Welcome to Foley's International Trade, Enforcement & Compliance Recent Developments Update.
Perhaps jealous of all the attention that these Recent Development updates have given to import matters, the Departments of Commerce and State remind us that export controls enforcement also is a big priority for the U.S. government. Throw in an economic sanctions enforcement action and we have a timely reminder that it's never a bad idea to check on the efficacy of your export controls and economic sanctions screening and other export-related compliance measures.
Export Controls Enforcement
The Department of Commerce has adopted a new policy that failure to disclose a known export controls violation constitutes a significant aggravating factor, while also clarifying that turning in another company will be treated as a significant mitigating factor, even for an unrelated violation that occurs later in time. Does your company maintain strong export control and economic sanctions compliance policies, particularly if it is a significant exporter or deals in goods or technical data that is controlled under either the Export Administration Regulations or the International Traffic in Arms Regulations?
Export Controls Penalty for Export of Controlled Technical Data
A U.S. company settled an export controls case involving the alleged export of ITAR-controlled technical data to Germany, China, and foreign-person employees, the alleged reexports of controlled technical data to Taiwan, and a failure to maintain ITAR records. If your company maintains ITAR- or EAR-controlled technical data, has your company set up a Technology Control Plan to ensure it has firm oversight regarding how controlled technical data is identified and marked, stored, and accessed?
Export Controls and Discrimination
The Department of Justice has released a fact sheet about how to comply with U.S. antidiscrimination requirements when dealing with export-controlled technical data, which often requires a license for non-U.S. persons to access. Has your organization reviewed the newest guidelines to determine if its hiring and promotion procedures, and licensing strategy, comply with the export control regulations and the latest governmental guidance?
Economic Sanctions Compliance
OFAC reports that a U.S. company that operated an online trading and settlement platform implemented an economic sanctions compliance program, but only after it had been operating for 16 months. As a result, the company engaged in 65,942 apparent violations based upon the late implementation of its economic sanctions screening. Does your company not only maintain export controls and economic sanctions screening but also periodically check legacy customers against embargoed-person lists?
Customs Penalty
An importer recently paid a $728,910 civil penalty based on claims of misclassifying goods. According to a DOJ press release, the importer placed all of its imports under a single HTSUS number (with a low duty rate) instead of separately classifying each of its products. The DOJ handled the matter as a False Claim Act case, because it resulted in a loss of revenue to the U.S. Treasury. Does your organization conduct regular post-entry checks to ensure that it is reporting the correct classification and valuation for all of its entries?
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