the Bell AH-1 attack helicopter, from a defendant and his company in the U.S., who then exported the aircraft parts to the U.A.E.
One defendant in Illinois is alleged to have placed orders and purchased U.S. aircraft parts from another defendant in Georgia on behalf of an Iranian national and his company in Iran. The charges specify that the defendant in Georgia and other defendants exported the aircraft parts to Iran via defendants in France.
A conspiracy charge carries a maximum penalty of five years in prison. A maximum penalty for an AECA violation is 20 years in prison, and an IEEPA violation carries a maximum penalty of 20 years. Money laundering carries a maximum 20 years in prison, while making false statements carries a maximum of five years in prison.
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BIS Publishes Changes to ECCN 4A003 and Revisions to License Exception APP
EAR Amendments Reflect Wassenaar Arrangement Changes
On June 24, 2011, the Bureau of Industry and Security (BIS) published a final rule revising the Export Administration Regulations (EAR) to implement changes made to the Wassenaar Arrangement's List of Dual Use Goods and Technologies (Wassenaar List) maintained and agreed to by governments participating in the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual Use Goods and Technologies (Wassenaar Arrangement, or WA) at the December 2009 WA Plenary Meeting (the Plenary) that relate to Export Control Classification Number (ECCN) 4A003.
This rule also makes corresponding revisions to License Exception APP, the de minimis rule, and post shipment verification reporting requirements in the EAR.
Additionally, this rule moves Albania and Croatia from Computer Tier 3 to Computer Tier 1 in the section of the EAR dedicated to export control requirements for high performance computers. The Administration believes Albania and Croatia are eligible to be treated as Computer Tier 1 countries because their governments have made the necessary reforms to allow the countries to join the North Atlantic Treaty Organization, and have adopted accepted global standards in export controls.
This rule is effective on June 24, 2011. |
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DDTC Seeks Comments on Export/Import Licenses, Agreements, Reports, and Record Maintenance Requirements
On June 30, 2011, the Department of State posted a notice in the Federal Register seeking Office of Management and Budget (OMB) approval for the information collection requirements for the following:
- DSP-5: Application/License for Permanent Export of Unclassified Defense Articles and Related Unclassified Technical Data;
- DSP-61: Application/License for Temporary Import of Unclassified Defense Articles;
- DSP-73: Application/License for Temporary Export of Unclassified Defense Articles;
- DSP-83: Non-Transfer and Use Certificate
- DSP-85: Application/License for Permanent/Temporary Export or Temporary Import of Classified Defense Articles and Classified Technical Data;
- DSP-94: Authority to Export Defense Articles and Services Sold under the Foreign Military Sales (FMS) Program;
- DSP-6, DSP-62, DSP-74, DSP-84, DSP-119: Application for Amendment to License for Export or Import of Classified or Unclassified Defense Articles and Related Technical Data;
- Request for Approval of Manufacturing License Agreements, Technical Assistance Agreements, and Other Agreements;
- Statement of Political Contributions, Fees, or Commissions in Connection with the Sale of Defense Articles or Services; and
- Maintenance of Records by Registrant.
Comments are due to the Department of State within 60 days from June 30, 2011 or by August 29, 2011.
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DDTC Posts a New Commodity Jurisdiction Request Form
The U.S. Department of State Directorate of Defense Trade Controls (DDTC) announced that effective June 3, 2011, applicants must download and use the updated DS-4074 Version 1.1. All prior versions of the form will be rejected.
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CBP E-Allegation Leads to Criminal Conviction
 On June 15, 2011, U.S. Customs and Border Protection's (CBP) announced that analysts of its trade fraud targeting unit, responding to a complaint filed through E-Allegations, CBP's online trade violation reporting system, uncovered a transshipment scheme to avoid paying antidumping duties on imported steel-wire hangers. The scheme was identified in December 2009 after analyzing a commercial allegation.
Analysts pursued the lead, piecing together information about a Mexican manufacturer who appeared to be involved in the alleged illegal scheme where the hangers were shipped form China to the U.S., sent to Mexico, and then imported back into the U.S. as products of Mexico. The 55-count indictment in the Southern District of California included conspiracy, entry of goods by means of false statements, false statement, wire fraud, and money laundering.
The filing resulted in the sentencing of the responsible individual from Tijuana, Mexico, to 70 months in federal prison and an order to pay more than $3 million in restitution to the U.S. government as well as a forfeiture of more than $4 million in proceeds gained through the illegal transshipment scheme. |
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CBP Seeks Comments on Petition for Remission or Mitigation of Customs Forfeitures and Penalties Incurred
Comments are due by August 12, 2011.
On June 13, 2011, the U.S. Customs and Border Protection (CBP) issued a notice in the Federal Register seeking comments on an information collection requirement concerning the Petition for Remission or Mitigation of Forfeitures and Penalties Incurred.
CBP Form 4609, the Petition for Remission of Forfeitures and Penalties Incurred, is completed and filed with the CBP Port Director by individuals who have been found to be in violation of one or more provisions of the Tariff Act of 1930, or other laws administered by the CBP. Persons who violate the Tariff Act are entitled to file a petition seeking mitigation of any statutory penalty imposed or remission of a statutory forfeiture incurred. This petition is submitted on CBP Form 4609 and used by CBP personnel as
a basis for granting relief from forfeiture or penalty. |
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CBP Will No Longer Mail Copies of Approved Bond Submissions to the Bond Principals
Effective June 1, 2011, U.S. Customs and Border Protection's (CBP) Revenue Division will no longer mail copies of approved bond submissions to bond principals via U.S. mail. Principals can confirm the approval of all continuous bond submissions including new bonds, riders, and terminations via ACE portal account access. The trade community can also validate continuous bond approvals using other electronic methods such as the Automated Broker Interface and Automated Surety Interface.
The Revenue Division will provide copies of recently approved continuous bond submissions at no charge if a valid request is received from a principal associated with the bond as follows:
- Requests must be made by the principal via email to cbp.bondquestions@dhs.gov.
- The request must be received within 30 calendar days of the bond transaction approval. Requests received after 30 calendar days may use the Freedom of Information Act (FOIA) process.
- The request must identify the specific documentation being requested, such as a copy of a new bond, rider, or termination paperwork. The request must reference the applicable 9-digit CBP bond number and the principal's importer number.
- These email requests must use an email subject line that begins with the words "Bond Copy Request".
The Revenue Division will only provide requested copies as an email 'reply' to received requests which fully satisfy all of the above conditions. In addition to the above, principals continue to have the option of obtaining copies of continuous bond paperwork via the Freedom of Information Act (FOIA) process at any time.
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Calendar of Events
Upcoming Trade Events & Seminars
 Our website has a comprehensive listing of import and export conferences held throughout the country, as well as Customs training, EAR training, ITAR training, and other training. Below is a small sampling of what's available in the coming months:
ITAR Compliance: Disclosure and Audits - Federal Publications Seminars
July 14-15, 2011 - Hilton Head Island, SC
Update 2011 - Bureau of Industry and Security
July 19 - 21, 2011 - Washington, DC - $985
Complying with U.S. Export Controls - Bureau of Industry and Security
August 10 - 11, 2011 - Universal City, CA - $430
Complying with U.S. Export Controls - Bureau of Industry and Security
September 13 - 14, 2011 - Smithfield, RI - $330
How to Develop an Export Management and Compliance Program - Bureau of Industry and Security
September 21-22, 2011 - Santa Clara, CA - $497.50
6th National Forum on International Technology Transfers & Deemed Export Compliance - American Conference Institute (ACI)
September 26 - 27, 2011 - Washington, DC
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Who's Hiring?
A Summary of Current Trade Job Opportunities
 As a service to the international trade community, Global Trade Expertise compiles links to trade job opportunities from many different sources. New trade job listings are posted frequently on our website.
To sort the job opportunities by region, fields, or levels, click on the appropriate category or tag in the right column on our Trade Jobs webpage. |
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Thanks again for your interest in our newsletter!
Sincerely,
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Jennifer Kessinger, Tammie Krauskopf & Ruta Riley
Attorneys & Consultants
jk@globaltradeexpertise.com
Tel. 925.876.1381 (Jennifer Kessinger)
tk@globaltradeexpertise.com
Tel. 708.707.4087 (Tammie Krauskopf)
rr@globaltradexpertise.com
Tel. (630) 862-8123
www.globaltradeexpertise.com
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