4.bis ofac consolidated v2 - sanctions alert · legal counsel –zte corp. jeannette l. chu...
TRANSCRIPT
Sanctions Risk ManagementSymposium
September 18-19, 2017 | The Princeton Club | New York, NY
incooperation with
September18,201711:15AM– 12:15PMOFACandBIS:HowtheyWorkTogetherandHowtheir
RegulatoryandCriminalPowersAreApplied
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MatthewBellDeputyChiefCompliance
Officer,ChiefExportComplianceOfficer&
LegalCounsel– ZTECorp.
JeannetteL.ChuManagingDirector
ExportControls&TradeSanctionsPricewaterhouseCoopers
PeterJeydelAssociate
Steptoe&JohnsonLLP
HowardR.FieldsSVP/GroupHeadAMLTradeSanctionsandExportControls
ComplianceCounselMasterCard
Navigating the Turbulent Currents of International Sanctions and Export Controls | September 18-19, 2017 | The Princeton Club | New York, NY
Sanctions Risk Management Symposiumincooperation with
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PeterJeydelAssociateSteptoe&JohnsonLLP
IntroductiontoBISandhowitissimilarto/differentfromOFAC
Navigating the Turbulent Currents of International Sanctions and Export Controls | September 18-19, 2017 | The Princeton Club | New York, NY
Sanctions Risk Management Symposiumincooperation with
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MatthewBellChiefComplianceOfficer&LegalCounselZTECorporation,USA
Navigating the Turbulent Currents of International Sanctions and Export Controls | September 18-19, 2017 | The Princeton Club | New York, NY
Sanctions Risk Management Symposiumincooperation with
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§ Heavyrelianceonvoluntarydisclosuresandsettlementagreements§ Civilpenaltiesmaybeimposedonastrictliabilitybasis§ Extraterritorialapplicationofregulations§ Appeals ofcivilenforcementactionsaredifficultandrarelypursued§ Increasedfocusonchargingindividualsforwillfulviolations§ Adoptedsimilarguidelinesonsettlement(e.g.,egregious;voluntarydisclosures)
§ Eachoftheresponsibleagencieshasitsownprioritiesandapproachtoenforcementactions
KeyElementsofOFAC&BISEnforcementApproach
Navigating the Turbulent Currents of International Sanctions and Export Controls | September 18-19, 2017 | The Princeton Club | New York, NY
Sanctions Risk Management Symposiumincooperation with
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TreasuryDepartment:OfficeofForeignAssetsControl(OFAC)
§ Enforceseconomicsanctionsregulations
§ Publishedpenaltyguidelinesestablishapproachtoassessingcivilpenalties
§ Largestenforcementactionshistoricallyhavefocusedonbanksandfinancialtransactions§ Highprofile,highdollarsettlements
§ Concertedefforttoincreaseeffectivenessofsanctionsthroughenforcement
§ AccesstoU.S.financialsystemandmarketskeysourceofleverage
§ ThreatofSDNdesignation
§ Othersectors§ Telecommunications(ZTE)§ Energy(Weatherford,Haliburton,Schlumberger)
§ Insurance(NavigatorsInsuranceCompany)
§ Aircraft/Aerospace(Fokker)§ Medicalproducts(Alcon)§ ConsumerElectronics(Epsilon)
§ SECreportingrequirementsfortransactionswithSDNsandGovernmentofIranentities
Navigating the Turbulent Currents of International Sanctions and Export Controls | September 18-19, 2017 | The Princeton Club | New York, NY
Sanctions Risk Management Symposiumincooperation with
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CommerceDepartment– BureauofIndustryandSecurity(BIS)
§ EnforcestheExportAdministrationRegulations(EAR)
§ “GeneralProhibition10”orneedforfuturelicenseshastheeffectofforcingdisclosureinmanycases
§ EARpenaltyguidelines§ CommerceDepartmentpublishedupdatedpenaltyguidelinesforEARenforcementcasesinJune2016
§ BasedonOFAC’spenaltyguidelines
§ Includesmitigationforvoluntarydisclosureandimplementationofcomplianceprograms
• IncreasedEnd-UserChecksandCompanyVisits
• AdditionaloutreachrelatedtoExportControlReformtoverifyproperhandlingof“600Series”itemsanduseofLicenseExceptionSTA
• Visitsservebotheducationalandcompliancefunctions
• StrategicplacementofcompaniesontheEntityListtoforcenegotiationsandchangeconduct
Navigating the Turbulent Currents of International Sanctions and Export Controls | September 18-19, 2017 | The Princeton Club | New York, NY
Sanctions Risk Management Symposiumincooperation with
NotableEnforcementCases
§ ZTE(2017)
§ AlconLaboratories,Inc.(2016)
§ Schlumberger(2015)
§ FokkerServicesB.V.(2014)
§ Weatherford(2013)
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Navigating the Turbulent Currents of International Sanctions and Export Controls | September 18-19, 2017 | The Princeton Club | New York, NY
Sanctions Risk Management Symposiumincooperation with
BIS&OFACAreasofConvergenceinInvestigations
§ Comparablelengthoftollingagreements§ Focusonselecttransactionstoincludeaschargesinsettlementagreement§ Analysiscandifferbasedonstrength/weaknessofjurisdiction§ Canimposeauditingandreportingrequirements§ Workinparalleltopushresolution§ Keeplinesofcommunicationopenwitheachagencyastheycoordinateduringthe
investigation§ Provideclearandconsistentinformationtoeachagencyeventhroughoneagencymight
askformoredetailedinformationonaparticulartransaction
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Navigating the Turbulent Currents of International Sanctions and Export Controls | September 18-19, 2017 | The Princeton Club | New York, NY
Sanctions Risk Management Symposiumincooperation with
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JeannetteChuManagingDirectorPwC
Navigating the Turbulent Currents of International Sanctions and Export Controls | September 18-19, 2017 | The Princeton Club | New York, NY
Sanctions Risk Management Symposiumincooperation with
BIS&OFACAreasofDivergenceinInvestigations
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BIS
§ Investigationsdevelopedfrommultiplesourcesofinformationincludingdisclosures,outreachvisits,end-usechecks,anonymousleads,intelligenceanalysisetc.
§ +/-100CriminalInvestigatorsincludingExportControlOfficersstationedoverseas
§ Focusondevelopingcasesforcriminalprosecution
OFAC
§ Relianceondisclosures§ Nocriminalenforcementauthority§ Nodedicatedinvestigativeresources
Navigating the Turbulent Currents of International Sanctions and Export Controls | September 18-19, 2017 | The Princeton Club | New York, NY
Sanctions Risk Management Symposiumincooperation with
WhattoExpectandHowtoPrepare
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§ OutreachvisitsconductedbySpecialAgentsfromBIS,OfficeofExportEnforcementmaybetransaction-focusedorgeneralinnature§ Haveaprocedureinplacethatisbuiltonimmediatenotificationofin-housecounselandtheExportComplianceOfficial
§ Understandrecordretentionrequirements(15CFR762.2)§ “timelyproduction”maybeopenforinterpretation
§ Sentineltrips,Pre-LicenseChecks/PostShipmentVerifications§ Whereappropriate,explainthepurposeofsuchvisitstotherecipient§ ForPSVsmakesureend-usershavelicenseconditionsandunderstandcomplianceimplications
Sanctions Risk ManagementSymposium
September 18-19, 2017 | The Princeton Club | New York, NY
incooperation with
Questions?
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Navigating the Turbulent Currents of International Sanctions and Export Controls | September 18-19, 2017 | The Princeton Club | New York, NY
Sanctions Risk Management Symposiumincooperation with
BonusSlidesProvidedby
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Navigating the Turbulent Currents of International Sanctions and Export Controls | September 18-19, 2017 | The Princeton Club | New York, NY
Sanctions Risk Management Symposiumincooperation with
OfficeofForeignAssetsControl(OFAC)
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§ FallsundertheTreasuryDept.
§ OFAC’shistoricalmissiontocutofftradewithenemystates,primarilythroughtheUSfinancialsector
§ Hotline1 (800) 540-6322 or(202)622-2490
Navigating the Turbulent Currents of International Sanctions and Export Controls | September 18-19, 2017 | The Princeton Club | New York, NY
Sanctions Risk Management Symposiumincooperation with
OFAC’sSpeciallyDesignatedNational(SDN)
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§ Alistofindividualsandcompaniesownedorcontrolledby,oractingfororonbehalfof,targetedcountries.
§ Alsolistsindividuals,groups,andentities,suchasterroristsandnarcoticstraffickersdesignatedunderprogramsthatarenotcountry-specific.
§ Collectively,suchindividualsandcompaniesarecalled“SpeciallyDesignatedNationals”or“SDNs.”
§ TheirassetsareblockedandU.S.personsaregenerallyprohibitedfromdealingwiththem.
Navigating the Turbulent Currents of International Sanctions and Export Controls | September 18-19, 2017 | The Princeton Club | New York, NY
Sanctions Risk Management Symposiumincooperation with
OFACEnforcementGuidelines
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§ EconomicSanctionsEnforcementGuidelines§ Issuedin2009§ SetsforththeEnforcementGuidelinesthatOFACwillfollowindetermininganappropriateenforcementresponsetoapparentviolationsofU.S.economicsanctionsprogramsthatOFACenforces.
§ https://www.treasury.gov/resource-center/sanctions/Documents/fr74_57593.pdf
Navigating the Turbulent Currents of International Sanctions and Export Controls | September 18-19, 2017 | The Princeton Club | New York, NY
Sanctions Risk Management Symposiumincooperation with
BasePenaltyMatrixfromOFAC
EnforcementGuidelines
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Navigating the Turbulent Currents of International Sanctions and Export Controls | September 18-19, 2017 | The Princeton Club | New York, NY
Sanctions Risk Management Symposiumincooperation with
OFACLicenses
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Specificlicense:Allowsapartytoengageinanotherwiseprohibitedtransaction.
Generallicenses:Authorizecategoriesoftransactions,suchasallowingreasonableservicechargesonblockedaccounts,withouttheneedforcase-by-caseauthorizationfromOFAC.
Navigating the Turbulent Currents of International Sanctions and Export Controls | September 18-19, 2017 | The Princeton Club | New York, NY
Sanctions Risk Management Symposiumincooperation with
BureauofIndustryandSecurity(BIS)
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§ FallsunderDepartmentofCommerce§ Mission:AdvanceU.S.nationalsecurity,foreignpolicy,andeconomicobjectivesbyensuringaneffectiveexportcontrolandtreatycompliancesystemandpromotingcontinuedU.S.strategictechnologyleadership.
§ AdministersandenforcestheExportAdministrationRegulations(EAR)
§ ExportEnforcementHotline- 1-(800)424-2980§ www.bis.doc.gov
Navigating the Turbulent Currents of International Sanctions and Export Controls | September 18-19, 2017 | The Princeton Club | New York, NY
Sanctions Risk Management Symposiumincooperation with
BISEnforcementGuidelines
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§ GuidanceonChargingandPenaltyDeterminationsinSettlementofAdministrativeEnforcementCases
§ RevisedJune22,2016§ Promotesgreatertransparencyandpredictabilitytotheadministrative
enforcementprocess.§ AlignsproceduresofDOC’OfficeofExportEnforcementwiththoseofOFAC,
bothofwhichadministerbulkofprogramsunderInternationalEmergencyEconomicPowersAct.
§ https://www.bis.doc.gov/index.php/documents/pdfs/1567-administrative-enforcement-guidelines/file
Navigating the Turbulent Currents of International Sanctions and Export Controls | September 18-19, 2017 | The Princeton Club | New York, NY
Sanctions Risk Management Symposiumincooperation with
BISLists
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§ DeniedPersonsList:Individualsandentitiesthathavebeendeniedexportprivileges.Anydealingswiththemthatwouldviolatethetermsofitsdenialorderareprohibited.
§ TheEntityList: ForeignpartiesthatareprohibitedfromreceivingsomeorallitemssubjecttotheEARunlesstheexportersecuresalicense.
§ UnverifiedList:PartieswhosebonafidesBIShasbeenunabletoverify.Nolicenseexceptionsmaybeusedforexports,reexports,ortransferstoUVLparties.Astatementmustbeobtainedpriortoshippingitemsnotsubjecttoalicenserequirement.
§ ConsolidatedScreeningLists:consolidatesexportscreeninglistsoftheDOC,StateandtheTreasurytoassistinscreeningpartiestoregulatedtransactions http://apps.export.gov/csl-search#/csl-search
Navigating the Turbulent Currents of International Sanctions and Export Controls | September 18-19, 2017 | The Princeton Club | New York, NY
Sanctions Risk Management Symposiumincooperation with
BIS’CommerceControlList(CCL)
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AkeyindeterminingwhetheranexportlicenseisneededfromtheDOCisknowingwhethertheitemyouintendtoexporthasaExportControlClassificationNumber(ECCN).
ECCNsarelistedinthe CommerceControlList(CCL) (SupplementNo.1toPart774oftheEAR)
See:https://www.bis.doc.gov/index.php/regulations/commerce-control-list-ccl
Navigating the Turbulent Currents of International Sanctions and Export Controls | September 18-19, 2017 | The Princeton Club | New York, NY
Sanctions Risk Management Symposiumincooperation with
BasePenaltyMatrixfromOFAC
EnforcementGuidelines
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