Aug

24

Well, This Will Bring Iran to Its Knees

Posted by at 6:19 pm on August 24, 2026
Category: Iran Sanctions • OFAC
Arthur Ashe Stadium, photo by Clif Burns

As part of the announcement of today’s “Economic D-Day Against Iran,” the Office of Foreign Asset Controls (“OFAC”) announced a revocation of certain general licenses under the Iran sanctions. Most of them have to do with exceptions relating to educational and professional conference activity. Personal remittances are also no longer subject to a general license.

But this one hits home for me and shows that we really mean business about crushing Iran’s economy. A long time ago (and before we were, er, strongly encouraged to go dark), I posted about Adel Borghei, an Iranian tennis referee who showed up at the U.S. Tennis Open and was politely told that the sanctions on Iran prevented him from performing his anticipated role as a line referee at the match. The nice folks at my then firm Bryan Cave agreed we should help Mr. Borghei out in his predicament

Bryan Cave [agreed] to take on Mr. Borghei as a pro bono client, and we filed a license application with OFAC requesting permission for him to referee in this year’s Open. And, believe it or not, we got a license in record time on the Friday before the Labor Day Weekend. Mr. Borghei, as a result, was able to referee at the Open after all. This article in the New York Times tells the story in more detail, with a great picture of Mr. Borghei arriving at the Open to get started.

Shortly after granting the license for Mr. Borghei, OFAC adopted the now-revoked General License F (“[a]uthorizing certain services in support of professional and amateur sports activities and exchanges”). Leaving aside whether the full panoply of economic sanctions, including the secondary sanctions teased but undisclosed by Secretary Bessent, will accomplish their intended purpose, it seems safe to say that telling Iranian athletes that they can’t come to the United States to play in their sports will have little effect one way or another. After we exiled Iran’s World Cup team to Tijuana (of all places), it is doubtful that Iran footballers are chomping at the bit to come to the United States. Is OFAC thinking about secondary sanctions on countries that allow Iranian athletes to participate in professional sports in those countries? Even if so, that seems unlikely in and of itself to have any impact on the Iranian government and the current conflict.

We should remember that for years we tried to tailor sanctions to minimize harm to the innocent populations of rogue states. There was, of course, a good reason for that.

In other news, several other colleagues and I have accepted positions at Clark Hill.

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Dec

24

Reduced Sleigh Team Jeopardizes Christmas in the United States

Posted by at 9:56 am on December 24, 2018
Category: Cuba Sanctions • OFAC
Santa Flanked by F-16

BREAKING NEWS: North Pole spokeself Mr. Elf E. McElfface contacted Export Law Blog with unsettling information. Apparently Donner and Blitzen are under the weather meaning that Santa will have to make his annual Christmas Eve run with six reindeer instead of his normal complement of eight. As readers will recall from the Press Release posted below back in 2016, OFAC’s rules were amended to permit Santa to visit both the United States and Cuba, provided that he went to Cuba first and only gave Cuban children EAR99 gifts. Otherwise, he would be landing in the United States with a sleigh containing toys in which Cuban children had an interest in violation of section 515.207(b) which was not waived by section 515.550(b).

Santa is concerned that requiring the reindeer to fly over the United States from the North Pole to Cuba and then back to the United States will unduly strain the six reindeer that will be making the run. Mr. McElfface pointed out that none of us, including the reindeer who are somewhere around three hundred years old (except for Rudolph who is 262 years old), are getting any younger. So, although Santa and the six healthy reindeer will do their best under these constraints, children in the United States should be prepared that this year there may be nothing (not even a lump of coal) under the tree for them. A GoFundMe campaign is in the works to purchase several tons of coal to be delivered to OFAC should any U.S. children be impacted by OFAC’s Cuba First rules for Santa.

FOR IMMEDIATE RELEASE
MEDIA CONTACT: Elf E. McElfface, [email protected] or (951) 262-3062

Santa’s Village, North Pole – Santa Claus today, on behalf of himself, Mrs. Claus and the 40,000 elfployees of the Santa Foundation, expressed his gratitude to the Office of Foreign Assets Control for its timely revision of its rules to grant Santa clear authority this year to visit children both in the United States and Cuba. For years, Santa’s efforts to bring holiday cheer to children of both countries has been thwarted by section 515.207 of the Cuba regulations which would prohibit Santa’s sleigh from landing in the United States while toys for Cuban children remained in the sleigh or in landing in the United States if those toys had been delivered to Cuban children first.

Today’s action waives these restrictions if Santa’s sleigh only carries items that would, if they were subject to the EAR, be EAR99 or controlled only for AT reasons. This ends the long struggle over whether teddy bears and other toys — which are not food, medicine, or personal communications devices — could only be delivered to Cuban children in wrapped parcels with the child’s name and address written on the outside and with the statement “GIFT—Export License Not Required” also marked on the parcel package. Notwithstanding the diligence and timely efforts of Santa’s elfployees, compliance with these requirements for each non-naughty child in Cuba has heretofore been impossible.

News of the OFAC announcement led to loud cheers and applause throughout Santa’s Village. Elf E. McElfface, Santa’s spokeself, wiped a tear of joy from his eye as he said to the elves in one of Santa’s workshops that he never believed that this would occur in his lifetime, which was saying a lot given that the average life expectancy of an elf on the North Pole is currently just over 500 years.

As Christmas approaches, Santa said that he was looking forward to this year’s delivery of toys and goodies to the nice children throughout the world more than ever before and reminded children everywhere, both in Cuba and the United States, that they could call his hotline at +1 (951) 262-3062 to leave their Christmas wishes and toy requests.

This press release may include predictions, estimates or other information that might be considered forward-looking. While these forward-looking statements represent the Santa Foundation’s current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward-looking statements, which reflect our opinions only as of the date of this press release. Please keep in mind that we are not obligating ourselves to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events.

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Copyright © 2018 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)


Sep

24

Gun Smuggler Gets 51 Month Library Fine for Overdue Guns

Posted by at 6:18 pm on September 24, 2018
Category: Arms Export • Criminal Penalties

title=So, if you and I went to the Haskell Free Library and Opera House, half of which is in Derby Line, Vermont, and the other half of which is in Stanstead, Québec, we would think of it as a clever gimmick designed to attract tourists to boring little towns with little else to offer. But, were you and I genius criminals, we would see it as a venue for the perfect crime.

Here’s why. If you’re from Canada, you park in Canada, and you can walk to the only entrance on the U.S. side without clearing Canadian or U.S customs. And it’s the same thing on the way out if you go straight back to your car in the parking lot in Canada. So, this brilliant criminal gang cooked up the plan to buy guns in the United States and then leave them in a backpack in the library’s bathroom. Then the Canadian gang member would later retrieve the guns and take them back to Canada without ever having to worry about U.S. or Canadian Customs. Brilliant! Foolproof! Genius!

Of course, never underestimate cops in funny hats and red coats who ride around on horses. They’re much smarter than they appear. A joint operation nabbed the Canadian charged with retrieving the gun-filled backpack from the library’s men’s room. That Canadian, Alex Vlachos, was just sentenced to 51 months in U.S. prison for his role in the transnational library smuggling scheme. He will be given credit for the 43 months he spent in U.S. prison after being extradited to the United States. Do you think he spent much time in the prison library?

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Copyright © 2018 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)


Sep

13

Entity List Screening Headaches Can Be Costly: The Abbreviated Version

Posted by at 6:51 pm on September 13, 2018
Category: BIS • Civil Penalties • Entity List

VNIEFF via http://www.vniief.ru/en/resources/2d252b804af3374599869d5b6de8bab2/12.jpg [Fair Use]BIS recently announced a settlement with Mohawk Global Logistics Corporation for $155,000 ($20,000 of which was suspended if Mohawk behaved itself during a probationary period).   The penalty arose out of Mohawk’s export of items to institutions on the Entity List without the required license.  In both instances, Mohawk screened against the list, but things went wrong.

One of the exports went to the University of Electronic Science and Technology of China (“UESTC”).  Rather than screen against the full name of the university, Mohawk just screened the university’s commonly-used acronym — UESTC.   As a result, it failed to flag the transaction.  BIS, in the charging documents, noted that the address it had for UESTC was a “near-match” (whatever that means) to the address shown for UESTC on the Entity List.  The take-away here, of course, is that exporters should screen entire names and addresses.

One of the other exports was to the All-Russian Scientific Research Institute of Experimental Physics otherwise known as VNIIEF (because the name in Russian – Всероссийский Научно-Исследовательский Институт Експериментальной Физики [Vserossiyskiy Nauchno-Issledovatelckiy Eksperimentalnoy Fiziki] — is abbreviated as ВНИИЕФ or VNIIEF when transliterated to the Roman alphabet — got that?).  Now for this export the transliterated Roman abbreviation resulted in a hit, which, for some unexplained reason, the Mohawk export supervisor simply ignored.

A footnote dropped by BIS on VNIIEF reveals the perils of foreign language names and the Entity List.   The initial listing was for the “All-Union” Scientific Research Institute of Experimental Physics.  When this was updated to the correct “All-Russian” Scientific Research Institute of Experimental Physics in 2011, the common acronym VNIIEF (but not ARSIEP, which is, clearly, a better acronym) was added.  But searches of VNIIEF, the common name of that entity, prior to 2011 would not have turned up anything.   The moral of this story:  don’t search abbreviations or acronyms.

The fine here seems high.   The goods involved were EAR99 items and worth, in total, about $200,000.  A license probably would have been granted if requested so there’s no palpable harm to national security here.  And Mohawk tried to screen but just did not do a very good job of it.  However, it’s not like they, like many exporters, did not even try to screen the recipients.   Granted the inexplicable activity of the Mohawk supervisor in overriding the hit for VNIIEF would permit some aggravation of the penalty.  And perhaps the failure to screen addresses when they had a “near match” of the correct address further annoyed BIS.  But it seems to me here that BIS is fining incompetence rather than malice.

 

 

 

https://efoia.bis.doc.gov/index.php/documents/export-violations/export-violations-2018/1193-e2561/file

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Copyright © 2018 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)


Aug

30

To Russia With Love: State Imposes Limited Sanctions for Nerve Gas Attacks

Posted by at 3:56 pm on August 30, 2018
Category: Russia Sanctions • State Department

Novichok Vodka via https://www.rt.com/business/426529-novichok-brand-russia-business/ [Fair Use]I wrote earlier this month on a State Department press release finding that Russia had used chemical weapons in the attacks on Sergei and Yulia Skirpal in the United Kingdom and that, accordingly, sanctions would be imposed on Russia pursuant to the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 (the “CBW Act”). That act requires the imposition of five sanctions, although the President has the authority to waive any or all of the sanctions based on national security considerations. On Monday, the State Department published a notice in the Federal Register imposing those sanctions, effective immediately. As expected, the application of certain of the sanctions was waived completely or partially, and the ones given full effect are unlikely to be of much concern to Russia.   As a result, it seems unlikely that Russia will find any reason to curtail its use of nerve agents around the world.

The first sanction required by the CBW Act is the termination of all foreign assistance to Russia under the Foreign Assistance Act of 1961. This sanctions was waived on national security grounds. It’s not clear why State bothered to use the national security waiver here, since Russia last received foreign assistance under the act in 2014 and none was scheduled to be provided in 2019 (or likely any time after that.)

The second required sanction is the termination of arms sales to Russia. State waived this sanction except “with respect to the issuance of licenses in support of government space cooperation and commercial space launches.” You’ve got to get supplies to the International Space Station somehow or other.  And, of course, DDTC stopped granting license to export most items on the USML back in 2014.

The notice imposes the third required sanction completely and without waiver. It terminates all “foreign military financing for Russia under the Arms Export Control Act.” This can hardly be an earth-shaking development. When was the last time the US financed arms sales to Russia? World War II?

The fourth sanction — denial to Russia of “any credit, credit guarantees, or other financial assistance by any department, agency, or instrumentality of the United States Government, including the Export-Import Bank of the United States” — is also imposed without any waiver. Again, this is a sanction without any forseeable impact given the likelihood that little, if any, such federal financial assistance is being provided to Russia.  The last transactions involving Russia financed by the EXIM Bank were in 2014.

The fifth required sanction under the CBW Act is the prohibition of “the export to Russia of any goods or technology” controlled on the Commerce Control List for NS reasons. The State Department notice here has a number of waivers that arguably are not very different from waiving the prohibition in its entirety.

Not surprisingly, the waiver includes any exports under license exception ENC. Remember that all encryption items, other than mass market items, are controlled for NS reasons, so this prohibition would have prohibited, say, exporting network equipment to Russia. How could we spy on them if we don’t sell them routers?  Which is why, of course, Russia limits imports from the United States of items, such as routers, with encryption functionality.  Other exceptions that survive the prohibition are GOV, RPL, BAG, TMP, TSU, APR, CIV, and AVS.

Beyond the waivers for exports under the aforementioned license exports, there are waivers for exports to wholly-owned U.S. subsidiaries, to commercial (i.e. non-governmental) enterprises, and to Russian nationals in the United States. Because Russia has always been subject to NS controls, these waived exports will still require, as they always have, licenses.

One final observation should be made on the meaning of “to Russia” in these sanctions. As noted the sanctions prohibit the provision of federal financial assistance “to Russia.” The reference in the fifth sanction to waivers for deemed exports to Russian nationals in the United States means that “to Russia”  means to anyone in Russia and to any Russian outside Russia.  So, if that a Russian granted asylum in the United States is one of the victims of a natural disaster, FEMA could not provide any financial relief to that Russian.  That’ll teach Russia!

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Copyright © 2018 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)


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