bureau of industry and security (bis) u.s. … of export enforcement bureau of industry and security...
TRANSCRIPT
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Office of Export EnforcementBureau of Industry and Security (BIS)
U.S. Department of Commerce
Sidney M. Simon
Special Agent in Charge
New York Field Office
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JML
FREIGHT
HOUGHTON CHEMICAL
INTERNATIONAL
ATT Communications
SWISSCO
Illinois Tool Works Inc.
Bet
Air
PA
NA
VIA
TIO
N
ICSINC
AVSAVS
INDUSTRIAL SCIENTIFIC
CORPORATION
OMEGA
CCP
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Protect National Security and
Foreign Policy Goals
– Prevention and Detection in
Partnership with Industry
– Investigation and Prosecution
– Domestic and International
Law Enforcement Cooperation
Export Enforcement’s
Mission
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• The role of OEE
• Statutes and Penalties
• Recent Cases
• Root Causes of Problems
• Questions & Answers
Office of Export Enforcement
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• The enforcement arm of The Department
of Commerce, Bureau of Industry and
Security (BIS)
Who Are We?
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San Jose
Los Angeles
Dallas
Chicago Boston
New York
Washington
Office of Export Enforcement
Field Office Regions
MiamiHouston
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• The key to OEE’s mission is educating the
exporting community about preventing
violations and exporter responsibilities under the
Export Administration Regulations through
– Company Outreach Visits
– Seminars
– Workshops
Education Component of
OEE’s Mission
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A Robust Compliance Program will…
1) assist you in avoiding illegal transactions.
2) assist you in avoiding negative publicity.
3) assist you in avoiding fines and/or imprisonment
4) assist you in avoiding a situation where your company has to pay enormous costs for legal representation resulting from a criminal or administrative proceeding.
A Robust program helps you and your company stay in compliance with the law and enhances our national security.
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Preventive Export Activities
• Check exporters and
customers prior to
issuing validated license
• Check end-users and
end-uses after shipment
• Use watch list to screen
license applications
• Review Shipper’s Export
Declarations in ATS
• Detentions/Seizures
• Issue Temporary
Denial Orders
• Educate Exporters -
Outreach & BEET
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Enforcement Activities
• Confidential and Industry Sources
• Intelligence Sources
• Safeguards Verification Program
• Export Document Review
(SEDs, Airway Bills, Bills of Lading)
• Public Sources - Newspapers, Trade
Publications, Internet
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Investigations and
Sanctions
• Investigations:
– Criminal
– Administrative
• Sanctions:
– Criminal fines and imprisonment
– Civil fines and penalties
– Denial of export privileges
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CRIMINAL
CRIMINAL PENALTIES
•EAR currently enforced under 50
U.S.C., sec. 1705 (b), IEEPA
•Conspiracy, 18 U.S.C. sec. 371
•Money Laundering, 18 U.S.C.
1956
•And more….FCPA?
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• “Willful Violations”
– $250,000 fine for individuals and/or
– Ten years imprisonment
– $1 Million or five times the value of
the exports involved for firms
Criminal Penalties
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Administrative Penalties
• CIVIL AUTHORITIES
– TITLE 15, C.F.R. Part
764
– EAR Section 764
• CIVIL SANCTIONS
– Fines:
$250,000/violation
– Denial of Export
Privileges / Revocation
of Export Licenses
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Temporary Denial Orders (TDOs)
• Commerce is the only agency authorized to issue TDOs
• Designed to halt imminent violations
• Warns exporters & consignees not to do business with these individuals & firms
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Voluntary Self Disclosure• EAR Section 764.5
• Initiated by a company
when a company
identifies export
violations
• Violations still
investigated by OEE
• “Great Weight”
Mitigating Factor
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How Do I Avoid Civil Actions?
Five Root Causes of Civil
Enforcement Cases1. Incomplete Transaction Information
2. Ignoring Red Flags
3. Human Error
4. Incorrect SED Filing
5. Non-Compliance with License Conditions
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1. Incomplete Transaction
Information
• Unknown end-user
• Unknown or inconsistent end-use
• Multiple parties to a transaction
• Incorrect product classification
• Identify all parties to a transaction, verify as legitimate intermediaries and ultimate consignees.
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2. Ignoring Red Flags
• Person ordering the technology is
unfamiliar with product or technical
information regarding end-use
• Inappropriate end-user: banks, overseas
freight forwarders, etc.
• Conflicting information on sales
documentation and export routing
correspondence.
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3. Human Error
• Overwhelmed by end of quarter orders and
processing
• New personnel using outdated go-by
documentation
• Export manager on vacation (cross train
back up personnel)
• Lack of communication with sales staff and
foreign distributors.
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4. Incorrect SED Filing
• Wrong ECCN
• Improper use of NLR (No License
Required)
• Wrong Ultimate Consignee
• Non-conformance of documents
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5. Non-Compliance with License
Conditions
• Identify all license conditions issued and
identify any conflict with sales transaction.
Resolve any conflicts before proceeding
with transaction. Even if this means
amending the license!
• Notify intermediate and ultimate consignees
of the BIS license conditions.
• Submit all reporting as required by BIS
license.
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Other Enforcement Priorities
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Deemed Exports
A “deemed export" is an export of technology
or source code (except encryption source
code) that is "deemed" to take place when it is
released to a foreign national within the
United States. See §734.2(b)(2)(ii) of the
Export Administration Regulations (EAR).
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Technology is "released" for export when it is
available to foreign nationals for visual
inspection (such as reading technical
specifications, plans, blueprints, etc.);
when technology is exchanged orally; or when
technology is made available by practice or
application under the guidance of persons with
knowledge of the technology
Deemed Exports
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• U.S. entities must apply for an export license
under the "deemed export" rule when both of
the following conditions are met:
(1) they intend to transfer controlled
technologies to foreign nationals in the United
States; and
(2) transfer of the same technology to the
foreign national's home country would require
an export license.
Deemed Exports
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Direction OEE is Headed
• Increased Partnership with
Industry – Goal is to prevent
violations
• More agents and more targeted
emphasis
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When You Find a Violation
• Notify management
• Identify and contain immediate violation
• Conduct internal audit for scope of problem
• Disclose problem to BIS/OEE promptly and
completely
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Contact BIS
• If you have questions about product
classification, call BIS Exporter Services
• If you have questions about Red Flags or
other potential enforcement problems call
BIS Office of Export Enforcement (OEE)
• Check the BIS Website for current
information about regulations, denied
parties and listed entities
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OFFICE OF EXPORT
ENFORCEMENTHotline 1-800-424-2980
NYFO Main
718 370 0070 24 hr
WWW.BIS.DOC.GOV