Criminal convictions and penalties and other export enforcement actions saw significant increases in fiscal year 2021, according to the Bureau of Industry and Security’s most recent annual report. 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 attorney Kristine Pirnia at (202) 730-4964 or via email.
BIS investigations resulted in the criminal conviction of 50 individuals and companies for export violations in FY 2021, up from 36 in FY 2020 and the highest number since FY 2013. Penalties for convictions amounted to $2.8 million in criminal fines (up from $111,200), $2.37 million in forfeitures (up from $903,062), $3.15 million in restitution (up from $1.13 million), and 1,118 months of imprisonment (up from 615).
BIS investigations also resulted in the completion of 57 administrative enforcement actions (up from 31) and the imposition of $9.82 million in civil penalties (down from $32.9 million). Export control matters accounted for 55 of the enforcement actions and $9.73 million in penalties. Two companies (down from five) agreed to pay civil penalties totaling $94,750 (down from $823,000) to settle alleged antiboycott violations.
BIS completed 1,030 end-use checks (up from 987) in 49 countries (up from 37). Of these, 120 were pre-license checks (up from 74), which are designed to prevent the export of sensitive items to unreliable parties, and 910 were post-shipment verifications (down from 913), which can help ensure that recipients of exported items are or will be using the items as authorized and adhering to license conditions. Nearly three-quarters of the checks were conducted in China, the United Arab Emirates, Germany, Hong Kong, Turkey, India, and Singapore.
BIS completed 960 (down from 1,385) licensing determinations for its Office of Export Enforcement and 1,987 (up from 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 500 warning letters (up from 454), 543 detentions (up from 487), 251 seizures (up from 145), 33 denial orders (up from 10), two renewed temporary denial orders (unchanged), the addition of 160 parties to the Entity List (down from 279), and the addition of 105 military end-users to, and the removal of three from, the MEU list.
BIS processed 41,446 export license applications (up from 37,895). The vast majority (86.0 percent) were approved, while 12.3 percent were returned without action and 1.7 percent were denied. The agency’s average application processing time was 26 days (up from 23).
Of the applications processed, 12,851 (up from 12,400) were for exports of 600 series items transferred from the U.S. Munitions List to the Commerce Control List. BIS approved 92.0 percent of these applications (up from 91.0), returned 7.7 percent without action (down from 8.6), and denied 0.3 percent (down from 0.4).
U.S. companies exported $7.4 billion of licensed items (up from $6.35 billion), representing 0.4 percent of total U.S. exports. Exports made under a BIS license exception totaled $15.2 billion (up from $14.5 billion), or approximately 0.9 percent of U.S. exports.
BIS processed 3,317 classification request applications (up from 3,128) with an average response time of 59.8 days (up from 52).
BIS’ Export Management and Compliance Division conducted seven reviews of corporate written export compliance programs (down from 15) as well as 65 remote compliance reviews (up from one) to identify and counsel exporters with apparent filing errors in the Automated Export System. Half of these reviews (32) were focused on 500 series items transferred from the USML to the CCL, 18 were focused on the use of license exception STA (strategic trade authorization), and the remaining 15 were completed for other export transactions.
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