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Lack of Due Diligence Leads to $155,000 Penalty for Unlicensed Export to Russia

Wednesday, August 15, 2018
Sandler, Travis & Rosenberg Trade Report

Inadequate measures to prevent exports to restricted end-users have resulted in a $155,000 civil penalty against a logistics company accused of violating the Export Administration Regulations.

The Bureau of Industry and Security alleged that the company aided the export of an item designated EAR99 to a Russian entity on the BIS Entity List without the required license. According to BIS, the company provided freight forwarding services for this unlicensed export even though documents provided to it by the exporter clearly identified the Russian entity’s full name as set forth on the Entity List along with a near-exact match of the entity’s address. The company’s screening software correctly identified the Russian entity and flagged the shipment, but an export supervisor erroneously overrode or ignored this flag. Without further inquiry or due diligence, BIS states, the company proceeded with the transaction and prepared and filed electronic export information that falsely indicated the exported item did not require a license (NLR).

BIS is suspending $20,000 of the penalty against this company through Dec. 15, 2019, and waiving it thereafter, provided the company commits no further export violations during that time. If the company fails to pay the penalty BIS may suspend its export privileges for one year.

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