The Bureau of Industry and Security has imposed a $500,000 civil penalty against a U.S. exporter for shipping goods to a Chinese company listed on the Entity List without the requisite BIS license or other authorization.
According to a BIS press release, the exporter violated the Export Administration Regulations by sending 74 separate shipments to the restricted entity despite being aware that shipments of goods subject to the EAR to that entity required a BIS license. BIS noted that while the restricted entity itself was not a customer of the exporter, it was the third-party outsource assembly and test service provider designated by a customer of the exporter and should therefore have been screened by the exporter’s transaction screening system. However, that did not happen due to a data entry error.
EAR violations can yield administrative monetary penalties of up to $364,992 per violation or twice the value of the transaction, whichever is greater. A BIS official said that in this case the exporter’s voluntary self-disclosure of the violative conduct and “extensive cooperation throughout the investigation” resulted in a significant reduction in the penalty assessed. BIS added that the remedial measures the exporter took after discovering the violative conduct were also a mitigating factor.
For more information on how ensure your company remains in compliance with restrictions on exports to Entity List companies, please contact Kristine Pirnia at (202) 730-4964 or via email.
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