Access USA Shipping, LLC, of Sarasota, Florida, recently entered into a $27 million agreement with BIS to settle allegations that it violated the Export Administration Regulations (EAR). The company, which does business under the name MyUS, provides package forwarding and consolidation services for foreign buyers. Regular readers of this blog will know this is not the first time a package forwarding company has run afoul of the regulations. In fact ,we first reported on Access USA Shipping and some potential problems in this post from 2013. And just last year, another package forwarding company was fined $250,000 for EAR violations.
According to documents available from BIS, Access USA was charged with 150 violations of the regulations. This follows a multi-year investigation into the firm’s activities.
Problems for package forwarders
The package-forwarding industry faces a number of unique issues that can lead to violations of export regulations. Specifically:
- These companies typically purchase U.S.-origin goods for foreign buyers, which means they (the package forwarder) are the Exporter of Record. They are the primary party responsible for compliance.
- They often market their services as allowing a foreign buyer to “get a U.S. mailing address.” This means the foreign buyer can appear to U.S. companies as being a U.S. Person when, in fact, they are not.
- Package forwarders also frequently offer “personal shopper” services for foreign buyers. This activity further masks the true identity and destination of items bought in the United States.
- Unless they physically inspect the contents of every item being procured, shipped and consolidated at their warehouses, then package forwarders may not even be aware they are illegally exporting items outside of the United States.
For these reasons, and others, it’s important that any company involved in package forwarding maintain a robust compliance program.
Access USA’s violations
For a period of about 16 months, BIS alleges that Access USA was party to numerous export violations. These include:
- Providing misleading item descriptions in order to avoid detection by the U.S. Government. Examples include describing rifle scopes as “sporting goods,” optical sights as “garage tool kits” and night vision lenses as “camera lenses.”
- Removing labels, price tags and other information from items prior to export.
- Employing multiple strategies and policies to undervalue exports.
- Failing to make the required Electronic Export Information (EEI) filings in AES, or making false certifications in these filings.
- Exporting items to a variety of destinations without the required BIS export license.
- Making shipments to a company listed on BIS’s Entity List.
Aggravating factors for Access
Earlier this month, Access USA was assessed penalties totaling $27 million for these EAR violations. Although there are always both mitigating and aggravating factors in every case, some of the information in BIS’s charging letter certainly did not help the firm’s case. For example:
- An email from the CTO to the former CEO, which states: “I know we are willingly and intentionally breaking the law.”
- A written policy on the company’s website, stating that Access USA would not ship to “persons and/or entities identified on any U.S. Department of Commerce Denied Persons List, Entity List of [sic] proliferation concern.”
- An email from the former CEO suggesting that Access USA could undervalue its shipments and that it “can stop ASAP” if the company was “warned by the government.”
- Multiple onsite visits, phone calls and exchanges of information between BIS enforcement agents and Access USA, where the agents conveyed details on what the company should be doing and how it could prevent violations of the EAR.
Tom Reynolds is the Vice President of Operations for Export Solutions, a consultancy firm which specializes in ITAR and EAR compliance. Follow Tom on Google+.