A Commerce Department rule designed to cut off U.S. shipments to foreign military intelligence agencies in China, Russia and beyond could create a host of due-diligence issues for exporters, industry lawyers said. Those issues could be compounded by industry uncertainty surrounding the scope of the rule, which may be unclear without BIS guidance. “We're getting an enormous number of questions,” said Giovanna Cinelli, an export control lawyer with Morgan Lewis. “I think the rule is open to interpretation, and that’s creating uncertainty.”
The State Department’s Directorate of Defense Trade Controls’ Defense Export Control and Compliance System will be unavailable 6 a.m. to 8 a.m. EST Feb. 22 for maintenance, DDTC said. DDTC is encouraging users to make sure their work in progress is saved before the scheduled maintenance.
An Atlanta-based Bitcoin service provider was fined more than $500,000 for allowing people in sanctioned countries to use its services. BitPay committed more than 2,000 sanctions violations when it allowed people in Cuba, North Korea, Iran, Sudan, Syria and the Crimea region of Ukraine to use digital currency on the company’s platform to transact with U.S. parties, the Office of Foreign Assets Control said Feb. 18. The company allowed the transactions even though it had information that revealed the people were located in sanctioned regions, OFAC said, adding that “deficiencies” in the company’s compliance program led to the violations. The agency said BitPay allowed $129,000 worth of digital currency transactions that should have been blocked.
The Bureau of Industry and Security revoked export privileges for a Chicago resident for an illegal export to the United Arab Emirates, BIS said in a Feb. 17 order. BIS said Siddharth Bhatt was convicted Sept. 16, 2020, of violating the International Emergency Economic Powers Act after he tried to export a controlled U.S.-origin thermal imaging camera to the UAE without a required license. Bhatt was sentenced to 48 months of probation and was fined about $2,500. BIS revoked Bhatt’s export privileges for 10 years from the date of his conviction, and revoked any BIS-issued licenses in which he had an interest at the time of his conviction.
A Treasury Department spokesperson declined to say whether a decrease in sanctions settlements from 2019 to 2020 was due to issues caused by the COVID-19 pandemic, saying sanctions investigations are completed on a “variety of timelines.” The Treasury’s Office of Foreign Assets Control “takes its enforcement activities very seriously, and treats every matter with the care and due diligence that it deserves,” the spokesperson said in a Feb. 17 email. “These cases don’t always follow a set schedule, and we finalize cases when they’re ready and when we have all the facts and documentation necessary to draw the appropriate conclusion and finding.” The agency in 2019 settled 26 cases worth nearly $1.3 billion, compared with 16 cases totaling $23 million in 2020 (see 2102120061).
The European Union won’t hesitate to push back on U.S. extraterritorial sanctions but wants to work more closely with the Biden administration on sanctions programs to ease compliance burdens for EU companies, a top EU official said. “There is no better way to protect against extraterritorial sanctions than to align sanctions implementation with partners like the United States,” said Mairead McGuinness, an EU commissioner overseeing financial markets.
Sen. Tom Cotton, one of the most prominent China hawks in Congress, thinks that the Bureau of Industry and Security is buried within an organization “hostile to the aggressive use of export controls,” and so it should be moved from the Commerce Department to the State Department, because, he says, that department puts national security first. Cotton, who has published a lengthy report on what he calls the economic long war with China, discussed his views during an online program at the Reagan Presidential Foundation on Feb. 18.
Although President Joe Biden told a Feb. 16 CNN town hall that there will be more “repercussions” for China’s human rights violations in the Xinjiang region, the White House declined to say whether that includes more sanctions. “As it relates to our policy toward China, we are not in a rush,” White House Press Secretary Jen Psaki said Feb. 17. Psaki said Biden is “focused on communicating and working with our partners and allies around the world” and has had a “number of conversations” with European allies about potential next steps. “There's an ongoing policy process and I don't have anything to preview,” Psaki said.
House lawmakers in both political parties wrote to ask the State Department to provide a briefing on the agency’s implementation of sanctions against Nord Stream 2 and further steps the U.S. can take to block work on the Russian gas pipeline (see 2101190018). The members specifically asked for an update on the State Department’s “assessment of possible sanctionable activity” by vessels working on the pipeline, which companies are complying with the 30-day wind-down period the U.S. offered on sanctionable activity, the status of talks with allies and any proposals offered to the Biden administration to persuade the U.S. to forgo the sanctions.
The Bureau of Industry and Security have outlined a series of increased restrictions on exports to Myanmar, including a more strict licensing policy and the suspension of certain license exceptions. The changes, described by the Commerce Department last week and effective Feb. 18, came after President Joe Biden authorized sanctions and ordered stronger export controls for shipments to the country’s military after it overthrew the government earlier this month (see 2102110020).