AIT Worldwide Logistics - regulatory Compliance Update

REGULATORY COMPLIANCE UPDATE

Export Violation Penalties Rise Sharply

President George W. Bush signed S. 1612 into law as Public Law 110-96 on October 16, 2007, sharply increasing the penalties that exporters will face for export violations.

PL 110-96, the International Emergency Economic Powers Enhancement Act, amends the penalty provisions in section 206 of the International Emergency Economic Powers Act (IEEPA). When the Export Administration Act of 1979 lapsed on August 21, 2001, President Bush invoked emergency powers under IEEPA to keep the main provisions of the Export Administration Act in force for one year. In subsequent years, President Bush has used this same method to keep the Export Administration Act in force.

Under PL 110-96 the penalties for export violations in section 206 of the IEEPA are increased dramatically as follows:

Civil penalties for export violations are increased from $10,000 to either (1) $250,000 or (2) an amount that is twice the amount of the transaction that is the basis of the violation with respect to which the penalty is imposed.
Criminal penalties for export violations are increased from $50,000 to $1,000,000, the possible term of imprisonment is increased from 10 to 20 years, and the violator may incur one or both penalties.

These penalties apply, among others, to such export compliance failures as exporting without filing the proper export declaration, exporting without the proper licenses, exporting to prohibited parties, and failure to abide by the licensing requirements.

The Bush Administration has stated that it supports legislation to create a streamlined and strengthened export control system that effectively promotes both U.S. national security and U.S. economic interests.

The The Bureau of Industry and Security (BIS) issued a final rule that amends the Export Administration Regulations (EAR) to list names of end-users in the People's Republic of China (PRC) approved to receive exports, reexports and transfers of certain items under Authorization Validated End-User (VEU). In a final rule published in the Federal Register, BIS revised and clarified U.S. export control policy for the PRC, establishing Authorization VEU and identifying the PRC as the initial eligible destination. This rule identifies five specific validated end-users. Effective Date: November 19, 2007.

The The Bureau of Industry and Security (BIS) issued a proposed rule that would require that export and reexport license applications, classification requests, encryption review requests, License Exception AGR notifications and related documents be submitted to the Bureau of Industry and Security (BIS) via its Simplified Network Application Process (SNAP-R) system. This requirement would not apply to applications for Special Comprehensive Licenses or in certain situations in which BIS would authorize paper submissions. Comments must be received by December 18, 2007.

The U.S. Customs and Border Protection (CBP) issued a final rule that amends the regulations to reflect changes in the organizational structure of CBP resulting from the establishment of the new Office of International Trade, as well as the nomenclature changes effected by the transfer in 2003 of CBP to the Department of Homeland Security and the subsequent renaming of the U.S. Customs Service as CBP. Effective Date: October 19, 2007. Washington - Southampton Container Terminals, United Kingdom, Port Qasim, Pakistan (both managed by DP World) and Puerto Cortez, Honduras will become the first seaports to implement the Secure Freight Initiative (SFI) beginning October 12 by scanning all maritime containers destined for the United States for nuclear or other radiological materials. These ports fulfill the requirements set out in the Security and Accountability For Every (SAFE) Port Act of 2006, which establishes a program that couples Non-Intrusive Inspection (NII) and radiation detection technology. Data from these systems is then provided to U.S. officials at U.S. Customs and Border Protection’s National Targeting Center for analysis.

The The Bureau of Industry and Security (BIS) issued a correction to Title 15 of the Code of Federal Regulations, revised as of January 1, 2007, on page 282, in Supplement No. 1 To Part 740--Country Groups, in the table Country Group D, for the entry "Korea, North," the table is corrected by adding an X under the second column [D: 1] National Security.

The Office of Foreign Assets Control (OFAC) is publishing the names of 21 newly-designated individuals and entities whose property and interests in property are blocked pursuant to Executive Order 12978 of October 21, 1995, "Blocking Assets and Prohibiting Transactions with Significant Narcotics Traffickers." The designation by the Director of the Office of Foreign Assets Control of the 21 individuals and entities identified in this notice pursuant to Executive Order 12978 is effective on October 10, 2007. The list of additional designees is as follows:

1. Alzate Jimenez, Diego Uriel; 2. Alzate Jimenez, Luis Holmes; 3. Alzate Jimenez, Tulio Hernando; 4. Andinaenvios An en S.A.,; 5. Asesoria y Soluciones Grupo Consultor S.A.; 6. Cambios y Capitales S.A.; 7. Constructora e Inmobiliaria Andina S.A.; 8. Consultoria Integral y Asesoria Empresarial S.A.; 9. Financiacion y Empresa S.A.; 10. Fundacion Para La Educacion y El Desarrollo Social; 11. Inversiones Corporativas LTDA.; 12. Inversiones Epoca S.A.; 13. Inversiones Sardi Alzate S.C.S.; 14. J.A.J. Barbosa y CIA. S.C.S.; 15. Lopera Barbosa, Adriana; 16. Lopera Barbosa, Jairo Humberto; 17. Lopera Barbosa, Juan Carlos; 18. Outsourcing De Operaciones S.A.; 19. Salazar Lugo, Nelson; 20. T.H. Alzate y Cia. S.C.S.; 21. Turismo Hansa S.A.

The Office of Foreign Assets Control (OFAC) is publishing the name of four individuals whose property and interests in property have been unblocked pursuant to Executive Order 12978 of October 21, 1995, Blocking Assets and Prohibiting Transactions With Significant Narcotics Traffickers. The unblocking and removal from the list of Specially Designated Narcotics Traffickers of the individuals identified in this notice whose property and interests in property were blocked pursuant to Executive Order 12978 of October 21, 1995, is effective on October 10, 2007. The listing of the unblocked individuals follows:

1. CALDERON ASCANIO, Ricardo; 2. CORDOBA VALENCIA, Juan Ramon; 3. CALDERON RODRIGUEZ, Solange; 4. IDROBO ZAPATA, Edgar Hernando

The U.S. Customs and Border Protection (CBP) issued an interim rule amending the regulations on an interim basis to implement the preferential tariff treatment and other customs-related provisions of the United States-Bahrain Free Trade Agreement entered into by the United States and the Kingdom of Bahrain. Interim rule effective October 16, 2007.

The Office of Foreign Assets Control (OFAC) issued a Quarterly TSRA report. -- Quarterly Report of Licensing Activities pursuant to Section 906(b) of the TSRA, covering activities undertaken by the OFAC under Section 906(a)(1) of the TSRA from October through December 2005 and January through March 2006 Under the procedures established in its TSRA-related regulations, OFAC processes license applications requesting authorization to export agricultural commodities, medicine, and medical devices to Iran and Sudan under the one-year specific licensing regime set forth in Section 906 of the TSRA.

The Office of Foreign Assets Control (OFAC) issued a Release of Civil Penalties Information -- OFAC is now posting on the website copies of its final agency Penalty Notices with the relevant case reports to the extent permitted under applicable law.

ENTITIES – 31 CFR 501.805 (d)(1)(i)

Zeromax LLC Settles Iran Embargo Program Allegations:

$481,983

Fairfield Chemical Carriers Inc. Settles Sudanese Sanctions Violation Allegation:

$37,500

INDIVIDUALS – 31 CFR 501.805 (d)(1)(ii) One individual has agreed to a settlement totaling $765.75 for dealing in property in which Cuba or a Cuban national had an interest:

The Office of Foreign Assets Control (OFAC) The Office of Foreign Assets Control (OFAC), Department of Treasury announced revisions to their watch list on October 10, 2007. Entities have been added in the notice and information on existing parties on the watch list has been updated with new addresses and branch offices.

DENIED PARTIES SCREENING UPDATE:

The following entities were added to the Denied Persons List. The full list of changes can be accessed at the OCR web site.

A & C International Trade, Inc.
Privileges affected: Prohibited from participating directly or indirectly in any brokering activities and in any export from or temporary import into the United States of defense articles, related technical data, or defense services in all situations, pursuant to section 38 of the AECA and section 127.7 of the ITAR. Exceptions may be made to this denial policy on a case-by-case basis. U.S. District Court of Washington, D.C., Docket # 99-CR-21-ALL.
Effective date: 04/13/00, Expiration date: UNTIL RESCINDED F.R. Date: 03/05/2002, Citation: 67 FR 10033
AL-KHASHIBAN, Fahd Muhammad Abd Al-Aziz , AKA/DBA: a.k.a. AL-KHASHAYBAN, Fahd Muhammad Abd Al-Aziz; a.k.a. AL-KHASHIBAN, Fahad; a.k.a. AL-KHASHIBAN, Fahad H.A.; a.k.a. AL-KHOSHIBAN, Fahad Mohammad A.; a.k.a. AL-KHOSHIBAN, Fahad Muhammad A.; a.k.a. AL-KHOSIBAN, Fahad H.A.; a.k.a. AL-KHUSHAYBAN, Fahd Muhammad Abd al-Aziz; a.k.a. KHASHAYBAN, Fahad H.A.; a.k.a. KHASIBAN, Fahad H.A.; a.k.a. KHESHAIBAN, Fahad H.A.; a.k.a. KHESHAYBAN, Fahad H.A.; a.k.a. KHUSHAIBAN, Fahd; a.k.a. RAHMAN, Abdur Abu; a.k.a. RAHMAN, Abu Abdur; a.k.a. THABET, Shaykh; a.k.a. THABIT, Abu; a.k.a. THABIT, Shaykh Abu
Privileges affected: Designated under Executive Order 13224; DOB 16 Oct 1966; POB Aniza, Saudi Arabia; nationality Saudi Arabia (individual). Effective date: 10/10/07, Expiration date: UNTIL RESCINDED
AL-TALHI, Abdul Rahim, Buraydah, SAUDI ARABIA , AKA/DBA: a.k.a. AL NAJI, Abu Al Baraa; a.k.a. AL TAHI, Abdulrahim; a.k.a. AL TAHLI, Abd Al-Rahim; a.k.a. AL-TALAHI, Abe Al-Rahim; a.k.a. AL-TALHI, Abd al-Rahim; a.k.a. AL-TALHI, Abd Al-Rahim Hamad; a.k.a. AL-TALHI, Abdul-Rahim Hammad; a.k.a. ALTALHI, Abdulrheem Hammad A; a.k.a. AL-TALJI, Abd-Al-Rahim; a.k.a. AL-TALJI, Abdulrahim; a.k.a. JUNAYD, Shuwayb; a.k.a. RAHIM, Abdul
Privileges affected: Designated under Executive Order 13224; DOB 8 Dec 1961; POB Al-Taif, Saudi Arabia; nationality Saudi Arabia; Passport F275043 (Saudi Arabia) issued 29 May 2004 expires 5 Apr 2009 (individual). Effective date: 10/10/07, Expiration date: UNTIL RESCINDED

This newsletter is not intended to provide legal guidance. Adherence to this decision does not relieve the exporter of the statutory responsibilities of complying with the applicable statutes, regulations, policies and procedures of the U.S. Government.