![Page 1: 4.BIS OFAC Consolidated V2 - Sanctions Alert · Legal Counsel –ZTE Corp. Jeannette L. Chu Managing Director Export Controls & Trade Sanctions PricewaterhouseCoopers Peter Jeydel](https://reader031.vdocuments.us/reader031/viewer/2022022015/5b55f4987f8b9ab7348be011/html5/thumbnails/1.jpg)
Sanctions Risk ManagementSymposium
September 18-19, 2017 | The Princeton Club | New York, NY
incooperation with
September18,201711:15AM– 12:15PMOFACandBIS:HowtheyWorkTogetherandHowtheir
RegulatoryandCriminalPowersAreApplied
1
MatthewBellDeputyChiefCompliance
Officer,ChiefExportComplianceOfficer&
LegalCounsel– ZTECorp.
JeannetteL.ChuManagingDirector
ExportControls&TradeSanctionsPricewaterhouseCoopers
PeterJeydelAssociate
Steptoe&JohnsonLLP
HowardR.FieldsSVP/GroupHeadAMLTradeSanctionsandExportControls
ComplianceCounselMasterCard
![Page 2: 4.BIS OFAC Consolidated V2 - Sanctions Alert · Legal Counsel –ZTE Corp. Jeannette L. Chu Managing Director Export Controls & Trade Sanctions PricewaterhouseCoopers Peter Jeydel](https://reader031.vdocuments.us/reader031/viewer/2022022015/5b55f4987f8b9ab7348be011/html5/thumbnails/2.jpg)
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
2
PeterJeydelAssociateSteptoe&JohnsonLLP
IntroductiontoBISandhowitissimilarto/differentfromOFAC
![Page 3: 4.BIS OFAC Consolidated V2 - Sanctions Alert · Legal Counsel –ZTE Corp. Jeannette L. Chu Managing Director Export Controls & Trade Sanctions PricewaterhouseCoopers Peter Jeydel](https://reader031.vdocuments.us/reader031/viewer/2022022015/5b55f4987f8b9ab7348be011/html5/thumbnails/3.jpg)
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
3
MatthewBellChiefComplianceOfficer&LegalCounselZTECorporation,USA
![Page 4: 4.BIS OFAC Consolidated V2 - Sanctions Alert · Legal Counsel –ZTE Corp. Jeannette L. Chu Managing Director Export Controls & Trade Sanctions PricewaterhouseCoopers Peter Jeydel](https://reader031.vdocuments.us/reader031/viewer/2022022015/5b55f4987f8b9ab7348be011/html5/thumbnails/4.jpg)
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
4
§ Heavyrelianceonvoluntarydisclosuresandsettlementagreements§ Civilpenaltiesmaybeimposedonastrictliabilitybasis§ Extraterritorialapplicationofregulations§ Appeals ofcivilenforcementactionsaredifficultandrarelypursued§ Increasedfocusonchargingindividualsforwillfulviolations§ Adoptedsimilarguidelinesonsettlement(e.g.,egregious;voluntarydisclosures)
§ Eachoftheresponsibleagencieshasitsownprioritiesandapproachtoenforcementactions
KeyElementsofOFAC&BISEnforcementApproach
![Page 5: 4.BIS OFAC Consolidated V2 - Sanctions Alert · Legal Counsel –ZTE Corp. Jeannette L. Chu Managing Director Export Controls & Trade Sanctions PricewaterhouseCoopers Peter Jeydel](https://reader031.vdocuments.us/reader031/viewer/2022022015/5b55f4987f8b9ab7348be011/html5/thumbnails/5.jpg)
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
5
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
![Page 6: 4.BIS OFAC Consolidated V2 - Sanctions Alert · Legal Counsel –ZTE Corp. Jeannette L. Chu Managing Director Export Controls & Trade Sanctions PricewaterhouseCoopers Peter Jeydel](https://reader031.vdocuments.us/reader031/viewer/2022022015/5b55f4987f8b9ab7348be011/html5/thumbnails/6.jpg)
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
6
CommerceDepartment– BureauofIndustryandSecurity(BIS)
§ EnforcestheExportAdministrationRegulations(EAR)
§ “GeneralProhibition10”orneedforfuturelicenseshastheeffectofforcingdisclosureinmanycases
§ EARpenaltyguidelines§ CommerceDepartmentpublishedupdatedpenaltyguidelinesforEARenforcementcasesinJune2016
§ BasedonOFAC’spenaltyguidelines
§ Includesmitigationforvoluntarydisclosureandimplementationofcomplianceprograms
• IncreasedEnd-UserChecksandCompanyVisits
• AdditionaloutreachrelatedtoExportControlReformtoverifyproperhandlingof“600Series”itemsanduseofLicenseExceptionSTA
• Visitsservebotheducationalandcompliancefunctions
• StrategicplacementofcompaniesontheEntityListtoforcenegotiationsandchangeconduct
![Page 7: 4.BIS OFAC Consolidated V2 - Sanctions Alert · Legal Counsel –ZTE Corp. Jeannette L. Chu Managing Director Export Controls & Trade Sanctions PricewaterhouseCoopers Peter Jeydel](https://reader031.vdocuments.us/reader031/viewer/2022022015/5b55f4987f8b9ab7348be011/html5/thumbnails/7.jpg)
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)
7
![Page 8: 4.BIS OFAC Consolidated V2 - Sanctions Alert · Legal Counsel –ZTE Corp. Jeannette L. Chu Managing Director Export Controls & Trade Sanctions PricewaterhouseCoopers Peter Jeydel](https://reader031.vdocuments.us/reader031/viewer/2022022015/5b55f4987f8b9ab7348be011/html5/thumbnails/8.jpg)
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
8
![Page 9: 4.BIS OFAC Consolidated V2 - Sanctions Alert · Legal Counsel –ZTE Corp. Jeannette L. Chu Managing Director Export Controls & Trade Sanctions PricewaterhouseCoopers Peter Jeydel](https://reader031.vdocuments.us/reader031/viewer/2022022015/5b55f4987f8b9ab7348be011/html5/thumbnails/9.jpg)
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
9
JeannetteChuManagingDirectorPwC
![Page 10: 4.BIS OFAC Consolidated V2 - Sanctions Alert · Legal Counsel –ZTE Corp. Jeannette L. Chu Managing Director Export Controls & Trade Sanctions PricewaterhouseCoopers Peter Jeydel](https://reader031.vdocuments.us/reader031/viewer/2022022015/5b55f4987f8b9ab7348be011/html5/thumbnails/10.jpg)
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
10
BIS
§ Investigationsdevelopedfrommultiplesourcesofinformationincludingdisclosures,outreachvisits,end-usechecks,anonymousleads,intelligenceanalysisetc.
§ +/-100CriminalInvestigatorsincludingExportControlOfficersstationedoverseas
§ Focusondevelopingcasesforcriminalprosecution
OFAC
§ Relianceondisclosures§ Nocriminalenforcementauthority§ Nodedicatedinvestigativeresources
![Page 11: 4.BIS OFAC Consolidated V2 - Sanctions Alert · Legal Counsel –ZTE Corp. Jeannette L. Chu Managing Director Export Controls & Trade Sanctions PricewaterhouseCoopers Peter Jeydel](https://reader031.vdocuments.us/reader031/viewer/2022022015/5b55f4987f8b9ab7348be011/html5/thumbnails/11.jpg)
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
11
§ OutreachvisitsconductedbySpecialAgentsfromBIS,OfficeofExportEnforcementmaybetransaction-focusedorgeneralinnature§ Haveaprocedureinplacethatisbuiltonimmediatenotificationofin-housecounselandtheExportComplianceOfficial
§ Understandrecordretentionrequirements(15CFR762.2)§ “timelyproduction”maybeopenforinterpretation
§ Sentineltrips,Pre-LicenseChecks/PostShipmentVerifications§ Whereappropriate,explainthepurposeofsuchvisitstotherecipient§ ForPSVsmakesureend-usershavelicenseconditionsandunderstandcomplianceimplications
![Page 12: 4.BIS OFAC Consolidated V2 - Sanctions Alert · Legal Counsel –ZTE Corp. Jeannette L. Chu Managing Director Export Controls & Trade Sanctions PricewaterhouseCoopers Peter Jeydel](https://reader031.vdocuments.us/reader031/viewer/2022022015/5b55f4987f8b9ab7348be011/html5/thumbnails/12.jpg)
Sanctions Risk ManagementSymposium
September 18-19, 2017 | The Princeton Club | New York, NY
incooperation with
Questions?
12
![Page 13: 4.BIS OFAC Consolidated V2 - Sanctions Alert · Legal Counsel –ZTE Corp. Jeannette L. Chu Managing Director Export Controls & Trade Sanctions PricewaterhouseCoopers Peter Jeydel](https://reader031.vdocuments.us/reader031/viewer/2022022015/5b55f4987f8b9ab7348be011/html5/thumbnails/13.jpg)
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
13
![Page 14: 4.BIS OFAC Consolidated V2 - Sanctions Alert · Legal Counsel –ZTE Corp. Jeannette L. Chu Managing Director Export Controls & Trade Sanctions PricewaterhouseCoopers Peter Jeydel](https://reader031.vdocuments.us/reader031/viewer/2022022015/5b55f4987f8b9ab7348be011/html5/thumbnails/14.jpg)
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)
14
§ FallsundertheTreasuryDept.
§ OFAC’shistoricalmissiontocutofftradewithenemystates,primarilythroughtheUSfinancialsector
§ Hotline1 (800) 540-6322 or(202)622-2490
![Page 15: 4.BIS OFAC Consolidated V2 - Sanctions Alert · Legal Counsel –ZTE Corp. Jeannette L. Chu Managing Director Export Controls & Trade Sanctions PricewaterhouseCoopers Peter Jeydel](https://reader031.vdocuments.us/reader031/viewer/2022022015/5b55f4987f8b9ab7348be011/html5/thumbnails/15.jpg)
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)
15
§ Alistofindividualsandcompaniesownedorcontrolledby,oractingfororonbehalfof,targetedcountries.
§ Alsolistsindividuals,groups,andentities,suchasterroristsandnarcoticstraffickersdesignatedunderprogramsthatarenotcountry-specific.
§ Collectively,suchindividualsandcompaniesarecalled“SpeciallyDesignatedNationals”or“SDNs.”
§ TheirassetsareblockedandU.S.personsaregenerallyprohibitedfromdealingwiththem.
![Page 16: 4.BIS OFAC Consolidated V2 - Sanctions Alert · Legal Counsel –ZTE Corp. Jeannette L. Chu Managing Director Export Controls & Trade Sanctions PricewaterhouseCoopers Peter Jeydel](https://reader031.vdocuments.us/reader031/viewer/2022022015/5b55f4987f8b9ab7348be011/html5/thumbnails/16.jpg)
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
16
§ EconomicSanctionsEnforcementGuidelines§ Issuedin2009§ SetsforththeEnforcementGuidelinesthatOFACwillfollowindetermininganappropriateenforcementresponsetoapparentviolationsofU.S.economicsanctionsprogramsthatOFACenforces.
§ https://www.treasury.gov/resource-center/sanctions/Documents/fr74_57593.pdf
![Page 17: 4.BIS OFAC Consolidated V2 - Sanctions Alert · Legal Counsel –ZTE Corp. Jeannette L. Chu Managing Director Export Controls & Trade Sanctions PricewaterhouseCoopers Peter Jeydel](https://reader031.vdocuments.us/reader031/viewer/2022022015/5b55f4987f8b9ab7348be011/html5/thumbnails/17.jpg)
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
17
![Page 18: 4.BIS OFAC Consolidated V2 - Sanctions Alert · Legal Counsel –ZTE Corp. Jeannette L. Chu Managing Director Export Controls & Trade Sanctions PricewaterhouseCoopers Peter Jeydel](https://reader031.vdocuments.us/reader031/viewer/2022022015/5b55f4987f8b9ab7348be011/html5/thumbnails/18.jpg)
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
18
Specificlicense:Allowsapartytoengageinanotherwiseprohibitedtransaction.
Generallicenses:Authorizecategoriesoftransactions,suchasallowingreasonableservicechargesonblockedaccounts,withouttheneedforcase-by-caseauthorizationfromOFAC.
![Page 19: 4.BIS OFAC Consolidated V2 - Sanctions Alert · Legal Counsel –ZTE Corp. Jeannette L. Chu Managing Director Export Controls & Trade Sanctions PricewaterhouseCoopers Peter Jeydel](https://reader031.vdocuments.us/reader031/viewer/2022022015/5b55f4987f8b9ab7348be011/html5/thumbnails/19.jpg)
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)
19
§ FallsunderDepartmentofCommerce§ Mission:AdvanceU.S.nationalsecurity,foreignpolicy,andeconomicobjectivesbyensuringaneffectiveexportcontrolandtreatycompliancesystemandpromotingcontinuedU.S.strategictechnologyleadership.
§ AdministersandenforcestheExportAdministrationRegulations(EAR)
§ ExportEnforcementHotline- 1-(800)424-2980§ www.bis.doc.gov
![Page 20: 4.BIS OFAC Consolidated V2 - Sanctions Alert · Legal Counsel –ZTE Corp. Jeannette L. Chu Managing Director Export Controls & Trade Sanctions PricewaterhouseCoopers Peter Jeydel](https://reader031.vdocuments.us/reader031/viewer/2022022015/5b55f4987f8b9ab7348be011/html5/thumbnails/20.jpg)
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
20
§ GuidanceonChargingandPenaltyDeterminationsinSettlementofAdministrativeEnforcementCases
§ RevisedJune22,2016§ Promotesgreatertransparencyandpredictabilitytotheadministrative
enforcementprocess.§ AlignsproceduresofDOC’OfficeofExportEnforcementwiththoseofOFAC,
bothofwhichadministerbulkofprogramsunderInternationalEmergencyEconomicPowersAct.
§ https://www.bis.doc.gov/index.php/documents/pdfs/1567-administrative-enforcement-guidelines/file
![Page 21: 4.BIS OFAC Consolidated V2 - Sanctions Alert · Legal Counsel –ZTE Corp. Jeannette L. Chu Managing Director Export Controls & Trade Sanctions PricewaterhouseCoopers Peter Jeydel](https://reader031.vdocuments.us/reader031/viewer/2022022015/5b55f4987f8b9ab7348be011/html5/thumbnails/21.jpg)
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
21
§ DeniedPersonsList:Individualsandentitiesthathavebeendeniedexportprivileges.Anydealingswiththemthatwouldviolatethetermsofitsdenialorderareprohibited.
§ TheEntityList: ForeignpartiesthatareprohibitedfromreceivingsomeorallitemssubjecttotheEARunlesstheexportersecuresalicense.
§ UnverifiedList:PartieswhosebonafidesBIShasbeenunabletoverify.Nolicenseexceptionsmaybeusedforexports,reexports,ortransferstoUVLparties.Astatementmustbeobtainedpriortoshippingitemsnotsubjecttoalicenserequirement.
§ ConsolidatedScreeningLists:consolidatesexportscreeninglistsoftheDOC,StateandtheTreasurytoassistinscreeningpartiestoregulatedtransactions http://apps.export.gov/csl-search#/csl-search
![Page 22: 4.BIS OFAC Consolidated V2 - Sanctions Alert · Legal Counsel –ZTE Corp. Jeannette L. Chu Managing Director Export Controls & Trade Sanctions PricewaterhouseCoopers Peter Jeydel](https://reader031.vdocuments.us/reader031/viewer/2022022015/5b55f4987f8b9ab7348be011/html5/thumbnails/22.jpg)
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)
22
AkeyindeterminingwhetheranexportlicenseisneededfromtheDOCisknowingwhethertheitemyouintendtoexporthasaExportControlClassificationNumber(ECCN).
ECCNsarelistedinthe CommerceControlList(CCL) (SupplementNo.1toPart774oftheEAR)
See:https://www.bis.doc.gov/index.php/regulations/commerce-control-list-ccl
![Page 23: 4.BIS OFAC Consolidated V2 - Sanctions Alert · Legal Counsel –ZTE Corp. Jeannette L. Chu Managing Director Export Controls & Trade Sanctions PricewaterhouseCoopers Peter Jeydel](https://reader031.vdocuments.us/reader031/viewer/2022022015/5b55f4987f8b9ab7348be011/html5/thumbnails/23.jpg)
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
23