$285K Export Control Penalty by BIS

Jun. 24, 2024
By: Ashley J. Bodden

In June, the Department of Commerce’s Bureau of Industry and Security (BIS) announced a $285,000 civil penalty against Sapphire Havacilik San Ltd. STI (Sapphire), an aviation company based in Ankara, Türkiye, for violating controls on exports to Russia.

According to the BIS charging letter, Sapphire admitted to violating export control regulations targeting Russia by chartering a US-origin aircraft into Russia arranged by Russian nationals without the required BIS license. BIS notes the Russian national passengers provided payment to Sapphire through third-party non-Russian charter brokers, which provided a benefit to the Russian national on board. Thus such flights were controlled by or under charter or lease by a Russian national. BIS found the relevant flights were not within the license exception Aircraft, Vessels, and Spacecraft (AVS) and violated Section 764.2(a) of the ECRA.

Since the Russian Federation’s war against Ukraine began, the U.S. has implemented a widespread series of export controls that have severely restricted Russia’s access to technologies and other items, including luxury goods. Effective February 24, 2022, BIS imposed further controls on aviation-related items to Russia, including a license requirement for the export, reexport, or transfer (in-country) to Russia of any aircraft or aircraft parts specified under any export control classification number.

In addition, BIS also excluded any aircraft registered in, owned by, controlled by, or under charter or lease by Russia or a national of Russia from being eligible for export or reexport to Russia pursuant to license exception AVS (Section 740.15 of the EAR) effective March 2, 2022.  Consequently any U.S.-origin aircraft or foreign aircraft that includes more than 25% controlled U.S.-origin content that is registered in, owned by, controlled by, or under charter or lease by Russia or a national of Russia, is subject to a license requirement.

For more information or questions about complying with U.S export controls to Russia or other restricted destinations, please contact any attorney at Barnes Richardson and Colburn.