WASHINGTON – The U.S. Department of the Treasury today announced the designations of senior ISIL oil official Faysal al-Zahrani, foreign fighter facilitator Husayn Juaythini, and senior ISIL official Turki al-Binali pursuant to Executive Order (E.O.) 13224, which targets terrorists and those providing support to terrorists or acts of terrorism. These designations support President Obama’s strategy to degrade and destroy ISIL. These designations also further Treasury’s efforts to attack ISIL’s finances and disrupt its ability to profit from illicit oil sales within its territory in Iraq and Syria by inhibiting these individuals from accessing the international financial system. They also support work by the broader counter-ISIL Coalition, including Operation Tidal Wave II, which consists of deliberate targeting and precision airstrikes in Iraq and Syria to disrupt ISIL’s control of oil-related resources. As a result of today’s actions, any property or interest in property of the individuals designated by Treasury within U.S. jurisdiction is frozen. Additionally, transactions by U.S. persons involving the designated individuals are generally prohibited.
Recent Trade Compliance News
ENFORCEMENT INFORMATION FOR February 8, 2016 Information concerning the civil penalties process is discussed in OFAC regulations governing the various sanctions programs and in 31 C.F.R. part 501. On November 9, 2009, OFAC published as Appendix A to part 501 Economic Sanctions Enforcement Guidelines. See 74 Fed. Reg. 57,593 (Nov. 9, 2009). The Economic Sanctions Enforcement Guidelines, as well as recent final civil penalties and enforcement information, can be found on OFAC’s Web site at http://www.treasury.gov/ofac/enforcement. ENTITIES – 31 C.F.R. 501.805(d)(1)(i) Barclays Bank Plc Settles Potential Civil Liability for Apparent Violations of the Zimbabwe Sanctions Regulations: Barclays Bank Plc (“Barclays”), a financial institution headquartered in London, United Kingdom, has agreed to remit $2,485,890 to settle its potential civil liability for 159 apparent violations of § 541.201 of the Zimbabwe Sanctions Regulations, 31 C.F.R. part 541 (ZSR). From July 2008 to September 2013, Barclays processed 159 transactions totaling approximately $3,375,617 to or through financial institutions located in the United States – including Barclays’ New York branch (“Barclays NY”) – for or on behalf of corporate customers of Barclays Bank of Zimbabwe Limited (“BBZ”) that were owned 50 percent or more, directly or indirectly, by a person identified on the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) List of Specially Designated Nationals and Blocked Persons (the “SDN List”). OFAC has determined that Barclays did not voluntarily self-disclose the apparent violations to OFAC, and that the apparent violations constitute a non-egregious case. The total base penalty amount for the apparent violations was $5,029,000. Beginning in or around 2005, local restrictions precluded Barclays from implementing measures for complying with economic sanctions, including sanctions screening, in Zimbabwe. Consequently, beginning in 2006, the bank’s operations in the United Kingdom (“Barclays UK”) began screening cross-border transactions involving BBZ and/or BBZ’s customers. Under the new procedure, Barclays UK relied on BBZ’s electronic customer records and documentation to perform sanctions-related customer screening and transaction screening involving BBZ.
In 2006, BBZ implemented an electronic customer system that allowed the bank to input and maintain customer information in an electronic format. The system had several limitations, however, that prevented BBZ from accurately capturing and/or screening beneficial ownership information for its corporate customers. For example, when BBZ introduced the system, it was capable of capturing information related to a single primary account party (i.e., BBZ’s customer) but was initially unable to include data for a related party – such as the ultimate beneficial owner of the customer – in the electronic system even if the information appeared in the paper file for a customer. Barclays identified this shortcoming in 2007 and attempted to address the issue, but the changes did not allow BBZ to effectively capture or otherwise identify all of its customers’ beneficial owners in the bank’s electronic system. In 2009, Barclays again attempted to correct the shortcoming by building a “work-around” that the bank stated was ultimately cumbersome to implement and little used.
Barclays’ Group Anti-Money Laundering (AML) policies in place during the period in which the apparent violations occurred required the bank’s operations – including BBZ – to identify the ultimate beneficial owners of corporate customers. BBZ’s Know Your Customer (KYC) procedures were ambiguous and difficult to follow with respect to the requirement to identify related parties and/or beneficial owners of corporate customers. As a result, the bank failed to obtain information on ultimate beneficial owners for a portion of BBZ’s corporate customers in its paper files and/or failed to upload this information into BBZ’s electronic customer system. Due to BBZ’s failure to include updated beneficial ownership information in its electronic customer files (which, as noted above, was utilized by Barclays UK for OFAC sanctions compliance screening), Barclays UK was unaware of, and incapable of screening, this information for certain BBZ customers. On July 25, 2008, OFAC designated Industrial Development Corporation of Zimbabwe (IDCZ) pursuant to Executive Order 13469 of July 25, 2008, “Blocking Property of Additional Persons Undermining Democratic Processes or Institutions in Zimbabwe.” At the time of OFAC’s designation, BBZ maintained U.S. Dollar (“USD”)-denominated customer relationships for three corporate customers that were owned, 50 percent or more, directly or indirectly, by IDCZ and were also therefore blocked persons pursuant to OFAC’s Guidance on Entities Owned by Persons Whose Property and Interests in Property are Blocked. Neither BBZ nor Barclays UK identified these customers as blocked persons at that time due to the aforementioned issues, however, and continued to process USD transactions for or on their behalf to or through the United States in apparent violation of the ZSR. By no later than 2011, Barclays became aware of weaknesses and shortcomings in relation to certain of BBZ’s KYC practices, including the bank’s inability to capture data for related parties (i.e., beneficial owners) in its customer files. As part of a remediation effort in 2011, Barclays targeted a number of bank operation centers in Africa, including BBZ, in order to determine whether those locations were fully implementing the bank’s Group AML policies. As part of these efforts, BBZ updated the paper files for one of the customer accounts to reflect IDCZ’s beneficial ownership of the company, but the bank failed to include this information in the electronic customer system (which Barclays UK utilized and relied upon to conduct sanctions related screening). Beginning in October 2012, U.S. financial institutions blocked four funds transfers that Barclays NY processed on behalf of one of the three corporate entities beneficially owned by IDCZ located in Harare, Zimbabwe. Three of the funds transfers were originated by the aforementioned company’s account with BBZ, whereas the fourth was destined for an account maintained by the company at a third-country financial institution unaffiliated with Barclays. Upon receiving notification that a transaction it processed had been blocked by another U.S. financial institution, Barclays NY conducted an internal investigation and determined that BBZ’s customer was owned, indirectly, 50 percent or more by IDCZ, an entity on OFAC’s SDN List. Although Barclays NY conducted an investigation that confirmed this information, the bank failed to properly upload identifying information for the blocked person into its sanctions screening filter in a timely or accurate manner and subsequently processed three additional transactions involving the same party between November 2012 and September 2013 – all of which were blocked by other U.S. financial institutions.
The settlement amount reflects OFAC’s consideration of the following facts and circumstances, pursuant to the General Factors Affecting Administrative Action under OFAC’s Economic Sanctions Enforcement Guidelines, 31 C.F.R. part 501, app. A. OFAC found the following to be aggravating factors in this case: although Barclays attempted to comply with OFAC sanctions despite various constraints imposed by the local Zimbabwean authorities, Barclays failed to implement adequate controls to prevent the apparent violations from occurring despite numerous warning signs that its conduct could lead to a violation of U.S. sanctions laws; multiple business lines and personnel within Barclays, including supervisory and management staff in the bank’s Compliance and Audit functions, had actual knowledge or reason to know of the conduct that led to the apparent violations (including the bank’s awareness of the limitations of the systems used by BBZ with respect to capturing full information concerning the beneficial ownership of certain of its corporate customers); Barclays processed 159 funds transfers totaling approximately $3,375,617 that conferred economic benefit to, and provided indirect access to the U.S. financial system for, blocked persons, causing harm to the Zimbabwe sanctions program and its associated policy objectives; Barclays is a large and commercially sophisticated international financial institution; and Barclays’ compliance program was inadequate to identify BBZ’s customers as blocked persons and/or prevent the apparent violations from occurring.
OFAC considered the following to be mitigating factors: Barclays has not received a penalty notice or Finding of Violation in the five years preceding the earliest date of the transactions giving rise to the apparent violations; Barclays took remedial action in response to the apparent violations; and Barclays substantially cooperated with OFAC’s investigation by submitting detailed and organized information, and by executing a statute of limitations tolling agreement and an extension to the agreement. OFAC also considered the fact that the prohibited entities were not publicly identified or designated and included on the SDN List at the time that Barclays processed transactions for or on their behalf. This settlement demonstrates that an enforcement response may be particularly appropriate, even when an individual or entity is not included on the SDN List, in response to apparent violations in which: (a) the apparent violator is an institution that maintains direct customer relationships for entities that are beneficially owned, directly or indirectly, 50 percent or more by one or more SDNs, and is processing or routing transactions to or through the United States on behalf of such customers; (b) the institution’s own records clearly demonstrate or otherwise clarify the SDN ownership of the customer, but the institution failed to act on the information; and/or (c) information concerning the SDN ownership of the customer is publicly available and allows intermediary banks to identify and block such transactions.
This enforcement action highlights the importance for institutions with operations in countries with a significant presence of persons (individuals and entities) on the SDN List to take appropriate measures to ensure compliance with U.S. economic sanctions when processing transactions for or on behalf of their customers to, through, or within the United States. For more information regarding OFAC regulations, please visit: http://www.treasury.gov/ofac.
See full OFAC web notice here: https://www.treasury.gov/resource-center/sanctions/CivPen/Documents/20160208_barclays.pdf
This article appeared in the USA-Midwest Report in the South China Morning Post on February 26, 2016 (prepared by Discovery Reports).
Ulice Payne has an uncanny ability to understand the market and foresee its demands. In the same year that he founded Addison-Clifton in Chicago, Illinois, the company president set up a Shanghai representative office to help companies in China comply with global trade regulations. That was over one decade ago. The mainland had just joined the WTO, and Payne foresaw that many companies would need its expertise in meeting trade regulations on products related to aerospace, defence, vehicles and power generation.
“We have designed our business to serve society,” Payne says. “We blend our understanding of the global regulatory framework with the scientific and engineering know-how of products to meet market demands.”
The company anticipates big opportunities in the aviation maintenance, repair and overhaul (MRO) space. Addison-Clifton would likely capture the market for aspiring China MRO companies that are working on airworthiness certificates for jet engines and avionics manufactured by existing Addison-Clifton clients. The company is also cooperating with the Shanghai Foreign Investment Development Board to encourage foreign capital into the industrial zones with a special emphasis promoting aviation.
Furthermore, Addison-Clifton expects to play a significant role in the mainland’s burgeoning electric vehicles industry. For example, the firm was the official business consultant for the Ningbo Foreign Trade and Economic Cooperation Bureau in connection with securing the participation of foreign electric car manufacturers for its clean energy vehicle summit. The firm continues to implement its plans to facilitate further support in this area due to China’s need for greener technologies.
Ultimately, Payne was right. He later expanded Addison-Clifton’s presence in China by opening a wholly foreign-owned enterprise subsidiary in Ningbo, thereby supporting two major port cities on the mainland. With his associations in the East, including India, Payne further increased Addison-Clifton’s capabilities in the region with its Asia Market Services practice. In addition to trade compliance services, Addison-Clifton provides multinational companies with quality assurance guidance along with supply chain support that includes actual product inspections and identifying and qualifying China suppliers.
“We have spent years in China building genuine relationships with customers and local governments,” Payne says. “By understanding the market and the role of the government, we can serve as a bridge between the private and public sectors.”
The Ministry of Commerce plans to step up the pace of its free trade arrangements with partner countries that offer what it called a high degree of transparency, openness and inclusiveness to the world economy.
Noting the signing of the Trans-Pacific Partnership on Thursday, which does not include China, a ministry statement said: “China is studying it, and evaluation work is under way.”
Twelve nations including the United States and Japan signed the TPP in New Zealand on Thursday.
The deal, agreed in October after five years of talks, is aimed at promoting trade and investment among countries which hold 40 percent of the world economy.
Zhang Jianping, director of the International Economic Cooperation Institute at the National Development and Reform Commission, said the TPP is still in its early stage, and will now go through a two-year ratification period, in which “at least six countries, including Canada, Australia and Japan, must approve the final text, for a deal to be implemented via legislative procedures”.
Zhang said because the TPP members are at different stages of economic development, all the major economies would need to accept the deal, which will set common standards on issues ranging from labor rights to intellectual property protection.
China hopes to complete negotiations on the Regional Comprehensive Economic Partnership by the end of this year, which would link the Association of Southeast Asian Nations with China, Australia, India, Japan, New Zealand and South Korea, accounting for one-third of the global gross domestic product.
Beijing will also launch FTA negotiations with Israel and initiate FTA feasibility studies with Colombia, India, Nepal, Maldives and South Pacific island nations including Fiji and Papua New Guinea this year, as well as reinstate free trade negotiations with the Cooperation Council for the Arab States of the Gulf.
For more on this story, visit http://www.chinadaily.com.cn/business/2016-02/05/content_23402286.htm
WASHINGTON—The U.S. Commerce Department’s Bureau of Industry and Security (BIS) has acted against five parties who are attempting to sell two U.S. origin aircraft to Caspian Airlines, a designated Iranian airline. The U.S. Department of the Treasury designated Caspian in 2014 for its support for terrorism, sanctions that are not being lifted under the Joint Comprehensive Plan of Action (JCPOA). The action, called a “temporary denial order” (TDO), suspends the export privileges of Ribway Airlines Company Limited, Af-Aviation Limited, Andy Farmer, John Edward Meadows, and Jeffrey John James Ashfield Both aircraft are registered in Gambia and, according to the registration documents, are currently owned by Ribway. Meadows and Ashfield were both involved in brokering the sale of the aircraft to Caspian. On January 16, 2016, pursuant to commitments in the JCPOA, Treasury’s Office of Foreign Assets Control (OFAC) announced a statement of licensing policy (SLP) under which U.S. and non-U.S. persons may request specific authorization from OFAC to engage in transactions for the sale of commercial passenger aircraft and related parts and services to Iran exclusively for civil passenger aviation end uses, so long as such transactions are consistent with U.S. law and do not involve any person on OFAC’s Specially Designated Nationals and Blocked Persons List (SDN List). Caspian Airlines, which was designated for its support to the IRGC in August 29, 2014, remains on the SDN List and is ineligible for this favorable licensing policy. “U.S. sanctions imposed on Iran because of its support for terrorism remain in place notwithstanding the implementation of the JCPOA,” noted Commerce Assistant Secretary for Export Enforcement David W. Mills. “BIS continues to actively investigate and enforce U.S. export controls on Iran, especially when those activities are in support of entities that have been designated for their support for terrorism,” he added.
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HARRISBURG – The United States Attorney’s Office for the Middle District of Pennsylvania and the Office of Export Enforcement of the United States Department of Commerce announced that FIMCO, an Iranian corporation, was sentenced today to pay a $100,000 criminal fine by United States District Court Judge Yvette Kane in Harrisburg for conspiracy to evade export licensing requirements. The conspiracy was in connection with an attempt to smuggle to Iran a machine with possible military as well as civilian applications. According to U.S. Attorney Peter Smith, in December 2012, a federal grand jury in Harrisburg charged FIMCO in a sealed indictment made public in July 2015. In April 2014, an American company, Hetran, Inc., an engineering and manufacturing corporation in Orwigsburg, Schuylkill County, Pennsylvania, and its President, Helmut Oertmann, were charged with participating in the conspiracy. A guilty plea was entered on behalf of the corporation in July 2015 before United States Magistrate Judge Susan E. Schwab. Hetran manufactured a large horizontal lathe, also described as a bar peeling machine (“peeler”), valued at more than $800,000 and weighing in excess of 50,000 pounds. The machine is used in the production of high grade steel for the manufacture of automobile and aircraft parts. Under U.S. law and regulations, American companies are forbidden to ship “dual use” items (items with civilian as well as military or proliferation applications), such as the peeler, to Iran without first obtaining a license from the U.S. Government. Aware that it was unlikely that such a license would be granted, FIMCO, which does business in Dubai, United Arab Emirates, and other alleged co-conspirators agreed to falsely state on the shipping documents that the enduser of the peeler was Crescent International Trade and Services FZE (Crescent), an affiliated company, knowing that the machine would subsequently be shipped to Iran after being offloaded in Dubai. In June 2012, Hetran caused the peeling machine to be shipped from Pennsylvania to Dubai in the United Arab Emirates, fraudulently listing Crescent as the end-user, knowing that the shipment was ultimately being sent by FIMCO to Iran in violation of federal law. The Office of Export Enforcement, Bureau of Industry and Security (BIS), U.S. Department of Commerce detected the shipment and ordered that it be re-delivered to the United States. The seizure of key shipping documents, emails and correspondence from Hetran to Iran revealed the scheme, and was critical to the success of the case, and to shutting down the contemplated shipment. As part of its plea agreement with the United States, FIMCO agreed that the government would recommend a criminal fine. The company also has agreed under a settlement with BIS to pay a $837,500 civil penalty to the U.S. Department of Commerce, of which it paid $587,500 out-of-pocket, with the remaining $250,000 suspended for two years. The suspended portion of the civil penalty will be waived thereafter so long as FIMCO complies with the terms of the plea agreement and any criminal sentence and satisfies certain additional conditions. FIMCO will also be made subject to a two-year suspended denial of its export privileges. “The penalty imposed today, together with the six-figure administrative penalty being paid by FIMCO to the Department of Commerce, reflects the seriousness of the violation, said Under Secretary of Commerce Eric L. Hirschhorn. The Office of Export Enforcement will continue to pursue and fully prosecute those who violate our export control laws and threaten our national security.” During the investigation by the Department of Commerce’s Bureau of Industry and Security (BIS), FIMCO and Crescent were placed on BIS’s Entity list in August 2014. The Entity List identifies foreign parties that are prohibited from receiving listed items unless the exporter secures a license. Those persons present a greater risk of diversion to weapons of mass destruction (WMD) programs, terrorism, or other activities contrary to U.S. national security or foreign policy interests. By publicly listing such persons, the Entity List serves as an important tool to prevent unauthorized trade in such items. In December 2014, Helmut Oertmann and Hetran were sentenced by Judge Kane to 12 months’ probation; Oertmann and Hetran were ordered as part of a settlement with BIS to pay a penalty of $837,500 with $337,500 of that amount paid out-of-pocket and the remainder conditionally suspended, which penalty Judge Kane adopted as to Oertmann and Hetran. The other indicted company, Crescent International Trade and Services FZE, and the three Iranian individuals who served as officers of FIMCO, Khosrow Kasraei, Reza Ghoreishi, and Mujahid Ali, are presently fugitives. The case was investigated by the New York Field Office of the Office of Export Enforcement, Bureau of Industry and Security, Department of Commerce. The Department of Commerce’s Office of the Chief Counsel for Industry and Security handled the civil proceedings. The prosecution was handled by Assistant U.S. Attorney Christy H. Fawcett and was overseen by the National Security Division of the U.S. Department of Justice.
Clicke Here for the official DOJ Press Release: http://www.bis.doc.gov/index.php/about-bis/newsroom/press-releases
NEW YORK — The relationship between Chinese and US economies continued to grow in2015, with China surpassing Canada to become the US’s largest trading partner inNovember, the China General Chamber of Commerce-USA (CGCC) said Tuesday.
More than 800,000 American jobs depend on goods and services sold to China, the CGCCsaid in the 2015 White Paper, in a notable sign that trade relations with China helped boostthe US economy and local jobs market.
Meanwhile, Chinese direct investment in the United States in 2015 will likely have exceededthe 10 billion US dollars benchmark for the third year since 2013, totaling nearly 60 billiondollars since 2000, said the CGCC, the largest non-profit organization representing Chineseenterprises in the United States.
“The results of this year reflected the confidence of Chinese enterprises to continue growingtheir business in the US market,” said Chen Xu, chairman of CGCC, at the launching of theWhite Paper.
“The past 2015 witnessed a successful development of China-US trade and economicrelationship. Bilateral trade volume reached over 558 billion US dollars. Although world tradeis sluggish, China-US trade managed to increase,” said Zhu Hong, minister for commercialaffairs at the Chinese Embassy to the United State.
“On the investment front, more and more Chinese executives and entrepreneurs are planningto do businesses in the US By 2015, there are more than 2,000 Chinese firms settling in theUS with a total investment of nearly 60 billion dollars,” Zhu added.
Chinese companies were benefiting from economic growth in the United States, the WhitePaper said, citing that 60 percent of respondents to the CGCC survey noted that their annualrevenues increased in 2014.
“To gain US market share” continued to be the top business objective for Chineseenterprises, according to the Annual Business Survey Report on Chinese enterprises in theUS released by the CGCC Tuesday.
Respondents paid rising attention to acquiring advanced management concept and skills.About 91 percent of respondents expected revenue increase in the next three to five years,while 52 percent of respondents reinvest their US profits into the country.
The United States was attracting a growing number of Chinese companies due to itsoutstanding business environment, policies that promote innovation, business standards, andbusiness accountability, the White Paper said.
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China is to invest about 77 billion yuan ($11.7 billion) this year on the construction of civil aviation infrastructure, especially airports, according to the Civil Aviation Administration of China.
The agency said it will step up construction of important new airports, including those in Beijing, Chengdu, Qingdao, Xiamen and Dalian.
Eleven key infrastructure projects and 52 upgrades or expansion work on civil aviation facilities will be started this year, the administration said in a statement.
It said work on Beijing’s second international airport, the largest construction project in Chinese civil aviation history, is progressing well.
Work on the terminal and air traffic control facilities began in September and construction of support facilities is expected to start in June.
The airport is scheduled to be completed in June 2019 and to become operational in December that year, the administration said.
The civil aviation agency will also work with the National Development and Reform Commission, the country’s top economic planner, to publish a blueprint this year on the locations of new civil airports to be built before 2030, according to the statement.
Dong Zhiyi, a deputy director at the administration, has said China plans to build 66 new civil airports in the next five years, taking the number of such airports on the Chinese mainland to 272 from 206.
Demand has been rising for air travel, spurring the development of more airports.
According to the National Tourism Administration, Chinese travelers made more than 4 billion trips to domestic destinations last year. They also made 120 million trips abroad, an increase of 16 percent year-on-year.
The civil aviation administration said Chinese made 440 million trips by air last year and predicted that the figure could rise to 485 million this year.
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