Whoever said freight forwarders weren’t responsible for export compliance? A recent settlement from the BIS seems to point at a new trend in government enforcement of U.S. export regulations. Namely, holding all parties accountable for their actions.
Earlier this month, FedEx agreed to pay a $370,000 civil penalty to settle charges that it violated the EAR on six occasions from 2004 to 2006.
“It is vital that every stakeholder in the U.S. exporting chain remain vigilant in its efforts to prevent prohibited transactions that may be detrimental to our national security, and each will be held accountable if it fails to do so,” said Assistant Secretary for Export Enforcement David W. Mills. This action follows a recent trend by BIS to actively seek aggressive penalties for individuals, as well as corporations, who fail to maintain proper export compliance under the law.
According to its press release, BIS alleged that, on two occasions in 2006, FedEx facilitated the unlicensed export of electronic components from the United States to Mayrow General Trading – an entity which has been under a General Denial Order from BIS since June 5, 2006. (Mayrow is believed to be actively acquiring electronic components used to build Improved Explosive Devices which are deployed against U.S. and coalition forces in Iraq and Afghanistan.)
Other allegations from BIS charged FedEx with unlicensed exports to Beihang University in China (another entity which has been determined to be engaged in activities contrary to U.S. national security and/or foreign policy interests). Beihang is on the Commerce Department’s Entity List.
Finally, FedEx was also charged with facilitating three unlicensed exports of printer components to Syria.
All of this illustrates the needs for companies to develop robust export compliance processes – including restricted party screening – regardless of where they sit in the global supply chain.
Tom Reynolds is the President of Export Solutions, a consultancy firm which specializes in helping companies with import/export compliance.