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Businesses Urged to Watch for Export Violation Schemes

Monday, January 20, 2020
Sandler, Travis & Rosenberg Trade Report

The Department of Justice reports that five men in Pakistan, Canada, Hong Kong, and the United Kingdom have been indicted in U.S. federal court for conspiracy to violate the International Emergency Economic Powers Act and the Export Control Reform Act. Assistant Attorney General for National Security John Demers said this scheme is “the kind of deceptive behavior U.S. businesses need to watch out for in designing appropriate export control and sanctions compliance programs.”

For more information on export compliance, please contact Kristine Pirnia.

The DOJ states that between September 2014 and October 2019 the defendants operated an international procurement network of front companies that existed to acquire U.S.-origin goods for two organizations in Pakistan that were on the Department of Commerce’s Entity List. They then exported these goods to those organizations without having applied for or obtained the required DOC export licenses.

The defendants attempted to conceal the true destination of these goods by using their network of front companies as the supposed purchasers and end-users and as the apparent source of payments. As a result, they caused U.S. companies to file export documents that falsely identified the ultimate consignees of the shipments. The DOJ states that while the indictment identified 29 different U.S. companies so involved, none of them is alleged to have been complicit in the illegal exports.

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