Background

A U.S. company has agreed to pay a $307,922 civil penalty to settle charges that it committed a number of export violations. The company will also complete two internal audits of its export controls compliance program.

According to an order from the Bureau of Industry and Security, the company made incomplete or inaccurate representations, statements, or certifications in preparation for and support of a commodity jurisdiction request. Specifically, in response to government concerns about whether the item at issue contained sufficient safeguards to prevent it from being adapted and diverted to end-users of concern, the company repeatedly said it had developed an innovative anti-tamper system, when in fact that system was never successfully developed or added as a feature of the item at issue.

In addition, BIS states, while seeking and obtaining an official classification identifying the item on the Commerce Control List for export control purposes, the company represented to the U.S. government that the item was designed for the commercial smartphone market. However, the company did not disclose that it had also developed internal plans for military applications.

In addition to paying the penalty, the company will be required to conduct two internal audits of its export controls compliance program, one covering the year prior to the order and the other covering the year after. If either of the audits identify actual or potential violations of the Export Administration Regulations, the company must promptly provide a detailed plan of corrective actions to be taken and submit to BIS copies of the pertinent air waybills and other export control documents and supporting documentation.

For more information on export compliance programs and other means of ensuring that your company complies with applicable export controls, please contact attorney Kristine Pirnia via email.

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