Mar
25
Freight Forwarder Agrees to $20k Export Penalty
Posted by Clif Burns at 9:10 pm on March 25, 2010
Category: BIS
The Bureau of Industry and Security (“BIS”) recently released documents related to its settlement with Buffalo-based G&W International Forwarders of charges that G&W aided and abetted the export of a stack sizer screening machine (classified as EAR99) to a company on BIS’s Entity List. Specifically, the item was exported to India Rare Earth, Ltd. Rare Earth’s entry on the Entity List indicates that EAR99 items exported to Rare Earth require a BIS license and that there is a “presumption of approval” for license requests for EAR99 items. In other words, nobody in this transaction bothered to take the five minutes required to screen the name of the shipment’s recipient. G&W agreed to pay a $20,000 penalty in five equal monthly installments and to conduct an internal audit of its compliance procedures.
There is no record that the exporter has been charged in connection with the export in question. (The likely identity of the exporter can be easily discovered by Googling “Stack Sizer Screening Machine” and then remembering that G&W is located in Buffalo, New York.) What follows is, admittedly, rank speculation on my part, but it seems to me not unlikely that the exporter voluntarily disclosed the violation to BIS and then identified G&W as the freight forwarder. This case should serve as a further reminder to freight forwarders that the days where some thought that they could get away with a lackadaisical attitude to export compliance are over.
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Copyright © 2010 Clif Burns. All Rights Reserved.
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5 Comments:
There is a wee small problem with the BIS charging letter: “Aiding and abetting” was not a statutory offense under IEEPA in 2006. This is another example of where BIS plusses up its body count by going after little guys who can’t afford to fight back with charges that aren’t really offenses.
As for not being an offense at the time, how did you determine that Hillbilly? 742.6 says it was last amended via 70 FR 8250, Feb. 18, 2005. I have been trying to find a tool to track the changes in the regs for when we do Due Diligence and if you have one other than the human eye mark one please share!
Likely the case announced 13th September 2009. I am always amazed when people whose job it is to ship things don’t know or totally ignore the rules. This wasn’t some little retail shop selling overseas for the first time, it was a forwarder. They should know better, its their job.
@WIFI: First, I stated that the statute, IEEPA, had not been amended in 2006 to include aiding and abetting, whereas your citation is to the EAR and a part of the EAR which does not deal with offenses. The appropriate citation for the offense of “aiding and abetting” is EAR 764.2(b). Generally speaking, however, the GPO/Federal Register has some tools for tracking changes in the CFR, which have always been published in paper; but, which are now available on its web-site. The paper versions which go back to a time before Al Gore and I created the web can be found at any decent law school library. There are both commercial and governmental sources for researching changes in statutes.
Thanks.
For the in-depth stuff I leave that to legal. It is so odd, being from the Technical world, looking at these things. If only it was just
diff current_reg.txt old_reg.txt.
My interest was in looking at things like, (total fake example in case any BIS enforcement agents are reading this 🙂 ) on Sept 7, 2003 this company shipped something to Slovenia under LVS. Were they able to do that then? It just not that easy to figure out what was valid then.
This case further enforces the fact that all exports must be screened for licenses, regardless of the products or quantity shipped or who is on the ship-to address.
Screening for licenses of exported goods prior to the transaction is essential. With export control lists constantly being updated, performing a single search before shipment might not be enough due to lag time between the order and the shipment. To avoid mistakes and fines like this one, it is crucial to screen the parties before money changes hands and then rescreen them when the goods are about to ship.
Read more about screening best practices here: http://www.integrationpoint.com/documents/IP_5MistakestoAvoidWhenScreeningExports.pdf
