From October, the Office of Trade Sanctions Implementation (OTSI) will be empowered to investigate breaches of trade sanctions and impose corresponding civil monetary penalties. We examine the powers OTSI will have, how it will interact with other UK sanctions authorities and what impact it may have.
The G7 published joint guidance for industry on preventing evasion of the export controls and sanctions imposed on Russia. The guidance document contains items which pose a heightened risk of being diverted to Russia, updated red flag indicators of potential export control and/or sanctions evasion, Best practices for industry to address these red flags, and screening tools and resources to assist with due diligence.
The Commerce Department proposed prohibiting the sale or import of connected vehicles integrating specific pieces of hardware and software, or those components sold separately, with a sufficient nexus to the People’s Republic of China (PRC) or Russia. Published by the Bureau of Industry and Security, the rule focuses on hardware and software integrated into the Vehicle Connectivity System (VCS) and software integrated into the Automated Driving System (ADS). These are the critical systems that, through specific hardware and software, allow for external connectivity and autonomous driving capabilities in connected vehicles.
The Commerce Department’s Bureau of Industry and Security (BIS) issued a final rule making changes to the Export Administration Regulations (EAR) related to BIS’s policies and practices regarding voluntary self-disclosures (VSDs) and to the BIS Penalty Guidelines. The rule revises the BIS Penalty Guidelines to change how the Office of Export Enforcement (OEE) calculates the base penalty in administrative cases and how OEE applies various factors to the base penalty to determine the final penalty.
On September 6, the U.S. Departments of State, Agriculture, Commerce, Homeland Security, and Treasury jointly released an updated warning for U.S. businesses about risks to their operations and activities in Hong Kong. Risk factors that were formerly limited to mainland China are now also a concern in Hong Kong and could affect commerce, trade, and seemingly routine individual commercial activities in Hong Kong. Many of these risks stem from the 2020 Law of the People’s Republic of China on Safeguarding National Security in the Hong Kong SAR (National Security Law, or NSL), as well as the Safeguarding National Security Ordinance (SNS Ordinance), which was enacted in March 2024 under Article 23 of Hong Kong’s Basic Law.
Bureau of Industry and Security (BIS) is implementing export controls on several semiconductor, quantum, and additive manufacturing items with an interim final rule published September 6th. The rule adds and revises Export Control Classification Numbers (ECCNs) in the Commerce Control List, adds a new license exception for countries that have implemented equivalent technical controls, and adds two new worldwide license requirements to the national security and regional stability controls in the Export Administration Regulations (EAR). The new controls include a limited number of deemed export requirements in the sectors of quantum computers, materials, and related electronic assemblies; aerospace technology; and integrated circuit “development” or “production.”
RTX Corporation, the defense contracting roll-up formerly known as Raytheon, has entered into a settlement agreement with the U.S. Department of State following a comprehensive investigation into violations of the Arms Export Control Act (AECA) and the International Traffic in Arms Regulations (ITAR). By paying $100 million in fines and promising to spend another $100 million on compliance programs, the firm avoids debarment and further criminal or civil action.
The Justice Department declined to prosecute the Boston Consulting Group, Inc. (BCG) for a scheme in which the firm paid $4.3 million in "commissions" to obtain consulting contracts with the government of Angola. The Government’s investigation found evidence that from in or about 2011 until in or about 2017, BCG, through its Lisbon, Portugal office, paid its agent in Angola to help BCG obtain business from the Angolan Ministry of Economy (“MINEC”) and the National Bank of Angola (“BNA”).
The Commerce Department’s Bureau of Industry and Security (BIS) is taking action to further restrict the supply of both U.S.-origin and “U.S. branded” (i.e., labeled) items to Russia and Belarus for the Kremlin’s war efforts. BIS has imposed controls on a range of items subject to the Export Administration Regulations (EAR) that did not previously require export licenses when destined for Russia. Also imposed are similarly stringent controls on items subject to the EAR that are destined for Belarus. Notably, both countries have been made subject to broad in-country transfer controls.
In concert with the Commerce Department measures, Treasury and the State Department targeted nearly 400 individuals and entities both in Russia and in Asia, Europe, and the Middle East—whose products and services enable Russia to sustain its war effort and evade sanctions. Treasury targets include ammunition and materiel suppliers, trust and corporate formation entities, cyber and precious metals actors, advanced procurement networks and Russia's metals and mining industry. The measures also target Russian financial technology companies that provide necessary software and IT solutions for Russia’s financial sector.
The Commerce Department's Bureau of Industry and Security (BIS) imposed a $5.8 million civil penalty against a Pennsylvania manufacturer for shipments of "low-level items" to parties tied to the People’s Republic of China’s (PRC) hypersonics, unmanned aerial vehicles (UAV), and military electronics programs. Formerly known as Tyco Electronics, and before that AMP Incorporated, TE Connectivity Corporation is one of the world's leading manufacturers of connectors and other electronic sensors and assemblies.
The Treasury-let interagency Committeee on Foreign Investment in the U.S. (CFIUS) rolled out a revised website, aimed at providing increased transparency and information about enforcement actions. Included in the rollout was disclosure of a record fine related to the telecoms merger between German T-Mobile and Japanese-controlled Sprint.
Senate Finance Committee Chairman Ron Wyden (D-Ore) has introduced much-anticipated bipartisan legislation to tighten imports requirements for low-value packages in order to close the so- called de minimis loophole. The bill would prohibit the use of the $800 de minimis threshold to import certain types of goods, including goods that are import-sensitive or subject to additional trade remedies.
The Commerce Department announced Friday that it has made the decision to continue classifying Vietnam as a non-market economy country for purposes of calculating US antidumping duties on imports from Vietnam.
Thursday, August 1st, the Justice Department rolled out its corporate whisatleblower awards program, launching justice.gov/CorporateWhistleblower for the reporting of information about certain types of corporate crime. If the Justice Department brings a prosecution that results in the forfeiture of criminal proceeds, the whistleblower may be eligible to receive a portion of that forfeiture as a monetary award. The Pilot Program covers four areas of corporate crime not covered by existing whistleblower regimes: foreign corruption, foreign corrupt conduct, financial institutions and fraud against private insurers.
The Departments of State and Commerce are each issuing separate but complementary proposed rules regarding personal services to foreign defense and intelligence activities. State's review of "defense service" in the ITAR focused on identifying activities of U.S. persons that provide a critical military or intelligence advantage such that they warrant control under the ITAR and are activities that are not currently subject to the ITAR; or are controlled under the ITAR, but the current control language would benefit from additional clarity..
Commerce released two new proposed rules governing military and intelligence end uses and end users, including activities by U.S. persons, as well as amendments to the EAR controls on Foreign-Security End Users (FSEUs) and expanding controls on activities of “U.S. persons.” BIS is proposing amendments to control “support” furnished by “U.S. persons” to identified foreign- security end users. These rules propose to implement the broadest expansion of presidential export control authority since the Export Control Reform Act (ECRA) was signed in August 2018.
July 24 the Bureau of Industy and Security published a Final Rule formalizing the changes to the Export Administration Regulations imposed by Congress in the emergency supplemental appropriation [HR 815] signed into law April 24th. As a result of this new FDP Rule, exporters require a U.S. Government authorization for transfer of these items when produced outside the United States with certain U.S. technology, software, or production equipment when exports are destined to Iran or for use in connection with certain equipment destined to Iran, even when such items were never exported from the United States.
The long-awaited Standards Rule has been published by the Commerce Department, revising Export Administration Regulations to facilitate US industry participation in international standards setting bodies. In this rule, the Bureau of Industry and Security (BIS) amends the Export Administration Regulations (EAR) to revise the scope and the terms used in the EAR to describe “standards-related activities” that are subject to the EAR. As we reported last month [12385] lack of clear guidance from Commerce has chilled come companies' participation for fear of running afoul of export controls.
The nine nuclear-armed states—the United States, Russia, the United Kingdom, France, China, India, Pakistan, the Democratic People’s Republic of Korea (North Korea) and Israel—continued to modernize their nuclear arsenals and several deployed new nuclear-armed or nuclear-capable weapon systems in 2023, according to the most recent SIPRI Yearbook.