Archive for March, 2009


Mar

10

May Cause Somnambulism with Amnesia for the Event


Posted by at 3:14 pm on March 10, 2009
Category: General

The UK’s Export Control Office (“ECO”) has just released a video on export control that has the tenor and excitement of certain videos they used to show us in high school health class on those touchy subjects of serious concern, and you all know which ones I mean. I think they even hired the same narrator and just told him to say al-you-men-i-um instead of allume-i-num.

Slam down a double espresso and then click play to watch:

For those in the U.K. that the video doesn’t put to sleep, it might scare them into not ever exporting anything again. It doesn’t clearly delineate what can and can’t be exported and then promises jail time for mistakes, solemnly intoning the old canard that “ignorance of the law is no excuse.” (Well, actually it is, at least in the United States. A criminal prosecution for export violations requires that the defendant have at least some knowledge that the export was illegal or improper.)

My absolutely favorite part comes near the end where the soporific narrator intones:

What the ECO does, and the licensing process, is, of course, more complicated than a short video like this can ever hope to explain.

Translation: this video was produced in order to spend some extra funds that were lying around the agency but that’s not something we could admit, at least until the very end of the video where there was a very good chance that you had already decided to watch something much more interesting, like, you know, the one of that dachshund with the machine that throws tennis balls for him.

If you weren’t able to make it through the ECO video, but are still dying to know what was in it, the ECO helpfully provides a transcript here.

Permalink Comments (4)

Bookmark and Share


Copyright © 2009 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)

Mar

5

Oh, The Things You Will Learn on Business Wire!


Posted by at 9:26 pm on March 5, 2009
Category: General

Electronic Systems, Inc.Regular readers will know that we have a particular fascination with Business Wire press releases where companies announce that they have “achieved” registration under the International Traffic in Arms Regulations (“ITAR”). These press releases are amusing because anyone who can figure out how to fill out and mail in the registration form with the requisite fee will be registered and will obtain a registration number.

Boasting about ITAR registration is not too different from a company claiming that it “achieved” an employer identification number from the I.R.S, thereby demonstrating the company’s extensive knowledge of corporate tax laws and its commitment to tax compliance. And by the time the PR firms for these new ITAR registrants have finished with the Business Wire press release, some of these companies wind up claiming that the ITAR registration demonstrates the company’s intimate knowledge of even the most obscure provisions of the ITAR, its passage of a grueling three-day exam on all aspects of export law, its successful completion of a three-month compliance audit by the Directorate of Defense Trade Controls (“DDTC”) and its ability to leap tall buildings in a single bound.

The latest in this series is this press release from South Dakota based Electronic Systems, Inc., (“ESI”) which, I must say, sets a new benchmark in misunderstanding the DDTC registration process.

Electronic Systems, Inc. today announced they have received their official International Traffic in Arms Regulations (ITAR) registration from the US Department of State, Bureau of Political-Military Affairs. Companies receiving this certification demonstrate that they have knowledge and understanding to fully comply with the AECE and ITAR as well as having corporate procedures and controls in place to ensure compliance. The ITAR Registration means that the company is uniquely positioned to fully support defense related projects in the United States. Companies that are based in the United States but owned by foreign companies or non-Americans make them ineligible for ITAR compliance.

You know, I was almost willing to go along with the company’s claim that ITAR registration demonstrated that it had knowledge of the ITAR. At least I was until I got to that last sentence about foreign ownership precluding ITAR registration. Apparently section 122.2(b)(2) of the ITAR, which specifically contemplates registration by foreign-controlled companies, wasn’t covered on that grueling exam that ESI had to take before “achieving” registration.

Permalink Comments (3)

Bookmark and Share


Copyright © 2009 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)

Mar

4

Congress Starts Rolling Back Cuba Sanctions


Posted by at 6:27 pm on March 4, 2009
Category: Cuba Sanctions

Cuban StampDon’t start making room in you humidors for any Cuban Cohibas just yet, but provisions attached by the House of Representatives to the 2009 Omnibus Appropriations Act rolling back some Cuba sanctions are likely to be approved by the Senate. At least that’s the word from Senate majority leader Harry Reid.

Three sections of the Omnibus Appropriations Act deal with the Cuba Sanctions program. Section 620 amends the Trade Sanctions Reform and Export Enhancement Act of 2000, commonly known as TSRA, to provide for a “general license” to travel to Cuba in connection with “marketing and sale of agricultural and medical goods.” In OFAC-speak, this means in effect that licenses would no longer be required for such travel. Currently, individuals seeking to travel to Cuba in connection with TSRA transactions need to apply for a specific license. And, although such licenses are generally granted, the specific license requirement can result in delays and added expense in connection with such travel.

Second, section 621 prohibits the expenditure of any funds to enforce amendments to “section 515.560 and section 515.561 of title 31, Code of Federal Regulations, related to travel to visit relatives in Cuba, that were published in the Federal Register on June 16, 2004.” Those amendments, among other things, narrowed the definition of relatives that could be visited, limited such trips to once every three years, imposed a requirement that a specific license be obtained for relative trips that previously could be made under a general license, and decreased the amount of money that could be spent during visits to relatives from $167 per day to $50 per day and $50 per trip. Other amendments to sections 515.560 and 515.561 not involving relatives, such as the amendment allowing authorized travelers to bring back $100 worth of Cuban goods for personal consumption (cigars, of course) would presumably not be affected by section 621.

Finally, section 622 reverses a rule adopted by OFAC requiring that payment be received for TSRA exports to Cuba prior to the ship’s departure from the shipping port. In effect, this eliminated the “cash against documents” rule standard for export transactions. Under that rule, the Cuban buyer’s bank (usually a European bank) would pay for the shipment upon presentation to it of a negotiable bill of lading which is considered to be equivalent to the delivery of the goods themselves. Often the goods would have arrived in the Cuban port prior to this presentation of the bill of lading. Requiring payment prior shipment from the U.S. port, and, hence, prior to delivery of the bill of lading to the confirming bank, materially increased the risk of Cuban TSRA exports and made it more difficult for such transactions to be financed or handled by banks.

Permalink Comments Off on Congress Starts Rolling Back Cuba Sanctions

Bookmark and Share


Copyright © 2009 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)

Mar

2

New York Branch of Italian Bank Investigated For Iran Violations


Posted by at 5:44 pm on March 2, 2009
Category: ITAR Creep

Intesa Sanpaolo BranchItalian wire service Adnkronos International reported today that the New York branch of Italian bank Intesa Sanpaolo is under investigation in the United States in connection with its involvement in U.S.-dollar wire transfers originated by sanctioned banks and individuals in Iran. Although few details are given in the report, it appears that investigators are claiming that the transfer documents failed to identify the correct originators of the transfers. Investigators have also alleged that the transferred funds were used to buy weapons.

The investigation is being conducted jointly by New York, U.S. and Italian authorities. Police authorities in Milan claim to have uncovered evidence that sanctioned Iranian banks asked Intesa Sanpaolo to conceal their names on the international funds transfers. Investigators have also stated that Intesa Sanpaolo is one of 10 major European banks under investigation for handling wire transfers for sanctioned Iranian banks.

Intesa Sanpaolo says that it is cooperating fully with the investigation.

Permalink Comments Off on New York Branch of Italian Bank Investigated For Iran Violations

Bookmark and Share


Copyright © 2009 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)