Compliance

As the export agencies still strive to implement one system for export licensing and compliance, DDTC has come one step closer by creating a new on-line process for filing CJ requests.  As of November 16 at 5 pm, DDTC will no longer accept paper filings for CJ requests.  This morning, November 21,  DDTC started accepting electronic filings through the new Defense Export Control and Compliance System (DECCS). This new system will replace DTRADE and EFS and will allow the user to save drafts and copy previously inputted data.  Yay. Progress is made one small step at a time. (more…)

I know the title of this blog is Export Compliance Matters, but I feel compelled to provide evidence that  import compliance is also becoming a serious compliance risk. Customs and Border Protection (CBP) just announced Friday that the US government is owed 2.3 billion dollars in antidumping and countervailing duties alone. Moreover,  CBP  has issued several “informed compliance” letters encouraging prior disclosure of customs violations by warning the trade community that the CBP and Immigrations and Customs Enforcement are enforcing trade violations. The issuance of the letters comes in tandem with more sophisticated auditing techniques that CBP has developed to catch violations, including using customs data provided by CBP’s Automated Commercial Environment (ACE). (more…)

The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) has issued a voluntary disclosure guidance for export violations. The guidance takes effect July 22 and its intent is to make Commerce’s enforcement more in line with that of the Office of Foreign Assets Control (OFAC). Specifically, the new guidance introduces the OFAC concept of a “base penalty amount.” Like OFAC base penalties, the BIS base penalties will be determined by whether the violation was egregious and whether it was voluntarily disclosed. Once a base penalty amount is determined, the amount can move downward or upward based on mitigating and aggravating factors. (more…)

U.S. importers should reevaluate their compliance program as U.S. Customs and Border Protection (CBP)’s steps up its efforts to enforce payment of antidumping and countervailing duties. The efforts come at the heel of this February’s passage of the Trade Facilitation and Enforcement Act, which gave CBP new investigatory authority over claims that certain importers are not paying duties. A new interim final rule is expected by Aug. 22. Importers of steel and other goods from China should be especially cautious. (more…)

There has been a change in the US Department of Justice regarding corporate disclosures. The recently updated United States Attorney’s Manual has revised its provisions called the “Principles of Federal Prosecution of Business Organizations.” These Principles, commonly referred to as the Filip factors, determine when a company gets “mitigation credit” in a civil or criminal prosecution of any kind, including trade matters. Until this November 2015 change, companies would get “mitigating credit” for any voluntary disclosure. If they disclose all known information they will receive a large mitigation benefit. If the company discloses only a little data, it could still receive some credit for cooperating. However, this new policy requires that a company reach a “threshold hurdle” by providing the government with a complete picture of all individuals involved and all facts relating to the misconduct in order for the government to consider providing any cooperation credit for the disclosure by the company. This new policy is meant to help the Department prosecute individuals. (more…)

The Department of Justice’s (DOJ’s) Criminal Division has now hired “Compliance Counsel” but the Department has no plans to move towards making a formal compliance defense available to those charged with regulatory violations.  Assistant Attorney General Caldwell also noted that “[t]he quality and effectiveness of a compliance program is also an important factor that prosecutors consider in determining whether to bring charges against a business entity that has engaged in some form of criminal conduct.”  Ms. Caldwell went on to caution  against mere “window dressing” and “paper programs,” encouraging companies to opt for fostering a corporate culture that actually, actively and visibly supports compliance if they want the DOJ to view their efforts favorably when misconduct occurs. (more…)

Recently I have attended several cyber security conferences. What I have learned about protecting information has changed how I view export controls.  Senior management and board members should think about the big picture as it relates to information controls and exports rather than dealing with these issues separately.  For instance, I was reviewing a nondisclosure agreement today related to export controls. The agreement will apply to an off-site worker. I immediately started thinking of the Target information breach.  The breach happened because a new business platform was using a subcontractor that was not vetted for its IT security.  The post-event analysis indicated that a broader strategic approach should have been taken in the business planning stage.  Senior executives needed to consider all areas of the business operations together to plan procedures to minimize corporate risks. (more…)

The Customs-Trade Partnership Against Terrorism (C-TPAT) certification program is a voluntary government program through which importers and exporters can agree to implement and maintain a set of predetermined supply chain security measures and submit to government site visits in exchange for benefits such as expedited review of shipment documentation at the border. The program is designed to streamline import/export procedures, increase shipment security, and save the C-TPAT partner company time and money. Nearly a year ago, U.S. Customs and Border Protection’s (CBP) expanded the previously importers-only C-TPAT to include exporters, releasing a fact sheet outlining eligibility requirements and the  benefits available to participants that I discussed in this September 2014 post.  Then in May 2015, CBP deployed “Phase II of Portal 2.0” – an update to the C-TPAT web portal that includes the addition of the exporter application to the site, effectively implementing the September 2014 policy change. (more…)

As you know there are ongoing changes to the Cuba export regulations.  President Obama announced the reopening of the U.S. embassy in Havana and a Cuban embassy in Washington. The Commerce Department will remove Cuba from list of countries subject to anti-terrorism (AT) controls, and Cuba has been removed from the list of state sponsors of terrorism (SSOT).  Our January blog is still the state of play for permissible business. (more…)

Iran entered into a historic nuclear agreement with the U.S. and other world powers on July 14th 2015. The agreement will allow the licensing of the export, re-export, sale, lease or transfer to Iran of commercial passenger aircraft for commercial and civil aviation use. The deal also grants the export of spare parts and components for commercial passenger aircraft.  It is reported that Iran is looking to replace hundreds of commercial aircraft. (more…)