Mar

1

Assassination In Malaysia Leads To Calls to Redesignate DPRK As A Terrorist State


Posted by at 9:14 pm on March 1, 2017
Category: BISDDTCNorth Korea Sanctions

Kim Jong Un Smoking via KCNA [Fair Use]The assassination by the Norks of Kim Jong Un’s brother in a Malaysian airport with the help of gullible stooges and some VX nerve agent has reignited the debate as to whether the State Department should redesignate the DPRK as a state sponsor of terrorism. The DPRK was first put in the list after it bombed a Korean Air Flight in 1987, killing 115 people. The country was removed in 2008 in return for shutting down its plutonium plant and permitting inspections.

In order to designate a country as a state sponsor of terrorism, a determination must be made that the country “repeatedly provided support for acts of international terrorism.” See, e.g., section 6(j) of the (zombie) Export Administration Act. None of the statutes that invoke that phrase define “acts of international terrorism,” although section 40(d) of the Arms Export Control Act states that the term includes activities that “aid or abet the efforts of an individual or group to use … chemical, biological, or radiological weapons.” I suppose that might cover the murder of an individual with a chemical weapon in an airport, although terrorism seems more readily to mean an act that indiscriminately targets multiple civilians in order to instill fear in a population or community.

Advocates of redesignation have argued that the cyber attack on Sony (in connection with its distribution of the hilarious and decidedly anti-Nork film The Interview) and other assassinations abroad demonstrate repeated acts of terrorism. But again, it’s hard to argue that these acts, while reprehensible, are designed to instill fear in a community.

In any event, the redesignation would be most symbolic. Once designated, U.S. law prohibits arms sales, which are already prohibited. Licenses would be required for certain specified goods, but section 746.4 of the EAR already requires licenses for all items subject to the EAR other than food and medicine. Being designated as a state sponsor of terrorism means that under the Trade Sanctions and Export Reform Act of 2000 a one-year license is required for exports to that country of agricultural commodities, medicine or medical devices, but North Korea is explicitly exempted from this by section 7205(a)(2)

Given that the redesignation of the loathsome Norks would be mostly symbolic, it seems to be a bad idea to torture the definition of “international terrorism” to include computer hacking and individual murders to get there.

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Feb

28

ZTE License Extended; Iranian News Outlet Gets It Wrong


Posted by at 7:24 pm on February 28, 2017
Category: BISIran Sanctions

ZTE Stand 6 via http://www.zte.com.cn/cn/events/ces2013/show/201301/t20130110_381605.html [Fair Use]Last Friday, the Bureau of Industry and Security extended the duration of the temporary general license which permits exports to ZTE notwithstanding it’s inclusion on the Entity List. Without the temporary general license, unlicensed exports to ZTE of items subject to the EAR would be prohibited.

It is notable that this extension — from February 27, 2017, to March 29, 2017 — is the shortest period of duration for the ZTE temporary general license granted so far, the others having been March 24, 2016, to June 30, 2016; June 30, 2016 to August 30, 2016; August 30, 2016, to November 28, 2016; and November 28, 2016, to February 27, 2017. It’s not quite clear why this duration is so much shorter than has been granted before.

The Financial Tribune, which bills itself as the “First Iranian English Daily” and which is owned by the Iranian newspaper Donya-e-Eqtesad has a rather entertaining, if incorrect, take on the meaning of the extension of the ZTE temporary general license:

ZTE has been granted an exceptional reprieve from the US Department of Commerce to continue exporting its telecoms equipment to Iran.

Er, not so much. After all, it was ZTE’s exports of telecom equipment from the United States to Iran which got ZTE in the snert in the first place. ZTE can export items not subject to the EAR to Iran without need of the temporary general license; and the temporary general license would not authorize ZTE, or anyone else for that matter, to export items subject to the EAR to Iran. All the temporary general license permits is the exports of items subject to the EAR to ZTE.

So, file the Financial Tribune‘s story under “Fake News” or “Wishful Thinking” depending upon your individual inclination.

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Feb

23

Federal Judge Protects Banks from Injured Sailors and Widows


Posted by at 5:15 pm on February 23, 2017
Category: OFACSanctionsSudanTerrorism Risk Insurance Act

Image viahttps://commons.wikimedia.org/wiki/File:INTEL-COGNITIVE-Cole.jpg [Public Domain]A recent decision by a federal district court in New York prohibited sailors and their families holding a $314 million judgement against Sudan from collecting any of the judgment from funds that had been wired by a Sudanese bank to various other banks and that were then blocked under the Sudanese Sanctions Regulations.  The judgment arose from Sudan’s participation in Al Qaeda’s bombing of the U.S.S. Cole on October 12, 2000.  Instead, now that the Sudanese Sanctions have been lifted, those funds will go to the banks and not to the sailors and their families.

The decision is premised on a highly questionable reading of section 201(a) the Terrorism Risk Insurance Act. That section permits victims of terrorism to execute judgments arising from a terrorist act “against the blocked assets of that terrorist party,” including the blocked assets of “any agency or instrumentality of” that terrorist party.

At issue were funds transferred by El Nilein Bank.  The bank was an instrumentality of the Sudanese government when the funds were blocked, which is why they were blocked in the first place, but not at the time the plaintiff sought to attach the assets. The court held that the TRIA did not apply because El Nilein was not an agency of the Sudanese government at the time the plaintiffs attempted to attach the funds and because the blocked funds, under New York law, were the property of the blocking bank and not El Nilein.

Oddly, the court reached these conclusions without even citing the definition of “blocked assets” in section 201(d)(2) of the TRIA, a definition which would seem to mandate the exact opposite conclusion.

The term “blocked asset” means— (A) any asset seized or frozen by the United States under section 5(b) of the Trading With the Enemy Act (50 U.S.C. App. 5(b)) or under sections 202 and 203 of the International Emergency Economic Powers Act (50 U.S.C. 1701; 1702)

As readers of this blog know well, OFAC takes the position that assets can be frozen under IEEPA even if they are not legally owned by the blocked party and are legally owned by another party. It is sufficient that the blocked person have some interest, direct or indirect, including a contingent interest. So an asset can be a “blocked asset” of a party even if it is not the property of that party.   Moreover, under the court’s analysis, a wire blocked by an intermediate bank can never be levied against under TRIA unless the intermediate bank was itself a blocked party — an absurd result that Congress never could have intended.

This definition of “blocked asset” also is inconsistent with the Court’s idea that the blocked assets could not be seized because Nilein Bank was not an agency of Sudan at the time the plaintiffs sought to attach the blocked assets. The definition is, significantly, in the past tense. As a result, under this definition and under OFAC rules, the wires did not become unblocked when Nilein Bank was allegedly privatized. The blocked funds did not cease being the “blocked assets” of an agency of Sudan because of that privatization; they would only cease to be such blocked assets when they were unblocked. Nor is their any conceivable reason why Congress would want to create, as the Court did, a class of blocked assets of unblocked parties that are somehow exempt from the TRIA.

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Feb

21

Unhelpful Suggestion of the Day


Posted by at 6:36 pm on February 21, 2017
Category: BISCCLCustomsDDTCHTSUSUSML

Jardins Tuliere [sic] Statue by Eksley [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://flic.kr/p/dRYGik [cropped]

An interesting article [subscription required] in the Journal of Commerce reports survey results indicating that one-third of all U.S. e-commerce merchants report that they have incurred fines and delays from regulatory agencies in connection with their imports and exports.  Within that group, 29 percent of the companies surveyed stated that they had been subject to fines in connection with cross-border shipments. With respect to delays, they cited the Bureau of Industry and Security, and the Directorate of Defense Trade Controls, at 32 percent and 30 percent, respectively. That’s a surprising figure by any measure, if true and representative.

But more astonishing and surprising is the suggestion that the JoC article author proposes to fix this:

The task of ensuring trade compliance is also becoming more difficult, as 48 percent said they now do business in more than 50 countries.Trade regulations are constantly increasing and growing, necessitating agile and adept global trade management platforms, empowered by a combination of technology, trade compliance intelligence, and automation.

These systems can help properly classify goods based on descriptions from product catalogs, country of export, and country of import. Strong and reliable classification can help avoid hang-ups at Customs agencies. … In addition to helping avoid run-ins with these agencies, automation is helpful because it allows shippers to track the costs and length of these delays, allowing for better forecasting and business planning.

Don’t get me wrong, automation is often a good idea. But to suggest that the HTSUS, USML Categories or ECCN numbers can be assigned to a product through automation is, well, preposterous. It is something that can only be suggested by someone who has never looked at the USML, the CCL or the HTSUS. Maybe this will be possible sometime in the future when cars fly and robots are butlers. But right now, it’s not a feasible solution.

Photo Credit: Jardins Tuliere [sic] Statue by Eksley [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://flic.kr/p/dRYGik [cropped]. Copyright 2009 Eksley

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Feb

14

SDN List Hit Holds Up Food Bank Funds in Britain


Posted by at 11:12 pm on February 14, 2017
Category: Economic SanctionsOFACSDN List

Eventbrite Instagram Post via https://www.instagram.com/p/032C0eyzj7/?taken-by=eventbrite [Fair Use]So, UK accountant Mamunal Islam was minding his own business trying to raise money for a Bedford food bank. He thought maybe he’d sell tickets to a film through Eventbrite and use the proceeds to help people in his home town who needed food. He had never even heard of this obscure agency in the United States call the Office of Foreign Assets Control until San Francisco based Eventbrite told him that they were keeping his money and the hungry people in Bedford, well, they could eat cake. (Eventbrite didn’t really say the last part.)

It seems that Eventbrite thought that Mamunal Islam was a match on the SDN List, and although it never said that the food bank customers could eat cake, it did, according to an article on BBC News, say this:

Eventbrite said it was “truly sorry” but “a person with a very common name is more likely to make the list.” … Eventbrite said the Office of Foreign Assets Control (OFAC) had only recently added “M Islam” to its list. … A spokesman for the company said: “As a US company, Eventbrite must comply with US law. “In this instance, a payment to the organiser was temporarily held because of a potential OFAC name match. “Whether that is J Smith or M Islam does not make the slightest difference.”

To begin with, I don’t know what SDN List Eventbrite was using but it’s certainly not the one that OFAC publishes. Here’s every individual on the SDN List with Islam in his/her name:

ATABIEV, Islam SDN
ATABIYEV, Islam SDGT
ATABIYEV, Islam Seit-Umarovich SDGT
ABU ISLAM, Karim SDGT
ABU ISLAM SDGT
AL-SURIR, Abu Islam SDGT
AL-GADDAFI, Saif al-Islam LIBYA2
AL-QADHAFI, Saif al-Islam LIBYA2
EL-QADDAFI, Seif al-Islam LIBYA2
ELKADDAFI, Saif al-Islam LIBYA2
GADDAFI, Saif al-Islam LIBYA2
GADHAFI, Saif al-Islam LIBYA2
GHADAFFI, Saif al-Islam LIBYA2
GHATHAFI, Saif al-Islam LIBYA2
QADDAFI, Saif al-Islam LIBYA2
QADHAFI, Saif al-Islam LIBYA2
DEL ROSARIO SANTOS, Ahmad Islam SDGT

I don’t see any “M Islam” there, do you?  I don’t see anything even close other than “Islam” — which should not be cause to say that “Mamunal Islam” is a hit.  If sharing one part of a name is enough, than Eventbrite would need to block every Sally, Carol, José, Mohammed, Ahmed, Tom, Robert, Paul and James, because all those names also show up on the list.

Beyond this, Eventbrite had already burned the barn after the horses had escaped, so to speak.   If Mamunal Islam was really on the list — and he is not — then it would have been illegal to have sold any tickets on his behalf.  By the time there were actual funds to block, the rules had already been broken. So it’s not clear why Eventbrite didn’t tell Mr. Islam that there was an issue when he signed up or registered a new event rather than after he’d already sold a bunch of tickets for the food bank event.

Ultimately Eventbrite reversed its action after Mr. Islam provided “information confirming his country of birth” thereby proving, I suppose, that he is not the second son of Muammar Gaddafi.  So there was, ultimately, a happy ending, more or less, for Mr. Islam, Eventbrite, and the food bank in Bedford.

I understand that OFAC is in the business of scaring people to death and that Eventbrite’s reaction was not entirely irrational.  I’m also guessing that Eventbrite was the victim of one of the numerous paranoid screening services that market their value by claiming to screen against a semi-dubious list of sixty-two billion names of dodgy people.   Last, and perhaps least,  I’m sure “Islam” is scarier to an Internet company in San Francisco than, say, “Sally” or “Carol.”  Still, it seems that common sense should have prevailed here sooner than it did.

 

 

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