BIS Annual Reports Shows Increase in Criminal Fines, Drop in Civil Penalties
The Bureau of Industry and Security has posted its fiscal year 2011 Annual Report to Congress for the October 1, 2010 through September 30, 2011 period. The report includes information on its FY 2011 activities in the areas of export control reform, export licensing, export enforcement, industry outreach activities, international regimes and treaty compliance, etc. With respect to its enforcement activities, BIS notes that criminal fines rose by 60%, civil penalties fell substantially (due in large part to one large penalty in FY 2010 which was not repeated in FY 2011), and the number of antiboycott cases fell by almost half.
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Highlights of BIS' FY 2011 Enforcement Activities
BIS' summary of its FY 2011 enforcement activities indicates the following:
More Criminal Convictions, Fines, Jail Time in FY 2011
BIS investigations in FY 2011 resulted in the criminal conviction of 39 individuals and businesses for export violations, as compared to 31 convictions in FY 2010. The penalties for these convictions came to $20,214,000 in criminal fines, more than $2.1 million in forfeitures, and more than 572 months of imprisonment; compared to $12,298,900 in criminal fines, more than $2 million in forfeitures, and more than 522 months of imprisonment in FY 2010.
Fewer Administrative Cases, Administrative Penalties in FY 2011
In FY 2011, BIS investigations resulted in the completion of 47 administrative cases against individuals and businesses and $8,508,300 in administrative penalties, as compared to 53 cases and more than $25.4 million in administrative penalties in FY 2010. (BIS notes that a single case in FY 2010 had an administrative penalty of $15 million). Of the 47 closed cases, eight involved antiboycott violations that resulted in total penalties of $129,300.
Fewer Antiboycott Cases, Antiboycott Penalties in FY 2011
During FY 2011, eight companies agreed to pay civil penalties totaling $129,300 to settle allegations that they violated the antiboycott provisions of the EAR, as compared to 14 antiboycott cases that involved $380,975 in penalties in FY 2010. Additionally, BIS issued two antiboycott Warning Letters in FY 2011.
BIS Completed Antiboycott Compliance Assessment in UAE
BIS officials conducted an antiboycott compliance assessment trip to the United Arab Emirates in October 2010, where they briefed U.S. Embassy officials, including those from the U.S. and Foreign Commercial Service, on the EAR.
BIS Conducted 891 End-Use Checks in Over 60 Countries, Most Were PSVs
In FY 2011, BIS completed 891 end-use checks in more than 60 countries. Of these, 88 were Pre-License Checks (PLCs) and 803 were Post-Shipment Verifications (PSVs).
Export Control Officer Added for China in Late FY 2011
To conduct end-use checks, BIS maintained Export Control Officers (ECOs) in U.S. embassies and consulates in Moscow, Beijing, Hong Kong, New Delhi, Abu Dhabi, and Singapore. Following the establishment of the Singapore office in December 2010, BIS further expanded the ECO program with the assignment of an additional ECO to the Beijing office in late 2011.
Preventative Enforcement Actions Included Warning Letters, Detentions, Seizures, Etc.
BIS completed a significant number of additional preventive enforcement actions in FY 2011, including the issuance of 227 warning letters; 139 detentions; 69 seizures; one Temporary Denial Order against one company and one individual, and one order adding one company as an additional respondent to an existing Temporary Denial Order; renewals of four Temporary Denial Orders previously issued against a total of nine companies and two individuals; six orders adding a total of nine related persons to denial orders or Temporary Denial Orders; two denial orders under Section 11(h) of the EAA (which authorizes denial of export privileges of parties convicted under certain Federal statutes); one order revoking a penalty suspension (and thereby activating the penalty); and 1,053 outreach contacts with industry.
BIS' FY 2011 annual report also contains appendices covering:
- FY 2011 Regulatory Changes
- BIS Organizational Structure and Administrative Information
- Summaries and Tables of Closed Export Enforcement Cases and Criminal Cases
- Boycott Requests Reported to Office of Antiboycott Compliance
- Approved Applications for Country Group D:1 and Cuba
- Report on Domestic Impact of U.S. Exports to Controlled Countries
- Agricultural Supply Tables and Information
- Export Control Reform Fact Sheets, Speeches, and Testimony