A new regulation imposes stringent export controls on entities subject to more than a dozen U.S. financial sanctions programs, including on activities outside the U.S.
Exporters should carefully review this rule and ensure they adjust their screening and other processes accordingly. For assistance, or for more information on how this rule might affect your business, please contact attorney Kristine Pirnia at (202) 730-4964 or via email.
A Bureau of Industry and Security press release states that for many years the Export Administration Regulations have restricted export, reexport, and transfer (in-country) transactions involving certain persons and entities identified on the List of Specially Designated Nationals and Blocked Persons maintained by the Office of Foreign Assets Control or pursuant to certain statutory authorities.
However, after reviewing categories of end-users and global activities that implicate both financial sanction and export control concerns, BIS has issued a final rule that, effective March 21, imposes license requirements for exports of all items subject to the EAR for all persons blocked under 11 OFAC-administered sanctions programs. No license exceptions may overcome these requirements (with narrow exceptions), and license applications will generally be subject to a review policy of presumption of denial. The rule also continues export license requirements involving all items subject to the EAR in connection with persons sanctioned under three other OFAC programs.
The 14 sanctions programs addressed by this rule include the following.
- seven executive orders related to Russia’s harmful foreign activities (EOs 13405, 13660, 13661, 13662, 13685, 14024, and 14038)
- two programs related to terrorism (the Foreign Terrorist Organizations Sanctions Regulations and the Global Terrorism Sanctions Regulations)
- the Weapons of Mass Destruction Proliferators Sanctions Regulations
- four programs related to narcotics trafficking and other criminal networks (EOs 13581 and 14059, the Narcotics Trafficking Sanctions Regulations, and the Foreign Narcotics Kingpin Sanctions Regulations)
BIS states that this rule will act as a backstop for activities over which OFAC does not exercise jurisdiction, including deemed exports and deemed reexports, and for reexports and transfers (in-country) that would otherwise not involve U.S. persons (e.g., U.S. financial institutions).
Notably, BIS adds, the rule allows for controls on items outside the U.S., complementing the existing authority in many OFAC programs to impose blocking sanctions on persons who materially assist, sponsor, or provide financial, material, or technological support for, or goods or services to or in support of, SDNs, even outside of U.S. jurisdiction.
Shipments of items removed from eligibility for a license exception or export, reexport, or transfer (in-country) without a license (NLR) as a result of this rule that were en route aboard a carrier to a port of export, reexport, or transfer on March 21, pursuant to actual orders for export, reexport, or transfer to or within a foreign destination, may proceed to that destination under the previous eligibility provided the export, reexport, or transfer is completed no later than April 22.
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