The Bureau of Industry and Security has imposed an $81,000 civil penalty against a vessel carrier to settle charges that it violated the anti-boycott provisions of the Export Administration Regulations. Specifically, BIS alleged that the carrier (1) furnished information concerning its business relationships with or in an boycotted country with intent to comply with, further, or support an unsanctioned foreign boycott and (2) twice failed to report the receipt of a request to engaged in a restrictive trade practice or boycott.
BIS is also requiring the carrier to complete an internal audit of its anti-boycott compliance program. If this audit identifies actual or potential violations the carrier will have to include copies of the pertinent transaction documents with the report of the audit results.
If the carrier fails to comply with the provisions of this settlement Bis may suspend its export privileges for one year.
The U.S. maintains two anti-boycott laws that are enforced by the Commerce Department through the EAR and the Treasury Department through the Internal Revenue Code. Under the anti-boycott provisions of the EAR, companies are prohibited from the following.
- agreement to refuse or actual refusal to do business with or in Israel or with blacklisted companies
- agreement to discriminate or actual discrimination against others based on race, religion, sex, national origin, or nationality
- agreement to furnish or actual furnishing of information about business relationships with or in Israel or with blacklisted companies
- agreement to furnish or actual furnishing of information about the race, religion, sex, or national origin of another person
- implementing letters of credit containing prohibited boycott terms or conditions
The EAR also require U.S. persons to report each quarter requests they have received to take certain actions to comply with, further, or support an unsanctioned foreign boycott. Maximum civil penalties under the EAR for anti-boycott violations are the greater of $302,584 per violation or twice the value of the transaction. For criminal violations, penalties of up to $1 million and/or 20 years’ imprisonment may be imposed.
The anti-boycott provisions of the Internal Revenue Code require U.S. taxpayers to report annually to the Internal Revenue Service their (1) operations in or related to countries maintaining unsanctioned boycotts, (2) participation in unsanctioned boycotts, and (3) receipt of requests to participate in unsanctioned boycotts. These provisions also penalize taxpayers who participate in or cooperate with an unsanctioned foreign boycott by denying them the right to claim certain tax benefits. A willful failure to report anti-boycott requests can lead to a criminal fine of up to $25,000 and/or imprisonment for one year.
For more information on anti-boycott requirements, please contact Kristine Pirnia.
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