During all the activities (sanctions, tariffs, designated entities, etc.) of the past two months there was an updating of guidelines by Customs and Border Protection (CBP) that may have been overlooked.
In July, CBP updated its Forfeiture Remission Guidelines for Export Control Violations. Considering the fact that the last update was published in 2004, changes were due.
Updates on Penalty Amounts and Terminology
Formerly, penalties were a predetermined amount based upon the violation. Now penalties will be assessed based upon the percentage of the seized cargo's value. Another change that occurred through this update is that formerly the terms “technical violations” and “substantive violations” were used by CBP to categorize the violations. These terms have been changed to “license violations” and "non-license violations". A License Violation occurs when there is a violation of export control laws (or related import control laws) where the shipment does not have the required export authorization. A Non-license Violation occurs when there is a violation of the export control laws where the shipment has the required export authorization or where a license is not required, but there is another violation (e.g. Census Bureau’s Foreign Trade Regulations (FTR) Violations). According to CBP, this change in terminology was to eliminate confusion that the “technical violations” and “substantive violations” terms caused the public and their own officers. Another reason provided by CBP is that these terms are not utilized by export licensing agencies (DDTC, BIS, OFAC, ATF, DEA and others).
Forfeiture Remission Amounts
This change to categorize violations also has a direct effect on how forfeiture remission amounts are assessed. CBP did emphasize that the below are guidelines, and in the presence of extraordinary aggravating factors, such as related criminal conviction, intentional nature of the violation, a pattern of violations or the indication of a disregard for obligations under U.S. laws and regulations, remissions could be higher than the amounts provided.
Additionally, the remission amount for License Violations should generally be at the higher end of the range. The remission amount for Non-license Violations should generally be at the lower end or middle of the range, depending on the specific nature of the violation. The guidelines establish that:
- First Offense, No Aggravating Factors: Remission upon payment of 10–30% of the export value of the seized goods, but no less than $500 (or the export value of the goods if less than $500)
- Second Offense, No aggravating factors: Remission upon payment of 30–50% of the export value of the seized goods, but no less than $1,000 (or the export value of the goods if less than $1,000) Mitigation Guidelines: Export Control Seizures U.S. Customs and Border Protection Updated July 2019
- Third or Subsequent Offense, No Aggravating Factors: Remission upon payment of 50-80% of the export value of the seized goods, but no less than $1,500 (or the export value of the goods if less than $1,500)
- First Offense, Aggravating factors: Remission upon payment of 30–50% of the export value of the goods, but no less than $1,000 (or the export value of the goods if less than $1,000)
- Second Offense (and subsequent offenses), Aggravating factors: Remission upon payment of 50–80% of the export value of the seized goods, but no less than $2,500 (or the export value of the goods if less than $2,500)
Other elements of the previous guidelines remain the same.
Hopefully no one reading will need to refer to these guidelines, but if you do, Export Solutions wants to ensure you have the correct and most recent guidelines. If you need assistance in this area, please contact Export Solutions 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.