No organization wants to be found guilty of an export violation—be it a civil, administrative or criminal financial penalty, criminal conviction or jail time, placement on a government watch list, or even the negative media attention that frequently accompanies a violations press release from the U.S. Department of Commerce’s Bureau of Industry and Security (BIS).

With the potential to cause even more disruption to a business than the above, is BIS’ authority to deny all export privileges of a domestic or foreign individual or company. Just think about the impact this would have on a business whose bottom line is dependent on the export or re-export of goods.

Circumventing the Long Arm of the (Export) Law

Some organizations don’t seem all that fussed about staying on the right side of U.S. export laws—such as the case with Chinese telecom giant ZTE, for example—and indeed many are willfully breaking the law from top-level management down.

According to the most recent edition of BIS’ Don’t Let This Happen to You! Actual Investigations of Export Control and Antiboycott Violations, a good many violations also occur at the hands of a few bad seeds within organizations, who knowingly side-step established export compliance procedures and processes.

Sure, one could read through the entire 72-page tome that details violations and penalties going all the way back to 2008—and which run the gamut of national security, foreign policy and economic violations, including terrorism-related, deemed-export, Commerce Control List (i.e., nuclear, chemical/biological, missile tech, etc.) and anti-boycott contraventions—to gain a better understanding of who did what, why, and the lessons to be learned to help avoid an export violation from “happening to you.”

But we did the work for you!

Here are some high-level Dos and Don’ts, according to Don’t Let This Happen to You! to having an effective export compliance program—and in helping to avoid the potential penalties than can come as a result of an export violation.

Don’t…

  • Do business with someone on a restricted or denied watch list
  • Send your goods—especially dual use or military items—to a sanctioned and embargoed country without first ensuring you are lawfully allowed to do so. Iran, Cuba, North Korea and China are just a few nations upon which BIS has placed very strict export controls (if not banned exports altogether)
  • Assume that the person party to the transaction is the ultimate end user, or that the individual will use the item as intended
  • Make false statements—or present falsified documents—if federal agents come knocking on your door
  • Be “too busy” to get the appropriate licenses

Do…

  • Screen (and rescreen regularly!) to ensure your organization isn’t doing business with a denied or restricted party—or sending goods and products to a sanctioned or embargoes country
  • Ensure your goods are classified correctly
  • Have the proper licenses and other documentation required in order to ship your goods lawfully
  • Proper due diligence on the ultimate End User, and have an understanding of how the item will be used
  • Mind that your controlled technology (i.e., deemed and hand-carried exports) is protected, both at home from visiting parties, and while travelling abroad
  • Take immediate corrective measures if you discover an export violation—self reporting has saved countless organizations from fines and other penalties
  • Follow BIS’s nine guiding principles when assessing your organization’s export compliance program (page 14), which include, but not limited to: having management-approved export compliance standards, conducting ongoing compliance training and awareness, maintaining records and keeping an audit trail, and implementing and maintaining an escalation process

And for those who don’t think it could happen, here are the penalties BIS handed out in Fiscal Year 2017 alone:

Criminal Penalties

  • 31 individuals and businesses convicted
  • $287,102,532 in criminal fines
  • $166,234,123 in forfeitures
  • 576 months of imprisonment

Administrative Penalties

  • 52 administrative cases
  • $692,296,500 in administrative penalties

Don’t want an export violation to happen to you?

BIS’ Don’t Let This Happen to You! Actual Investigations of Export Control and Antiboycott Violations is a treasure trove of material that details the various regulatory acts and enforcement authorities at play, how fines and other penalties are determined, and their recommended “Nine Principles for an Effective Compliance Program”—among other useful information and guidance.

For assistance with managing your export compliance processes, including many of the suggested best practices outlined in BIS’ Don’t Let This Happen to you—including screening for restricted and denied parties, keeping an audit trail of your screening activities, and solutions to help manage your export documentation and license requirements—visit VisualCompliance.com.