International Trade Enforcement Roundup | April 2023 Update

What happened? On April 20, Tanveer pleaded guilty to knowingly submitting falsified export valuations for items he shipped to Pakistan. The Foreign Trade Regulations require exporters to file the EEI on specific exports through the Automated Export System (AES). It is unlawful to “knowingly [fail] to file or knowingly [submit], directly or indirectly, to the U.S. Government, false or misleading export information through the AES.” Tanveer bought two “Slam Sticks,” devices used to record shock and vibration data, paying over $4,000. However, when shipping the goods to Pakistan, Tanveer created a fraudulent invoice representing that they were valued at less than $200.

The press release can be found here.

Notably. As the action notes, falsely submitting export control information through the AES is, itself, illegal and can result in substantial penalties. While making EEI submissions is often a largely administrative process, it is important to ensure the accuracy of the information.

Enforcement Policy Updates

BIS: Clarifying Policy Regarding Voluntary Self-Disclosures and Disclosures Concerning Others

Voluntary Disclosures: The Carrot and the Stick. In an April 18 memo, Matthew Axelrod, assistant secretary for Export Enforcement, announced a major update in BIS enforcement policy. Under the new policy, companies that discover export control violations and choose not to disclose them to the Commerce Department risk the non-disclosure being considered an “aggravating factor” if a penalty is imposed. Axelrod emphasized that the new policy will apply where “there is a deliberate nondisclosure for significant possible violations.” Currently, BIS enforcement guidelines strongly [encourage] submission of voluntary self-disclosures and consider self-disclosures as a mitigating factor but do not explicitly state that a failure to disclose would constitute an “aggravating factor.” The new policy also encourages individuals, companies, and universities to disclose violations committed by competitor companies. Assistant Secretary Axelrod wrote, “we don’t want parties to suffer in silence when they’re forgoing sales because of our controls while their competitors continue to book revenue.” The new policy incentivizes disclosing the violations of others through the award of “credit” for tips that lead to enforcement actions; BIS will consider this “credit” as a mitigating factor in the event the disclosing party is involved in a future enforcement action, even if unrelated. Companies disclosing potential export control violations in conjunction with potential sanctions violations could also receive monetary awards. The Financial Crimes Enforcement Network’s (FinCEN) whistleblower program offers potential monetary awards to individuals who provide information that ultimately leads to a successful enforcement action.

The memo can be found here.

Notably. The Axelrod memo continues a key theme– implement an effective compliance system or else. Companies should review their compliance infrastructure and ensure potential violations can be quickly escalated up the chain of responsibility to be reviewed and disclosed when the situation warrants. Failure to disclose will now, at least in some cases, be deemed an “aggravating factor.”

8 International Trade Enforcement Roundup |

Powered by