On April 18, 2017, the US Department of State notified the US Congress that Iran has been complying with the conditions of the Joint Comprehensive Plan of Action (“JCPOA”). The US Department of State is required to notify the US Congress every 90 days on Iran’s compliance with the JCPOA, and the April 18, 2017, notification was the first such notification under the Trump Administration.
The Department of Commerce’s Bureau of Industry and Security (“BIS”) announced a final rule, effective today, March 29, 2017, to amend the Export Administration Regulations (“EAR”) to remove Zhongxing Telecommunications Equipment Corporation (“ZTE”) and its subsidiary, ZTE Kangxun Telecommunications Ltd. (“ZTE Kangxun”), from the Entity List. ZTE and ZTE Kangxun were originally placed on BIS’s Entity List on March 8, 2016.
Ending a five-year investigation, ZTE Corp. (“ZTE”), the second-largest producer of telecommunications equipment in China, entered into a plea agreement with the US Department of Justice (“DOJ”) and settlement agreements with the US Department of Commerce’s Bureau of Industry (“BIS”) and the US Department of Treasury’s Office of Foreign Assets Control (“OFAC”), for violations of US sanctions against Iran and US export controls, making false statements to the US government, and obstruction of justice (complete plea/settlement agreements are available at the following links: DOJ, BIS and OFAC). If the criminal plea with the DOJ is approved by a federal judge, the combined $1.19 billion in penalties would be the largest fine and forfeiture ever levied by the US government in an export control case.
On February 2, 2017, the US Treasury Department’s Office of Foreign Assets Control (“OFAC”) issued a general license (“General License 1”) permitting certain limited transactions with the Russian Federal Security Service (“FSB”), Russia’s principal security agency. FSB was designated by OFAC as a Specially Designated National (“SDN”) on December 29, 2016 and subsequently also added to the US Commerce Department’s Entity List on January 4, 2017. FSB remains designated, but OFAC’s General License 1 is a welcome step towards alleviating concerns of US technology companies over the need to deal with FSB in its regulatory role in approving the import, distribution, and use of encryption products in Russia, as well as its broader law enforcement role. Meanwhile, the US Commerce Department’s Bureau of Industry and Security (“BIS”) has yet to take parallel action to authorize exports, reexports, and transfers to FSB of goods, software, and technology subject to US jurisdiction under the Export Administration Regulations (“EAR”).