U.S. Trade Controls: What You Need to Know in 2014 LIVE Webcast

Speaker Firms and Organization:
Sheppard, Mullin, Richter & Hampton LLP
J. Scott Maberry
Partner
Fluet Huber + Hoang PLLC
Jennifer S. Huber
Partner
Kirkland & Ellis LLP
Laura Fraedrich
Partner
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Presented By:
May 09, 2014
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Partner Firms:

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Partner Firms:
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Fluet Huber + Hoang (FH+H) is a values based law
firm that serves as advocate, counsel, and
champion for clients worldwide. Started by 1 lawyer
in 1 office with 1 client, FH+H has rapidly grown to
five practice groups – Government Contracts,
International Trade + Transaction, Litigation +
Investigation, Corporate + M&A, Employment +
Labor – that serves the needs of hundreds of
businesses and individuals. We're dedicated to
improving lives and helping business grow.
Sheppard Mullin is a full service Global 100 firm with
650 attorneys in 15 offices located in the United States,
Europe and Asia. Since 1927, companies have turned
to Sheppard Mullin to handle corporate and technology
matters, high stakes litigation and complex financial
transactions. In the U.S., the firm's clients include
more than half of the Fortune 100. For more
information, please visit www.sheppardmullin.com.
Kirkland & Ellis LLP is a global law firm with
approximately 1,600 lawyers representing clients in
complex private equity, corporate and tax, litigation
and dispute resolution/arbitration, restructuring, and
intellectual property and technology matters. The
Firm has offices in Beijing, Chicago, Hong Kong,
London, Los Angeles, Munich, New York, Palo
Alto, San Francisco, Shanghai and Washington,
D.C.

Brief Speaker Bios:
Jennifer S. Huber
Ms. Huber is widely-recognized as an elite international trade and business transactions attorney with an exceptional ability to bring
creative business and legal solutions to fast-paced, high-risk environments. She has particular experience negotiating and closing
complex international transactions involving numerous parties, complex regulatory requirements, corporate formation overseas, and
the interplay of foreign and domestic law in emerging economies.
May 09, 2014
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J. Scott Maberry
Mr. Maberry is an International Trade partner in the Government Contracts, Investigations & International Trade Practice Group in the
Washington, D.C. office of Sheppard, Mullin, Richter & Hampton LLP.
Mr. Maberry's expertise includes counseling and litigation in export controls, the Foreign Corrupt Practices Act (FCPA), anti-terrorism,
economic sanctions, anti-boycott controls, and Customs. He also represents clients in negotiations and dispute resolution under the
World Trade Organization (WTO), North American Free Trade Agreement (NAFTA), and other multilateral and bilateral agreements.

Brief Speaker Bios:
Laura Fraedrich
Laura Fraedrich represents clients in a broad range of export control, customs, and trade remedy matters. She advises and
represents clients with respect to export control matters, including issues related to the International Traffic in Arms Regulations, the
Export Administration Regulations, and the various embargoes administered by the Office of Foreign Assets Control. She also
represents importers in all types of U.S. customs matters, including ruling requests, prior disclosures, protests, penalties, seizures,
liquidated damages, and audits covering classification, valuation, country of origin, and trade preference issues. Her trade remedy
experience includes antidumping and countervailing duty matters, Section 201 and Section 421 proceedings, and Section 337 cases.
Antidumping and countervailing duty experience extends to all areas of such proceedings at both the U.S. Department of Commerce
and the U.S. International Trade Commission, including investigations, administrative reviews, sunset reviews, scope inquiry
proceedings, and changed circumstances reviews, as well as NAFTA panel reviews. She also assists companies in evaluating
whether to seek clearance for foreign acquisitions in the United States and prepares joint notifications to the Committee on Foreign
Investment in the United States. Finally, she counsels clients with respect to the Foreign Corrupt Practices Act and represents their
interests before U.S. enforcement agencies.
May 09, 2014
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► For more information about the speakers, you can visit: http://theknowledgegroup.org/event_name/u-s-trade-controls-what-you-need-to-know-in-2014-live-webcast/

In a two hour live webcast, a panel of thought leaders and practitioners assembled by the
Knowledge Group will discuss the latest issues regarding U.S. trade controls. Speakers will
help firms better understand recent legal developments that impact their ability to conduct
business overseas and develop sound strategies for trade controls compliance.
May 09, 2014
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Featured Speakers:
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Jennifer S. Huber
Partner
Laura Fraedrich
Partner
J. Scott Maberry
Partner
Sheppard, Mullin, Richter & Hampton
LLP

Introduction
Mr. Maberry is an International Trade partner in the Government Contracts, Investigations & International Trade Practice
Group in the Washington, D.C. office of Sheppard, Mullin, Richter & Hampton LLP.
Mr. Maberry's expertise includes counseling and litigation in export controls, the Foreign Corrupt Practices Act (FCPA), anti-
terrorism, economic sanctions, anti-boycott controls, and Customs. He also represents clients in negotiations and dispute
resolution under the World Trade Organization (WTO), North American Free Trade Agreement (NAFTA), and other
multilateral and bilateral agreements.
His practice includes representing clients before the U.S. Department of Treasury Office of Foreign Assets Control (OFAC),
Department of Commerce Bureau of Industry & Security (BIS), the Department of State Directorate of Defense Trade
Controls (DDTC), the U.S. Department of Justice (DOJ), the International Trade Commission (ITC), the Committee on
Foreign Investment in the United States (CFIUS), federal courts and grand jury proceedings, and WTO and NAFTA dispute
resolution panels.
May 09, 2014
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J. Scott Maberry
Partner
LLP

Introduction
Ms. Huber is widely-recognized as an elite international trade and business transactions attorney with an exceptional ability
to bring creative business and legal solutions to fast-paced, high-risk environments. She has particular experience
negotiating and closing complex international transactions involving numerous parties, complex regulatory requirements,
corporate formation overseas, and the interplay of foreign and domestic law in emerging economies.
Ms. Huber routinely counsels corporate clients in all aspects of cross-border transactions, including export control, anti-
bribery and corruption, international joint ventures negotiation, structuring, and documentation, and establishment of foreign
subsidiaries. Her practice also includes counseling in international compliance support, including ITAR, EAR, OFAC, FCPA,
foreign ownership, control and influence (FOCI) mitigation, and the review of transactions requiring approval by the
Committee of Foreign Investment in the United States (CFIUS). Ms. Huber has specific expertise in the defense,
intelligence, and security industries, and holds an active TS-SCI security clearance.
May 09, 2014
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Jennifer S. Huber
Partner

Introduction
Laura Fraedrich represents clients in a broad range of export control, customs, and trade remedy matters. She advises and
represents clients with respect to export control matters, including issues related to the International Traffic in Arms
Regulations, the Export Administration Regulations, and the various embargoes administered by the Office of Foreign
Assets Control. She also represents importers in all types of U.S. customs matters, including ruling requests, prior
disclosures, protests, penalties, seizures, liquidated damages, and audits covering classification, valuation, country of origin,
and trade preference issues. Her trade remedy experience includes antidumping and countervailing duty matters, Section
201 and Section 421 proceedings, and Section 337 cases. Antidumping and countervailing duty experience extends to all
areas of such proceedings at both the U.S. Department of Commerce and the U.S. International Trade Commission,
including investigations, administrative reviews, sunset reviews, scope inquiry proceedings, and changed circumstances
reviews, as well as NAFTA panel reviews. She also assists companies in evaluating whether to seek clearance for foreign
acquisitions in the United States and prepares joint notifications to the Committee on Foreign Investment in the United
States. Finally, she counsels clients with respect to the Foreign Corrupt Practices Act and represents their interests before
U.S. enforcement agencies.
May 09, 2014
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Laura Fraedrich
Partner

Introduction to ITAR
Subject matter: Anything specially designed or modified for
military use; U.S. Munitions List a catch-all
Coverage: Commodities, technical data, services
Regulator: Directorate of Defense Trade Controls
Method: License required to all destinations
Regulations: • International Traffic in Arms Regulations, 22 C.F.R.
Subchapter M
• http://www.pmddtc.state.gov/regulations_laws/itar.ht
ml
• http://fullcirclecompliance.eu/shop/bartlett-
annotated-itar/
14

Introduction to EAR
Subject matter: Items in “Commerce Control List” defined by
performance specs
Coverage: Commodities, technology
Regulator: Bureau of Industry and Security
Method: Matrix of performance and destination
Regulations: • Export Administration Regulations, 15 C.F.R. Part 730 et
seq.
• http://www.bis.doc.gov/index.php/regulations/export-
administration-regulations-ear/
15

2009: President Obama orders a broad-based review of
export controls
2010: Defense Secretary Gates announces fundamental
reform of export control system
2011: First proposed rules revising USML and CCL
2012: First ECR rules go into effect
16
Export Control Reform Timeline

“Higher walls around fewer items”
• Make the USML a positive list
• Move many items from USML to CCL
• New definition of “Specially Designed”
common to USML and CCL
17
ECR Essentials

18
ITAR Controls:
License required to all destinations
Former “catch-all” items
EAR Controls:
More export opportunities
ECR Essentials

1. Review the USML
– Review enumerated items
– Catch-and-release under “specially designed” definition
2. If not on the USML, review the CCL
3. Determine CCL category and product group
4. Review applicable “600 series” entries
– Specifically enumerated items
– Categories .x and .y
5. Review applicable non-600 series entries
19
ECR Essentials: Order of Review

An end item or material is specially designed if:
1. As a result of “development”
2. Has properties peculiarly responsible for
3. achieving or exceeding performance specifications
4. In the relevant CCL or USML paragraph.
A part, accessory, attachment, component or
software is specially designed if:
1. It is for use “in or with”
2. Items in the relevant CCL or USML paragraph.
20
Specially Designed – “Catch”

1. For any item: if listed in a paragraph not
containing “specially designed”
2. For any part: if a fastener (screw, nut, rivet,
pin, etc.)
Released from “specially designed”
21
Specially Designed – “Release”

For parts, attachments, accessories, components, or software:
3. If the item has the same capabilities, function, and form
as an item in production not enumerated on CCL or USML
4. If the item was developed with knowledge it would be
used in or with items not enumerated on CCL or USML
5. If the item was developed as a general purpose
commodity or software
6. If the item was developed with knowledge it would be
used with EAR99 commodities
Released from “specially designed”
22
Specially Designed – “Release”

23
ECR Status
USML Description ECCNs Status
I Firearms 0y601 Final rule TBD
II Artillery 0y602 Final rule TBD
III Ammunition 0y603 Final rule TBD
IV Launch Vehicles/Missiles 9y604 Effective July 1, 2014
V Explosives/Propellants 1y608 Effective July 1, 2014
VI Vessels of War 8y609 Effective January 6, 2014
VII Tanks/Military Vehicles 0y606 Effective January 6, 2014
VIII Aircraft 9y610 Effective October 15, 2014
IX Training Equipment 0y614 Effective July 1, 2014
X Personal Protective Equipment 1y613 Effective July 1, 2014

24
ECR Status (cont’d)
USML Description ECCNs Status
XI Electronics 3y611, 9y620 Final rule TBD
XII Fire Control/Sensors/Night Vision TBD Final rule TBD
XIII Miscellaneous 0y617 Effective January 6, 2014
XIV Toxicological Agents 1y607 Final Rule TBD
XV Spacecraft/Satellites 9y515 Final Rule TBD
XVI Nuclear N/A Effective July 1, 2014
XVII Classified Articles and Services N/A Effective October 15, 2014
XVIII Directed Energy Weapons TBD Final rule TBD
XIX Gas Turbine Engines 9y619 Effective October 15, 2014
XX Submersible Vessels 8y620 Effective January 6, 2014

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What is the FCPA?
In very general terms, the FCPA is a U.S.
law prohibiting payments to foreign
officials in exchange for preferential
treatment.

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What Constitutes a “Foreign Official?”
• A “foreign official” is any “officer or employee of a foreign government or
any department, agency, or instrumentality thereof, or of a public
international organization, or any person acting in an official capacity for
or on behalf of any such government or department, agency, or
instrumentality, or for or on behalf of any such public international
organization.” 15 U.S.C. § 78dd-1(f)(1)(A).
• The FCPA also prohibits corrupt payments to foreign political parties and
their officials, and to candidates for foreign political offices.
• BUT WAIT- In addition, corrupt payments to an otherwise permitted
individual may also be prohibited if the payer knows that such individual
will, in turn, offer, give, or promise the payment (or part of the payment)
to a foreign official, official of a foreign political party, or a candidate for
foreign political office.

May 09, 2014
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What Constitutes a “Corrupt Payment?”
• Anything of value!
– Travel Expenses
– Gifts
– Entertainment
– CASH
• Success = Irrelevant
– The mere offering, promising, or authorization to provide a corrupt
payment constitutes a violation of the FCPA.
• Size = Irrelevant
– The magnitude of the object or service given, offered, promised or
authorized is wholly irrelevant. Furthermore, even idiosyncratic gifts,
if considered valuable by the recipient, can constitute a corrupt
payment.

May 09, 2014
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What Does “Corruptly” Mean?
In order for a payment to qualify as “corrupt,” it
must be made with the intent to incentivize the
recipient to abuse his/her authority by granting
preferential treatment, failing to take action, or
improperly directing business towards the
payer.

May 09, 2014
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Recent Enforcement Actions
1. Hewlett-Packard Company (April, 2014)
• Hewlett-Packard subsidiaries in Mexico, Poland, and Russia orchestrated complex
schemes through which they funneled millions of dollars to government officials in
exchange for valuable contracts with the Office of the Prosecutor General of the
Russian Federation, the Polish National Policy agency, and Pemex, respectively.
• Total criminal and regulatory penalties: over $108,000,000
• TAKEAWAY: Monitor your subsidiaries!
2. Marubeni Corporation (March 19, 2014)
• Marubeni used two consultants to pay officials of Perusahaan Listrik Negara,
Indonesia’s state-owned and state-controlled electricity company, hundreds of
thousands of dollars in exchange for the lucrative “Taharan” contract.
• Total criminal fine: $88,000,000
• TAKEAWAY: Are your consultants really “consulting?” What is their precise role?
3. Alcoa World Alumina LLC (January 9, 2014)
• Through using an intermediary with close ties to the Bahraini Royal Family, Alcoa’s
Australian subsidiary made tens of millions of dollars in corrupt payments to foreign
officials in exchange for a long-term supply agreement with a government-
controlled aluminum smelter.
• Total criminal and regulatory penalties: $384,000,000
• TAKEAWAY: Know your intermediaries!

May 09, 2014
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Recent Advisory Opinions
1. March 17, 2014
• Summary: DOJ declined to take enforcement action against Requestor for its payments to a
foreign official in exchange for the official’s minority interest in a business that he owned prior
to his government service.
• Key Considerations:
– Intent
– Independent Share Evaluation
– Meaningful Disclosures
2. December 19, 2013
• Summary: DOJ declined to take enforcement action against Requestor for its payments of a
foreign official’s daughter’s medical expenses.
– Adequate Assurances
– Intent
– Hospital = Recipient
3. September 18, 2012
• Summary: DOJ declined to take enforcement action against Requestor, a U.S. lobbying firm for a
foreign country, for its payments to a consultant whose ownership was connected to such
country’s royal family.
– Owner’s Representations and Powers
– No Corrupt Influence
– Focus on Compliance

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FCPA Compliance Strategies for Emerging Markets
Pre-Transaction Compliance Strategies
1. Legal, regulatory and cultural research
• Identify controlling entities
– Government?
– Military?
– Militias/Tribes?
• Local presence requirements
– Likely in flux, so distinguish formal from
informal requirements
• Permit requirements (if any)
– Business licenses
– Visas
– Customs permits
• Cultural pressure points
– Is corruption concentrated in particular
ministries and sectors?
• Transparency International
• Leverage in-country network
2. Identify and assess all intermediaries pre-
transaction
• Local representatives
• Consultants
• Logisticians
• Close-protection security
• Couriers
• Transportation providers
• Translators
3. Customize international party questionnaires, anti-
corruption certifications, and training materials to
each in-country party (including clients)
• Translate everything!
4. Set Tone
• Establish low tolerance for corruption at outset

May 09, 2014
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FCPA Compliance Strategies for Emerging Markets
Ongoing Compliance Strategies
1. Experienced cadre of in-country support staff
• Lawyers
• Accountants
• Bankers
2. In-country situational awareness
• Scheduled and unscheduled visits to intermediaries, support personnel, and clients
• Communicate, communicate, communicate!
3. Sophisticated reporting requirements and mechanisms
• Internal
• External
4. Hyper-focused accounting personnel
• Remember- the first signs of corruption will appear in irregular financial reporting
5. Alertness to political, legal, regulatory, military, and religious shifts
6. Adaptability
• Continually assess and re-assess efficacy of compliance strategy in light of in-country
events and evolving client requirements
7. Dynamic disclosure strategy
8. Ongoing communications with trade counsel

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Navigating Intermediary
Relationships
1. Thorough Due Diligence
• Initiate Early
• International Party Questionnaires
• Anti-Corruption Certifications
• Investigative Follow-Up
• Red Flags
2. Effective Training
• Practical Approach
• Translated
• In-Person
• Training Modules
– Assess responses!
• Emphasize:
– Consequences (legally and contractually)
– Corporate Commitment
3. Sustained Monitoring
• Robust Accounting Program
• Frequent and In-Person Contact

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Detection Mechanisms
1. Development of Transaction-Specific Red Flags
2. In-Country Presence
3. Robust Accounting Program
4. Routine and Non-Routine In-Country Audits
5. Anonymous Reporting Hotline
6. Private Investigative Services
• Recommended for select occasions
7. Culture of Compliance
• Leadership should encourage the reporting of non-compliance,
and this message should be widely disseminated.
8. Reporting Requirements in Third-Party Contracts

U.S. ECONOMIC SANCTIONS
May 09, 2014
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Overview of U.S. Economic
Sanctions Laws
May 09, 2014
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U.S. ECONOMIC SANCTIONS
 U.S. economic sanctions prohibit trade and other dealings by
U.S. persons with certain countries, entities and persons for
national security or other foreign policy goals.
 These laws and regulations are more likely to be violated by
transactions that occur outside the United States.
 Failure to comply can result in large penalties and even jail time
for violators.
May 09, 2014
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Overview
 The U.S. Department of the Treasury, Office of Foreign Assets Control
(“OFAC”) is a United States administrative agency that primarily administers
two sets of laws:
 prohibitions on transactions with Specially Designated Nationals (“SDNs”) and
Blocked Persons (terrorists, arms dealers, drug dealers, threats to national
security) and Foreign Sanctions Evaders; and
 restrictions on trade with several key countries and their nationals (Iran, Syria,
Sudan, Cuba and, to a more limited degree, North Korea, among others).
 These laws apply to U.S. companies, U.S. persons wherever located, and, in
some cases, the activities of subsidiaries of U.S. companies.
May 09, 2014
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OFAC Specially Designated Nationals
 What are OFAC Specially Designated Nationals (“SDNs”)?
 OFAC publishes a list of Specially Designated Nationals and Blocked
Persons (SDN List), which includes both individuals and entities with
whom U.S. persons and entities are prohibited from transacting business
and to whom U.S. persons cannot provide services.
 SDNs are designated under one of several regulatory schemes designed
to address perceived threats to U.S. national security and other foreign
policy goals of the United States, such as international drug trafficking,
human rights violations, international terrorism, proliferation of weapons
of mass destruction and certain countries’ regimes or former regimes.
May 09, 2014
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Specially Designated Nationals
 What are Specially Designated Nationals (“SDNs”)? (cont’d)
 For example, SDNs may be individuals designated for the following reasons:
 Based on affiliation with or connection to narcotics trafficking organizations under the
Specially Designated Narcotics Traffickers Sanctions Regulations;
 Based on affiliation with or connection to terrorist organizations such as under the Foreign
Terrorist Organization Sanctions Regulations or Global Terrorism Sanctions Regulations;
 Because of concerns related to the proliferation of weapons of mass destruction under
Weapons of Mass Destruction Sanctions Regulations or the Weapons of Mass Destruction
Trade Control Regulations; or
 Based on a myriad of foreign policy concerns related to U.S. foreign relations under country-
based sanctions regulations which extend to certain individuals, typically those associated
with particular regimes or affiliated with the governments or former regimes of Belarus,
Burma, Côte d’lvoire, Democratic Republic of the Congo, Iraq, Lebanon, Liberia, Libya,
Russia, Somalia, South Sudan, Ukraine, the Western Balkans, Yemen and Zimbabwe.
May 09, 2014
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 What are Specially Designated Nationals (“SDNs”)? (cont’d)
 Any entity at least 50% owned by an SDN is itself considered an SDN,
regardless of whether that entity has been officially designated as such
by OFAC.
 Furthermore, OFAC also prohibits engaging in any transaction that
“evades or avoids, has the purpose of evading or avoiding” U.S. sanctions.
May 09, 2014
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Facilitation
 Facilitation prohibited
 In addition to the prohibition on direct transactions, no U.S. person or
entity may participate in any way in a transaction with an SDN that may
be lawfully conducted by a foreign person or entity.
 The term “facilitation” is construed broadly by OFAC to encompass even
mere approvals and back-office services.
 For example, U.S. persons may “facilitate” a transactions by:
 supervising personnel;
 approving business plans or credit; and
 providing back-office services such as IT services.
May 09, 2014
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Blocked Property
 What is blocked property?
 Property and interest in property belonging to an SDN is “blocked,” or
effectively frozen.
 U.S. persons that have possession or control of the property or interest in
property of an SDN are required to place such property in blocked,
interest-bearing accounts and report the blocked property to OFAC within
10 business days.
 Annual reporting requirements also apply.
May 09, 2014
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Foreign Sanctions Evaders (“FSEs”)
 OFAC publishes a list of foreign individuals and entities
determined to have violated, attempted to violate, conspired to
violate, or caused a violation of U.S. sanctions on Syria or Iran.
 The Foreign Sanctions Evaders list also identifies foreign persons
who have facilitated deceptive transactions for or on behalf of
persons subject to U.S. sanctions.
 Transactions by U.S. persons or within the United States
involving FSEs are prohibited.
May 09, 2014
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Country-Based Sanctions Regimes
 OFAC regulations generally prohibit any and all
transactions (such as exports of products and the
provision of services) with, to, in, involving, or relating
to countries subject to comprehensive U.S. sanctions
or persons in these countries.
 Comprehensive sanctions apply to Cuba, Iran, Sudan, Syria
and, to a more limited extent, North Korea.
May 09, 2014
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Country-Based Sanctions Regimes
Iran, Sudan, Syria and Cuba
 What is prohibited?
 Among other types of transactions, OFAC regulations largely prohibit
financial transactions with nationals of sanctioned countries or “where a
benefit may be received” in a sanctioned country.
 Furthermore, the Cuban Assets Control Regulations prohibit dealing in
any property in which a Cuban national has an interest.
 Thus, transactions with Cuban nationals are prohibited regardless of whether
a benefit may ultimately be received in the sanctioned country, subject to
some limited exceptions.
 Like SDNs, property belonging to Cuban nationals is “blocked.”
May 09, 2014
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Application of Country-Based Sanctions
to Foreign Subsidiaries of U.S. Companies
 Cuba sanctions have always applied to foreign
subsidiaries of U.S. companies.
 Since October 2012, Iran sanctions also apply to foreign
subsidiaries of U.S. companies owned (50% or more) or
controlled by U.S. companies.
May 09, 2014
47

Overview of Ukraine-Related
Sanctions
May 09, 2014
48

Ukraine-Related Sanctions
 List-based sanctions so far.
 March 6, 2014 E.O. 13660 authorizing sanctions on persons:
 undermining democratic processes in Ukraine; threatening the peace, security and stability
of Ukraine; asserting governmental authority in the Crimean region without the
authorization of the government of Ukraine or; misappropriating Ukrainian state assets.
 March 17, 2014 E.O. 13661 authorizing sanctions on:
 officials of the Government of the Russian Federation
 individuals or entities that operate in the arms or related materiel sector in the Russian Federation
 parties that provide “material or other support to any senior official of the Government of the
Russian Federation”
 and designating Russian and Ukrainian officials
 Additional designations since then and discussion of sector-related sanctions
(March 20, 2014 E.O. 13662).
May 09, 2014
49

Ukraine-Related Sanctions (cont’d.)
 Certain ITAR licenses have been revoked and policy for license
applications is one of denial.
 13 companies have been added to the U.S. Commerce
Department Entity List: requires a license to export and policy is
one of denial.
May 09, 2014
50

Overview of the January 20, 2014
Joint Plan of Action
Related to Iran
May 09, 2014
51

January 20, 2014 Joint Plan of Action
between the United States, the United Kingdom, Germany,
France, Russia, China and Iran
 No change to Iran sanctions for U.S. companies and their owned or controlled non-
U.S. affiliates.
 Temporary suspension until July 20, 2014 of potential U.S. sanctions on non-U.S.
persons engaging in transactions related to:
 exports of petrochemical products from Iran;
 Iran’s purchase or sale of gold or other precious metals;
 Iran’s automotive sector;
 spare parts for civil aviation (also favorable licensing policy for U.S. persons); and
 exports of petroleum and petroleum products from Iran to China, India, Japan, the Republic of
Korea, Taiwan or Turkey.
May 09, 2014
52

January 20, 2014 Joint Plan of Action (cont’d.)
 Activities and services must be initiated and completed during
the Suspension Period.
 Other sanctions on Iran, including those targeting Iran’s energy
and petrochemical sectors, remain in place.
 Suspension may be lifted at any time.
May 09, 2014
53

Overview of OFAC’s General and
Specific Licensing Program
May 09, 2014
54

OFAC’s General and Specific Licensing Program:
Exceptions to the OFAC Prohibitions
 OFAC often issues general licenses, which authorize the
performance of certain transactions that otherwise would be
prohibited.
 Upon request, OFAC also issues specific licenses on a case-by-
case basis under certain limited situations and conditions.
May 09, 2014
55

Examples of General Licenses: Iran
 Iran General License - Authorizing the exportation or reexportation of medicine and basic medical supplies to Iran
 Iran General License - Authorizing the Exportation or Reexportation of Food Items
 Iran General License - Authorizing the Exportation or Reexportation of Replacement Parts for Certain Medical Devices
 Iran General License - Related to Consular Funds Transfers and to the Transportation of Human Remains
 Iran General License Related to Personal Communication Services - Exportation of certain services and software over the internet
 Iran General License (No. 2) - Authorizing U.S. persons who are employees or contractors of six international organizations to
perform transactions for the conduct of the official business of those organizations in or involving Iran
 Iran General License (No. D) - General License with Respect to the Exportation and Reexportation of Certain Services, Software,
and Hardware Incident to the Exchange of Personal Communications
 Iran General License (No. D-1) - Iranian General License D-1 ("GL D-1"), amends Iran General License D and clarifies certain
aspects of GL D and adds certain new authorizations.
 Iran General License (No. E) - Authorizing Certain Services in Support of Nongovernmental Organizations’ Activities in Iran
 Iran General License (No. F) - Authorizing Certain Services in Support of Professional and Amateur Sports Activities and Exchanges
Involving the United States and Iran
 Iran General License (No. G) - Certain Academic Exchanges and the Exportation or Importation of Certain Educational Services
Authorized
May 09, 2014
56

Application for a Specific License
 Most license applications are to be made by letter with a detailed description
of the proposed transaction, including the names and addresses of any
individuals or companies involved.
 Can also apply online at OFAC’s website.
 There is a specific form to be filed to apply for the release of blocked funds
that is available on OFAC’s website.
 License applications submitted under TSRA (Trade Sanctions Reform and
Export Enforcement Act of 2000) for agricultural or medical goods should be
submitted by hard copy.
May 09, 2014
57

OFAC Specific Licensing Policies
 OFAC periodically changes and publishes specific licensing
policies.
 For example:
 Policy for specific licenses regarding transactions with Iran is one of
denial.
 Policy is favorable for transactions involving telecommunications and
agriculture sectors in Iran.
 Specific license applications can take months to process.
May 09, 2014
58

Best Practices for International
Trade Compliance:
Compliance Programs, Detection Mechanism and
Crisis Response
May 09, 2014
59

Compliance Programs
May 09, 2014
60

Effective Compliance Program
Key Steps for an effective program:
 Management Commitment: “Tone at the Top”
 Risk Assessment: “Risk Based Approach”
 Written Policies and Procedures
 Responsible Personnel
 Compliance Training
 Recordkeeping
 Monitoring and Auditing
 Handling and Reporting Violations
 Remediation
May 09, 2014
61

Effective Compliance Program (cont’d.)
Specific Export Control Steps:
 Understand Jurisdiction: ITAR v. EAR.
 Determine classification of item to be exported and whether a license is
needed (certain countries may require a license for exports of certain items;
also, ensure parties are not identified on Entity, Denied Persons, or
Unverified Lists maintained by U.S. Department of Commerce, Bureau of
Industry and Security).
 Monitor post-shipment activities, including compliance with license
conditions and whether there are re-exports, transfers, servicing or returns.
 Prohibited end-uses.
May 09, 2014
62

Specific OFAC Steps:
 Companies engaging in international transactions need to screen third-parties: employees, customers,
and vendors.
 Companies also must ensure that transactions do not involve or otherwise relate to embargoed
countries.
 Screening can be done manually using information at http://www.treasury.gov/resource-
center/sanctions/SDN-List/Pages/default.aspx and http://www.treasury.gov/resource-
center/sanctions/SDN-List/Pages/fse_list.aspx.
 Also, various vendors offer screening services that can be built into electronic systems.
 Companies should also monitor changes in economic sanctions laws by visiting the OFAC Press Center
at http://www.treasury.gov/press-center/Pages/default.aspx.
 You can sign up for OFAC press alerts such as additions to or deletions from the SDN list and the FSE list.
 Contracts with third parties should include compliance provisions to ensure that they do not conduct
business in a manner that would cause you to violate economic sanctions laws.
May 09, 2014
63

Specific Anti-Corruption Steps:
 Contracts with third parties should include compliance provisions to ensure that they
do not conduct business in a manner that would cause you to violate anti-corruption
laws.
 Companies should perform due diligence on any third-party agents and make sure
that all contracts with such entities contain anti-corruption provisions.
 Monitor sales to or other interactions with non-U.S. government officials entities.
May 09, 2014
64

• Dedicate adequate resources immediately
• Estimate the scope and severity first
• Initial notification vs. final disclosure
• Investigative best practices
• Good writing counts
• New School of Corrective Actions
65
Crisis Response: VSD Considerations

May 09, 2014
66
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► You may ask a question at anytime throughout the presentation today. Simply click on the question mark icon located on the floating tool bar on the bottom right side of your screen. Type
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Q&A:
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Jennifer S. Huber
Partner
Laura Fraedrich
Partner
J. Scott Maberry
Partner
LLP

► You may ask a question at anytime throughout the presentation today. Simply click on the question mark icon located on the floating tool bar on the bottom right side of your screen. Type
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Contact Info.
April 03, 2014
70
Jennifer S. Huber
Partner
T: (703) 590-1234
E: jhuber@fluetlaw.com
J. Scott Maberry
Partner
Sheppard, Mullin, Richter & Hampton LLP
T: (202) 469-4975
E: smaberry@sheppardmullin.com
Globaltradelawblog
Laura Fraedrich
Partner
T: (202) 879-5990
E: lfraedrich@kirkland.com

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