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Schlumberger Pleads Guilty, Pays $232.7M Criminal Fine

Friday, March 27th, 2015

Pumpjacks

As announced by the US Department of Justice on Wednesday, Schlumberger Oilfield Holdings Ltd. agreed to plead guilty and pay over $232.7 million for violating US sanctions by facilitating trade with Iran and Sudan.

The plea agreement also includes a three year probationary period for the company and represents the largest ever criminal fine in connection with IEEPA. The company established a business segment in the US (D&M) which provided oilfield services to Schlumberger customers in Iran and Sudan through non-U.S. subsidiaries. Internal company processes were designed to disguise the identities of the embargoed locations in the automated computer system in order to obtain approval from the D&M Global Asset Manager in the United States. D&M was illegally involved in the day-to-day operations in Iran and Sudan, including through U.S. persons working at D&M headquarters, and this involvement occurred with D&M’s knowledge and understanding of the applicability of U.S. sanctions laws to the company.

In sum the company violated U.S. sanctions against Iran and Sudan by:

  • Approving and disguising the company’s capital expenditure requests from Iran and Sudan for the manufacture of new oilfield drilling tools and for the spending of money for certain company purchases
  • Making and implementing business decisions specifically concerning Iran and Sudan
  • Providing certain technical services and expertise in order to troubleshoot mechanical failures and to sustain expensive drilling tools and related equipment in Iran and Sudan

“This is a landmark case that puts global corporations on notice that they must respect our trade laws when on American soil,” said U.S. Attorney Machen. “Even if you don’t directly ship goods from the United States to sanctioned countries, you violate our laws when you facilitate trade with those countries from a U.S.-based office building. For years, in a variety of ways, this foreign company facilitated trade with Iran and Sudan from Sugar Land, Texas. Today’s announcement should send a clear message to all global companies with a U.S. presence: whether your employees are from the U.S. or abroad, when they are in the United States, they will abide by our laws or you will be held accountable.”

“Today’s criminal guilty plea demonstrates the Commerce Department’s commitment to aggressively prosecute multinational corporations for violations involving embargoed destinations,” said Under Secretary Hirschhorn. “We will continue to pursue violators wherever they are located and whatever their size. I commend the Office of Export Enforcement and the Department of Justice for their outstanding efforts to investigate and prosecute this case.”

Let this hefty, record-setting fine, be an example to all global companies considering themselves insulated from prosecution simply by implementing policies and hiring compliance personnel without proper ongoing training. The plea agreement specifically states that it was Schlumberger’ s failure to train its employees adequately to ensure that all U.S. persons, including non-U.S. citizens who resided in the United States while employed at D&M, complied with Schlumberger’s sanctions policies and compliance procedures, which contributed to the violations.

Source documents:

Schlumberger Plea Agreement

Schlumberger Statement of Offense

Schlumberger Information

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PayPal Fined $7.7M by OFAC for “Inadequate” Screening

Friday, March 27th, 2015

On Wednesday, The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced a $7,658,300 settlement with PayPal, Inc. (PayPal) to settle potential civil liability for 486 apparent violations of the:

  • Weapons of Mass Destruction Proliferators Sanctions Regulations, 31 C.F.R. part 544
  • Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560
  • Cuban Assets Control Regulations, 31 C.F.R. part 515
  • Global Terrorism Sanctions Regulations, 31 C.F.R. part 594
  • Sudanese Sanctions Regulations, 31 C.F.R. part 538

According to the settlement, PayPal failed to employ “adequate” screening technology and procedures to identify the potential involvement of U.S. sanctions targets in transactions that PayPal processed.  Because of this, PayPal was unable to reject or block prohibited transactions pursuant to applicable U.S. economic sanctions program requirements.

In addition, PayPal processed 136 transactions totaling $7,091.77 to or from a PayPal account registered to an individual on OFAC’s List of Specially Designated Nationals and Blocked Persons. PayPal’s screening setup did not identify the account holder as a potential match to the SDN List, and even when it did, PayPal Risk Operations Agents dismissed alerts on six separate occasions after failing to obtain or review documentation corroborating the identity of the SDN.

Of particular note is that each of the transactions giving rise to the apparent violations either contained an explicit reference to a country subject to OFAC sanctions or another term linked to the country (i.e., “Tehran,” “Khartoum,” “Cuba,” “Iran,” “Sudan,”, “Iranian,” or “Cuban”), or involved a PayPal account in which the Specially Designated Global Terrorists Interpal or Kahane Chai had an interest.

The moral of the story here is to make sure your company:

  1. Has implemented screening software
  2. Has implemented procedures on how screening should occur and how to resolve all potential matches
  3. Considers adding an automatic block, hold, or escalation for review for all matches to obvious red flag terms such as “Iran”, “Iranian”, “Cuba”, etc.).

The full settlement agreement can be found here and a useful “Enforcement Information” summary is here for further information on the settlement, the aggravating and mitigating factors involved, etc.

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DTrade Form Viewer and Firefox Incompatibility

Wednesday, March 25th, 2015

This is a post intended to help out others who may have run into errors during the installation or post-installation running of the DTrade IBM Forms Viewer (the IBM Forms Viewer – latest version 8.0.1.1 from DDTC is here). If you’re seeing errors mentioning “Netscape_listener” or other listeners then you probably have Firefox installed on your computer and, in so doing, have prevented the Forms Viewer from running properly. As unbelievable as it is, the fix for this is to completely uninstall Firefox and then the Forms Viewer should work perfectly (meaning .xfdl forms and the attachments within them will utilize Internet Explorer).

This is an unfortunate situation for those of us who enjoy using Firefox. Of course, if you are doing ITAR work and need to prepare and submit licenses to DDTC, then you currently have no option but to uninstall Firefox so that the Forms Viewer works properly. The only other solution would be to keep Firefox installed but install Forms Viewer in a Windows virtual machine that doesn’t have Firefox installed on it. For me, this is too extreme a solution. I truly hope DDTC or IBM can fix this with the next release of the Forms Viewer.

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New Updates to The Searchable CCL™

Tuesday, February 17th, 2015

A new and improved version of The Searchable CCL™ is now available. This new version is up to date as of February 12, 2015 and includes the recently introduced ECCN 3A611 for military electronics. We’ve also overhauled formatting throughout the entire document to make it even easier for you to find what you need. Enjoy!

Background
The Searchable CCL is a searchable version of the Commerce Control List (CCL). Many have found it difficult to easily read and search the CCL on the e-CFR website, so we created a document which provides easy searching of the entire CCL and has improved readability. Features include:

  • Notes, technical notes, and nota bene are properly italicized
  • Improved indentation to better grasp the structure of complex ECCNs like 3A001
  • Document markers for accessibility
  • Inclusion of the alphabetical index to the CCL and EAR Part 772 “Definitions of Terms” since these are both useful references when working within the CCL

We hope you find it as useful as we do!

To get your copy, simply click the icon below and download The Searchable CCL. This is a direct download – there is no cost, registration, or any other information required. Don’t forget to save the PDF to your computer for easy access while offline.

The Searchable CCL

 

 

 

 

 

(you can also right-click and choose “Save Link As…”)

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EU Dual-Use List Receives Major Update

Thursday, December 18th, 2014

The European CommissionThe European Commission has made some long overdue changes to the EU control list of Dual-Use Items (Annex I to Council Regulation (EC) No 428/2009) in order to incorporate changes from multilateral regime meetings held in 2011-2013. The newly updated list comes into force on December 31, 2014 and includes over 400 changes to every category (0-9) on the dual-use list.

For a headline summary of changes by category, see this PowerPoint file hosted by the UK ECO. For a little more detail, take a look at the comprehensive change note.

Source: UK ECO

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