Drawback

The State Department will implement a temporary waiver “of the policy of denial on the export, reexport, retransfer, and temporary import of non-lethal defense articles and defense services destined for or originating in the Republic of Cyprus,” the Directorate of Defense Trade Controls said in a Sept. 2 notice. The DDTC will temporarily amend the International Traffic in Arms regulations on Oct. 1 to allow for the waiver, which is a result of a State Department determination under the FY 2020 National Defense Authorization Act, it said. The U.S. policy won't change for “lethal defense articles and defense services destined for or originating” in Cyprus, it said.

The Office of Foreign Assets Control will adjust for inflation some civil monetary penalties, it said in an interim final rule released Sept. 2. The changes apply to “penalties for failure to comply with certain recordkeeping and reporting requirements, which are contained in OFAC’s Economic Sanctions Enforcement Guidelines in OFAC’s Reporting, Procedures and Penalties Regulations,” it said. Increases are effective Oct. 5.

The Trump administration “is committed to bold, decisive action” against China that protects U.S. national and economic security interests, Commerce Secretary Wilbur Ross said during a virtual Bureau of Industry and Security conference on Sept. 2. He cited as evidence BIS' s additional export restrictions on Huawei (see 2008170029) and President Donald Trump’s Aug. 6 executive order banning U.S. transactions with the parent companies of TikTok and WeChat. “We each must remain alert to China’s malign behavior and that of other foreign entities that seek our sensitive technologies to damage our economic and national security,” Ross said. “China is a capable, effective and adaptable adversary with unconstrained resources, who regularly uses our American freedom and rules-based norms to advance its goal of dominating global markets.”

A British Virgin Islands company agreed to plead guilty to charges related to the evasion of sanctions on North Korea, the Department of Justice said in an Aug. 31 news release. The company, Yang Ban Corporation, admitted it “deceived banks in the U.S. into processing transactions for North Korean customers,” using “financial cutouts and front companies,” the U.S. Attorney’s Office for the District of Columbia said. In addition to the guilty plea, Yang Ban will pay a penalty of more than $673,000, which includes a fine of about $112,000.

Industry members should be aware of the “key North Korean procurement entities and deceptive techniques employed in the operation and support of the regime’s ballistic missile program,” the Office of Foreign Assets Control, the Bureau of Industry and Security and the State Department Bureau of International Security said in a guidance document. The procurement activities “expose the electronics, chemical, metals, and materials industries as well as the financial, transportation, and logistics sectors to the risk of possibly violating United Nations (UN) and U.S. sanctions, as well as the imposition of sanctions and penalties under various U.S. legal authorities,” they said.

Export Compliance Daily is providing readers with some of the top stories for Aug. 24-28 in case you missed them. You can find any article by searching on the title or by clicking on the hyperlinked reference number.

Export compliance is never going to be perfect, panelists said, but with constant education, companies can ensure that their mistakes only warrant warning letters, not fines. The American Association of Exporters and Importers held a panel Sept. 1 about how export compliance plays out in the real world.

While industry welcomed the U.S. June decision to allow companies to more easily participate in standards-setting bodies in which Huawei is a member (see 2006160035), the administration should expand the rule to exempt all businesses on the Entity List, companies and trade groups said in comments last month. If the Bureau of Industry and Security does not expand the rule, companies will still be hampered at international standards bodies and could continue to cede technology leadership to China, they said.

China revised its list of technologies subject to export controls, including some dual-use items, the country’s Commerce Ministry and Ministry of Science and Technology said Aug. 28, according to unofficial translations. The list has 53 revisions, China’s Commerce Ministry said, including the addition of export restrictions on 23 “new technology items.” The Ministry of Science and Technology provided a Chinese-language notice outlining the changes.

A U.S. website infrastructure company said the Commerce Department determined not to penalize it after the company submitted a voluntary disclosure about potential export control and filing violations. Cloudflare, based in California, submitted disclosures last year (see 1909120065) to the Bureau of Industry and Security and the Census Bureau for making “incorrect” electronic export information statements and for allowing the export or “download of certain software prior to making required filings.” The company, in an Aug. 10 Securities and Exchange Commission filing, said its disclosures were “completed with no penalties” by Census in November and BIS in June.