Archive for the ‘BIS’ Category



The Unverified List Rises Again

Posted by at 7:01 pm on June 19, 2014
Category: BISRussia SanctionsUnverified List

By Daderot (Own work) [CC0], via Wikimedia Commons we reported back in January of this year, in a sort of Christmas amnesty, the Bureau of Industry and Security(“BIS”) freed all current prisoners on the Unverified List (“UVL”) and announced that it was building a bigger and more uncomfortable jail for the next set of UVL inmates. Under the rules of the new jail, all exports to parties on the UVL, regardless of the value of the export, would require an AES filing. If the export to the UVL party required a license, no license exceptions could be used. And, most importantly, UVL parties would have to sign a lengthy statement promising to obey the Export Administration Regulations, revealing the end use and end user of the item (including the address,  favorite ethnic food and Facebook password for each end user), committing to cooperate in all future end use checks and swearing on a religious book of choice that they would be home and in bed by 9:00 p.m. every night, no exceptions. (I exaggerate, of course, but the required statement is lengthy, contains most of the things I’ve listed and must be signed even if the U.S. exporter is planning to send a set of steak knives or other EAR99 item to the UVL party.)

On Monday, the gates of the new prison opened and 29 new UVL inmates were welcomed to the new and improved UVL correctional facility. I scanned the list and did not see any former entities on the UVL on this new list, although it’s possible I might have missed a few. The announcement of the new list does not reveal the particular crimes committed by each entity on the list but under BIS rules they would have had to have failed an end-use check in one way or other, either by not submitting to it, not being where they were supposed to be, or not being able to explain what happened to an item previously exported to them.

Five Russian companies were added to the UVL, and this was probably unconnected to recent sanctions on Russia over the Crimea and Ukraine issues. Given that BIS has suspended issuing licenses for Russia, being on the list may be somewhat more burdensome for the Russian parties.  Although licenses might in theory be available as a fall-back option to UVL parties outside Russia who could no longer use license exceptions, this fall-back option will not be available to the Russian entities on the UVL.

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Blame Canada!

Posted by at 9:18 am on June 13, 2014
Category: BIS

Bass Pro Store via [Fair Use]Gun and sporting equipment retailer Bass Pro agreed to pay to the Bureau of Industry and Security (“BIS”) a $25,000 fine for exporting nine rifle sighting devices classified as ECCN 0A987 to China, Cyprus and Canada.

Wait, did you say Canada? Canada??? As in the 51st state? Surely this must be a mistake. Is that even an export? I thought you could export everything but Justin Bieber to Canada.

Of course, that’s a common misconception, and this case is an object lesson in one of the few things that can’t be exported to Canada. Items covered under ECCN 0A987, such as rifle scopes and sighting devices, have Firearms Convention (FC) as a reason for control and require BIS licenses for exports to all signatories to the Convention, including Canada.

The convention in question is the OAS’s Inter-American Convention Against the Illicit Manufacturing of and Trafficking in Firearms, Ammunition, Explosives, and Other Related Materials. All members of the OAS except Cuba have signed the convention. The United States, mostly as a result of the NRA’s desire to protect the right of Mexican drug lords to own automatic weapons, has signed but not ratified the treaty.

So even though you can ship a rifle scope to France without an export license from BIS, under the OAS Firearms Convention you can’t ship one to Canada without that license.

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Universal Jurisdiction: Export Denial Order Edition

Posted by at 8:07 pm on May 27, 2014
Category: BISSyria

Aramex Employee via [Fair Use]BIS recently announced a consent agreement with Aramex Emirates under which Aramex agreed to cough up $125,000 in connection with its export of network equipment from the U.A.E. to Syria. Of course, for the few of us remaining that do not believe that the U.S. Government can exercise jurisdiction over everyone anywhere in the world whenever it wants, the interesting question is this: why did a company in the U.A.E. get tangled up over a shipment from the U.A.E. to Syria that was legal under U.A.E. law?

At issue were network devices and software classified as ECCN 5A002 and 5D002. In the Order, BIS then has this to say:

Under the widely-known U.S. trade embargo against Syria, no item subject to the Regulations may be exported or re-exported to Syria without a Department of Commerce license, with the exceptions of certain medicines and food, as set forth at all times pertinent hereto in General Order No. 2.

General Order No. 2 notes that the prohibitions of the embargo on Syria are described in section 746.9 of the EAR, which indeed prohibits all exports and re-exports except “food and medicine” by everyone in the universe. (Don’t get confused by section 742.9 which describes another set of restrictions on Syria which would permit exports of certain EAR99 items but which have been superseded by 746.9 and is just kept in the EAR to confuse ordinary people and to keep lawyers employed.)

So, even though the EAR says that foreign persons can’t re-export items from their own country to Syria, why would anyone pay any attention to this, particularly where the export was not illegal under the laws of their own country? An attempt by the U.S. to extradite someone for such an export might not be entertained by his local courts simply because the U.S. asserts that the item originally came from the United States.

BIS’s hammer here is more likely the export denial order. Even if it has no criminal jurisdiction and no ability to enforce or collect administrative fines in such cases, it does have the power to impose an export denial order which would forbid persons within its jurisdiction from exporting anything to Aramex. That might deliver a significant economic blow to a freight forwarder and logistics provider like Aramex. In that case a $125,000 fine might appear to be a good deal.

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The Case of the Missing FLIR

Posted by at 11:23 pm on May 14, 2014
Category: BISCriminal Penalties

HRC Series Flir Camera via [Fair Use]Last week a federal grand jury in Illinois indicted Bilal Ahmed on charges that he attempted to export a FLIR HRC-U thermal imaging camera, classified as ECCN 6A003.b.4.b, to Pakistan without the required license from the Bureau of Industry and Security (“BIS”).

Reading the criminal complaint, which is the most detailed statement of facts in the case, reveals a few somewhat strange holes in the government’s case. Basically, the only evidence that the government has that Bilal Ahmed exported or even attempted to export anything was a box that they searched at a UPS store addressed to a company in Pakistan that had an invoice for the camera and, apparently, nothing else.

The complaint starts by describing the negotiations between Ahmed and a used-goods seller to buy an HRC-series thermal imaging camera. After payment was made, the camera was shipped to the address of Ahmed’s company Trexim Corporation, in Schaumburg, Illinois. Federal agents then followed Ahmed from his home in Bolingbrook, Illinois, to a FedEx office in Bolingbrook, Illinois. The complaint does not indicate what, whether a box or a letter or anything else, Ahmed took the FedEx store and there is absolutely no indication of what he might have shipped from there. Going to a FedEx store can hardly constitute evidence of an illegal export

Subsequently Ahmed contacted the seller and indicated that he had received the camera, that it was in bad condition, and that he wanted a case for it. An agreement was made to send him the case. The case was shipped to Schaumburg and agents then followed Ahmed again, this time from his office in Schaumburg to a UPS store in Elk Grove village. After Ahmed left, the agents inspected the contents of the box, which was addressed to Pakistan and labeled NLR, and found an invoice for the HRC camera. No other contents of the box were mentioned in the criminal complaint beyond the invoice. If the camera case was in there, you would think that the criminal complaint would, perhaps, mention it since it would be the only solid evidence that the camera, for which the case would have been destined, had been shipped to Pakistan.

So, you may wonder, where is the camera or any evidence that it was exported? The agents apparently failed to inspect the package at the Bolingbrook FedEx, and when they did get around to looking at the box at the Elk Grove Village UPS all they found of any interest was an invoice. That is apparently why Ahmed is charged only with attempted export, but there doesn’t seem to be any evidence of any attempted export of the camera either. I guess the idea is that sending the invoice alone was an attempted export, a far-fetched notion at best.

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Bad Times for Timchenko

Posted by at 9:45 pm on April 29, 2014
Category: BISEntity ListOFACRussia SanctionsSanctionsSDN List

Gennady Timchenko via [Fair Use]The Bureau of Industry and Security (“BIS”) yesterday added thirteen companies to the Entity List as part of new sanctions against Russia. Many of these companies are connected to Gennady Timchenko who was added to the SDN List in the first round of sanctions and whom we have discussed previously on this blog. Under the Export Administration Rules, licenses are required for exports of all items “subject to the EAR” (i.e., U.S. origin items or foreign produced items with specified percentages of U.S. content) to anyone placed on the Entity List. BIS has said that there will be a presumption of denial for license applications to export items to the thirteen companies newly added to the list.

The companies added to the entity list are the following:

Stroytransgaz Holding, located in Cyprus; Volga Group, located in Luxembourg and Russia; and Aquanika, Avia Group LLC, Avia Group Nord LLC, CJSC Zest, Sakhatrans LLC, Stroygazmontazh, Stroytransgaz Group, Stroytransgaz LLC, Stroytransgaz-M LLC, Stroytransgaz OJSC, and Transoil, all located in Russia.

The Volga Group is owned by Timchenko and itself owns Aquanika, Avia Group, Avia Group Nord, Transoil, Sakhatrans and Stroytransgaz. The only company on the list not connected to Timchenko is CJSC  Zest, which is a leasing company owned by Rossiya Bank.

Interestingly, if you are on pins and needles about whether Justin Timberlake will perform at Hartwall Arena in Finland, the Volga Group, owned by Timchenko, is the vehicle by which Timchenko owns 50 percent of Hartwell Arena. Volga Group, like all of the thirteen companies listed above that have been added to the Entity List, was added yesterday by the Office of Foreign Assets Control to the SDN List. So Justin Timberlake fans planning on heading to Helsinki might want to see if they can get refunds.

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