US TREASURY ISSUES GENERAL LICENSE AUTHORISING EXPORT OF INTERNET SERVICES & SOFTWARE TO CRIMEA; US BUREAU OF INDUSTRY AND SECURITY PUBLISHES RUSSIA DUE DILIGENCE GUIDANCE

OFAC has published Ukraine-related General License No. 9, authorising the exportation or re-exportation from the US or by US persons to Crimea of services and certain software connected with the exchange of personal communications over the internet, web browsing, and social media.  The General Licence is a derogation from a US prohibition on trade with the Crimea region in Executive Order 13685 (2014).

The General Licence does not apply to:

  1. any individual or entity listed as a Specially Designated National, or whose property and interests in property are otherwise blocked;
  2. commercial-grade internet connectivity services or telecommunications facilities;
  3. commercial web-hosting or domain name registration services; or
  4. any goods or technology not necessary to enable the services set out above.

Specific licences can be issued on a case-by-case basis for services and software incident to the exchange of personal communications over the internet, which are not covered in the General Licence.  The US Treasury’s new FAQ on the General Licence is here.

Russia Due Diligence Guidance

Guidance from the US Bureau of Industry and Security (BIS) on due diligence practices has been released to assist companies in preventing unauthorized exports to Russia.  The guidance reiterates Export Administration Regulations Part 732’s requirements on red flags, stating that while exporters can generally rely on the end-use representations of the customer, they have an “affirmative duty” to enquire about end use, end user, and ultimate destination where the customer is “a person who is clearly not going to be using the item for its intended end use”.

The guidance also sets out a checklist of due diligence factors to consider when enquiring into the ultimate destination of an item:

  1. Consider email address and telephone number country codes, in addition to languages used in communications from customers or on a customer’s website
  2. Research the intermediate and ultimate consignees and purchaser, as well as their addresses, using business registers, company profiles, websites, and other resources
  3. Be aware of the countries a freight forwarder advertises that it serves and the industry sectors a distributor or other non-end user customer supplies
  4. Determine whether a license is required based on the probable country of ultimate destination, end use, and end user.  Consider the Country Chart, end use and end user controls, and embargoes and special controls.
This entry was posted in Russia, Ukraine, USA by Maya Lester QC. Bookmark the permalink.

About Maya Lester QC

Maya Lester QC has a wide ranging practice in public law, European law, competition law, international law, human rights & civil liberties. She has a particular expertise in sanctions. As the most recent (2016) Chambers & Partners directory put it, she "owns the world of sanctions". She spent 2011-12 in New York at Columbia Law School lecturing and writing on sanctions. She represents and advises hundreds of companies and individuals before the European and English courts and has acted in most of the leading cases, including Kadi, Tay Za, Central Bank of Iran, NITC and IRISL.

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