Exporters shouldn't expect a grace period from enforcement under the Bureau of Industry and Security's new 50% rule, but the agency likely is first looking for intentional violators as opposed to exporters who made good-faith efforts to comply, industry lawyers and advisers said in interviews.
The U.S. ambassador to NATO suggested this week that the Trump administration won’t sign off on any new Russia sanctions until all EU and NATO members stop buying Russian energy.
Although the Bureau of Industry and Security in FAQs this week suggested its new 50% rule applies only to ownership and not the control that a parent company may have over an affiliate, that doesn’t mean U.S. exporters should ignore an Entity Listed company’s controlling influence over an unlisted company, said Mike Huneke, a trade lawyer with Morgan Lewis.
The Bureau of Industry and Security this week fined British Virgin Islands-based company Hallewell Ventures and its owner, Albert Avdolyan, $374,474 for violating sanctions against Russia. BIS said Hallewell illegally reexported a Bombardier Global 7500 jet from the Maldives to Russia without a license.
A Canada-headquartered biotechnology company agreed to pay the Bureau of Industry and Security $685,051 after admitting to illegally exporting water quality testing and analytical instruments to Iran. BIS said the company knew the shipments violated U.S. export controls, adding that it worked to “conceal” the destination of the exports by falsely listing a United Arab Emirates freight forwarder as the ultimate consignee, undervalued the items to avoid UAE customs scrutiny, and left out references to Iran in the invoice.
Processing of most export license applications, as well as sanctions licenses, will pause during the government shutdown that began Oct. 1, although export enforcement operations and national security-related investigations will continue, the Commerce, State and Treasury departments said this week.
The Bureau of Industry and Security's new 50% rule only applies to ownership, not the “control” that a parent company may have over an affiliate, the agency said in new FAQs. Other FAQs stress that the government’s Consolidated Screening List is no longer exhaustive, clarify how license exceptions may apply to unlisted affiliates, explain how BIS will determine whether a U.S. exporter has “knowledge” that a listed entity owns part of a non-listed foreign affiliate, and more.
The Bureau of Industry and Security is rolling back a Biden-era interim final rule that increased restrictions on firearms exports, the agency said in a final rule effective Sept. 30. BIS said it decided that the rule should be “rescinded in its entirety” after hearing from U.S. firearms manufacturers that the controls “would cost them hundreds of millions of dollars per year in lost sales.”
A new interim final rule released by the Bureau of Industry and Security this week introduces a 50% ownership threshold rule for the Entity List and Military End-User List, a change that’s expected to drastically increase the number of companies subject to stringent export licensing restrictions. BIS also is adopting the rule, which it calls the “Affiliates rule,” for export transactions involving certain parties sanctioned by the Office of Foreign Assets Control, which BIS said will “align more closely” OFAC’s 50% rule with the new restrictions under the Export Administration Regulations.
Nvidia CEO Jensen Huang made the case last week for fewer export controls on the company’s chips, saying the U.S. government should allow Nvidia to “compete” in the Chinese market. He also avoided directly answering whether the company’s export license applications for China are being granted, despite the Trump administration announcing earlier this year that it planned to approve exports of Nvidia’s H20 chips in exchange for a cut of the sales revenue (see 2508220003).