More Export Controls Because, Er, Killer Robots

Posted by at 6:07 pm on August 17, 2015
Category: General

Trumpet-Playing Robot by Angela N. [CC-BY-SA-2.0 (], via Flickr [cropped]

Wall Street Journal tech writer Christopher Mims has a really bad idea today: impose U.S. “export controls on commercial robotics and drone technology.” Mr. Mims, who was trained as a neuroscientist, can, I suppose, be forgiven for not knowing much about export controls, but that still does not fully excuse such a ridiculous idea.

First, let’s start with his reason for imposing these export controls, which appears to have had its genesis in Mims spending too much time watching old Terminator flicks.

It’s inevitable, say the experts I talked to, that nonstate actors and rogue states will create killer robots once the underpinnings of this [commercial robotics and drone] technology become cheap and accessible, thanks to its commercial use.

Yes, but terrorists and rogue states can use mobile phones to detonate bombs remotely as well, and no one is suggesting that the way to solve this problem is to prevent the export of mobile phones and mobile phone technology.

Second, and most importantly, the notion that export controls would solve this problem is based on Mims’s notion that all technology of any value comes from the United States. If other countries have such technology, U.S. export controls won’t fix the problem and will simply disadvantage U.S. companies. On this point, Mims should read his own newspaper. The Wall Street Journal, only a few months back, noted that the biggest seller of commercial drones, the ones that Mims fears will be loaded with bombs by terrorists, is SZ DJI Technology Co., located in … are you ready? … China.

Permalink Comments (1)

Bookmark and Share



The Unspeakable in Pursuit of the Inedible: Iran Edition

Posted by at 9:41 pm on August 12, 2015
Category: Iran SanctionsOFAC

Hunters in Iran via [Fair Use]U.S. sanctions on Iran make a number of benign transactions with Iran difficult. If you want to send, say, a chia “pet” to a relative in Tehran, you need a license, and you probably can’t get one. On the other hand, if you want to pay the Government of Iran tens of thousands of dollars to hunt, say, a Transcaspian Urial or a Laristan Mouflon in the wilds of Iran, hey, no problem!

Apparently almost a decade ago, the Office of Foreign Assets Control put aside national policy considerations to permit U.S. persons to tromp around the woods and mountains of Iran hoping to bag some rare Iranian wildlife. According to this article published today by the BBC, the government fees to kill a Transcaspian Urial are around $15,000 and for a Laristan Mouflon around $20,000. This is exclusive of fees paid to local guides.

Not only has OFAC apparently eased the sanctions to permit huge payments to Iran for wild game hunting, but it’s relatively easy to bring the dead animal, or at least parts therof, back. The Fish and Wildlife Service have said that “sport-hunted trophies” can be brought back from Iran in a traveler’s luggage but not shipped separately. Interestingly, such “trophies” can’t be brought back at all from Sudan, in case you were wondering.

Many sites, such as this one listing references from U.S. citizens, detail the prices for expeditions to Iran, including the governmental fees that must be paid. This site, clearly aimed at Americans, is somewhat cagier about mentioning that hunting in Iran requires making payments to the Government of Iran and apparently supplies information on such fees only by email in response to specific inquiries.

My point here is not so much whether hunting for the sport of killing alone is right or wrong. Rather it is this: why would OFAC have a conniption over exports by American of fingernail polish to Iran but seem to have no issue with Americans giving the government of Iran tens of thousands of dollars to hunt exotic animals?


Permalink Comments Off on The Unspeakable in Pursuit of the Inedible: Iran Edition

Bookmark and Share



NYDFS Disciplines Consulting Group for Engaging in Legal Analysis

Posted by at 5:52 pm on August 10, 2015
Category: OFAC

Wall Street by Dave Center [CC-BY-SA-2.0 (], via Flickr[cropped]The saga of the over-reaching New York Department of Financial Services (“NYDFS”) and Standard Chartered Bank, chronicled on this blog here, here, and here, is the blogging gift that just keeps on giving. Standard Chartered Bank hired Promontory Financial Group to help investigate transactions that the bank conducted with countries subject to U.S. economic sanctions. Today the NYDFS announced that it was restricting Promontory’s access to certain confidential reports necessary for it to provide consulting services to banks because its final report on the Standard Chartered investigation “exhibited a lack of independent judgment.” Apparently, Promontory, at the behest of Standard Chartered’s outside counsel, changed some words in the investigative report, for example, changing a description of transactions “that should be called to the attention of authorities” to transactions that “may be of interest to the authorities.” Seriously.

But that’s not the worst of it. What really got the NYDFS to clutch its pearls and fall on the fainting couch was that Promontory had the unmitigated gall to engage in a legal analysis to determine whether certain transactions were actually OFAC violations or not.

While Promontory was preparing reports for the Department, Promontory was also providing arguments to the Bank’s counsel to help it assert that certain transactions should not be considered violations. On September 16, 2011, a Senior Analyst suggested some “fresh thinking” about emphasizing categories of transactions that were potentially exempt from OFAC sanctions. Several days later, on September 19, 2011, a Managing Director replied, “[g]ood points on fresh thinking although I think that fresh thinking about reducing the number of violations is more likely to command attention for obvious reasons.” The Senior Analyst replied about the value that Promontory might add, stating that “big wins” will come from payments that Promontory “might be able to drop off.” Regarding this email exchange, the Senior Analyst testified that Promontory provided information to the Bank’s counsel to help reduce the number of violations and a Managing Director testified that the Bank and its counsel asked Promontory if they had observed anything that “might have an impact on reducing the amount of violations.”

That’s right. Promontory was punished for actually trying to analyze whether certain transactions violated OFAC’s rules or not rather than just assuming that everything the bank did was a violation. This takes particular significance when you recall that NYDFS punished Standard Chartered for U-Turn transactions with Iran that were legal under OFAC’s rules on the ground that, no matter what OFAC itself said, these transactions violated OFAC’s rules.

Promontory, not surprisingly, has said that it will seek a stay of NYDFS’s action against it.

Permalink Comments Off on NYDFS Disciplines Consulting Group for Engaging in Legal Analysis

Bookmark and Share



I’m from the Government and I’m Here To Fine You

Posted by at 11:51 pm on August 5, 2015
Category: OFAC

PPI via [Fair Use]Today the Office of Foreign Assets Control (“OFAC”) announced that it fined Production Products, Inc., a small family-run business in Maryland, the sum of $78,500 in connection with charges that the company exported HVAC duct manufacturing equipment to a company in China on the Specially Designated Nationals and Blocked Persons List. OFAC noted that, because the equipment was valued at $500,000, it could have fined the company $1 million and touted its own beneficence in imposing such a reduced fine. Given that the maximum fine would likely have been a death blow to the company, this is somewhat equivalent to claiming that someone should be grateful because, although you could have killed them, you decided only to cut off a few fingers.

OFAC noted a number of “aggravating factors” that had gotten its dander up, all of which boil down to the fact that PPI had no idea that there was an SDN List and had no idea that it needed to check it or have a — gasp! — compliance program. Apparently not having an OFAC compliance program is the new Eighth Deadly Sin, ranking only slightly behind sloth and lust.

Rather than being an opportunity to add to the Federal coffers, this case should have been an opportunity for governmental self-reflection. Shouldn’t OFAC ask itself why this company — like millions of other small companies — has never heard of OFAC or its SDN List? These companies almost certainly know that there are certain things — guns, explosives and the like — that they can’t export but would be shocked (and justifiably so) to learn that you can’t ship so much as a pencil to a company in China on the mysterious list without suffering grievous consequences.

But instead of wondering why so many people have not heard of OFAC or its rules, OFAC gets its feelings hurt and lashes out with penalties. It seems to me that the efforts used to punish people for not knowing about OFAC might be better shifted to educational efforts to deal with the fact that so few small companies are aware of their obligations with respect to the SDN List.

Permalink Comments (4)

Bookmark and Share



Breaking News: Two U.S. Senators Flunk ITAR Literacy Test

Posted by at 10:51 pm on August 4, 2015
Category: DDTC

Senator Chuck Grassley via [Public Domain]
ABOVE: Sen. Chuck Grassley

Plenty of people are upset by the proposal by the Directorate of Defense Trade Controls (“DDTC”) to revise the definition of public domain to exclude technical data about defense articles released to the public without the permission of DDTC or the Department of Defense. But Senators Ron Johnson and Chuck Grassley are so fired up that they wrote a letter to DDTC, sent to me by a reader, demanding that they justify this position.

Of course, before taking the DDTC to task over the impact of an ITAR proposal, it might have been a good idea to actually read the ITAR itself, or at least parts of it. Yes, I know. Reading is hard. It takes away time that can be spent cavorting with lobbyists at steakhouses. But that is what the staff is for, right? Apparently not, judging from this whopper in the Grassley/Johnson letter to DDTC.

The proposal expands the definition of “defense article” to include items such as firearms ….

Now, I can understand saying this if firearms were in Category XIX or another Category near the end of the USML. That would require the staff to read all the way to the end of the United States Munitions List, a daunting task for even the most dedicated Senate staffer. But, as we all know — well all of us but Senators Grassley and Johnson and their staffs — firearms are covered by Category I. In fact, “firearms” is the first word in the title of Category I.

I think this is what used to be called an epic fail.

Permalink Comments (3)

Bookmark and Share

« Previous posts | Next posts »