ZTE Corporation and ZTE Kangxun update – March 28, 2017

Many of you heard that ZTE was placed under US Sanctions in March 2016. After 1 year of negotiations and major changes to ZTE management, the case was settled in March 2017 for close to $1.2 billion.

https://www.bloomberg.com/politics/articles/2017-03-07/china-s-zte-said-to-settle-u-s-sanctions-case-for-1-billion

While the ZTE case was egregious, they were not alone in being sanctioned.

Today we are mostly affected by the Sanctions imposed on Russia due to their invasion of Crimea. Many companies who normally purchase EDA products are sanctioned outright, or prohibited due to their ownership or involvement with military. It’s not enough to check the company name.

  • You need to research their ownership since if the company is owned or controlled 50% or more by a sanctioned organization (or group of sanctioned parties) then the company is also sanctioned.
  • It’s important to translate the Russian version of the company website – don’t rely on the English version to have all of the information.
  • Understand what their business is. If you have European operations you’ll be subject to European sanctions, not just US sanctions, and the EU sanctions encompass shipments to companies designing for the Russian military.

In other sanctions news, the big stories have been Cuba and Iran. As of 2017, both countries are sanctioned from receiving EDA tools. And remember the Deemed Exports rule. If you employ Iranian engineers in the US or elsewhere and any capacity where they have access to your technology, you will require an export license before you transfer any data to them.

ZTE Corporation and ZTE Kangxun update – June 27, 2016

On June 28th, the Federal Register will contain a notice that the temporary general license issued for ZTE Corporation and ZTE Kangxun will be extended until August 30, from its original expiration date of June 30. While both corporations remain on the US Sanctions list, this general license allows US Companies to continue trade with these two companies.

https://s3.amazonaws.com/public-inspection.federalregister.gov/2016-15228.pdf

Background on the original sanctions and temporary general license can be found here:

https://www.bis.doc.gov/index.php/about-bis/newsroom
http://in.reuters.com/article/zte-usa-commerce-idINKCN0WN05U


Russia, Ukraine, and Crimea http://premier-pharmacy.com/product-category/blood-pressure Sanctions Update – December 11, 2014

Are you in compliance with the US and EU Sanctions on Russia?

If you are doing business in Russia, be aware that the standard technique of screening the customer name against the various prohibited parties lists is not enough. The new Sanctions are not all-encompassing, and because of this screening your customer becomes a manual and time-consuming process.

The Sanctions apply to target industries, for instance energy and banking.   What does your end-user do?

A key component of the Sanctions is the 50% rule.  If a company is owned or controlled 50% or more by a listed organization, they are also Sanctioned.  Several former EDA customers are now prohibited parties due to their ownership by a named organization.  Other existing customers can only be on payment-in-advance terms, since their owners are subject to Sanctions prohibiting loans of 30 days or longer – standard credit terms will violate the sanctions.

If you are not researching the ownership of your customer in Russia, then you are putting yourself at risk of violation.

Helpful links to FAQs on the Treasury and Commerce web sites are:
http://www.treasury.gov/resource-center/sanctions/Programs/Pages/ukraine.asp
http://www.bis.doc.gov/index.php/component/content/article/9-bis/carousel/775-%20frequently-asked-question-on-bis-s-russia-sanctions


Russia, Ukraine, and Crimea Sanctions Update – August 12, 2014

We all know that the US, EU, Japan and Canada have imposed sanctions on companies and individuals is Russia, Ukraine and Crimea due to the situation in Ukraine.  We need to be aware of these sanctions and how they affect us.

Although our products are under the jurisdiction of the Commerce Department’s Commerce Control List, as administered by the Bureau of Industry and Security, our businesses are also subject to the regulations of the US Department of the Treasury, Office of Foreign Trade Controls (OFAC).  And if we have an established presence in the EU, Canada or Japan, we may be subject to their policies as well.

The two US agencies conduct their own Sanctions and Prohibitions programs, and there is a distinct difference between them.  When a large company is put under Commerce sanctions, only the subsidiaries listed under the sanction are caught.  For instance in China, several subsidiaries of CETC are listed, others are not.  Commerce guidance is that you should do your due-diligence, and being a related party should be a “red flag” to investigate what they do, but there is no outright ban.

The Treasury sanctions are more complicated.  If a listed company or individual owns or controls more than 50% of another company, that company is also sanctioned, whether or not they are listed outright.  Case in point – Concern Sozvezdie is now on the Ukraine-based sanctions.  Voronezh Research Institute Vega is not listed, however in doing research we determined that Vega is owned by Sozvezdie, so under the 50% rule Vega is also sanctioned.

The EU imposed sanctions on military and energy-futures industries that include a “grandfather” clause for signed contracts.  The US offers no such grandfathering!

What you should be doing

A)     It is imperative that you screen all of your customers against the lists of proscribed parties maintained by the government agencies.  Remember many denied parties are located in the US – this doesn’t just apply to exports.

B)     If you have not already done so, consider subscribing to a screening service.  Several companies offer in-house, SAAS or remote-login services that allow you to screen your customers against all of the lists with one submission.  When you include the Treasury Specially Designated Nationals (SDN) list, and you need to include the SDN, the list of screened names runs close to 30,000!

C)     Keep updated with changes to the programs.  Subscribe to news updates offered by the agencies.  You will be notified when individuals and companies are added to the main lists, as well as kept informed of regulatory changes.

D)    KNOW YOUR CUSTOMER!  Are they part of China’s military?  You can’t be selling to them without a license.

Below are some useful links to consider:

Commerce Department BIS website:
www.bis.doc.gov

BIS lists of parties of concern:
http://www.bis.doc.gov/index.php/policy-guidance/lists-of-parties-of-concern

Link to the OFAC website:
http://www.treasury.gov/about/organizational-structure/offices/Pages/Office-of-Foreign-Assets-Control.aspx

Treasury FAQ on the 50% rule, and the Ukraine sanctions:
http://www.treasury.gov/resource-center/sanctions/Documents/licensing_guidance.pdf
http://www.treasury.gov/resource-center/sanctions/programs/pages/ukraine.aspx

A review of the Russia – Ukraine sanctions along with links to the individual actions:
http://www.state.gov/e/eb/tfs/spi/ukrainerussia/

Various BIS pages concerning the Ukraine sanctions:
http://www.bis.doc.gov/index.php/about-bis/newsroom/press-releases/66-about-bis/newsroom/press-releases/717-russian-oil-industry-sanctions-and-addition-of-person-to-the-entity-list
http://www.bis.doc.gov/index.php/about-bis/newsroom/107-about-bis/newsroom/press-releases/press-release-2014/707-commerce-department-announces-further-expansion-of-export-restrictions-on-russia

A matrix of individuals named in the sanctions – this is a list of individuals only; companies are not listed, so this is incomplete.
http://en.wikipedia.org/wiki/List_of_individuals_sanctioned_during_the_2014_pro-Russian_unrest_in_Ukraine