On March 22, the Bureau of Industry and Security (BIS) issued a final rule (“March Rule”) that (1) added 23 persons to its Entity List, (2) removed one person from the Entity List, and (3) corrected a licensing requirement inaccurately described in a previous rule related to twelve previously designated Russian entities.

(1) New Designees: The March Rule also adds twenty-three persons to the Entity List. These include: (a) 15 persons added in South Sudan for being government, parastatal, or private entities acting contrary to U.S. foreign policy interests; (b) two persons in Singapore and Pakistan added for seeking to procure U.S.-origin items for nuclear-related entities in Pakistan; and (c) five entities in Pakistan for being involved in the proliferation of unsafeguarded nuclear activities and/or assisting others in evading Entity List restrictions. For all 23 persons, BIS imposed a licensing requirement for all items subject to the Export Administration Regulations (“EAR”) with a presumption of denial.

(2) Removed Designees: BIS also chose to remove one designee in the UAE and one in Ecuador based on “information received by BIS” from those entities and a review undertaken by the End-User Review Committee (“ERC”).

(3) Correction of Licensing Requirement: Finally, BIS corrected an error in a final rule published on February 16 (“February Rule”), which had added 21 entities to the Entity List.

Specifically, the February Rule had added 12 entities to the Entity List to support a parallel designation of these entities by the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”) pursuant to Executive Order 13662 on its Sectoral Sanctions Identification (“SSI”) list. The February Rule had, however, inconsistently described the licensing requirements applicable to these 12 entities (the other 9 entities were designated by OFAC as Specially Designated Nationals (“SDN”) and the BIS Entity List licensing requirement was correctly described).

Specifically, the preamble to the February Rule correctly stated that a “license is required for exports, re-exports, or transfers (in-country) of all items subject to the [Export Administration Regulations] EAR, when the exporter, re-exporter or transferor knows that the item will be used directly or indirectly in exploration for, or production of, oil or gas in Russian deep water (greater than 500 feet) or Arctic offshore locations or shale formations in Russia, or is unable to determine whether the item will be used in such projects.” That tailored requirement is consistent with the tailored licensing requirements BIS had previously imposed on entities designated by OFAC as subject to its sectoral sanctions program.

However, the February Rule also included a more general, and conflicting, entry for each of the 12 entities. Specifically, BIS had stated in its conclusion that a license was required for all items subject to the EAR for all end uses for all entities identified in the February Rule; this was a correct description of the requirements applicable to the nine designees who had been designated by OFAC as SDNs, but was too broad of a statement for the 12 designees designated by OFAC as SSIs.

The March Rule clarifies the February Rule and removes the conflict. Specifically, the March Rule confirms that the 12 entities subject to OFAC’s sectoral sanctions program (i.e., designated as SSIs) are subject only to the more limited licensing requirements related to all items subject to the EAR when used in projects specified in § 746.5 of the EAR. The broader restriction on the nine SDNs remains in place and was not modified in the March Rule.

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Photo of Dj Wolff Dj Wolff

David (Dj) Wolff is a partner and attorney at law in the firm’s Washington, D.C. and London offices and a director with C&M International, the firm’s trade policy affiliate.

At Crowell & Moring, he practices in the International Trade Group, where his practice…

David (Dj) Wolff is a partner and attorney at law in the firm’s Washington, D.C. and London offices and a director with C&M International, the firm’s trade policy affiliate.

At Crowell & Moring, he practices in the International Trade Group, where his practice covers compliance with U.S. economic sanctions, export controls and antiboycott regimes, and anti-money laundering (AML) laws and regulations. He is experienced in providing day-to-day compliance guidance, developing compliance programs including through on-site compliance trainings, responding to government inquiries, conducting internal investigations, representing them during civil and criminal enforcement proceedings, and, in collaboration with colleagues, managing the potential conflict of laws that can arise from the interaction between extraterritorial impacts of U.S. regulations and third country “blocking” laws or data privacy regulations. Dj splits his time between Washington and London, working regularly with European clients and colleagues to provide coordinated guidance on U.S., U.K., and EU sanctions compliance and enforcement. Dj also has extensive experience in international mergers and acquisitions, advising both buyers and sellers regarding the international trade implications of a potential deal.