MICHAEL RUFE EXPORT CONTROL OFFICER COORDINATOR BUREAU OF INDUSTRY AND SECURITY

Transcription

1 MICHAEL RUFE EXPORT CONTROL OFFICER COORDINATOR BUREAU OF INDUSTRY AND SECURITY Special Agent Michael Rufe began his career with the Office of Export Enforcement (OEE) in August Prior to his time at OEE, Rufe worked for DOC's International Trade Administration (ITA) and the Department of Justice Antitrust Division. In August 1998, SA Rufe transferred to the SAC Miami office and worked export investigations until October He was selected to be the first Export Control Officer (ECO) in New Delhi, India serving as ECO from November 2004 until December Upon his return to the United States, SA Rufe was assigned to the Operations Division of OEE headquarters. During this time he served as ECO coordinator, interagency detailee, FBI liaison and Sentinel Program coordinator. After serving as Acting unit chief in 2011 in the Operations Division, he is currently the ECO Program Director and the Sentinel Program coordinator within the Office of Enforcement Analysis (OEA).

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3 Bureau of Industry and Security U.S. Department of Commerce Types of U.S. Export Controls Dual-use Export Controls Overview Michael Rufe ECO Program Director Office of Enforcement Analysis Dual-Use Controls Administered by the Department of Commerce, Bureau of Industry and Security s (BIS) Export Administration Regulations (EAR) Defense Controls Administered by the Department of State, Directorate of Defense Trade Controls (DDTC) International Traffic in Arms Regulations (ITAR) Sanctions and Embargoes Administered by the Department of Treasury, Office of Foreign Assets Control (OFAC) Export Controls Examples of Dual-Use Items Export controls serve the national security, foreign policy, and nonproliferation interests of the United States. These include export controls designed to stem the proliferation of weapons of mass destruction and export controls designed to limit the military and terrorism support capability of certain countries. Use of Concern Gas centrifuge, Fabrication of WMD Missile Components Machine Tools Carbon Fibers Legitimate Use Parts & components of various machinery Golf club shafts, Fishing rods Mustard Gas Thiodiglycol Plastics, Dyes, Inks Stabilize biological agents for BW Freeze-Drying Equipment Instant Coffee Export Controls Bureau of Industry and Security Most U.S. controls are pursuant to obligations undertaken in one of the four multilateral export control regimes: The Nuclear Suppliers Group (1974) The Australia Group (1985) The Missile Technology Control Regime (1987) The Wassenaar Arrangement (1995) BIS is charged with administering and enforcing the Export Administration Act (EAA) and the Export Administration Regulations (EAR) The EAA and EAR control the export and re-export of U.S.-origin dual-use goods and technology It is a violation of the EAR to export to embargoed destinations 1

4 Export Enforcement The U.S. accomplishes its enforcement mission on an interagency basis with various law enforcement partners both domestically and internationally through: Focus on certain items, destinations, end-users and end-uses. Outreach and Prevention activities Pursuing appropriate administrative actions against export violators. Pursuing appropriate criminal sanctions against export violators. Types of End-use Checks Pre-License Check (PLC): validates information on export license applications. PRIOR to shipment. Post-Shipment Verification (PSV): strengthens assurances that all parties comply with an export license and licensing conditions to deter diversions AFTER shipment. Prevention and Outreach The key to the USG s enforcement mission is educating the exporting and reexporting community about the EAR and how to avoid and present violations. We do that through: Company outreach visits Seminars Workshops Other publicity BIS website ( Who conducts End-use Checks? Export Control Officers (ECO) Export Control Policy Engagement Foreign government and local business outreach Sentinel Program Checks conducted in locations by BIS Export Enforcement personnel where no ECO is present. U.S. Embassy/Consulate Officials EUCs involve physical visits (both with notice or no-notice) Proactive/Preventive Measures BIS Export Control Officer Locations Check exporters and customers prior to issuing licenses Check end-users and end-uses after shipment Use watch list to screen license applications Review Shipper s Export Declarations (SED) / Automated Export System (AES) Review visa applications Detentions/Seizures Issue Denial Orders Moscow Abu Dhabi New Delhi Beijing Hong Kong Singapore 2

5 BIS End-Use Check Program FY 2011 Completed 891 EUCs 10% PLCs 90% PSVs Approximately 18% were unfavorable Completed checks in over 60 countries Consequences of Unfavorables Unverified List: When BIS cannot conduct a pre-license check or a post-shipment verification for reasons outside of the U.S. Government's control, the names and countries of foreign persons who were parties to the transaction are placed on the Unverified List Entity List: The list specifies the license requirements that apply to each listed party. These license requirements are in addition to any license requirements imposed on the transaction by other provisions of the Export Administration Regulations Investigations: Criminal or Administrative. Unfavorable Checks - Middle East U.S. Controlled (ECCN: 6A003) High grade Night Vision Equipment. Licensed item. License is issued for demonstration purposes only. A post-shipment verification (PSV) check revealed that the Company had resold the items to a trading company not listed on the license. The ultimate End-Use after this resale remains unknown. Entity List and Other Lists USG Consolidated Screening List: Denied Persons List Commerce Entity List Commerce Unverified List Commerce Nonproliferation Sanctions State Debarred List State Specially Designated Nationals Treasury Many companies have been added to the BIS Entity List or are otherwise restricted from receiving items subject to the EAR. Some companies have successfully petitioned for their removal from the BIS Entity List. Unfavorable Checks - Observations Investigations: Criminal Penalties Inconsistent business models No awareness of technology ordered Cancellation upon scrutiny Failure or high reluctance to meet Confrontational attitude Vague customer information Willful Violations For Individuals: $1 million fine and/or 20 years imprisonment For Corporations: $1 million fine Targets are not just U.S. companies and individuals Red Flag Guidance: 3

6 Investigations: Administrative Penalties $250,000 or twice the value of the transaction, whichever is greater. Applies retroactively. Denial of Export Privileges / Revocation of Export Licenses Resources and Illustrative Cases Don t Let This Happen to You! shappentoyou_2010.pdf Know Your Customer Guidance Best Practices for Preventing Unlawful Diversion ces.htm FOIA Cases Examples/Press Releases ions.htm Thank You! Michael Rufe Office of Enforcement Analysis Bureau of Industry and Security U.S. Department of Commerce Michael.Rufe@bis.doc.gov 4

7 9/14/2012 Individuals Jurisdiction Economic Sanctions & Export Controls Trade Promotion Coordination Committee Inter-Agency Trade Officer Course Export Regulations and Services September 27, U.S. citizens and permanent resident aliens located anywhere in the world - Individuals, regardless of citizenship, physically located in the United States Corporations - organized under U.S. law, including foreign branches of U.S. companies - physically located in the U.S., including U.S. branches, agencies and representative offices of foreign corporations OFAC operates under a clause of strict liability! 1 4 Who is OFAC? Office of Foreign Assets Control (OFAC) U.S. Department of the Treasury OFAC administers and enforces economic and trade sanctions against targeted: Foreign governments Individuals Entities Practices Sanctions Programs Comprehensive Programs Sudan, Cuba, Iran (ITR and IFSR), Syria Limited Programs Burma (Myanmar), Diamond Trading, North Korea List-Based Programs (Activity): Anti-Terrorism, Non-Proliferation, Counter Narcotics Trafficking, Transnational Criminal Organizations, Grave Human Rights Abuses Via Information Technology (Regime): Balkans, Belarus, Zimbabwe, Cote D Ivoire, Democratic Republic of the Congo, Former Liberian Regime of Charles Taylor, Iraq, Lebanon, Libya, Somalia, Syria, Yemen 2 5 Who is OFAC? Comprehensive Sanctions Programs SANCTIONS Comprehensive use of U.S. economic force based on foreign policy goals Block assets and restrict trade and financial transactions Used against specific targets and their agents OFAC expertise is financial Jurisdiction is U.S. persons and citizens EXPORT CONTROLS Control dissemination of dual use products and technology to destinations and end users throughout the world BIS expertise includes engineering and product knowledge used for product classification Jurisdiction is U.S. persons as well as goods and technology 3 Cuba Iran Sudan Syria Imports and exports are generally prohibited 6 OFAC (Iran, Sudan) and BIS (Cuba) issue TSRA licenses 1

8 9/14/2012 Burma Conflict Diamonds North Korea Limited Sanctions Programs The Specially Designated Nationals (SDN) List - OFAC s prohibited parties list - Owned, controlled by or acting on behalf of targeted governments or groups - Individuals, entities, vessels, banks located worldwide - UPDATED FREQUENTLY Prohibitions vary by sanctions program and are targeted at specific industries or activities Balkans Belarus Zimbabwe Ivory Coast DR Congo Liberia Iraq Lebanon Libya Somalia Yemen List-Based Sanctions Programs: Regimes Applying for a Specific License TSRA Licenses Agricultural or Medical Products or Devices Dear OFAC Applicant information Banks Brokers Purchasing agents End-users Shipment terms Payment mechanism OFAC designates regime-members and affiliates as SDNs All transactions with SDNs are prohibited 8 11 Terrorism Weapons Proliferation Narcotics Trafficking Transnational Criminal Organizations Grave Human Rights Abuses Via Information Technology List-Based Sanctions Programs: Activities OFAC designates participating individuals and entities as SDNs Sanctions Enforcement Frequent OFAC Violations by Exporters: Transactions involving sanctioned countries Sudan, Cuba and Iran Transactions involving SDNs (directly or indirectly) SDN banks, vessels and shipping companies Unlicensed exports Relying on an out-of-date SDN list Relying on a freight forwarder All transactions with SDNs are prohibited

9 9/14/2012 Sanctions Enforcement OFAC Website Civil Penalties (Statutory Maximums): Trading With the Enemy Act $65,000 International Emergency Economic Powers Act $250,000 (or twice the transaction value) Foreign Narcotics Kingpin Designation Act $1,075,000 Anti-Terrorism and Effective Death Penalty Act $55, Sanctions Enforcement 2009 Guidelines Characteristics of the Violation - Willful or reckless - Sanctions harm - Timing of violation - Remediation - Awareness of conduct - Proportionality / Other relevant factors Characteristics of the Institution - Individual characteristics - Compliance program - Cooperation with OFAC - Previous enforcement actions - Future compliance/deterrent effect Contact Information OFAC Compliance Division OFAC_Feedback@treasury.gov OFAC Licensing Division OFAC Licensing Division 1500 Pennsylvania Avenue NW - Annex Washington, DC Compliance Program Risk Assessment Internal Controls Testing/Audit Training Responsible Individual 15 3

10 OFAC Specific & TSRA License Information OFAC Specific Licenses: GETTING STARTED: Be sure to check our website for application guidance as each sanctions program is unique. File a new, complete application for each request, including license renewal requests. Submit requests for amendments to an existing license in writing. Wait for a response from OFAC. Applicants may be asked for additional information in order to complete the application review process. Retain your records. Licensees may be required to file reports to OFAC on transactions processed under the license. Applying for a TSRA License NOTE: TSRA Licenses are only used for the export of agricultural goods, medicine and medical devices to Iran and Sudan, and may be subject to interagency reviews. Include an Official Commodity Classification Code of EAR99 for each product. EAR codes can be obtained by contacting the Bureau of Industry and Security (BIS). State the type of product to be exported: agricultural commodity, medicine, medical device. Provide a brief description of each product in simple, concise language. For medical devices, include technical specifications and a picture/diagram of the device. Examples of Agricultural Commodities Licensable under TSRA Licensable: Food, livestock Fibers Tobacco Wood, wood products Seeds, some fertilizers Reproductive materials Not Licensable: Agricultural equipment (motorized or hand tools) Clothing Cosmetics (unless entirely from plant materials) Furniture made from wood Pesticides, insecticides, herbicides

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31 SESSION NOTES REFLECTION QUESTIONS Think of three specific examples of how the information that you just heard can be relevant and valuable to an existing customer. Think of three specific examples of how your agency can work with the agency/offering previously presented for the benefit of your customers. How will this value translate to the customer s customer?