National Customs Brokers and Freight Forwarders Association of America

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National Customs Brokers and Freight Forwarders
Association of America April 8, 2008 Kevin A.
Delli-Colli Deputy Assistant Secretary for Export
Enforcement Bureau of Industry and
Security United States Department of Commerce
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Overview

• Dual Use Controls Protect National Security
• IEEPA Enhancement Act
• Freight Forwarder Responsibilities
• Enforcement Case Examples
• Common AES Errors
• Antiboycott Requests and Trends

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Why are Dual-Use Controls Essential?

• The 2006 National Strategy for Combating
  Terrorism states the U.S. needs to maximize its
  ability to deny terrorists access to the
  materials, expertise, and other enabling
  capabilities required to develop WMD.
• The potential danger posed by a dual-use piece of
  equipment is not as recognizable as an export of
  a complete weapon system and yet, ultimately,
  could prove more dangerous.
• While the end-use of a complete weapon system is
  obvious the potential danger in dual-use
  commodities controlled by the Export
  Administration Regulations depends on the
  end-use.

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BIS EXPORT ENFORCEMENT MODEL Prevention Regul
ation and licensing of dual-use
exports Industry Compliance Damage done
regardless of intent Enforcement Criminal,
Civil and other Unique Authorities
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IEEPA Enhancement Act of 2007

• Civil Penalty to 250,000 per Transaction
• Retroactive
• Higher Penalties Apply to all Pending Enforcement
  Actions
• Final Order has not been signed, or commenced on
  or after October 16, 2007
• Five General Exceptions
• Including all valid VSDs, prior to October 16,
  2007

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Recent Administrative Cases

• FY07/08 7 Final Orders - 1m in Fines Ranged
  from, 2K to 450K
• Mostly Aiding and Abetting Illegal Exports
• Entity Lists, General Order 3, Iran Sanctions
• Suggests poor compliance and screening procedures

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Noted Criminal Conviction

• In 2007, a civil settlement of 250K followed a
  2006 conviction for filing false SEDS
• Routed Transactions to Russia, false valuation,
  most likely, to assist in undervaluation scheme
  by foreign consignee

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Responsibilities Under the EAR

• Responsibilities of the Parties to a Transaction
• 15 CFR Sec 748.5
• Export Clearance Requirements
• 15 CFR Sec 758
• Know your Customer/Report Suspicious Activity
• Sup no. 1 of 15 CFR 732
• General Prohibitions
• 15 CFR Sec 764
• Enforcement and Protective Measures
• 15 CFR sec 764

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Most Common EAR Compliance Issues in AES

• No ECCNs reported with License Exceptions
• License Exception not applicable to the ECCN
• Country not authorized for License Exception
• Invalid ECCNs
• ECCN/Country do not match an approved license
• Value on license exceeded on AES record
• Incorrect EAR99 use with License Exceptions
• NLR used in reporting of sensitive exports

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BIS/Industry Partnership

• Industry Knows its Business Best
• Report Suspicious Activity ASAP
• Work Together to Prevent Illegal Exports and
  Expose Proliferation Networks

OEE Hotline [phone]
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Antiboycott

• Prohibited Boycott Requests
• Prohibited Boycott Trends

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Prohibited Boycott Requests 2006 and 2007
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Trends in Prohibited Boycott Requests UAE
- Requests to refuse to do business and for
prohibited furnishings in requests in
contracts KSA - Requests to refuse to do
business Syria - Requests for 8 point
questionnaire Iraq - Request for 8 point
questionnaire in connection with registration
of trade marks Libya - Requests for negative
certificates of origin and prohibited
furnishings in contracts and business
registration
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Antiboycott Advice Line [phone] Monday
Friday 9 to 5 Eastern Time WEB SITE
www.bis.doc.gov.antiboycottcompliance/default.htm
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WWW.BIS.DOC.GOV

• MAJOR CASES LIST

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BIS Export Enforcement Keeping the most
sensitive goods
out of the most dangerous hands Kevin A.
Delli-Colli Deputy Assistant Secretary (202)
482-3618 www.bis.doc.gov