We are all familiar with the requirements of filing the Electronic Export Information (EEI) in the Automated Export System (AES); but let’s be honest- it may be a regulation, but it is more like an administrative process: you file the information and if you make a mistake, you amend it. No big thing.
Last month, a U.S. Navy Officer, his wife and two Chinese nationals were arrested. The criminal indictment filed subsequent to their arrest charged, among other violations, that the individuals “…knowingly caused, and aided and abetted the causing of, the submission of false and misleading export information through a Shippers Export Declaration (SED) and the Automated Export System (AES).”
If convicted for conspiracy to submit false export information in AES, the four defendants each face up to five years in prison for these charges alone.
Sorry, no AES amendments permitted in this case. Pass Go, Do Not Collect $200 and Go to Jail.
So here is how that AES “administrative process” can escalate:
The individuals involved operated the business BQ Tree LLC in Florida. In September 2018, they began an email correspondence with representatives of the U.S. Manufacturer regarding the negotiated purchase and shipping of four inflatable vessels and engines to an overseas buyer. They requested that particular engines (Evinrude 55MFE outboard engines, which are marketed “for military use”) be added to the inflatable vessels to be purchased. The inflatable vessels and engines were to be sent, according to the defendants and their paperwork, to Belt Consulting Company Limited in Kowloon, Hong Kong. The end user was alleged to be United Vision Limited in Hong Kong. The actual end user was intended to be Shanghai Breeze or another entity in mainland China.
On October 8, 2019, false Electronic Export Information was submitted into AES stating that the end user was Belt Consulting Company Limited in Hong Kong, rather than Shanghai Breeze, and/or another entity in mainland China. This act, according to the Indictment filed in the United States District Court Middle District of Florida Jacksonville Division, constituted a violation of 13 U.S.C. § 305 which covers the submission of false or misleading information through the SED (or any successor document) or the AES and 18 U.S.C. § 2 (whoever commits an offense against the United States or aids, abets…).
The filing of correct and accurate export information either through the submission of an SED or the electronic submission through AES is a legal and regulatory requirement. The defendants allegedly sought to conceal their illegal export activities by disguising the true destination of the items to be exported. In this instance, the false filing became an overt act for the other criminal conspiracy and other violations.
So remember the filing of an EEI in AES is much more than an administrative process, and if the filing is incorrect, it may not be easily amended.
For more information on AES filing requirements, please contact us for a free consultation.
Jim McShane is a Sr. Consultant, Trade Compliance for Export Solutions -- a full-service consulting firm specializing in ITAR and EAR regulations.