Iran Export Controls

Two companies, one based in Taiwan and the other in Brunei, each must pay a fine of $83,769 and serve a five-year corporate probation term for conspiring to violate U.S. sanctions and export laws by shipping U.S.-made goods to Iran, DOJ announced. Taiwan-based DES International and Brunei-based Soltech Industry, charged in 2020 (see 2011120006), both pleaded guilty to conspiring to defraud the U.S. and violate the International Emergency Economic Powers Act and were sentenced in the U.S. District Court for the District of Columbia.

Microsoft will pay more than $3.3 million combined to settle alleged export control and sanctions violations largely related to its foreign subsidiaries, the Bureau of Industry and Security and the Office of Foreign Assets Control said in a pair of news releases April 6.

The State Department should impose “mandatory sanctions” against Iran under the Countering America’s Adversaries Through Sanctions Act in response to the country’s “significant defense transactions” with Russia, three Republicans said in a March 29 letter to Secretary of State Antony Blinken. Iran and Russia are building a “full-fledged defense partnership,” the letter said, which has led to “concerning advances in Iran’s military capabilities” and helped Russia sustain its war in Ukraine.

The Biden administration will soon announce a new “code of conduct” to improve export controls on goods and technology that could be used for human rights abuses, an effort being rolled out as part of the second Summit for Democracy this week, a senior administration official said during a March 29 call with reporters. The code, which the U.S. said it was “working to develop” during the first democracy summit in 2021 (see 2112090030), “commits subscribing states to better integrate human rights criteria in their export control regimes,” the White House said in a fact sheet.

The Biden administration this week plans to “unveil” new human rights-related export control measures as part of the second Summit for Democracy, a senior administration official said. The measures will show how the U.S. and its allies have so far implemented the Export Controls and Human Rights Initiative, an effort announced at the first democracy summit in 2021 that was designed to lead to better guardrails on exports of surveillance items and other technologies (see 2112090030).

The Bureau of Industry and Society’s export enforcement arm is ramping up outreaches to exporters amid a rise in new restrictions against Russia and China, said Christopher Grigg, a former DOJ official. Grigg, now a lawyer with Nixon Peabody, said the agency’s Office of Export Enforcement is contacting more companies to specifically vet their record-keeping procedures.

Five people from Iran, Turkey and the United Arab Emirates were charged in two cases at the U.S. District Court for the District of Columbia for violating the Arms Export Control Act and the International Emergency Economic Powers Act, DOJ announced. They allegedly tried to obtain and export U.S. technology to Iran from 2005 to 2013.

U.S. export controls against China could cause the country to dominate the global industry for “lower-capability” chip technologies, the Office of the Director of National Intelligence said in its annual threat assessment released last week. The DNI also warned that China, which is quickly building new chip factories, remains the “top threat to U.S. technological competitiveness.”

The Bureau of Industry and Security this week added 37 entities to the Entity List for a range of activities the agency said threaten U.S. national security, including for supporting Russia’s war effort, sending controlled items to China’s military and aiding companies already listed on the Entity List. The entities -- located in Belarus, Myanmar, China, Pakistan, Russia and Taiwan -- will be subject to a license requirement for all items subject to the Export Administration Regulations with varying license application review policies. BIS also modified 10 existing Chinese entries on the Entity List. The additions and changes took effect March 2.

The U.S. announced a new, sweeping set of export controls and sanctions last week to further hobble Russia on the one-year anniversary of its invasion of Ukraine, including additions to the Entity List, an expansion of industry sector restrictions on both Russia and Belarus, new export controls against Iran to address its drone transfers to Russia, and new financial sanctions against more than 100 people and entities. Many of the measures, which were announced alongside similar actions by U.S. G-7 allies, aim to “cut off the Russian defense industrial base and military from even low-technology consumer items,” the Bureau of Industry and Security said.