Insights

President Biden Announces Additional Sanctions and Export Controls on Russia

By: Olga Torres and Derrick Kyle
Date: 02/23/2024

Today, on the brink of the two-year anniversary of Russia’s invasion of Ukraine, President Biden announced additional sanctions and export controls against Russia and entities in third countries that have supported the Russian war effort. The February 23 Statement describes that the 500 new sanctions against Russia are “for its ongoing war of conquest on Ukraine and for the death of Aleksey Navalny,” the Russian opposition leader and anti-corruption activist that suspiciously died in a Russian prison on February 16.

Trade Violations Under the False Claims Act

By: Olga Torres, Managing Member
Date: 01/30/2024

On February 7, the U.S. Department of Justice (DOJ) announced that settlements and judgements under the False Claims Act (FCA) exceeded $2 billion for the 2022 fiscal year. The 2022 fiscal year also had the second-highest number of settlements and judgments for any given year in the history of the act.

Trade Due Diligence in the Context of an IPO

By: Olga Torres and Camille Edwards
Date: 01/30/2024

Ensuring compliance with U.S. export controls, import regulations, and economic sanctions is common practice for companies that engage in international trade. These companies often have internal compliance policies and due diligence practices that help to monitor compliance for everyday operations. In addition, companies undergoing structural, or ownership changes often must conduct trade-related due diligence to assess compliance risks associated with a relevant target company. 

Syrian Aid Charity Sentenced for Export Violations

By: Derrick Kyle, Senior Associate
Date: 01/30/2024

On December 28, 2023, a federal court sentenced New Hampshire charity NuDay (a/k/a NuDay Syria) to five years of probation – the maximum sentence for an organizational defendant – for three counts of Failure to File Export Information.

5 Key Takeaways from BIS’s Newest Voluntary Self-Disclosure Memorandum

By: Olga Torres, Managing Member
Date: 01/30/2024

In its third memorandum in the past two years,1 BIS recently announced further updates to its Voluntary Self-Disclosure (VSD) process related to administrative violations. My last article covered BIS’s April 18, 2023 memorandum, which discussed incentives for companies to disclose violations after uncovering “significant violations” or risk higher penalties because a failure to disclose will be treated as an aggravating factor.

What to Know about CBP Export Seizures

By: Derrick Kyle, Senior Associate
Date: 12/21/2023

Regular readers of our newsletter, and those familiar with U.S. import and export regulations, know that U.S. Customs and Border Protection (“CBP” or “Customs”) generally enforces the U.S. import regulations, while multiple executive government agencies administer regulations related to the export of goods.

In July 2019, CBP updated its Mitigation Guidelines (the “Guidelines”), specifically the section related to forfeiture remission for export seizures. [1]

Understanding ITAR Mandatory Disclosures and the “Duty to Inform” DDTC

By: By Olga Torres, Managing Member Camille Edwards, Associate Alex Dieter, Law Clerk
Date: 10/31/2023

The discovery of actual or potential International Traffic in Arms Regulations (“ITAR”) violations presents the question of whether to disclose the conduct to the Department of State Directorate of Defense Trade Controls (“DDTC”). For certain violations, the ITAR sets forth mandatory disclosure requirements, and specific circumstances may give rise to an affirmative duty to inform DDTC of certain activities and transactions.

BIS, DDTC, OFAC, and CBP Subpoenas and Requests for Information – Tips to Comply

By: By Olga Torres, Managing Member
Date: 10/31/2023

Receiving an administrative subpoena, summons, or other request for information from a federal U.S. agency can be surprising, but it is not an uncommon scenario in the trade world. The main agencies in charge of administering and enforcing U.S. trade laws each have the power to compel the disclosure of certain information or documentation that may be related to an agency’s enforcement of import, export, or economic sanctions regulations.

BIS Releases New Rules Updating Restrictions on Advanced Computing Chips, Manufacturing Equipment, and Supercomputing Items to Countries of Concern

By: Olga Torres, Managing Member Derrick Kyle, Senior Associate
Date: 10/31/2023

On October 17, 2023, the U.S. Department of Commerce Bureau of Industry & Security (“BIS”) released three rules amending the Export Administration Regulations (“EAR”) to strengthen export controls on advanced computing semiconductors and semiconductor manufacturing equipment to arms embargoed countries, including the People’s Republic of China (“China”), and to place certain additional entities in China on BIS’s Entity List. 

Trade Alert: State Department Publishes Third Consent Agreement of the Year

Date: 09/02/2023

The State Department’s Directorate of Defense Trade Controls (“DDTC”) published its third consent agreement of the year on August 28, 2023. This consent agreement is part of an administrative settlement with Island Pyrochemical Industries Corporation (“IPI”)1 involving three alleged violations of the Arms Export Control Act (“AECA”) and the International Traffic in Arms Regulations (“ITAR”). Specifically, IPI engaged in unauthorized brokering activities related to the transfer of ammonium perchlorate (“APC”)2 from an entity from China, a proscribed country under §126.1 of the ITAR, to a Brazilian company. In addition, IPI misrepresented the roles of the Chinese and Brazilian entities and falsely stated that it was the manufacturer of APC on DSP-5 license applications.  

ITAR Material Change Reference Guide

Date: 09/01/2023

Any person or company in the United States that manufactures, exports, temporarily imports, or brokers items, including technical data and software (defense articles), or performs certain services (defense services) that are controlled under the International Traffic in Arms Regulations (ITAR) is required to register with the U.S. Department of State Directorate of Defense Trade Controls (DDTC) and keep that registration current. Current in the context of the ITAR means not only the information that is current at the time the registration is initially submitted, but the registration information must accurately reflect the registered entity’s current information at any point in its timeline. 

Use the enclosed checklist for tracking and logging actions taken related to ITAR Registration Material Changes.

Are your company’s EEI filings compliant with the Census and BIS requirements for exports destined to China, Russia, or Venezuela?

By: Derrick Kyle, Senior Associate
Date: 08/17/2023

Industry is well aware of the final rule published on April 28, 2020 (Final Rule), by the U.S. Department of Commerce, Bureau of Industry and Security (BIS) that, among other changes, revises the Export Administration Regulations (EAR) § 744.21 provision related to Military End Uses and Military End Users in the People’s Republic of China (China), Russia, or Venezuela, and significantly expands the license requirements on exports, reexports, and transfers (in-country) of such items. See our previous article for more details about the EAR revisions stipulated in the Final Rule. Importantly, the Final Rule adds the Electronic Export Information (EEI) filing requirement in the Automated Export System (AES) for exports to China, Russia, or Venezuela. Specific provisions of the Final Rule became effective on June 29 and most recently, other aspects took effect on September 27.

Anti-Discrimination Concerns in Light of U.S. Export Control Compliance Requirements

By: Olga Torres, Managing Member
Date: 08/01/2023

In the United States export control laws and regulations require companies to receive export licenses prior to releasing any controlled items or technologies to non-U.S. persons. The process of determining what is controlled under the export regulations is a complex, technical process requiring the assistance of technical experts (such as engineers) and experts in the export regulations. The restrictions on releases of controlled technologies are known as “deemed exports” to non-U.S. persons such as, foreign national employees working in the U.S. under valid work visas. The practical difficulties arising from performing export classification reviews and determining who is a U.S. person or a non-U.S. person as defined in the export regulations often leads to inadvertent discriminatory practices that run afoul of anti-discrimination laws in the U.S. This is because oftentimes companies may believe it is easier to avoid having non-U.S. persons on staff altogether rather than risking export regulation violations. 

 

Trade Alert: Justice, Commerce, and Treasury Departments Issue a Tri-Seal Compliance Note on Voluntary Self-Disclosures

Date: 07/26/2023

On July 26, 2023, the Department of Justice (“DOJ”), the Department of Commerce’s Bureau of Industry and Security (“BIS”), and the Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) published their second Tri-Seal Compliance Note of the year. The first compliance note was issued on March 2 and focused on the importance of proactive trade compliance by companies and efforts to combat evasion of Russia-related sanctions and export controls. This time, the three departments have provided guidance pertaining to the other side of the compliance coin – what a company should do when it discovers it has been involved in potential violations of U.S. sanctions or export controls.  

Post-G7 Sanctions – Putting the G7 Leaders Concerns into Action

By: Donna Wedgeworth, Senior Trade Advisor
Date: 06/17/2023

In May 2023, the leaders of the United States, Canada, France, Germany, Italy, Japan, and the United Kingdom gathered in Hiroshima, Japan, for the annual G7 summit. The symbolic significance of these global leaders meeting in the city devastated by an atomic bomb on August 6, 1945, was very impactful, particularly to Japan’s Prime Minister, Kishida Fumio, a Hiroshima native. 

 

VTA Telecom Corporation Enters into Consent Agreement with the U.S. Department of State

By: Olga Torres, Managing Member, Veronica Ochoa, Paralegal
Date: 06/17/2023

On April 20, 2023, VTA Telecom Corporation (“VTA”) entered into an administrative consent agreement with the U.S. Department of State’s Directorate of Defense Trade Controls (“DDTC”) to resolve six alleged violations of the Arms Export Control Act (“AECA”) and the International Traffic in Arms Regulations (“ITAR”) for unauthorized exports of defense articles and technical data to Vietnam.

 

Trade Alert: Is Singapore a New Enforcement Hotspot?

Date: 05/01/2023

In recent years, Singapore has become a significant hub for international commerce. According to the U.S. International Trade Administration, the U.S. was Singapore’s fourth largest source of imports in 2021 and the primary choice for technology firm regional headquarters.  In addition, Singapore’s economy relies heavily on “transshipment and its status as a business hub.”  As such, Singapore serves as a focal point for international trade, and as two recent U.S. government actions suggest, a possible new focus for trade-related enforcement.

Alert on the Russian Oil Price Cap and Possible Evasion

By: Olga Torres, Managing Member
Date: 04/25/2023

The United States Office of Foreign Assets Control (“OFAC”) issued an Alert on April 17, 2023, warning U.S. persons about the possible evasion of the price cap imposed by the Department of Treasury on Russian oil.

OFAC and BIS Announce Microsoft Settlement of Sanctions and Export Control Violations

By: Derrick Kyle, Senior Associate, Veronica Ochoa, Paralegal
Date: 04/25/2023

On April 6, 2023, the Department of Treasury Office of Foreign Assets Control (“OFAC”) and the Department of Commerce Bureau of Industry and Security (“BIS”) announced a settlement with Microsoft Corporation (“Microsoft”) and issued a combined $3.3 million in civil penalties to settle potential violations of sanctions and export control laws pertaining to Russia and other sanctioned jurisdictions. 

BIS to Industry: Please Disclose “Big Deal” Violations and Whistle Blow on Others for Credit

By: Olga Torres, Managing Member
Date: 04/18/2023

In a memorandum published by the Bureau of Industry and Security on April 18, 2023, the Office of Export Enforcement (OEE) announced that it wants to incentivize voluntary self-disclosures (VSDs) after a party uncovers “significant” possible violations of the Export Administration Regulations (EAR), the types of violations that reflect national security harm.

In its announcement today, OEE spelled out the types of benefits that industry or academia gets when deciding to file a VSD, which often include a substantial reduction in potential monetary liability. Today’s announcement comes after OEE’s announcement last year, shifting administrative enforcement policies that impacted the VSD process.

The Mergers & Acquisitions Review: US Trade Compliance Due Diligence

Date: 03/10/2023

Torres Trade Law is pleased to share our contribution to “The Law Reviews: Mergers & acquisitions” Review 16th Edition. Our Managing Member, Olga Torres, and Senior Associate, Derrick Kyle, authored a chapter on U.S. Trade Compliance Due Diligence. The chapter focuses on two essential considerations when conducting trade due diligence. The chapter discusses U.S. trade due diligence required for M&A transactions, focusing on successor liability from violations by the target company and the impact of foreign investment reviews triggered by acquisition or investment by foreign persons.

The Mergers & Acquisitions Review provides a practical overview of global M&A activity and the legal and regulatory frameworks governing M&A transactions in major jurisdictions worldwide.

To receive a copy of the book, please email operations@torrestradelaw.com. The number of hard copies is limited and will be given on a first come first basis. 

*Reproduced with permission from Law Business Research Ltd. This article was first published in December 2022.   

U.S. Seeks to Curtail Diversion of Restricted Goods and Technology to Russia through Turkey

By: Derrick Kyle, Senior Associate
Date: 03/03/2023

As the war in Ukraine continues, the diversion of restricted goods and technology to Russia remains a risk for exporters. The Republic of Turkey has become a primary diversion point for such restricted goods.

Justice & Commerce Departments Launch Disruptive Technologies Strike Force

By: By Olga Torres, Managing Member
Date: 03/03/2023

On February 17, 2023, the U.S. Department of Justice (“DOJ”) and the U.S. Department of Commerce (“Commerce”) announced the creation of the Disruptive Technology Strike Force (“DTSF”). 

Trade Violations Under the False Claims Act

By: By Olga Torres, Managing Member Camille Edwards, Associate
Date: 03/03/2023

On February 7, 2023, the U.S. Department of Justice (“DOJ”) announced that settlements and judgements under the False Claims Act (“FCA”) exceeded $2 billion for the 2022 fiscal year. The 2022 fiscal year also had the second-highest number of settlements and judgments for any given year in FCA history. 

DDTC Updates Compliance Program Guidelines and Guidance for U.S.

By: By Derrick Kyle, Senior Associate Veronica Ochoa, Paralegal
Date: 03/03/2023

On December 5, 2022, the U.S. Department of State Directorate of Defense Trade Controls (“DDTC”) issued new Compliance Program Guidelines (“the Guidelines”) intended to provide an overview of DDTC’s expectations for an effective compliance program. The Guidelines discuss controls contained in the Arms Export Control Act (“AECA”) and the International Traffic in Arms Regulations (“ITAR”). The Guidelines also outline key elements of an effective ITAR Compliance Program (“ICP”), and identify suggestions, common compliance pitfalls, and tips for best practices.  

New Anti-Money Laundering Whistleblower Law Makes Economic Sanctions Violations Reportable

By: By Alex Dieter, Law Clerk
Date: 03/03/2023

To more effectively counter transnational corruption and economic sanctions evasion, recent changes to the U.S. anti-money laundering (“AML”) whistleblower regime expand and reinforce whistleblower protections and rewards in the Bank Secrecy Act of 1970, as amended (“BSA”).1 These changes to the BSA/AML whistleblower framework have significant implications, not only for “financial institutions” (as defined in the BSA) already subject to regulation under the BSA, but for all individuals and entities seeking to comply with U.S. economic sanctions administered by the U.S. Department of the Treasury (“Treasury”) Office of Foreign Assets Control (“OFAC”).

Trade Alert: White House Announces New U.S. & G7 Actions Against Russia On One-Year Anniversary of Ukraine Invasion

By: Olga Torres and Alexander Dieter
Date: 02/24/2023

On February 24, 2023, the one-year anniversary of Russia’s invasion of Ukraine, the White House announced a series of actions that the U.S. and Group of 7 (“G7”) will take to support Ukraine and impose further costs on Russia.

2022 Year-End Review Highlights

Date: 12/16/2022

We have seen a tremendous year in the trade and national security front and are now, more than ever, deeply aware of the impact trade compliance professionals have on safeguarding national security in the face of continued geopolitical threats. Here are some of the 2022 year-end review highlights.

New BIS Policy Cracks Down on Uncooperative Foreign Governments With Broad Implications for Parties Trading in Goods Subject to EAR

By: Camille Edwards, Associate
Date: 11/17/2022

The U.S. Department of Commerce Bureau of Industry and Security (“BIS”) is cracking down on foreign governments that prevent the end-use checks the BIS uses to ensure compliance with Export Administration Regulations (“EAR”). 

Export Controls on Chips to China Typify the Biden Administration’s National Security Strategy for Outcompeting China

By: Olga Torres, Managing Member
Date: 11/04/2022

On October 7, 2022, the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) announced a major new rule that restricts the ability of the People’s Republic of China (“PRC” or “China”) to obtain advanced computing chips
 

Think Tanks May Need to Rethink FARA Registration

By: Derrick Kyle, Senior Associate & Alex Dieter, Law Clerk
Date: 10/23/2022

When considering who must register under the Foreign Agents Registration Act (“FARA” or “the Act”), one normally thinks of individuals, law firms, or marketing firms, the typical kinds of agents that must register for lobbying or image-laundering activities on behalf of foreign persons. 

DDTC Issues Two Open General Licenses

Date: 07/20/2022

On July 13, 2022, the U.S. Department of State Directorate of Defense Trade Controls (“DDTC”), as part of a pilot program, issued two Open General Licenses (“OGL”), which were subsequently published via Federal Register on July 20, authorizing the retransfer and reexport of defense articles subject to the International Traffic in Arms Regulations (“ITAR”) within or between Australia, Canada, and the United Kingdom. Like General Licenses issued by the Office of Foreign Assets Control under the U.S. Treasury Department, OGL No.1 and OGL No. 2 apply if the transaction meets the stated requirements, without specific application to DDTC.

Amid Heightened Enforcement, Congress & DOJ Mull Reforms to FARA Statute & Implementing Regulations

Date: 07/01/2022

The Foreign Agents Registration Act of 1938 (“FARA” or “the Act”) is a controversial disclosure law that aims to combat covert foreign influence in the United States by promoting transparency with respect to the political, media, and public relations activities of so-called “agents of foreign principals.”

Empowered or Exposed?

Date: 07/01/2022

DOJ’s new compliance certification requirement seeks to “empower” CCOs.

A new policy at the U.S. Department of Justice (“DOJ”) pertaining to Foreign Corrupt Practices Act (“FCPA”)/anti-corruption compliance has recently sent shockwaves through the corporate compliance community. The change was first previewed by Assistant Attorney General (“AAG”) for the DOJ’s Criminal Division Kenneth Polite in a speech delivered on March 22, 2022:

BIS’s New Approach to Identifying “Emerging and Foundational Technologies”

Date: 07/01/2022

On May 23, 2022, the U.S. Department of Commerce Bureau of Industry and Security (“BIS”) published a proposed rule identifying new unilateral export controls on four dual-use biological marine toxins, the synthesis and collection of which BIS has identified for evaluation in accordance with the criteria set forth in Section 1758 of the Export Control Reform Act of 2018 (“ECRA”).1 Section 1758 requires BIS to identify and establish appropriate controls on the export, reexport, or transfer (in-country) of “emerging and foundational technologies” that are “essential to the national security of the United States.”2 Importantly, the proposed rule announced a change in BIS’s approach to identifying new technologies of high strategic importance for control: moving forward, BIS will no longer distinguish between “emerging technologies” and “foundational technologies,” but rather “will characterize all technologies identified pursuant to Section 1758 as ‘Section 1758 technologies.’”

CMIC Divestment Period Ends – What You Need to Know

Date: 07/01/2022

Amid political and trade tensions between the United States and the People’s Republic of China (“China”), President Trump issued Executive Order (“EO”) 13959 on November 12, 2020, to address the national emergency posed by the exploitation of United States capital to resource and enable the development and modernization of China’s military, intelligence, and other security organizations.

New Wave of Russian Sanctions, General Licenses, FAQs, and Export Controls

Date: 06/29/2022

On June 27 and 28, 2022, the U.S. government unleashed a new wave of sanctions and related measures aimed at Russians and Russian industry in response to Putin’s ongoing war against Ukraine. The Department of Treasury Office of Foreign Assets Control (“OFAC”) 1) added 99 persons to the Specially Designated Nationals and Blocked Persons (“SDN”) List, and 2) prohibited the importation of gold from Russia. OFAC also issued five new General Licenses. 

Five Lessons from DDTC’s Most Recent Consent Agreement

By: Derrick Kyle, Senior Associate
Date: 06/02/2022

On January 21, 2022, the U.S. Directorate of Defense Trade Controls (“DDTC”) entered into a consent agreement with Torrey Pines Logic, Inc. (“TPL”) and its founder and president, Dr. Leonid Volfson, for alleged violations of the Arms Export Control Act (“AECA”) and the International Traffic in Arms Regulations (“ITAR”). TPL, an electro-optics and communications equipment company, allegedly committed violations that involved the attempted unauthorized export and unauthorized export of defense articles, including to proscribed destinations; involvement in ITAR-regulated activities while ineligible; and failure to maintain export transaction records.

Russia Restrictions Could Be a Blueprint for U.S. Response if China Invades Taiwan

By: Olga Torres, Managing Member, Derrick Kyle, Senior Associate, and William Klaess, Associate
Date: 05/24/2022

On May 23, 2022, President Joe Biden, when asked whether the United States would get involved militarily if China invaded Taiwan, answered firmly, “Yes. That’s the commitment we made.”1 As the world watches the war in Ukraine,

Nuclear Regulatory Commission Suspends General License Authority to Export Radioactive Material to Russia

Date: 05/19/2022

On May 17, 2022, the Nuclear Regulatory Commission (“NRC”) issued an order, effective immediately, suspending the general license authority under NRC regulations to export radioactive material and deuterium for nuclear end use to Russia. Now, exporters of such material must apply to the NRC for a specific license to export to Russia.

Commerce Expands Export Controls on Shipments of EAR99 Items to or within Russia

Date: 05/10/2022

On May 9, 2022, the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) announced a new final rule, to be published on May 11, 2022, expanding export controls against Russia under the Export Administration Regulations (“EAR”). The final rule imposes a license requirement under 15 C.F.R § 746.5(a)(1)(ii) for exports, reexports, or transfers (in-country) to or within Russia for additional items subject to the EAR identified under specific Harmonized Tariff Schedule (“HTS”) descriptions. The final rule adds 205 HTS codes at the 6-digit level (and descriptions) and 478 corresponding 10-digit Schedule B numbers (and descriptions) to the chart in Supplement No. 4 to Part 746.

Treasury Specifies “Services” Prohibited for Export to Russia under Executive Order 14071

Date: 05/09/2022

On May 8, 2022, the Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) issued a determination pursuant to Executive Order (“EO”) 14071. The determination specifies that the provision of the following activities to any person in Russia are prohibited: accounting services, trust and corporate formation services, and management consulting services. The prohibition takes effect on June 7, 2022 and does not apply to services provided to entities located in Russia owned or controlled by U.S. persons, or any services in connection with the wind down or divestiture of any entity in Russia not owned or controlled by a Russian person. The determination expands EO 14024 to prohibit such services.

 

Lost at Sea: Lack of BIS Guidance on New Russia/Belarus FDP Rule Creates Compliance Chaos

By: William Klaess, Associate
Date: 04/23/2022

On March 2, 2022, as part of a string of sanctions and export controls, the Russia/Belarus Foreign Direct Product (“FDP”) Rule and Russia/Belarus-Military End User (“MEU”) FDP Rule took effect.1 These rules, generally, restrict the sale to Russia and Belarus of foreign-produced items produced with certain controlled U.S.-origin software or technology.

U.S. Responds to Russian Invasion of Ukraine With Devastating “Further Consequences” For the Russian Economy, Including Export Controls and Additional Economic Sanctions.

By: Olga Torres, Managing Member
Date: 02/24/2022

President Biden, following a meeting with the Leaders of the G7 on Thursday morning, addressed the ongoing Russian invasion of Ukraine as well as the “further consequences” that the U.S., in conjunction with many other nations, would be imposing against Russia. President Biden announced additional economic sanctions targeting major Russian financial institutions as well as more designations of Russian elites and their family members. Notably, President Biden for the first time announced that new export controls will be implemented to “cut off more than half” of Russia’s high-tech imports. However, despite pressures from domestic lawmakers and foreign heads of state, Russia was not ousted from the SWIFT financial messaging system, nor was Russian President Putin himself personally sanctioned. But, as President Biden made clear, such options remain “on the table.”

Conspiracy to Export “Ghost Guns” Sends Warning to Freight Forwarders and Third-Party Logistics Operators

By: Donald Pearce, Torres Trade Advisory, LLC
Date: 01/18/2022

In January 2022, a Providence, Rhode Island man was arrested by federal agents on suspicion of making false statements to law enforcement and conspiring to export hundreds of privately made firearms to the Dominican Republic. Federal, state, and local investigators allege that Robert Alcantara, 34, was behind a network that assembled “ghost guns” for export to the Dominican Republic. With Export Control Reform moving the jurisdiction of non-military firearms violations to the U.S. Department of Commerce, similar investigations are becoming more common in the export-enforcement realm.

U.S. Government Takes A Hard Line to Stop Human Rights Abuses With Clear Signals to Industry

By: Olga Torres, Managing Member & Maria Alonso, Associate
Date: 10/14/2021

In recent years, the U.S. Government (“USG”) has taken numerous actions to target forced labor and other human rights violations, with a significant increase in 2020 and early 2021. These include the issuance of trade-related restrictions, such as import and export laws, economic sanctions, and civil monetary penalties,

Changes in the U.S. Non-Preferential Origin Determination Rules – Implications for Companies Importing and Exporting Mexican Goods

By: Emilio Arteaga
Date: 10/14/2021

On July 6, 2021, the U.S. Government published a notice of proposed rulemaking and request for comments on an amendment to the Code of Federal Regulations (“CFR”) regarding the determination of non-preferential origin for imports from Mexico and Canada: Non-Preferential Origin Determinations for Merchandise Imported from Canada or Mexico for Implementation of the Agreement Between the United States of America, the United Mexican States, and Canada.

Emilio Arteaga is a Jr. Partner at Vazquez Tercero & Zepeda law firm in Mexico City. Torres Law and Vazquez Tercero & Zepeda are member law firms of Alliott Group Alliance and often collaborate on international trade corporate matters involving the United States and Mexico, including USMCA compliance issues.

ITAR Material Change and Registration Renewal Guide And Checklist

Date: 07/03/2021

Any U.S. company that manufactures, exports, or temporarily imports items or performs defense services that are controlled under the International Traffic in Arms Regulations (ITAR) is required to register with the U.S. Department of State Directorate of Defense Trade Controls (DDTC) and keep that registration current. Current in the context of the ITAR means not only the company information that is current at the time the registration is initially submitted, but the information in the registration must accurately reflect the registered company’s current information at any point in the company’s timeline. When certain changes occur within the registered company, such as a change of control, a merger or acquisition, or a change in executive leadership, those changes must be reported to DDTC and the company’s ITAR registration must be updated. At a minimum, ITAR registration must be renewed annually.

Safeguarding Technical Data: A Lesson from the Honeywell Consent Agreement

By: Maria Alonso, Associate
Date: 07/03/2021

Safeguarding technical data and preventing unauthorized exports of controlled technical data is a challenge for most companies. As demonstrated by the Honeywell consent agreement, the U.S. Government (“USG”) will not take violations involving unauthorized exports of controlled technical data lightly. Therefore, industry should carefully assess their compliance programs to ensure that technical data is safeguarded properly. This article provides an overview of the Honeywell consent agreement and discusses general recommendations for safeguarding technical data.

Important Takeaways for Exporters from Honeywell’s Consent Agreement with DDTC

By: Olga Torres, Managing Member and Derrick Kyle, Associate
Date: 05/12/2021

On April 27, 2021, Honeywell International, Inc. (“Honeywell”) entered into a consent agreement with the U.S. Department of State Directorate of Defense Trade Controls (“DDTC”) for alleged violations of the Arms Export Control Act (“AECA”) and the International Traffic in Arms Regulations (“ITAR”). Specifically, Honeywell, a defense contractor based in Charlotte, North Carolina, allegedly exported and retransferred ITAR-controlled technical data without required authorization. 

2020 Year End Review: CFIUS Regulations & Export Controls Impacting CFIUS Scrutiny

By: Olga Torres and Maria Alonso
Date: 01/19/2021

In 2020, the U.S. Department of the Treasury issued several final regulations to implement the Foreign Investment Risk Review Modernization Act of 2018, which as readers will recall expanded the jurisdiction of the Committee on Foreign Investment in the United States (“CFIUS”). In addition, the U.S. Government also issued in 2020 several regulatory actions that impact foreign investments, including the identification and review by the U.S. Department of Commerce for “emerging and foundational technologies that are essential to the national security of the United States,” among others. Overall, the final CFIUS regulations along with other regulatory actions call for closer scrutiny of foreign investments and the export controls.

U.S. Government Imposes Additional Export Controls on China Trade

By: Olga Torres, Managing Member
Date: 01/19/2021

Towards the end of its term, the Trump Administration continues to strengthen regulation of trade with China, even when it means leaving implementation of the new controls to the Biden Administration.

For companies doing business in and with China, the increased export controls and economic sanctions – a recent executive order prohibiting transactions with popular Chinese mobile payment apps, a new ‘Military End Use’ list that tightens export licensing for designated items, and a ban on securities investments in Chinese military entities – call for enhanced due diligence to ensure compliance.

DoD Codifies NISPOM and Incorporates Other Industrial Security Changes

By: Derrick Kyle, Associate
Date: 01/19/2021

On December 21, 2020, the Department of Defense (“DoD”) published a final rule with request for comments (the “Final Rule”), effective on February 24, 2021, codifying NISPOM in Title 32, Part 117 of the Code of Federal Regulations (“CFR”). In addition to codifying the NISPOM, the Final Rule makes other changes relevant to industrial security.

Due Diligence and Best Practices to Avoid Forced Labor in Supply Chains

By: Olga Torres, Maria Alonso, and Donna Wedgeworth, Torres Law
Date: 12/22/2020

The sad fact of forced labor in global supply chains cannot be denied. There are many indicators that forced labor is taking place, including restriction of movement and isolation, intimidation and violence, withholding of wages, retention of identification documents, reporting to immigration authorities, debt bondage, abusive working and living conditions, and excessive work schedules.

In response to this growing human rights concern, the U.S. has enacted regulatory controls, including import and export laws, economic sanctions, and regulations impacting U.S. government contracts, to encourage due diligence and responsible business conduct in global supply chains. This article will provide an overview of the recent developments in regulatory requirements governing forced labor prevention in global supply chains and recommended due diligence protocols.

Ransomware Attacks Are on the Rise; Are You Ready?

By: Olga Torres, Managing Member and Derrick Kyle, Associate
Date: 10/13/2020

Ransomware attacks have increased exponentially in recent years and COVID-19’s remote work policies only contributed to how successful bad actors are in perpetrating the attacks. If your company is not currently working towards increasing cybersecurity controls, it has never been a better moment to start doing so, especially if you deal with sensitive technologies or defense industries. In addition to the obvious business challenges companies face when dealing with a ransomware attack, there are several U.S. government laws, regulations, and implementing agencies that companies must be mindful of in the aftermath of an attack.

Where Does Your Food Come From? FDA Proposes Changes Affecting Traceability Records for Certain Foods

By: Donna Wedgeworth, Trade Advisor
Date: 10/02/2020

On September 21st, the U. S. Food and Drug Administration (FDA) announced a proposed rule change to the Food Safety Modernization Act (FSMA).

Commerce Issues Notice on "Foundational Technologies" – What You Need to Know

By: Maria Alonso, Associate
Date: 09/22/2020

The long-awaited, Advanced Notice of Proposed Rulemaking ("ANPRM") soliciting comments on the definition of, and criteria for, identifying “foundational technologies” (“the Notice) was finally issued on August 27, 2020, by the U.S. Department of Commerce, Bureau of Industry and Security (“BIS”). The deadline to submit comments is October 26, 2020.

Department of Defense Creates Cybersecurity Certification Program

By: Derrick Kyle, Associate
Date: 07/17/2020

In order to better manage the Defense Industrial Base’s compliance with cybersecurity obligations under the Defense Federal Acquisition Regulation Supplement (“DFARS”), the Department of Defense (“DoD”) is instituting a new program that requires defense contractors and subcontractors to obtain a certification of compliance with cybersecurity requirements to be eligible for bidding on and receiving government contracts. 

Food Safety: Remote Inspections under COVID-19 and Other Key Provisions in the Foreign Supplier Verification Program

By: Olga Torres, Managing Member & Derrick Kyle, Associate & Donna Wedgeworth, Trade Advisor
Date: 07/17/2020

The COVID-19 pandemic has affected nearly all aspects of everyday life, but sometimes it is easy to forget that the U.S. Government must also adjust its operations to be able to meet regulatory requirements during the pandemic. 

The L3Harris Lesson: Why Meeting ITAR Agreements Compliance Requirements Must Be Part of Every Defense Industry Company's Compliance Program

By: Maria Alonso, Associate
Date: 07/17/2020

Agreements executed under the International Traffic in Arms Regulations (“ITAR”) serve as a licensing tool for the transfer of defense articles, technical data, manufacturing know-how, and defense services between a U.S. party and a foreign party. Fulfilling the requirements of those agreements is a critical part of ITAR compliance, as demonstrated by the recent L3Harris Technologies, Inc. (“L3Harris” or “the Company”) consent agreement with the U.S. Department of State (“State”), Directorate of Defense Trade Controls (“DDTC”).

Important Revisions to EAR’s Military End Use/User Rule Effective June 29, 2020

By: Olga Torres and Derrick Kyle
Date: 06/29/2020

On June 29, 2020, revisions to the Export Administration Regulations (“EAR”) that will impact many exporters and reexporters – particularly those doing business with the People’s Republic of China – became effective. 

DDTC Provides Updated COVID-19 Measures

By: DDTC Web Notice
Date: 04/24/2020

Yesterday the Directorate of Defense Trade Controls published an update to its operations. Read this trade alert for full details.

Conducting Effective Corporate Investigations

By: Olga Torres, Managing Member
Date: 04/05/2020

Companies often must decide whether to conduct internal investigations after receiving information that could indicate ongoing violations of export control or economic sanction laws and regulations. It is important that they take adequate steps to preserve attorney-client privilege, immediately stop ongoing violations, and ensure resources and personnel are assigned to the investigative team. Deciding whether to conduct an investigation will ultimately depend on a variety of factors, and there are a number of decisions to be made at the outset of the investigation as outlined below.

When Federal R&D Funding meets U.S. Trade Controls: Proceed with Caution

By: Donna Wedgeworth, Trade Advisor
Date: 04/05/2020

If your company is fortunate enough to receive federal R&D funding, it is important to remember that these grants do not relinquish responsibility for compliance with trade regulations.

DDTC and Census COVID-19 Status of Operations

Date: 03/19/2020

Today the Directorate of Defense Trade Controls published an update to its operations.

Complying with U.S. Export Control and Immigration and Anti-Discrimination Laws

By: Olga Torres, Managing Member & Maria Alonso, Associate
Date: 01/16/2020

The intersection of immigration, anti-discrimination, and U.S. export control laws can be confusing for employers. But recent settlement agreements between the U.S. Department of Justice (“DOJ”) and multinational corporations and large international law firms, demonstrate that the DOJ will not tolerate employers discriminating against non-U.S. persons. This article will provide an overview of the intersection, and friction between, U.S. immigration, anti-discrimination, and export control laws and regulations.

***This article first appeared in the WorldECR journal in their November 2019 Issue.

2019 BIS Enforcement Actions: Lessons for 2020 and Beyond

By: Maria Alonso, Associate
Date: 01/16/2020

In 2019, the U.S. Department of Commerce Bureau of Industry and Security (“BIS”) entered into six settlement agreements with companies (not including individuals) for export violations of the Export Administration Regulations (“EAR”).

Some of the companies were assessed civil penalties as a result of their violations, while others lost their export privileges.

New Interim Final Rule Creates End-to-End Encryption Carve-Out for ITAR Technical Data

By: Olga Torres and Derrick Kyle
Date: 12/26/2019

The Department of State Directorate of Defense Trade Controls (“DDTC”) has published an interim final rule (“the Interim Final Rule”) seeking public comments and clarifying that certain transfers of encrypted technical data are not exports, reexports, or retransfers subject to the International Traffic in Arms Regulations (“ITAR”).

Lessons from the L3Harris Technologies Consent Agreement with DDTC

By: Managing Member, Olga Torres & Derrick Kyle, Associate
Date: 10/11/2019

On September 19, 2019, the U.S. Directorate of Defense Trade Controls (“DDTC”) entered into a consent agreement with L3Harris Technologies, Inc. (“L3Harris”) for alleged violations of the Arms Export Control Act (“AECA”) and the International Traffic in Arms Regulations (“ITAR”). 

D.C. Circuit Weighs in on Issue of Willfulness in Prosecutions for Unlawful Exports

By: Torres Law
Date: 10/11/2019

What is the appropriate standard for determining whether a defendant has acted willfully in violation of the Arms Export Control Act (“AECA”)? On August 20, 2019, the U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) weighed in on this question in U.S. v. Burden

State Department Proposes New Guidelines for the Export of Surveillance Technology Aimed at Addressing Human Rights Concerns

By: Torres Law
Date: 10/11/2019

Should human rights concerns be a consideration for exporters engaged in international trade? New draft guidance proposed by the U.S. Department of State aims to provide a potential roadmap for tackling this issue.

Freight Forwarders and the EAR

By: Derrick Kyle, Associate & Nicole Aandahl, Senior Counsel
Date: 07/17/2019

FedEx Corporation (“FedEx”) has openly challenged the Bureau of Industry and Security’s (“BIS”) jurisdiction to enforce the EAR with respect to actions taken by freight forwarders. 

Disclose. Promise. Just Don't Forget.

By: Olga Torres, Managing Member & Derrick Kyle, Associate
Date: 04/19/2019

In the United States, when violations of the export rules are discovered, exporters have the option to prepare and submit Voluntary Self-Disclosures to the U.S. export agencies in exchange for reduced penalties. These VSDs are formal statements containing a description of the violation and a promise to remedy the conduct that led to it.

Unfortunately, companies do not always follow through with the full implementation of the promised corrective measures, in some cases discontinuing the remedial process measures altogether. 

DoD Mandatory Disclosure Requirements for Export-Controlled Transfers as “Cyber Incidents”

By: Olga Torres, Managing Member & Derrick Kyle, Associate
Date: 10/22/2018

The export control regulations are difficult enough to understand in their own right. But for companies that are also involved in defense contracting, whether as prime contractors or subcontractors, the export control regulations occasionally intersect with additional requirements of the Defense Federal Acquisition Regulations Supplement (“DFARS”), making compliance much more difficult.

DOJ Fines International Law Firm for Citizenship-Based Discrimination

By: Derrick Kyle, Associate & Mackenzie Willard, Legal Assistant
Date: 10/22/2018

On August 29, 2018, in a settlement involving Clifford Chance US, LLP, a large international law firm, the Department of Justice (“DOJ”) provided the export community with a perfect example of the intersection of, and friction between, immigration anti-discrimination laws and the export control regulations, namely the International Traffic in Arms Regulations (“ITAR”) and the Export Administration Regulations (“EAR”).

A List of Lists and More Lists: Designations and What They Mean for U.S. and Non-U.S. Companies

By: Olga Torres, Managing Member
Date: 06/23/2018

The U.S. government maintains a variety of lists of sanctioned or denied parties—including entities, individuals, aircraft, and vessels—with whom companies and individuals are prohibited or restricted from dealing. These lists are assembled for different reasons and under differing authorities. That is, what might get an entity onto a list and how that entity might work to get off the list depends on the authorities and the national security purposes underlying the designation.

Mergers & Acquisitions: Successor Liability and Trade Law

By: Olga Torres, Managing Member & Jonathan Creek, Associate
Date: 06/23/2018

Past compliance with the full range of international trade, export controls, and economic sanctions laws and regulations should be a critical element of due diligence in mergers and acquisitions. Unfortunately, trade compliance is often overlooked.

FLIR Enters Into Consent Agreement with DDTC

By: Olga Torres, Managing Member and Jonathan Creek, Associate
Date: 04/26/2018

On April 24, 2018, FLIR Systems, Inc. (“FLIR”) entered into a consent agreement with the Directorate of Defense Trade Controls (“DDTC”) for alleged violations of the International Traffic in Arms Regulations (“ITAR”). FLIR manufactures and exports advanced sensors and integrated sensor systems for various military and commercial platforms used to protect borders, gather intelligence, and protect critical infrastructure. Notably, the consent agreement was reached after FLIR submitted 18 voluntary self-disclosures (“VSD”) between 2008 and 2017.

The STA License Exception by the Numbers

By: Olga Torres, Managing Member
Date: 04/02/2018

Section 22 CFR §740.20 of the Export Administration Regulations (“EAR”) provides for the Strategic Trade Authorization (“STA”) license exception. Between July 2011 and December 2016, 849 companies used license exception STA. During the same time period, the Bureau of Industry and Security (“BIS”) conducted 296 STA audits. This means that over 30% of STA users were subject to government review. This article examines STA use and audits by BIS.

Non-U.S. Companies Beware: U.S. Export Laws May Apply to You

By: By Olga Torres, Managing Member & Derrick Kyle, Associate & Jonathan Creek, Associate
Date: 04/02/2018

Non-U.S. companies involved in the reexporting of U.S. goods or technology should familiarize themselves with the applicable U.S. export laws, regardless of where they are located. This is because the U.S. export and economic sanctions laws have wide ranging extraterritorial reach. 

Census Bureau Requests Public Comments Regarding Routed Export Transactions

Date: 10/08/2017

On October 6, 2017, the U.S. Census Bureau’s International Trade Management Division (“ITMD” or “Census Bureau”) published an Advanced Notice of Proposed Rulemaking (“ANPRM”) seeking public comments regarding standard and routed export transactions.[1] The comment period will end on December 5, 2017. The Census Bureau is particularly interested in comments regarding the definition of a routed export transaction and the responsibilities of parties in routed export transactions. 

 

[1] Foreign Trade Regulations (FTR): Request for Public Comments Regarding Standard and Routed Export Transactions, 82 FR 46739 (proposed Oct. 6, 2017) https://www.federalregister.gov/documents/2017/10/06/2017-21569/foreign-trade-regulations-ftr-request-for-public-comments-regarding-standard-and-routed-export#h-7.

Late EEI Filing: Is It Too Late To Mitigate?

By: Derrick Kyle, Associate and Jordan Jensen, Law Clerk
Date: 09/22/2017

In 2009, the U.S. Customs and Border Protection (“CBP”) published guidelines that govern the enforcement and mitigation of civil penalties for companies and other entities that fail to comply with the Foreign Trade Regulations (“FTR”) in 15 C.F.R. § 30.[1]. While Section 30 includes a list of violations that trigger civil penalties, it also lists mitigating factors for violations.

Is the U.S.-Korea Trade Deal Headed for Trouble?

By: Jordan Jensen, Law Clerk
Date: 09/22/2017

Despite the perceived success of KORUS, under which exports of U.S. goods and services to South Korea were estimated at $63.8 billion in 2016,[1] on the morning of September 1, 2017, President Donald Trump reportedly informed his senior officials of his intent to withdraw from the agreement.[2] Although this announcement may be unsurprising to those following the administration’s renegotiation of NAFTA, the news sparked some controversy across industries that rely heavily on South Korean markets, such as the agricultural industry.

Whatcha Gonna Do When They Come For You? Export Control Agency Visits, Part 2

By: Olga Torres, Managing Member and Derrick Kyle, Associate
Date: 09/22/2017

This article is the second part of a two-part series. In the first article, we introduced the types of company visits conducted by the two major U.S. export agencies,[1] and discussed potential outcomes and consequences of these visits. In this second article, we discuss what to expect during a visit from the agencies and best practices to prepare for them.  The first article can be accessed here.

Uh oh. So, you think you may have an export problem

By: Andrea Fraser, Senior Counsel
Date: 07/07/2017

Perhaps the information came from a colleague or a customer or an anonymous tip left on your company’s “tip line.”  Or it could have been a comment made during a presentation at a professional meeting.  Something caught your attention and triggered the realization that you may have a U.S. export controls violation.  Whether or not you have experienced that sinking feeling, prudent compliance requires that you be prepared to take appropriate action at the first sign of trouble.  

Whatcha Gonna Do When They Come For You? Export Control Agency Visits

By: Olga Torres, Managing Member and Derrick Kyle, Associate
Date: 07/05/2017

Many exporters are at least vaguely familiar with the “company visits” or “outreach visits” conducted by the export control agencies, but most have very little idea what these visits actually entail, how a company is selected for a visit, or the potential consequences of such a visit. Exporters, freight forwarders, non-exporting manufacturers of defense articles, and companies that share controlled technology with foreign persons, resulting in “deemed exports” should thoroughly prepare for these visits if they are ever “lucky enough” to be selected.

International Trading Services Case Reaffirms Expansion of U.S. Importer Liability

By: Derrick Kyle, Associate and Jordan Jensen, Legal Extern
Date: 07/05/2017

Two recent U.S. court decisions will increase corporate officers’ and compliance professionals’ risks for personal liability for Customs law violations. Specifically, the decisions relate to fraudulent, grossly negligent, or negligent activity under the Customs penalty statute, 19 U.S.C. § 1592.  

DDTC Introduces New Electronic License Reporting Requirements

By: Derrick Kyle, Associate
Date: 07/05/2017

It is easy to think of the various U.S. government agencies with trade control responsibilities as operating entirely separate from one another. Often, that can be the case. Industry professionals have learned through the process of Export Control Reform that many trade procedures are not at all synchronized amongst the respective agencies. A final rule published by the Department of State this year serves as a reminder that, in many ways, certain functions of the various trade agencies are inextricably linked, and these agencies rely on one another to perform certain tasks. 

President Appoints New Head of the Bureau of Industry and Security

By: Staff Writer
Date: 05/03/2017

On March 30, President Trump announced his intent to nominate Mira Radielovic Ricardel to the position of Under Secretary of Commerce for Export Administration.

New Requirements for Export to Hong Kong

By: Derrick Kyle, Associate
Date: 05/03/2017

On January 19, 2017, the Bureau of Industry and Security (“BIS”) published a final rule regarding new support documentation requirements with respect to exports to Hong Kong.

From A to ZTE: A Review of Lessons Learned from the ZTE Case

By: Olga Torres, Managing Member
Date: 05/03/2017

On March 7, 2017, the U.S. Department of Justice (“DOJ”), the Treasury Department's Office of Foreign Assets Control (“OFAC”), and the Commerce Department's Bureau of Industry and Security (“BIS”) together levied the largest ever export and sanctions related penalty against Chinese telecommunications firm ZTE Corporation (“ZTE”). ZTE agreed to the combined $1.19 billion fine to settle a number of alleged violations of U.S. sanctions targeting Iran. 

Key Differences Remain in the Export Regulation Regimes, Spurring Cybersecurity Reviews

By: Olga Torres, Managing Member and Derrick Kyle, Associate
Date: 02/17/2017

Over the past decade, the availability of cloud computing services has grown exponentially to the point where cloud access is now viewed almost as a public utility. Cloud Service Providers (“CSPs”) may operate internationally, and CSP servers are often located in countries other than that of the user, leading to export control concerns. 

Freight Forwarding as Brokering Activity

By: Derrick Kyle, Associate
Date: 02/17/2017

This article briefly discusses the types of activities that trigger the brokering registration requirement under the International Traffic in Arms Regulations for freight forwarders. 

Outlook for Export Controls and Economic Sanctions Under the Trump Administration

By: Olga Torres, Managing Member and Matt Fogarty, Of Counsel
Date: 02/17/2017

The first weeks of the Trump Administration have been eventful, but there has been little action in the area of export controls and economic sanctions. In this regard, there's no clear consensus just yet as to whether and how significantly President Trump plans to deviate from the course set over the last eight years of the Obama Administration.

2016 Exports Year-End Review

By: Olga Torres and Derrick Kyle
Date: 11/09/2016

Deemed Exports and Reexports under the Harmonization Rules

By: Andrea Fraser-Reid
Date: 07/27/2016

Export Compliance Programs

By: Olga Torres and Luis Torres
Date: 07/27/2016

The Magna Brexit? Potential Implications on Trade & Export Compliance

By: Olga Torres and Sandy Aziz
Date: 07/26/2016

Trade Through a Single Window

By: Luis Torres, Law Clerk
Date: 06/16/2016

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