The Bureau of Industry and Security has issued an order denying the export privileges of a U.S. package forwarding company for three years due to the company’s continued violations of the Export Administration Regulations and failure to address past compliance failures.
The issuance of this denial order, apparently the first from BIS in more than five years, should “serve as a warning,” said Assistant Secretary for Export Enforcement Matthew Axelrod. “If you don’t follow the terms of our administrative settlement and you lack a robust compliance department, you may lose the ability to export at all.”
According to a BIS press release, the company at issue allows non-U.S.-based customers to purchase items online from U.S. retailers and have those items shipped to the company’s warehouse in the U.S. The company then consolidates and repackages the items for export.
In June 2021 the company entered into a settlement agreement with BIS to resolve two alleged violations of the EAR involving unlicensed exports of rifle scopes to end-users in China and the United Arab Emirates. As part of that settlement the company agreed to a three-year suspended denial order that BIS could activate if the company failed to meet the terms of the settlement or committed additional export violations. The settlement also required the company to conduct an audit of its export control compliance program and provide a detailed plan of corrective actions if the audit identified any violations.
BIS states that the required audit did identify problems, including “significant continued deficiencies” in the company’s export compliance program as well as apparent violations that occurred after the settlement. However, the company did not implement corrective actions to address these issues.
BIS has therefore issued a denial order, which cuts off not only the company’s right to export items subject to the EAR from the U.S. but also its right to receive or participate in exports from the U.S. or reexports of items subject to the EAR. This includes a prohibition on applying for, obtaining, or using any license, license exception, or export control document or engaging in or benefitting from such transactions.
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