Russian Sanctions: Revisions/Clarifications for Crimea Region of Ukraine & Guidance on Transshipments

Russian Sanctions: Revisions/Clarifications for Crimea Region of Ukraine & Guidance on Transshipments

On May 22, 2015, the US Government relaxed certain export and reexport controls imposed under US sanctions targeting the Crimea region of Ukraine (“Crimea”). OFAC (Office of Foreign Assets Control) issued a new  General License authorizing the export or reexport from the United States or by US Persons to persons in Crimea of certain services and software incident to the exchange of personal communications over the Internet. In coordination with OFAC, the Bureau of Industry and Security (BIS) issued a final rule amending the Export Administration Regulations (EAR), 15 C.F.R. Parts 730-774, to authorize without a specific license the export/reexport to, or transfer within, Crimea of certain software necessary to enable the exchange of personal communications over the Internet.

To read the entire rule: Federal Register

Guidance on Due Diligence to Prevent Unauthorized Transshipment/Reexport of Controlled Items to Russia

BIS remains concerned about efforts by front companies and other intermediaries, who are not the true final end users, to transship or reexport U.S.-origin items to the Russian Federation in violation of these measures and other export controls. Even prior to the imposition of restrictions based on the situation in Crimea, front companies and other intermediaries obtained U.S.-origin items that may require a license to Russia through intermediate countries subject to a more favorable licensing policy under the Export Administration Regulations (EAR).

Therefore, BIS is providing additional guidance to U.S. exporters to prevent unauthorized reexports to Russia, especially for transactions involving NS-controlled items, or which lists items that are subject to the military end use license requirement.

• Whenever a person who is clearly not going to be using the item for its intended end use (e.g., a freight forwarder) is listed as an export item’s final destination, the exporter has an affirmative duty to inquire about the end use, end user, and ultimate destination of the item to ensure the transaction complies with the EAR.
• In addition, the exporter should pay attention to any information that may indicate an unlawful diversion is planned. This may include discrepancies in the destination country and the country from which an order is placed or payment is made.
• When inquiring into the ultimate destination of the item, an exporter should consider e-mail address and telephone number country codes and languages used in communications from customers or on a customer’s website.
• The exporter should also research the intermediate and ultimate consignees and purchaser, as well as their addresses, using business registers, company profiles, websites, and other resources.
• Exporters should always screen their customers against the U.S. Government’s consolidated export screening list.
• Furthermore, exporters should pay attention to the countries a freight forwarder serves, as well as the industry sectors a distributor or other non-end user customer supplies.
• The exporter should then determine whether a license is required based on the likely country of ultimate destination and end use and end user.
• The exporter should consider not only the list-based license requirements specified and in conjunction with item’s classification specified in the EAR (the Commerce Control List), but also the end use and end user controls and the embargoes and special controls.
• If the exporter continues to have any doubts or concerns surrounding the end use, end user, or country of ultimate destination after exercising due diligence, the exporter should present all relevant information to BIS in the form of a license application or refrain from the transaction.

Export controls are a shared responsibility between government and industry. If you have any concerns about suspicious inquiries that come to your firm, you are encouraged to contact your local BIS Export Enforcement Office.

To read all the details: Guidance – Russia