This current action underscores the FBI’s and DOJ’s interest in sanctions enforcement, especially against high- profile targets like Vekselberg. While the initial freezing of oligarch assets received significant attention, U.S. authorities continue to monitor the activities around these individuals and their seized property and enforce those aiding in sanctions evasion.
Russia-Related Designations (OFAC Action)
Russian Sanctions Evasion Network. On February 1, OFAC designated 22 individuals and entities for their roles in a sanctions evasion network supporting the Russian defense industry. According to OFAC, the network was led by Russian arms dealer Igor Vladimirovich Zimenkov and assisted designated Russian defense companies with selling military materials and services, including cybersecurity and helicopters, abroad. Each of the parties subject to OFAC designation is essentially cut off from U.S. commerce, as U.S. persons are prohibited from conducting business with such parties, as well as entities owned 50% or more by one or more designated parties. In addition, U.S. persons must block all property of a designated party in their possession or control.
The OFAC press release can be found here.
3D Printing Company to Pay Up To $27 Million for Exports to China and Germany of Aerospace and Military Design Documents (DOS/DOC/DOJ Action) On February 27, 3D Systems Corporation, a South Carolina-based 3D printing company, agreed to pay a $20 million civil penalty for violations of the Arms Export Control Act (AECA) and the ITAR. (The AECA is the authorizing statute for the ITAR.) Interestingly, the matter started in October 2017 when BIS served 3D Systems with a subpoena related to potential export violations of the EAR. This prompted the company to conduct an internal investigation that resulted in discovery of ITAR violations. In particular, as a result of the investigation, the company identified unauthorized exports of technical data to China, Germany, and Taiwan, as well as to foreign person employees in India and the United Kingdom. To resolve the matter, 3D Systems entered into a consent agreement with the Department of State. Under that agreement, 3D Systems agreed to appoint, in consultation with the State Department, a designated official to oversee ITAR compliance, strengthen compliance policies and training programs, implement an export compliance system, and perform two compliance audits (one completed by 3D Systems and another by an outside consultant). These compliance undertakings were in addition to the company’s agreement to pay $20 million in penalties (though $10 million of that is set aside to cover the costs of the remedial measures). 3D Systems agreed to pay $2.77 million to settle with BIS for alleged violations of the EAR that occurred when the company emailed (exported) aerospace industry design blueprints and technical data to its Chinese subsidiary. 3D Systems employee emails that contained EAR-controlled drawings, blueprints, and engineering designs, were also stored on a server located in Germany. Finally, the company agreed to pay $4.54 million to settle FCA allegations brought by the DOJ for “improperly transmitting export-controlled technical data to China in violation of the export control laws of the United States in connection with certain NASA and DOD contracts.” The Department of State press release can be found here. The Department of State Proposed Charging Letter can be found here. The Department of State Consent Agreement can be found here. The BIS Order settling proposed charges can be found here. The DOJ press release can be found here. Notably. Government contractors often work on thin profit margins that can make it tempting to outsource business processes to cheaper jurisdictions. This does not mean that export rules can be ignored, especially
3 International Trade Enforcement Roundup |
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