David Mills, assistant Commerce secretary for export enforcement, gave attendees at the Bureau of Industry and Security’s Update Conference in Washington, D.C., an overview of the bureau’s recent export enforcement performance and an outline of its planned enforcement efforts as items are transferred from the U.S. Munitions List to the Commerce Control List.
Enforcement Performance in 2011
Office of Export Enforcement investigations resulted in the conviction of 29 individuals who received prison sentences totaling 572 months. There also were criminal convictions of 10 companies. “With individuals being convicted three times as often as companies,” Mills said, “you are seeing our emphasis on individual responsibility.” Together these cases resulted in the imposition of $20.2 million in criminal fines and $2.1 million in forfeitures, and OEE is on track to meet or exceed those numbers in 2012.
OEE and the BIS Office of Chief Counsel resolved 39 administrative enforcement cases, which imposed a total of $8.5 million in fines and 26 export denial orders. So far in 2012 OEE has resolved 24 administrative cases with $6.4 million in fines and 24 export denial orders. But not all investigations end with the imposition of penalties, as OEE issued 227 warning letters in 2011 and has issued 181 so far in 2012. Mills noted that criminal and administrative sanctions, including fines, denial orders and placement on the Entity List, can be pursued independently or in conjunction with each other depending on the circumstances of a particular case.
There were 213 voluntary self-disclosure investigations opened nationwide, 60% of which have already been closed. In 2012 there have been 68 VSD investigations opened to date and approximately 30% have been closed. BIS will continue its efforts to speed up the resolution of VSD cases.
BIS completed 891 end-use verifications, up 25% from the previous year. End-use check visits were conducted in 60 countries and over 18% of those visits were rated unfavorable; i.e., BIS detected a violation or a compliance issue or identified unreliable recipients of U.S. items and technology.
The Office of Antiboycott Compliance settled eight cases totaling $129,300 in administrative penalties and issued two warning letters. In 2012 to date the OAC has settled seven cases totaling $100,600 in penalties and issued three warning letters.
Enhanced Enforcement of Transferred Items
Mills highlighted several “significant cases” that he said “illustrate three characteristics about our organization that will tell you something about how we will enforce controls on items being transferred from the USML to the CCL.” Specifically, BIS will continue to (a) place a high priority on identifying and disrupting illicit global procurement networks for parts and components that are being used to make improvised explosive devices, (b) pursue investigative leads systematically and thoroughly, which “can and often does result in one case leading to another case, and to still another case,” and (3) strongly encourage exporters to submit voluntary self-disclosures, which result in nothing more than a warning letter “in the great majority of cases” and can “substantially” reduce any penalty that may be assessed.
Mills also outlined the following plan for enhanced enforcement of items transferred from the USML to the CCL.
- conduct targeted outreach to affected companies and reach out to counterparts in U.S. Customs and Border Protection to ensure that the transition phase does not inhibit legitimate transfers of 600 series items
- work with the Census Bureau to establish new electronic validations in the Automated Export System, including linking the use of license exception STA to a valid State or Commerce license number to ensure 600 series items are not inadvertently shipped to foreign consignees that have not been previously vetted by the government
- through the use of intelligence information via the Information Triage Unit, provide reliable and objective data to facilitate licensing officers’ reviews of the bona fides of foreign parties to license applications
- systematically review transactions of license exception STA to verify that the end-users are eligible and compliant
- work with the State Department to coordinate end-use checks at foreign firms receiving 600 series parts and components for incorporation into ITAR-controlled end-items
- focus on illicit procurement networks seeking not only weapons of mass destruction and IEDs but also 600 series items and information suppression technology
Source: STR Trade Report