BIS Implements Feb 2016 Australia Group Decisions

On December 16, 2016 the Department of Commerce (DOC), Bureau of Industry and Security (BIS) published a final rule (81 FR 90983-90987) amending the Export Administration Regulations (EAR) to implement the recommendations from the February 2016 Australia Group (AG) meeting (later adopted at the June 2016 meeting).

This rule amends:

• The CCL entry that "controls equipment capable of handling biological materials to reflect the AG updates to the nomenclature for certain bacteria and toxins identified on the AG 'List of Human and Animal Pathogens and Toxins for Export Control'"  
• The CCL entry that "controls equipment capable of handling biological materials to reflect the AG updates to the controls on cross (tangential) flow filtration equipment described on the AG 'Control List of Dual-Use Biological Equipment and Related Technology and Software'"
• The CCL entry that controls certain human and zoonotic pathogens and toxins by removing dengue fever virus, updating the nomenclature of the listing for conotoxin, and consolidating the controls for Shiga toxin and Verotoxin under a single listing
• The CCL entry that controls equipment capable of handling biological materials by updating the controls on biological containment facilities and related equipment and the controls on fermenters

Relevant ECCNs: 1C351 and 2B352.

The rule becomes effective on December 16, 2016.

GCSG launches a new monthly newsletter

DECEMBER 11, 2016

Global Compliance Solutions Group LLC (GCSG) launches a new monthly newsletter

GCSG distributes their inaugural monthly newsletter, Compliance Solutions News, to provide compliance professionals with relevant Trade Compliance, Anti-bribery and Anti-corruption, and Due Diligence commentary and news  

PRAIRIEVILLE, LA – GCSG, a professional compliance management consulting company, today announces the launch of a new monthly newsletter entitled “Compliance Solutions News”.  The newsletter is intended for compliance professionals in the trade compliance, anti-bribery and anti-corruption, and due diligence fields.   

“In today’s global compliance environment, the rate of change is accelerating.  It can seem like an impossible task for compliance professionals to stay up to date with all the changes.  Amid this fast-paced environment we are bombarded 24/7 with social media and email.  Knowing we are not the only source of information for our subscribers, we deliberated how we could bring the most value and in the least intrusive manner.  We settled on a monthly newsletter, a limited number of articles in each newsletter, concise article summaries, and a hyperlink to learn more for each article.  We believe this approach will enable our subscribers to receive relevant updates and to quickly determine if an individual newsletter or a specific article are of further interest,” said Jonathan Mellard, Founder, GCSG.

The newsletter is designed to provide relevant commentary and regulatory updates as well as developments at GCSG.  Each newsletter will also contain social media links, highlighted services, and other useful links. 

“We are excited to build on our client focused services with the launch of our monthly newsletter.  We believe this newsletter will help our clients stay up to date with the fast-changing compliance arena,” added Mellard. 

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For more information about GCSG please visit: http://www.globalcompliancesg.com/about-us/

To subscribe to our Compliance Solutions News monthly newsletter please enter your email address where prompted “Submit your email to receive our newsletter and press releases” on our Contact us page: http://www.globalcompliancesg.com/contact/

 ** *** **

Global Compliance Solutions Group LLC

GCSG is based in Prairieville, Louisiana.  We provide Advisory, Audit, and Due Diligence services for our clients across a range of industries in the areas of Import, Export and Customs Compliance, Anti-Bribery and Anti-Corruption, Drug Precursor, and Distilled Spirits Plant compliance.  The GCSG service team offers expertise on compliance program assessments, development and implementation, audits, and acquisition and third party due diligence. We have the experience to move our clients forward with strategic, business practical and creative compliance solutions.   GCSG personnel possess the required technical and regulatory expertise, in-house compliance program experience as well as the relational skills to assist corporations with managing both their national and international compliance needs. 

ISO Publishes New Anti-Bribery Standard

The International Organization for Standardization (ISO), on October 13, 2016, published a new standard (ISO 37001) that is designed to help organizations lower the risk and costs related to bribery throughout their operations.  The standard was developed by the ISO project committee (ISO/PC 278), Anti-bribery management systems) and it specifies requirements in the following areas:

• Policy and procedures
• Leadership commitment and responsibility
• Oversight by a compliance manager or function
• Training
• Risk assessments and due diligence
• Financial, procurement, commercial and contractual controls
• Reporting, monitoring, investigation, and review
• Corrective action and continuous improvement   

The new standard builds on the foundation established by other organizations, such as the International Chamber of Commerce (ICC), the Organisation for Economic Co-operation and Development (OECD), and Transparency International.

The standard was designed to be flexible enough to be useful by organizations of different sizes and locations.  Neill Stansbury, the Chair of the ISO project committee responsible for developing the new standard says, "The bribery risk facing an organization varies according to factors such as the size of the organization, the countries and sectors in which the organization operates, and the nature, scale and complexity of the organization's operations.  Therefore, ISO 37001 specifies the implementation by the organization of reasonable and proportionate policies, procedures and controls."

As with other ISO standards, organizations may choose to be certified to ISO 37001 by accredited third parties. 

GCSG is experienced with developing and implementing anti-bribery and anti-corruption programs and is able to assist your organization with implementation of an anti-bribery program as well as reviewing your existing program to ensure it is ready to pass an ISO certification audit.  Contact GCSG here for more information.    

Additional Resources:

• Purchase the ISO 37001:2016 standard
• Further information about the ISO 37001 Anti-bribery management system (pdf) 
• ISO 37001 PowerPoint presentation

DEA Proposes Revisions to Import-Export and Domestic Transaction Reporting Requirements

On Thursday, September 15, 2016 the Drug Enforcement Administration (DEA) published a proposed rule (81 FR 63575-63631) which would "update its regulations for the import and export of tableting and encapsulating machines, controlled substances, and listed chemicals, and its regulations relating to reports required for domestic transactions in listed chemicals, gamma-hydroxybutyric acid (GBL), and tableting and encapsulating machines."

Some of the proposed regulatory changes include, but are not limited to, the following:

• Mandate the electronic submission (DEA Office of Diversion Control secure network application) of all applications and other required filings and reports associated with the import and export of tableting and encapsulating machines, controlled substances, and listed chemicals (except for transshipment data)
• Proposing that import and export regulatory expiration periods, filing deadlines, and other timed action dates are to be generally calculated as "calendar days" unless otherwise noted
• Paper form import and export permits would be eliminated in favor of making them available via digital means
• Cease allowing exporters to amend foreign permit information on permit applications and issued permits
• Mandatory electronic reporting of return information for controlled substances imported or exported under permit procedures and for listed chemicals imported or exported under declaration procedures
• Cease allowing importers and exporters to amend information related to the authorization to import or export from the foreign competent national authority
• Amend the language relating to waivers of the 15-day advance reporting requirement for importations by "regular importers" and export transactions between regulated persons and "regular customers" - a waiver of the entire 15-day period will no longer be feasible
• Mandatory electronic filing of notifications of international transactions involving listed chemicals which meet or exceed the threshold amount identified in 1310.04
• Requiring that in maintaining records concerning imports and exports, the registrant needs to record the date on which the items are released by a customs officer at the port of entry or port of export
• Reports of unusual or excessive loss or disappearance of a listed chemical are to be filed through the DEA Office of Diversion Control secure network application
• Deliveries made by an importer directly to a customer without passing through the registered location of the importer (i.e. drop shipments), are explicitly prohibited under the proposed revisions to 1312.19 (controlled substances) and 1313.14 (listed chemicals)
• Requiring listed chemical importers and exporters to include both the date a customs officer releases an imported item or releases an item for export and the date that the shipment arrived at the location of the importer or exporter; the actual quantities of product both when released by a customs officer and at the time of shipment from the exporter's location or arrival at the importer's location, and the actual port of entry or export

If your company is subject to the DEA requirements for Controlled Substances, Listed Chemicals, or Tableting and Encapsulating Machines a thorough review of the proposed changes is necessary to ensure your business is prepared.  GCSG has extensive experience with DEA compliance and can be a resource for your business to understand and prepare for the proposed changes.

Contact us here for more information.    

OFPP Issues Draft Guidance on Anti-Trafficking Risk Management Best Practices & Mitigation

On Thursday, December 8, 2016 the Office of Federal Procurement Policy (OFPP) issued a notice and request for comment (81 FR 88707) on a draft guidance document entitled "Anti-Trafficking Risk Management Best Practices & Mitigation Considerations".  The guidance was drafted with the assistance of the Office to Monitor and Combat Trafficking in Persons in the Department of State (DOS) and the Department of Labor (DOL).  The guidance is intended to help agencies determine if one of their contractors is taking adequate steps to meet their anti-trafficking responsibilities under the Federal Acquisition Regulation (FAR).

Executive Order 13627 (September 25, 2012) and Title XVII of the National Defense Authorization Act (NDAA) (FY2013) established requirements for government contracts to prevent trafficking in persons.  As a result, the Department of Defense (DoD), General Services Administration (GSA), and the National Aeronautics and Space Administration (NASA) published a final rule (80 FR 4967-4992) on January 1, 2015 which amended the FAR in order to implement the requirements. 

The guidance memo states "Contractors are expected to be committed, proactive, and forthcoming in their efforts to address and reduce the risk of human trafficking in their operations and supply chains" and identifies a best practices list. 

The best practices list does not change existing regulatory requirements.  But it is noted that a contractor's efforts to "adopt best practices may be appropriately considered as a mitigating circumstance".  The best practice list includes the following:

1. Contractor Internal Steps
   • Appointment of an accountable official
   • Implementation of a Code of conduct and policies that address trafficking
   • Implementation of a worker training program for all employees
   • Implementation of a whistleblower protection mechanism
   • Development of a compliance plan for contracts or portions of contracts performed overseas in excess of $500,000
2. External steps
   • Company has taken steps to map out supplier relationships in its supply chain and utilized risk screening tools or procedures to identify high risk portions of its supply chain
   • Dissemination of a code of conduct throughout its supply chain
   • Validation of protections with its subcontractors
   • Implemented recurring auditing processes and regular updates to its policies and procedures
   • Demonstrated targeted corrective action plans for addressing risks, monitoring progress, direct monitoring, and follow-up audits for sites identified as non-conforming

Key Date(s):  Comments should be submitted in writing on or before January 9, 2017 via email (OFPPData@omb.eop.gov) or facsimile (202-395-5105).  Cite "Proposed Memo on Anti-Trafficking" in all correspondence.  

CBP Proposes TSCA Import Certification Requirement Changes

On August 29, 2016 the U.S. Customs and Border Protection (CBP) published a proposed rulemaking (81 FR 59157-59162) that would amend the regulations regarding the requirement to file a Toxic Substances Control Act (TSCA) certification when importing into the United States.

Under the current requirements, found in 19 CFR 12.121(a), when a TSCA regulated chemical is imported in bulk form or as part of a mixture or a non-TSCA chemical is imported, the importer (or their licensed customs broker) must submit a signed certification stating either:

1. All chemical substances in the shipment comply with all applicable rules or orders under TSCA and that the importer is not offering a chemical substance for entry in violation of TSCA or any rule or order thereunder, or
2. All chemicals in the shipment are not subject to TSCA. 

The TSCA certification is required to be filed with the director of the port of entry before release of the shipment. 19 CFR 121(a)(2) identifies how/where the certification may appear.

Under this rulemaking, CBP is proposing changes to 19 CFR 12.118 - 12.121.  These changes are intended to "clarify the description, scope, and definitions of the requirements for the importation of chemical substances, mixtures and articles containing a chemical substance or mixture, as well as the requirements associated with non-TSCA chemicals."  CBPs specific proposals include, but are not limited to, the following:

• Clarification of the definition of "chemical substances" to make it more clear the regulation applies to the importation of chemicals whether or not they are subject to TSCA.  
• Replacement of the existing definition of "chemical substance in bulk form" with a definition of "TSCA chemical substance in bulk form" and a new definition for the terms "TSCA chemical substance as part of a mixture" and "non-TSCA chemical". 
• Revision of references to "chemical substances, mixtures, or articles" to clarify that these regulations apply to TSCA chemical substances, mixtures, or articles as well as non-TSCA chemicals. 
• Revision of the scope in Sec. 119 to ensure it accurately reflects the requirements with regard to certain TSCA chemical substances and non-TSCA chemicals.   

Because the definition of "chemical substances" in section 3(2) of TSCA excludes certain substances, CBP believes referring to chemicals that are not subject to TSCA as a "chemical substance" may be confusing.  Therefore CBP has issued this rulemaking to clarify that the regulation applies to all chemicals regardless of whether they are "chemical substances" subject to TSCA. 

EPA Amends Export-Import regulations for Hazardous Wastes

On Monday, November 28, 2016 the Environmental Protection Agency (EPA) published a final rule (81 FR 85696) amending their Hazardous Waste Export-Import regulations.

The changes were made to make "existing export and import related requirements more consistent with the current import-export requirements for shipments between members of the Organization for Economic Cooperation and Development (OECD); enable electronic submittal to EPA of all export and import-related documents"; and "enable electronic validation of consent in the Automated Export System (AES) for export shipments subject to RCRA export consent requirements prior to exit."

The revisions will generally affect the following:

• Groups who export or import (or who arrange for the export or import) hazardous waste for recycling or disposal, including those subject to alternate management standards for:
  • Universal waste for recycling or disposal
  • Spent lead-acid batteries shipped for reclamation
  • Industrial ethyl alcohol shipped for reclamation 
  • Hazardous waste samples of more than 25 Kg shipped for waste characterization or treatability studies
  • Hazardous recyclable materials being shipped for precious metal recovery
• All recycling and disposal facilities who receive imports of hazardous wastes for recycling or disposal
• All persons who export (or arrange for the export) of conditionally excluded cathode ray tubes being shipped for recycling
• All persons who transport any export and import shipments described in the three bullets above

Some of the major regulatory provisions in the final rule include (list below is not exhaustive):

• Recognized traders must obtain an EPA ID number prior to arranging for export (40 CFR 262.12(d))
• Exporters must establish/amend contracts or equivalent arrangements to include the items listed in 40 CFR 262.83(f)
• Exporters must submit export notice or renotification with all required OECD items electronically into EPA's WIETS (40 CFR 262.83(b))
• Exporters must either file in AES for every shipment to validate consent and provide a manifest tracking number, or must ensure paper proof of consent accompanies the shipment and a paper manifest is given by the transporter to US CBP at the point of departure; after AES compliance date exporters must file in AES for every shipment (40 CFR 262.83(a)(6))
• Exporters must prepare and provide RCRA manifest for every shipment (40 CFR 262.83(c))
• Exporters must prepare and provide international movement document for every shipment (40 CFR 262.83(d))
• The last U.S. transporter must sign and date the manifest at the port for every shipment, keep a copy for their records and send back a copy to the generator (40 CFR 262.83 (a)(6)(i)(B)(2) and 263.20 (g)(4)(ii)
• Exporters must submit export annual report with all OECD items to EPA by March 1 detailing actual shipments made the previous calendar year (40 CFR 262.83(g))

Some of the electronic submittal requirements will not go into effect until a future electronic import-export reporting compliance date that will be announced in a separate Federal Register notice.

The rule becomes effective on December 31, 2016. 

Key Definitions:

• Exporter, also known as primary exporter on the RCRA hazardous waste manifest, means the person domiciled in the United States who is required to originate the movement document in accordance with Sec. 262.83(d) or the manifest for a shipment of hazardous waste in accordance with subpart B of this part, or equivalent State provision, which specifies a foreign receiving facility to which the hazardous wastes will be sent, or any recognized trader who proposes export of the hazardous wastes for recovery or disposal operations in the country of import.  
• Importer means the person to whom possession or other form of legal control of the hazardous waste is assigned at the time the imported hazardous waste is received in the United States.  
• Recognized trader means a person domiciled in the United States, by site of business, who acts to arrange and facilitate transboundary movements of wastes destined for recovery or disposal operations, either by purchasing from and subsequently selling to United States and foreign facilities, or by acting under arrangements with a United States waste facility to arrange for the export or import of the wastes.  

NESHAP Final Rule for Boilers

On September 14, 2016 the Environmental Protection Agency (EPA) published a final rule (81 FR 63112-63131) laying out their decisions in regards to their January 21, 2015 notice of reconsideration and their February 1, 2013 final amendments to the National Emission Standards for Hazardous Air Pollutants for Area Sources: Industrial, Commercial, and Institutional Boilers (Area Source Boilers Rule).  The issues being finalized in this rulemaking include: 

• Retention of the subcategory and separate requirements for limited-use boilers
• Amending three reconsidered provisions regarding alternative particulate matter (PM) standards for new oil-fired boilers; performance testing for PM for certain boilers based on their compliance test; and fuel sampling for mercury (Hg) for certain coal-fired boilers based on their initial compliance demonstration
• Making minor changes to the proposed definitions of startup and shutdown

With this rule, the EPA has adopted two alternative definitions of "startup" as well as some minor revisions to the term "shutdown". 

• The first definition of "startup" defines it to mean the first-ever firing of fuel, or the firing of fuel after a shutdown event, in a boiler for the purpose of supplying useful thermal energy for heating and/or producing electricity or for any other purpose.  Under this definition, startup ends when any of the useful thermal energy from the boiler is supplied for heating, producing electricity, or any other purpose. 
• The alternative definition of "startup" defines the period as beginning with the first-ever firing of fuel, or the firing of fuel after a shutdown event, in a boiler for the purpose of supplying useful thermal energy for heating, cooling, or process purposes or for producing electricity, and ending 4 hours after the boiler supplies useful thermal energy for those purposes.   
• "Shutdown" is defined to begin when the boiler no longer supplies useful thermal energy (such as steam or hot water) for heating, cooling, or process purposes or generates electricity, or when no fuel is being fed to the boiler, whichever is earlier.  Shutdown ends when the boiler no longer supplies useful thermal energy (such as steam or hot water) for heating, cooling, or process purposes or generates electricity, and no fuel is being combusted in the boiler. 

The final rule is effective on September 14, 2016.

Key Link(s):

• NESHAP for Area Source Boilers - Final Rule - September 14, 2016
• NESHAP for Area Source Boilers - Proposed Rule - January 21, 2015
• NESHAP for Area Source Boilers - Final Rule - February 1, 2013
• EPA - Boiler Compliance at Area Sources

BIS Harmonization of Destination Control Statements

On August 17, 2016 the Department of Commerce, Bureau of Industry and Security (BIS) published a final rule (81 FR 54721-54732) that implements changes recommended in a May 22, 2015 proposed rule (80 FR 29551-29554).  The rule revises the destination control statement in Sect 758.6 of the Export Administration Regulations (EAR).  The rule harmonizes the EAR statement with the destination control statement required for the export of items subject to the International Traffic in Arms Regulations (ITAR). 

The revised destination control statement reads as follows:

"These items are controlled by the U.S. Government and authorized for export only to the country of ultimate destination for use by the ultimate consignee or end user(s) herein identified.  They may not be resold, transferred, or otherwise disposed of, to any other country or to any person other than the authorized ultimate consignee or end-user(s), either in their original form or after being incorporated into other items, without first obtaining approval from the U.S. government or as otherwise authorized by U.S. law and regulations"

The rule is effective November 15, 2016.

Key Link(s):

• May 22, 2015, 15 CFR 758, EAR: Harmonization of the Destination Control Statements - Proposed Rule
• August 17, 2016, 15 CFR 758, EAR: Harmonization of the Destination Control Statements - Final Rule
• U.S. Department of Commerce, Bureau of Industry and Security

GCSG launches a new due diligence report product for businesses

JULY 28, 2016

Global Compliance Solutions Group LLC (GCSG) launches a new due diligence report product for businesses

GCSG has created a due diligence report to help companies assess potential risks associated with their current and potential third party relationships

PRAIRIEVILLE, LA – GCSG, an experienced source of risk management solutions for businesses, today announces the launch of a new due diligence report product.  The report is intended for companies who need a quick snapshot of the potential risk a third party relationship may present to their business.

“The reputation and compliance focus of third party partners has emerged as a top concern for companies operating in a global market.  Businesses that operate globally have realized the reputation of their partnerships can impact their own reputation and even result in civil and criminal enforcement actions,” said Jonathan Mellard, founder, GCSG.

The reports contain company and individual information, key risks identified on the report subject, and country specific risks.  The report is part of a suite of third party risk management solutions that also includes advisory services, in-depth onsite assessments, and compliance training.

“We are excited to announce the launch of our new report and to build on our existing suite of third party risk solutions.  This report will help our clients assess some of the risks involved with their current and potential third party relationships,” added Mellard. 

For more information about GCSGs new due diligence report please visit: http://www.globalcompliancesg.com/due-diligence-reports/

For more information about GCSGs suite of due diligence services please visit: http://www.globalcompliancesg.com/due-diligence-1/

 ** *** **

Global Compliance Solutions Group LLC

GCSG is based in Prairieville, Louisiana.  We provide Advisory, Audit, and due diligence services for our clients across a range of industries in the areas of Import, Export and Customs Compliance, Environmental, Health and Safety, Anti-Bribery and Anti-Corruption, Drug Precursor, and Distilled Spirits Plant compliance.  The GCSG service team offers expertise on compliance program assessments and implementation, audits, and acquisition and third party due diligence. We have the experience to move our clients forward with strategic, business practical and creative compliance solutions.   GCSG personnel possess the required technical and regulatory expertise, in-house compliance program experience as well as the relational skills to assist corporations with managing both their national and international compliance needs.  For more information, go to: http://www.globalcompliancesg.com

Contact us here.

EPA Adjusts Civil Monetary Penalty Amounts

On Friday, July 1, 2016 the Environmental Protection Agency (EPA) promulgated an interim final rule (81 FR 43091-43096) that will adjust the allowable civil penalty amounts for statutes they administer.

The Federal Civil Penalties Inflation Adjustment Act of 1996 required federal agencies to review their civil penalties every four years.  However, with the 2015 amendments the Act now requires agencies to adjust the level of statutory civil penalties with a "catch-up" adjustment through an interim final rulemaking; and to make subsequent adjustments for inflation every year (beginning January 15, 2017).  The 2015 Act sets a maximum allowable initial "catch-up" increase not to exceed 150% of the level that was in effect on November 2, 2015. 

The interim final rule will be effective on August 1, 2016.

The inflation adjusted penalties will affect violations that have occurred after November 2, 2015 and that were assessed on or after August 1, 2016.  The penalty amounts are the maximum allowed, under the statute, per day of violation. Some of the notable penalty adjustments include:

• 7 U.S.C. 1361(a)(1) - FIFRA from $5,000 to $18,750
• 15 U.S.C. 2615(a)(1) - TSCA from $25,000 to $37,500
• 33 U.S.C. 1319(d) - CWA from $25,000 to $51,570
• 42 U.S.C. 6928(a)(3) - RCRA from $25,000 to $93,750
• 42 U.S.C. 7413(b) - CAA from $25,000 to $93,750

See Table 2 of Section 19.4 at the link provided for a complete list of all of the EPA penalty adjustments.

Key Link(s):

• 40 CFR Part 19, Civil Monetary Penalty Inflation Adjustment Rule
• EPA

FCPA Legislation Introduced to Allow Individuals and Companies to take Legal Action

On June 9, 2016 U.S. Representative Ed Perlmutter (CO-07) introduced legislation (H.R. 5438) that would expand the Foreign Corrupt Practices Act (FCPA).  Enforcement actions under the FCPA may only be brought by the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC). The legislation introduced by Rep. Perlmutter, would also give individuals and companies the ability to take legal action against corporations who are violating the anti-bribery provisions of the FCPA.

In his press release, Rep. Perlmutter said, "This legislation helps encourage foreign companies to play by the rules or be brought to court.  Most importantly, it is a way to level the playing field and help U.S. companies compete abroad."

Key Amended Text:

"Authorized Plaintiffs. - Any person that violates subsection (a) shall be liable in an action brought in accordance with this subsection in any court of competent jurisdiction to any issuer that is subject to section 30A of the Securities and Exchange Act of 1934, domestic concern that is subject to this section, or other person that is a United States person, that is damaged by the violation of subsection (a) of this section, for damages caused to such issuer, domestic concern, or other person by the violation."

Key Link(s):

• Press Release
• Text - H.R. 5438 - Foreign Business Bribery Prohibition Act of 2016
• 15 USC 78dd-2: Prohibited foreign trade practices by domestic concerns

BIS Revises Guidance Regarding EAR Enforcement Cases

On Wednesday, June 22 the Department of Commerce, Bureau of Industry and Security (BIS) published (81 FR 40499-40511) updated guidance (found in Supplement No. 1 to part 766) regarding violations of the Export Administration Regulations (EAR). 

The guidance amends the EAR to make civil penalty decisions more transparent and aligns them with the Treasury Department's Office of Foreign Assets Control (OFAC). 

OFAC criminal penalties can reach 20 years imprisonment and $1 million per violation.  OFAC civil penalties use the transaction value as the starting point and can reach $250,000 or twice the value of the transaction, whichever is greater (Economic Sanctions Enforcement Guidelines). 

The updated guidance does not apply to alleged violations under part 760 of the EAR - Restrictive Trade Practices and Boycotts or to cases that are pending prior to July 22, 2016. 

The effective date of the final rule change is July 22, 2016. 

Key Link(s):

• Guidance on OFAC Enforcement Policy
• OFAC Enforcement Guidelines
• 15 CFR 766 - Guidance on Charging and Penalty Determinations in Settlement of Administrative Enforcement Cases

Congress sends President TSCA Overhaul bill

On Tuesday, Congress passed a bill that would update the 1976 Toxic Substances Control Act (TSCA).  The measure requires the Environmental Protection Agency (EPA) to evaluate new and existing chemicals with a risk-based safety standard.  The bill establishes deadlines for the EPA and makes it more difficult for industry to make proprietary claims. 

The American Chemistry Council (ACC), which represents the U.S. chemical industry, supported passage of the measure. 

Key Link(s):

• "Congress Sends Obama Bill to Regulate Toxic Chemicals" - Associated Press
• "Congress Passes Historic Legislation to Modernize TSCA" - ACC
• S.697 (Text of bill) - Frank R. Lautenberg Chemical Safety for the 21st Century Act - Congress.gov

O&G Sector - Emission Standards for New, Reconstructed, Modified Sources

On June 3, 2016 the US Environmental Protection Agency (EPA) published a rule (81 FR 35823-35942) that finalizes amendments and the addition of new standards to the existing new source performance standards (NSPS) for the Oil and natural gas source category.  The rule establishes new greenhouse gases (GHGs) and VOC standards in this source category. 

The emission sources affected by the GHGs and VOC standards include the following:

Sources that are unregulated by the current NSPS

• Hydraulically fractured oil well completions
• Pneumatic pumps
• Fugitive emissions from well sites and compressor stations

Sources that are regulated for VOC but not for GHGs

• Hydraulically fractured gas well completions
• Equipment leaks at natural gas processing plants

Certain Equipment that is used across the source category in which VOCs are currently regulated only from a subset

• Pneumatic controllers
• Centrifugal compressors
• Reciprocating compressors

The final rule is effective August 2, 2016. 

Key Link(s):

• 40 CFR 60 - Oil and Natural Gas Sector: Emission Standards for New and Modified Sources; Proposed Rule.  September 18, 2015 (80 FR 56593 - 56698)
• 40 CFR 60 - Oil and Natural Gas Sector: Emission Standards for New, Reconstructed, and Modified Sources; Final Rule.  June 3, 2016 (81 FR 35823-35942)

ACE will be sole CBP-authorized EDI system effective July 23, 2016

On May 23, 2016, the U.S. Customs and Border Protection (CBP) published a Federal Register notice (81 FR 32339-32340) announcing, effective July 23, 2016, that the Automated Commercial Environment (ACE) will be the sole CBP-authorized EDI system for electronic entry and entry summary filings (for all filers).

On the effective date the electronic filings listed immediately below must be formatted for submission in ACE, and will no longer be accepted in the Automated Commercial System (ACS). 

 01--Consumption--Free and Dutiable
 02--Consumption--Quota/Visa
 03--Consumption--Antidumping/Countervailing Duty
 06--Consumption--Foreign Trade Zone (FTZ)
 07--Consumption--Antidumping/Countervailing Duty and Quota/
Visa Combination
 11--Informal--Free and Dutiable
 12--Informal--Quota/Visa (other than textiles)
 21--Warehouse
 22--Re-Warehouse
 23--Temporary Importation Bond (TIB)
 31--Warehouse Withdrawal--Consumption
 32--Warehouse Withdrawal--Quota
 34--Warehouse Withdrawal--Antidumping/Countervailing Duty
 38--Warehouse Withdrawal--Antidumping/Countervailing Duty & 
Quota/Visa Combination
 51--Defense Contract Administration Service Region (DCASR)
 52--Government--Dutiable
 61--Immediate Transportation
 62--Transportation and Exportation
 63--Immediate Exportation
 69--Transit (Rail only)
 70--Multi-Transit (Rail only)

Until CBP publishes a future Federal Register notice, with a transition date, the 
following entry types must continue to be filed only in ACS. 

 08--NAFTA Duty Deferral
 09--Reconciliation Summary
 41--Direct Identification Manufacturing Drawback
 42--Direct Identification Unused Merchandise Drawback
 43--Rejected Merchandise Drawback
 44--Substitution Manufacturer Drawback
 45--Substitution Unused Merchandise Drawback
 46--Other Drawback

Filings for the below entry types will not be automated in ACS or ACE.

 04--Appraisement
 05--Vessel--Repair
 24--Trade Fair
 25--Permanent Exhibition
 26--Warehouse--Foreign Trade Zone (FTZ) (Admission)
 33--Aircraft and Vessel Supply (For Immediate Exportation)
 64--Barge Movement
 65--Permit to Proceed
 66--Baggage

Customer Due Diligence Requirements

On May 11, 2016 the Department of the Treasury, Financial Crimes Enforcement Network (FinCEN) published final rules (81 FR 29397-29458) under the Bank Secrecy Act to clarify customer due diligence requirements for Banks; brokers or dealers in securities; mutual funds; and futures commission merchants and introducing brokers in commodities. 

Unlike most other federal agencies where they've taken the approach to provide guidelines or inferred expectations around customer due diligence, these rules contain explicit customer due diligence requirements.

FinCEN makes the case that there are four core elements of customer due diligence (CDD):

• Customer identification and verification (already a requirement)

• Beneficial ownership identification and verification (required by the new final rule)

• Understanding the nature and purpose of customer relationships to develop a customer risk profile (implicitly required already and will now be explicitly required by the new final rule)

• Ongoing monitoring for reporting suspicious transactions and, on a risk-basis, maintaining and updating customer information (implicitly required already and will now be explicitly required by the new final rule)

These four core elements are also good basic guidelines for any global business, regardless of industry, with third party relationships.  Companies that fail to maintain an adequate level of oversight of their third parties risk conducting business with people and entities that do not share their same values for integrity.  This can lead to relationships that end with compliance failures that could damage the company's reputation and in some instances result in criminal/civil penalties.

A good third party due diligence program will include these basic elements:

• Written policy with Executive level support

• Third Party verification and screening against denied party/restricted party lists as well as for adverse media events

• Desktop procedures that include when, what and how a third party is to be on-boarded and for how an existing third party relationship is to be monitored (for changes in their risk profile)

• Red Flags awareness and a process for handling Red Flags as they arise

• Prioritization of third parties by level of risk and categorization by required levels of due diligence (low, moderate, high)

• Training    

Global Compliance Solution Group (GCSG) is well versed in assessing and implementing corporate third party due diligence programs.  If you have any questions or needs in this area please contact us directly at info@globalcompliancesg.com. 

The final rules become effective on July 11, 2016 and covered institutions must fully comply by May 11, 2018.

Key definitions:

• Third Party - means customers or intermediaries that conduct business on a company's behalf with persons outside of the company and encompasses those contracted in both sales and supply channels.

• Intermediaries - may include joint venture partners, consortium partners, agents, advisor (e.g. legal, tax, financial, consultant, lobbyist), supplier, vendor, service provider (e.g. communications, logistics, storage, brokers, forwarders, etc.) or distributor/reseller. 

Key link(s):

• Department of the Treasury

• FinCEN

• 81 FR 29397-29458

The 'Blue Guide' on the implementation of EU product rules 2016

On April 5, 2016 the European Commission posted an updated 'Blue Guide'.  The guides intended purpose is to enhance the understanding of EU product rules.  The 2016 version of the Blue Guide replaces the 2000 edition.  Key topics covered within the guide include:

• Regulating the free movement of goods
• When does union harmonization legislation on products apply?
• The actors in the product supply chain and their obligations
• Product requirements
• Conformity assessment
• Accreditation
• Market surveillance    

Key Link(s):

• Blue Guide 2016 EN

Singapore probing complex transactions involving 'many shell companies'

"SINGAPORE authorities are probing "complex and layered transactions" with "cross border elements" involving many shell companies...it is widely accepted that the case involves the probe into the money trail of Malaysia's troubled state-backed firm."

Article Link: "Singapore probing complex transactions involving 'many shell companies' in 1MDB case"

Source Credit: The Business Times

EU - The Union Customs Code came into force May 1, 2016

The major provisions of the European Union Customs Code (UCC) came into force on May 1, 2016.  For a complete list of changes to import, export, and storage procedures please see the following link: U.K. HM Revenue & Customs - The Union Customs Code Guidance

Key Link(s):

• European Commission - Union Customs Code