BIS Discusses Root Causes of Civil Enforcement Actions, Etc.
At the Bureau of Industry and Security’s recent Annual Export Controls Update Conference, a BIS’ Office of Export Enforcement Special Agent in Charge (SAC) discussed the root causes of civil enforcement actions, and what to do if violations of BIS statutes and regulations are found.
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Highlights of the SAC’s presentation, which focused on freight forwarder and exporter compliance, include:
OEE Investigations Can Result in Fines, Penalties, Denial of Export Privileges
BIS’ OEE conducts both criminal and administrative investigations which can result in criminal fines and imprisonment, civil fines and penalties, and denial of export privileges.
Five Root Causes of Civil Enforcement Actions
The SAC stated that the five root causes of civil enforcement actions are (i) incomplete transaction information; (ii) ignoring red flags, (iii) human error, (iv) incorrect EEI filing; and (v) non-compliance with license conditions.
Incomplete transaction information -- can occur with unknown end-users, unknown or inconsistent end-use, multiple parties to a transaction, incorrect product classification, etc.
Ignoring red flags -- can occur when the person ordering the technology is unfamiliar with the product or technical information regarding end-use, there are inappropriate end users, or if there is conflicting information on sales documentation and export routing correspondence.
Human error -- can happen when staff is overwhelmed by end of quarter orders and processing, new personnel is using outdated go-by documentation, an export manager is on vacation (BIS recommends cross training back up personnel), or there is a lack of communication with sales staff and foreign distributors.
Incorrect EEI filing -- can involve the wrong Export Control Classification Number (ECCN), the improper use of No License Required (NLR), a wrong ultimate consignee, or non-conformance of documents.
Non-compliance with license conditions -- BIS suggests a company identify all license conditions used and any conflict with sales transaction, resolve any conflicts before proceeding with transaction (even if this means amending the license); notify intermediary and ultimate consignees of the BIS license conditions; and submit all reporting as required by BIS.
Recommended Actions if a Violation is Found
The SAC recommended the following actions if a violation is discovered:
- Notify management
- Identify and contain immediate violation
- Conduct internal audit for scope of problem
- Disclose problem to BIS/OEE promptly and completely
Copy of Compliance and Enforcement for Freight Forwarders presentation available by emailing documents@brokerpower.com.