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$175,000 Penalty, External Audit Requirement for Attempted Export to Restricted Entity

Thursday, November 30, 2017
Sandler, Travis & Rosenberg Trade Report

The Bureau of Industry and Security has imposed a $175,000 civil penalty against a U.S. company to settle charges that it provided forwarding services to facilitate the attempted unlicensed export of items subject to the Export Administration Regulations to an entity in Pakistan listed on the Entity List. The items included an ultrasonic mill cutting machine, which is classified under ECCN 2B991 and controlled for anti-terrorism reasons, and related electrical equipment, which is designated EAR99.

BIS notes that this company had multiple proprietary interfaces/portals for entering and scheduling shipments and related forwarding services but had not connected two of them to its proprietary software that screened against the Entity List and other U.S. government prohibited party lists. Consequently, the company failed to flag the transaction at issue even though the name and address information in its possession closely matched the Entity List listing.

The settlement agreement also requires the company to complete two external audits of its export controls compliance program and submit the results to BIS. If either of these audits identifies actual or potential EAR violations the company will have to promptly provide copies of the pertinent air waybills and other export control documents and supporting documentation.

BIS is suspending $75,000 of the penalty through March 31, 2020, and waiving it thereafter, provided that during this period the company complies with the provisions of this settlement agreement and commits no further export violations.

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