Civil penalties for export violations increased and criminal convictions were higher than in recent years, according to the Bureau of Industry and Security’s annual report for fiscal year 2020. These and similar figures in the report underscore the need for exporters to keep a sharp eye on export compliance issues. For more information on how to review and evaluate your compliance, please contact Kristine Pirnia.
BIS investigations resulted in the criminal conviction of 36 individuals and companies for export violations, the same as FY 2019 and higher than FYs 2015-2018. Penalties for convictions amounted to $111,200 in criminal fines, $903,062 in forfeitures, $1.13 million in restitution, and more than 615 months of imprisonment.
BIS investigations also resulted in the completion of 31 administrative enforcement actions and the imposition of $32.9 million in civil penalties, nearly double the amount form FY 2019. Export control matters accounted for 26 of the enforcement actions and $32.1 million of the penalties. Five companies agreed to pay civil penalties totaling $823,000 to settle alleged antiboycott violations, up from three companies and $74,000 in penalties in FY 2019.
BIS completed 987 end-use checks in 37 countries. Of these, 74 were pre-license checks, which are designed to prevent the export of sensitive items to unreliable parties, and 913 were post-shipment verifications, which can help ensure that recipients of exported items are or will be using the items as authorized and adhering to license conditions. More than three-quarters of the checks were conducted in China, the United Arab Emirates, Germany, Hong Kong, Turkey, India, and Singapore.
BIS completed 1,385 licensing determinations for its Office of Export Enforcement and 1,438 for the Federal Bureau of Investigation and the Department of Homeland Security in support of their investigations of potential unlawful exports. LDs establish whether a license is or was required for a given transaction and are the first step in many successful enforcement actions.
Other enforcement actions completed included 454 warning letters, 487 detentions, 145 seizures, 10 denial orders and one amended order, two new temporary denial orders, and the addition of 279 parties to the Entity List (bringing the total to more than 1,500 entries in 78 country locations).
BIS processed 37,895 export license applications, up 10.8 percent from FY 2019, with a total value of $173.7 billion. The vast majority (86.3 percent) were approved, while 12.5 percent were returned without action and 1.2 percent were denied. The agency’s average application processing time was 23 days.
Of the applications processed, 12,400 were for exports of 600 series items transferred from the U.S. Munitions List to the Commerce Control List. BIS approved 91.0 percent of these applications, returned 8.6 percent without action, and denied 0.4 percent.
U.S. companies exported $6.35 billion of licensed items, representing 0.4 percent of total U.S. exports. Exports made under a BIS license exception totaled $14.5 billion, or approximately 1.0 percent of U.S. exports.
BIS processed 3,128 classification request applications with an average response time of 52 days, compared to 3,258 applications processed with an average response time of 44.3 days in FY 2019.
BIS’ Export Management and Compliance Division conducted 15 reviews of corporate written export compliance programs as well as seven on-site compliance reviews and one remote review of exporters with Automated Export System filing errors. The majority of these parties were small to medium-sized exporters that had never previously received any formal export control education. EMCD initiated these reviews to better understand the specific reasons the errors occurred, provide guidance on correcting them, find out what export compliance procedures the companies had in place, and offer export counseling assistance to enhance export compliance.
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