BIS issued the first anti-boycott penalty of the year last week to the National Bank of Egypt (warning: linked Bank web site has migraine-inducing animated gifs). As a result, BIS wrangled a settlement agreement and payment of $22,500 from the Bank. True to BIS form, the charging letter, the settlement agreement and the order provide minimal detail about the alleged violation, but still enough that something smells fishy, and it’s not a Nile Perch.

The charging letter notes that NBE has a branch in New York and then alleges that the bank “engaged in transactions involving the sale and/or transfer of goods or services (including information) from the United States to Syria.” Specifically, the charging letter references four commercial invoices either to or from Al Issar Trading Company which contained language certifying that no Israeli goods were “used for the production or preparation of the goods mentioned in this invoice.”

I think it is safe to say that the NBE in branch in New York was neither selling goods nor buying goods from Al Issar Trading Company. More likely, indeed almost certainly, what was involved here was that the Bank was issuing or confirming a letter of credit relating to that transaction. In a typical instance, a commercial invoice would be one of the documents to be presented for payment of the credit and would be used to determine the amount payed. The issuing or confirming bank would not read all the terms and conditions of the invoice, including any warranties relating to the country of origin of the goods or their component parts.

This is not unlike BIS’s penalizing a freight forwarder for a prohibited boycott term buried in the shipping documents, which we have complained about before. EAR § 760.1(e)(3) makes clear that intent is required for each anti-boycott violation and not merely the intent to perform the act that constituted the violation but also the “intent to comply with, further, or support an unsanctioned foreign boycott.” Since the Bank likely did not read the entire commercial invoice, it almost certainly didn’t have the requisite intent. Nor does there seem to be any sound policy basis to force banks to read every word of all customer export documents to ferret out anti-boycott violations.

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