On February 27, 2022, the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) issued a final rule (the “Iran Final Rule”) imposing new export control measures against Iran caused by to its support of Russian hostilities against Ukraine due to Iran’s provision of drones (a/k/a “Unmanned Aerial Vehicles” (“UAVs”) or “Unmanned Aircraft Systems” (“UASs”), which Russia has used to bomb the Ukrainian people.
On March 29, 2023, the BIS imposed a “20 Year Denial Order” on two U.S. companies and their common owner, who tried to evade the U.S. export controls relating to Iran. Under the Denial Order, the two U.S. companies will be prohibited from exporting any product subject to the Export Administration Regulations (“EAR”) for a period of 20 years.
New BIS Iranian Export Controls
While Iran is already subject to comprehensive U.S. economic and trade sanctions, the new Iran rule imposes additional export control measures that are intended to target Iran’s ability to supply UAVs to Russia.
The Iran Final Rule:
20 Year Denial Order
Scott Communications, Inc. and Mission Communications, LLC, as well as their owner, Kenneth Peter Scott, (collectively, “Scott Communications”) admitted to committing five violations of the EAR by attempting to export communications equipment to Jordan, while knowing that the equipment was destined for Iran without the required licenses. Scott Communications also admitted that it failed to file Electronic Export Information for the transaction and failed to maintain appropriate records. BIS stated that during the course of the investigation, Scott made false or misleading statements to Federal Bureau of Investigation and BIS Special Agents. A denial of export privileges prohibits a person from participating in any way in any transaction subject to the EAR. Furthermore, it is unlawful for other businesses and individuals to participate in any way in an export transaction subject to the EAR with a denied person.
For additional information involving Russia-related sanctions, visit Locke Lord’s Sanctions Resource Center.
ConclusionThis paper is intended as a guide only and is not a substitute for specific legal or tax advice. Please reach out to the authors for any specific questions. We expect to continue to monitor the topics addressed in this paper and provide future client updates when useful.
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