International Trade Enforcement Roundup | January 2023

Russia-Related Designations (OFAC/DOS Actions)

On January 26, OFAC designated the Wagner Group as “a significant Transnational Criminal Organization.” Concurrently, OFAC designated eight individuals, 16 entities, and four aircraft related to the Wagner Group, while the State Department (acting in concert with OFAC) designated five entities and one person related to the Wagner Group. Separately, the State Department designated nine individuals and 14 entities for affiliations with designated persons and/or for being part of Russia’s military-industrial complex and identified two yachts and one aircraft as blocked property. While the “Transnational Criminal Organization” designation of the Wagner Group is largely symbolic, it may dissuade some countries and other actors from doing business with the group. (The Wagner Group was previously designated by OFAC in July 2017.) In addition, as we noted in a recent blog, the Bureau of Industry and Security (BIS) added the Wagner Group to the Entity List in December 2022. As a result, a license from BIS is required for any person to export or re-export to the Wagner Group Export Administration Regulations (EAR)-controlled items, including certain items produced outside the United States using U.S.-origin technology or equipment.

The OFAC press release can be found here. The Department of State (DOS) press release can be found here.


California Resident Pleads Guilty to Illegally Exporting American Aviation Technology to Beijing University of Aeronautics and Astronautics (BUAA) (DOJ Action) Those involved. Jonathan Yet Wing Soong, former program administrator at Universities Space Research Association (USRA), a U.S. nonprofit research corporation focused on advancing space science and technology. Charges and penalties. Violating the International Emergency Economic Powers Act (IEEPA) (maximum of 20 years in prison and a $1,000,000 fine). What happened? Soong worked for USRA between August 2016 and September 2020. Soong’s responsibilities included vetting customers against U.S. government lists to ensure USRA was not illegally exporting products to prohibited entities. On May 1, 2015, a representative from BUAA, an entity on the Commerce Department’s Entity List, reached out to Soong, expressing interest in pursuing an arrangement where Soong uses the name of a third-party company to bypass U.S. export controls and receive software that allows for comprehensive analysis of aircraft dynamics. Soong used the third-party company to conceal the true recipient of the software, which was shipped directly to BUAA. Soong pleaded guilty to one count of violating the IEEPA. Sentencing is scheduled for April 28, 2023.

The press release can be found here.

Notably. Economic espionage continues to be a Chinese tactic in gaining ground in the technology race. On January 3, a New York man was sentenced to two years in prison for conspiring to steal trade secrets from GE Power to send back to his company in China. With the scope of export controls imposed on China and designated Chinese entities likely to increase, these types of evasion techniques may become more common. Companies should take note of the tactic and implement internal controls to protect against similar illegal exports.

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