Why have an Export Compliance Manual, Import Compliance Manual or ITAR Compliance Manual?
EXPORT MATTERS – Compliance controls consist of Export Compliance Manual, Training, Internal Audit of Controls, Records, Reference Materials and Internal Controls System.
North Carolina-Based Manufacturer of Semiconductor Technologies Settles Charges of Export Violations and False Statements
8/14/09 WASHINGTON, D.C. – The Commerce Department’s Bureau of Industry and Security (BIS) announced today that RF Micro Devices, Inc. (RFMD) of Greensboro, N.C. has agreed to pay a $190,000 civil penalty to settle allegations that it exported spread-spectrum modems in violation of the Export Administration Regulations to the People’s Republic of China. Source BIS website
Others this month
8/13/09 WASHINGTON, D.C. – The Commerce Department’s Bureau of Industry and Security (BIS) announced today that FMC Technologies, Inc., has agreed to pay a $610,000 civil penalty to settle allegations that it exported certain oil and gas industry service parts in violation of the Export Administration Regulations. Source BIS website
8/6/09 WASHINGTON, D.C. – The Commerce Department’s Bureau of Industry and Security (BIS) and the Treasury Department’s Office of Foreign Assets Control (OFAC) have entered into a joint settlement agreement with DPWN Holdings (USA), Inc. (formerly known as DHL Holdings (USA), Inc.) and DHL Express (USA), Inc. (collectively “DHL”), regarding allegations that DHL unlawfully aided and abetted the illegal exportation of goods to Syria, Iran and Sudan and failed to comply with record keeping requirements of the Export Administration Regulations (EAR) and OFAC regulations. DHL will pay a civil penalty of $9,444,744 and conduct external audits covering exports to Iran, Syria and Sudan from March 2007 through December 2011. Source BIS website
For any violations to occur, one of these elements broke down.
Factors to consider in a strong compliance system.
1. Whether the company has performed a meaningful risk analysis.
2. The existence of a formal written compliance program.
3. Whether appropriate senior organizational officials are responsible for overseeing the export (applies to Import also) compliance program.
4. Whether adequate training is provided to employees.
5. Whether the company adequately screens its customers and transactions.
6. Whether the company meets recordkeeping requirements.
7. The existence and operation of an internal system for reporting import/export violations.
8. The existence and result of internal/external reviews or audits.
9. Whether remedial activity has been taken in response to import/export violations.
EXPORT PENALTIES & PROCEDURES
CBP Dec. 08–50
Guidelines for the Imposition and Mitigation of Civil
Penalties for Failure to Comply with the Foreign Trade
Regulations in 15 CFR Part 30
Filing Export Dec
I. PENALTIES FOR THE FAILURE TO FILE ELECTRONIC EXPORT
INFORMATION (EEI) IN THE AUTOMATED EXPORT SYSTEM (AES)—
Penalty will be issued at the maximum amount of $10,000.
II. PENALTIES FOR THE LATE FILING OF ELECTRONIC EXPORT
INFORMATION (EEI) in AES— The Notice of Penalty will be issued in an amount that reflects $1,100 per
each day late, up to a maximum of $10,000.
III. PENALTIES FOR OTHER FTR VIOLATIONS, INCLUDING THE
FOLLOWING (Not an Exhaustive List):
•Incorrect value for shipment.
•Other incorrect information in the AES record, such as an incorrect
USPPI, consignee, end-user, commodity description, or port of export.
•Failure to cite license code or license number.
•Failure to obtain Power of Attorney for AES transmission.
•Failure to identify transaction as a routed transaction.
•Failure to correct information in AES as the changes become known to
the filer.
•Failure to provide carrier with appropriate proof of filing citation or exemption.
legend by the time periods set forth in the FTR.
•Failure to retain all records relating to the export shipment for a 5-yr.
period from the date of export.
The Notice of Penalty will be issued at the maximum amount of $10,000.
IV. CARRIER PENALTIES
For late filing of the manifest information, the penalty will be issued
at $1,100 per each day late, up to a maximum of $10,000 per violation,
in accord with section 30.47(b) of the FTR (15 CFR 30.47(b)).
IMPORT Violations
Source CBP website – CBP has provided a place to file a suspected violation by the trade or by an employee. Many FRAUD cases develop from information supplied by people in the “know.”
(informants) An informant may be eligible to receive a fee for information. The moiety Act allows payment up to $250,000 for each case and can be more if more cases. Under the qui tam provisions of the federal False Claims Act , up to 30% of recovery
Money, anger, disgust, change of attitude and other factors (revenge) may lead a person to tell all he knows about a shady activity.
DOJ Press Release 5/12/08 MICHAEL J. GARCIA, the United States Attorney for the Southern District of New York, announced today that apparel companies INTERTEX APPAREL GROUP, LTD., J.J. BASICS, INC., and BEN’S CLOTHING INC. D/B/A RED ZONE, as well as their principals JACK SETTON, MARC SETTON, VIVEK BENDRE, JACOB BENSADIGH, ANDSTEVE BENSADIGH (collectively the “defendants”) have agreed to pay a total of $2,798,872.50 to resolve civil charges that they defrauded the Government by making false statements in connection with the importation of wearing apparel into the United States.
Since at least 2001, the defendants engaged in a scheme to defraud the United States by systematically importing into the United States goods which were actually manufactured in China, but representing to the United States in the required customs entry documents that the goods were manufactured in either Russia or Korea. This scheme enabled the defendants to evade quotas on goods manufactured in China, and therefore to import goods into the United States that otherwise would have been prohibited. The defendants imported the goods for domestic sale to retailers, including Wal-Mart Stores, Inc., J.C. Penney Co., Inc., Family Dollar Stores, Inc., Kohls Corp. and Marshalls, a Division of TJX Companies, Inc.
Prosecution action through a law firm by a former employee who stands to be rewarded. Under the qui tam provisions of the federal False Claims Act, the informant can receive up to 30% of the recovery.
My experience was that this is a truth. Significant cases are a result in many, if not most, cases of inside information.
ITAR Violations
Common problems to avoid
1. Lack of a ITAR Compliance Manual
2. Paper is not necessarily an effective compliance system
3. Proper jurisdiction association to products, technology, training and internal controls audit lack
4. Lack of updating with corrective application controls
5. Sales dominates over proper procedures
6. Lack of recordkeeping
7. Lack of communication
8. Handling of foreign visitors and personnel
9. See the 9 factors above
DOJ Press Release 3/27/07 WASHINGTON—ITT Corporation, the leading manufacturer of military night vision equipment for the U.S. Armed Forces, has admitted sending classified materials overseas and will pay a $100 million penalty, Assistant Attorney General for the National Security Division Kenneth L. Wainstein and U.S. Attorney for the Western District of Virginia John L. Brownlee announced today, along with the Defense Criminal Investigative Service (DCIS) and U.S. Immigration and Customs Enforcement (ICE).
The corporation will pay a total monetary penalty of $100 million, one of the largest penalties ever paid in a criminal case. ITT Corporation will also be the first major defense contractor convicted of a criminal violation of the Arms Export Control Act.