The State Department fined U.S. defense firm RTX Corp. $200 million to settle alleged violations of the Arms Export Control Act and the International Traffic in Arms Regulations, one of the largest standalone export penalties ever issued by the agency. The Directorate of Defense Trade Controls said the 750 violations, most of which involved the “historical systemic failures” of an aerospace systems company acquired by RTX, stemmed from export control classification issues, the illegal “hand-carry” of defense items to another country and violations of the terms of DDTC licenses. RTX voluntarily disclosed the violations, which included exports of prohibited items to Lebanon, Iran, Russia and China.
Russia export controls and sanctions
The use of export controls and sanctions on Russia has surged since the country's invasion of Crimea in 2014, and especially its invasion of Ukraine in in February 2022. Similar export controls and sanctions have been imposed by U.S. allies, including the EU, U.K. and Japan. The following is a listing of recent articles in Export Compliance Daily on export controls and sanctions imposed on Russia:
The U.S. removed sanctions from a former board member of one of Russia’s largest private banks more than two years after he submitted a delisting petition and about 10 months after he sued the State Department for stalling a decision on that petition without explanation.
Hungarian national Bence Horvath was charged with violating U.S. export controls on Russia by conspiring to ship radio communications technology to Russian government end users without a license, DOJ announced Aug. 26. Horvath is charged with one count of conspiring to violate the Export Control Reform Act of 2018.
Reps. Tom Kean Jr., R-N.J., and Hillary Scholten, D-Mich., introduced a bill last week that would prohibit lawmakers from making personal financial investments that involve China, Russia, Iran or other “foreign adversaries.”
Some companies are struggling to meet a due diligence threshold set by the U.S. government for sales to foreign suppliers accused of illegal sales to Russia, said Anne van de Heetkamp, vice president of product management for global trade intelligence at Descartes Systems Group.
The U.S. issued nearly 400 new financial blocking sanctions last week against people and companies in Russia and across Asia, Europe and the Middle East for aiding Russia’s war effort against Ukraine. The designations, issued by the Treasury and State departments, target “numerous” Russia-related procurement and sanctions evasion networks along with businesses involved in the Russian energy and mining industries, supporting the country’s military industrial base, connected to Russian state-owned entities, helping to forcibly re-educate Ukrainian children and more.
The Bureau of Industry and Security is expanding the scope of its Russia/Belarus-related Foreign-Direct Product rule and adding new export controls on certain computer numerical control (CNC) machine tools-related software, the agency said last week. The FDP rule changes, effective Aug. 27, allow BIS to “more aggressively target” third-country companies procuring controlled goods that are indirectly sent to Russia, BIS said, while the CNC machine tool controls, effective Sept. 16, will prevent those tools in Russia and Belarus from receiving certain software updates.
Nearly a quarter of the 123 new entries the Bureau of Industry and Security will add to its Entity List this week are Chinese suppliers that the agency named in private red-flag letters to U.S. companies earlier this year.
New guidance issued last week by the Bureau of Industry and Security outlines how exporters should use contractual clauses in their sales contracts to prevent Russia-related trade violations, including how BIS views the EU’s requirement for a “no-Russia” clause. The agency also warned foreign corporate service providers about letting “bad actors” use rented addresses for billing or shipping, which they can use to evade detection when violating export controls.
Risk advisory firm Kharon said it has recently identified “numerous cases” of European companies directly and indirectly sending dual-use items to Russia, including through logistics firms based in the Baltic region and the United Arab Emirates.