$1.7 Million Penalty for Export Violations

The Bureau of Industry and Security has issued an order imposing a $1.7 million civil penalty against a U.S. company in response to 18 alleged violations of the Export Administration Regulations.

According to the order, over a three-year period the company used third-party distributors to sell items that can be used in the semiconductor manufacturing process to parties in China on the BIS Entity List without the requisite license or authorization. BIS alleged that the company knew the items were destined to restricted parties but never sought or received a license or authorization because it was unaware that one was needed for sales of EAR99 items. BIS attributed this failure to the company’s lack of formal export compliance policies or procedures at the time of the sales.

BIS said it will suspend the penalty for a year, and waive it thereafter, as long as the company takes certain measures, including conducting export control compliance training within six months, completing an internal audit of its export controls compliance program within nine months, and disclosing any actual or potential violations identified in that audit.