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Save Money by Admitting Your Export Violations to the U.S. Commerce Department

Sometimes it is beneficial for an exporter to voluntarily self-disclose its export violations to the U.S. Government. Maybe an exportation of an item occurred without first obtaining the necessary license, or maybe the item was shipped to a company overseas other than allowed in a license. Both situations are violations of the Export Administration Regulations, and both violations could result in $250,000 penalties against the exporter. By voluntarily self-disclosing the violation, the exporter would reduce, and might even eliminate, such a penalty.

For a suspected violation of 15 CFR 764.2 of the Export Administration Regulations (EAR) enforced by the Bureau of Industry and Security (BIS) of the U.S. Department of Commerce, an exporter may submit a voluntary self-disclosure (popularly known as a “VSD”) to the Office of Export Enforcement of BIS at its Washington, D.C. headquarters office. The contents of what must be included in a VSD are established in 15 CFR 764.5.

Procedurally, once a properly filed VSD is received by the BIS, it is investigated by a Special Agent from the Office of Export Enforcement. If a penalty or other sanction is contemplated, the case is referred to an attorney with the Office of Chief Counsel of BIS. The BIS attorney will contact the exporter’s attorney, eventually resulting in a written Settlement Agreement between the exporter and the BIS. Negotiating the terms of the Settlement Agreement is critical.

The Obama Administration is actively pursuing export control reforms. Importantly, Kevin Wolf, Assistant Secretary of Commerce for Export Administration, on November 9, 2010, at […]

By Jennifer Diaz|2015-12-01T01:51:39-05:00December 12, 2010|Export, U.S. Bureau of Industry and Security (BIS)|0 Comments

Miami Aircraft Company Pays $225,000 Fine for Lying to OFAC

Pinnacle Aircraft Parts, Inc., based in Miami, Florida, just paid $225,000 to the U.S. Office of Foreign Assets Control (“OFAC”) regarding OFAC’s investigation of a jet engine that may have been shipped to Iran. This case is unique in that OFAC did not assess the fine because the jet engine was actually shipped to Iran, but because Pinnacle Aircraft Parts failed to properly comply with it subpoena to provide all records about that shipment.

OFAC certainly has the authority to issue an administrative subpoena, and to demand documents for any alleged sale of a jet engine to Iran. See 31 CFR Section 501.602, which states:

Every person is required to furnish under oath, in the form of reports or otherwise, from time to time and at any time as may be required by the Director, Office of Foreign Assets Control, complete information relative to any transaction,…

Pinnacle received such a subpoena demanding “all correspondence and other documents” related to the payment and transportation of the jet engine. Through its outside legal counsel, Pinnacle provided 260 pages of responsive documents, however, according to the OFAC’s Enforcement Information notice for November 16, 2010.

[Pinnacle] failed to submit a copy of a post-sale e-mail – which Pinnacle had provided to its [legal] counsel – indicating that the aircraft engine was likely destined for Iran…

OFAC determined that the failure to produce the responsive document was “egregious”, resulting in almost the maximum penalty of $250,000. OFAC concluded that Pinnacle “knowingly withheld” the relevant documentation. Pinnacle’s unfortunate reliance on the incorrect advice of […]

By Jennifer Diaz|2015-12-01T01:50:41-05:00November 26, 2010|U.S. Office of Foreign Assets Control (OFAC)|0 Comments

10 MOST COMMON MISCONCEPTIONS IN INTERNATIONAL TRADE

I have been an international trade attorney for over 20 years. In that time, I have represented a few thousand companies involved in the importation, exportation, and international transportation of merchandise. I have seen respectful, efficient U.S. Government employees and the most uncaring bureaucrats, importers who care about the law and others who only care how to get around it, and customs brokers who always try to do the right thing and others who you wonder how they ever passed the broker exam and the background check. I have listed the 10 Most Common Misconceptions in International Trade.

I have actually heard intelligent people who are CEOs or General Counsels of their companies say the most surprising things to me over the years.

1. It is ok to bring in up to $100 worth of Cuban cigars into the United States.

2. Dietary supplements that are “all natural” are not regulated by the U.S. Food and Drug Administration (FDA), and, therefore, can make all kinds of medical claims.

3. The U.S. Government does not care about the value of cargo being exported from the United States because there are no duties, taxes or fees paid to the U.S. Government on exports.

4. If an airlines passenger brings into the United States over $10,000 in cash, the passenger must pay a tax to U.S. Customs or the IRS.

5. If an importer uses a customs broker to file an entry with U.S. Customs and Border Protection, and some false information is provided to U.S. Customs, only the customs broker is liable to U.S. Customs, not the importer.

6. No one […]

By Jennifer Diaz|2015-12-01T01:47:51-05:00September 26, 2010|Export, Import|0 Comments

Forbidden Places for Tourism and Trade

Please make plans to attend the Forbidden Place-Tourism and Trade seminar on Friday, September 24, 2010. This seminar will take place at the J.W. Marriott Hotel, Miami, Florida. This half-day seminar will address a variety of recent regulations administered by the Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury. Topics to be addressed include travel to and trade with restricted countries, immigration aspects of tourism to sanctioned countries, and representing a client who is the subject of an investigation or penalty by the OFAC.

Click on this highlighted link for a pdf of the full brochure for the agenda of the event. Our featured luncheon guest speaker is Charles Bishop, Sanctions Coordinator, OFAC. Mr. Bishop has primarily been involved with administering the Cuban Assets Control Regulations, including license applications for Service Providers, Carrier Service Providers, Travel Service Providers, and Remittance Forwarders.

Please call The Florida Bar’s International Law Section at 850-561-5831 to register over the phone, fax your registration to 850-561-5816 or register on-line at www.floridabar.org/CLE. Attorneys who attend will receive Continuing Legal Education (CLE) credits.

A block of rooms has been reserved at the J.W. Marriott Hotel Miami at the rate of $114 single/double occupancy. To make reservations, please call the hotel directly at (305) 329-3500. Reservations must be made by September 3, 2010 to assure the group rate […]

By Jennifer Diaz|2015-12-01T01:45:49-05:00August 30, 2010|Events, U.S. Office of Foreign Assets Control (OFAC)|0 Comments

Maersk Pays $3 Million for Trading With Iran and Sudan

Maersk Line, Ltd. paid the U.S. Office of Foreign Assets Control (OFAC) $3 million to settle allegations of violations of the U.S. trade embargo with Sudan and Iran that Maersk committed between 2003 and 2007. How the world’s largest ocean transportation company committed such violations is a good story. How Maersk’s lawyer was able to limit the payment to $3 million is also important to understand.

According to the OFAC Enforcement Information for July 28, 2010,

OFAC’s investigation alleged that Maersk provided unlicensed shipping services for 4,714 shipments of cargo originating in or bound for Sudan and Iran. These services involved the transportation of such cargo on vessels owned, operated, and/or chartered by Maersk’s parent, A.P. Moller-Maersk A/S on at least one leg of the cargo’s journey to or from Sudan and Iran.

This is very interestingly worded by OFAC. As A.P. Moller-Maersk A/S, a Danish conglomerate, is not bound by the U.S. laws regarding trade sanctions with Sudan and Iran, it could provide unrestricted vessels services in those countries. If, however, any part of the cargo to or from those countries were transported on a U.S.-flagged vessel, then a violation of the U.S. laws would occur. Cargo is often shifted from ship to ship between the port of departure and the port of delivery, and A.P. Moller -Maersk did not carefully trace the cargo from Sudan and Iran as well as it should have to prevent the cargo from touching a U.S.-flagged vessel.

Using OFAC’s Economic Sanction Enforcement Guidelines effective November […]

By Jennifer Diaz|2015-12-01T01:39:40-05:00August 16, 2010|U.S. Office of Foreign Assets Control (OFAC)|3 Comments

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