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BIS Reports on Export Control, Enforcement and Penalty Actions for FY 2012

Wednesday, July 10, 2013
Sandler, Travis & Rosenberg Trade Report

The Bureau of Industry and Security recently issued its annual report for fiscal year 2012, which includes information on the administration of export controls, enforcement efforts and penalty actions. Highlights of this report include the following.

Export Controls

- Through the publication of nine Entity List-related rules, 67 persons (in 88 separate entries) were added to the Entity List, 26 were removed, and 61 amendments were made to existing entries.

 - BIS processed 23,229 export license applications (down from 25,093 in FY 2011) for transactions valued at approximately $204.1 billion. BIS approved 19,817 license applications (85%), returned 3,197 without action (14%) and denied 143 (less than 1%). The average processing time to review a license application, including time for review by other agencies, was 26 days.

- Crude oil was the category of license applications with the highest transaction value, totaling $113.6 billion. The greatest number of license application approvals under a single commodity classification was for chemical manufacturing facilities and equipment (ECCN 2B350), with 2,777 approved applications for exports and reexports worth $348.5 million.

- For calendar year 2011, U.S. companies exported $4.6 billion of licensed items (of which 2.9% were exported under a special comprehensive license) and $20.2 billion of items under a license exception, representing 0.3% and 1.3%, respectively, of overall U.S. trade.

- Between 2009 and 2011, companies exported approximately 48.5% of the items they were authorized to export under BIS licenses.

- BIS processed 6,107 classification request applications, including encryption requests, in an average of 34.4 days.

- The FY 2010 removal of the commodity classification determination requirements for less-sensitive encryption items resulted in a 58% decrease in the number of encryption commodity classification requests completed, from 3,192 in FY 2010 to 1,332 in FY 2012. The encryption registration process, which replaced encryption reviews for many items, continued at a steady pace of approximately 100 per month, with 1,273 filed in FY 2012. BIS also approved more than 1,900 licenses for encryption items in FY 2012, up 18.8% from FY 2010.

- BIS provided recommendations to the State Department on 1,292 commodity jurisdiction requests in an average of 22 days.

- BIS conducted one on-site review and two desk audits of holders of special comprehensive licenses, which are issued to qualified exporters and consignees in place of individual export licenses.

- BIS conducted 22 Export Management and Compliance Program reviews of corporate written compliance programs.

- BIS conducted 26 deemed export license on-site compliance reviews to confirm implementation of technology control plans and other conditions associated with those licenses.

- BIS initiated a compliance program to review exports made under the new license exception Strategic Trade Authorization. Fifty desk reviews were conducted; of these exports, 44 were completely compliant with STA requirements and six involved minor technical errors. Four on-site document reviews were conducted but no compliance issues were found.

- BIS completed 442 enforcement license determinations, which are used to support enforcement actions connected with potential violations of the Export Administration Regulations, in an average of 37 days. In addition, BIS processed 194 LDs for the Federal Bureau of Investigation and 452 LDs for the Department of Homeland Security in support of criminal investigations of potential unlawful exports.


- BIS investigations resulted in the criminal conviction of 27 individuals and businesses for export violations, down from 39 in FY 2011. The penalties for these convictions came to $4.79 million in criminal fines, more than $5 million in forfeitures and more than 187 months of imprisonment, compared to $20.2 million in criminal fines, more than $2.1 million in forfeitures and more than 572 months of imprisonment the previous year.

- BIS investigations resulted in the completion of 42 administrative export and antiboycott cases against individuals and businesses and $7.44 million in civil penalties, down from 47 cases and more than $8.51 million in civil penalties in FY 2011.

Antiboycott Compliance

- Ten of the 42 cases closed involved antiboycott violations that resulted in total civil penalties of $142,600, up from eight cases and $129,300 a year earlier.

- BIS responded to 981 requests from companies for guidance on compliance with the antiboycott provisions of the EAR.

Preventive Enforcement

- BIS completed 994 end-use checks in more than 50 countries, up 10%. Of these, 136 were pre-license checks, which are conducted to prevent the release of sensitive items to unreliable parties, and 858 were post-shipment verifications, which assist the U.S. government in monitoring such transactions to conclusion. Approximately 56% of the checks were conducted by BIS export control officers stationed at U.S. embassies and consulates in Moscow, Beijing, Hong Kong, New Delhi, Abu Dhabi and Singapore. The remaining checks were conducted by Office of Export Enforcement special agents and analysts deployed from the U.S. or by foreign commercial service officers and support personnel stationed at various U.S. embassies.

- BIS issued 231 warning letters, 199 detentions and 48 seizures. Temporary denial orders were issued against 16 companies and eight individuals, 14 denial orders were imposed in closed enforcement cases, and 12 denial orders were issued under Section 11(h) of the Export Administration Act, which authorizes the denial of export privileges of parties convicted under certain federal statutes.

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