BIS Warns Forwarders About Risks of Offering Export License Services
Forwarders should think carefully before they file an export license application on behalf of a customer, a service that could make the forwarder liable in case of an export violation, said Tirrell McKnight, an official with the Bureau of Industry and Security's western regional office. McKnight suggested export application services should only be offered by forwarders who are confident in their export compliance, know their customers well and “want to take on that liability.”
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“There's nothing under the Export Administration Regulations that says that you cannot,” McKnight told an audience of forwarders, brokers, shippers and others Oct. 28 during the Pacific Coast Council's Western Cargo Conference, or Wesccon. “Whether or not your business is designed and capable of handling the responsibility, that's your call.”
Forwarders filing export applications on behalf of a client should be prepared to “take on the full onus of that,” she said. “So it's not that you can't, and I say in several situations you should not,” McKnight added. “But if you get the proper documentation from your customer, you can.”
An audience member said they were told BIS treats forwarders filing an export license application as an “automatic red flag,” and it could increase the chance the application is heavily scrutinized. McKnight said that’s true only for forwarders filing their first or second ever license application with BIS or if the forwarder uses License Exception STA (strategic trade authorization). That license exception authorizes certain exports to trusted U.S. allies, but requires the user to first obtain a statement from the foreign importer saying the item won’t be reexported outside a list of STA countries.
In those cases, BIS would want to check to make sure the forwarder is aware of their export compliance obligations, she said. “It's not necessarily to smack them on the hand or to catch them,” McKnight said. “But the first time we’re seeing you use STA, or the first time we're seeing a forwarder show up, we want to make sure” the forwarder isn’t “just checking the boxes to make that money.”
She said it “starts to be a problem” with filers who make “chronic” errors in their license applications. The “intent is to reach out to you to make sure that you understand … what you're doing and get you in the right direction to ensure that you're doing it correct.”