We’ll Never Get Caught

July 12, 2013
By Jim Trubits

Download PDF


Export controls exist to protect the national security of the U.S. It’s up to the Bureau of Industry & Security to enforce our export control laws. They focus on companies and individuals who engage in the export of controlled commodities, software, and technology. Their agenda is simple: What’s the end use of exported item? Are you exporting to an end user or destination of concern?

They fulfill this duty with focus, purpose and, if necessary, will penalize or sanction you and your company.

In 2012, the Bureau completed 994 end-use checks in more than 50 countries, up 10% from the previous year.

We’ll never get caught

Exporters that have a blasé attitude regarding their export responsibilities put themselves at risk for a civil–or worse–a criminal investigation.

Office Director Gerard Horner of the Bureau has stated on numerous occasions that they are using the Automated Export System (AES) to measure compliance with regulatory requirements.

For exporters unaware of the Export Administration Regulations (EAR) or AES filing requirements, as well as those who have not taken the time to develop and maintain an export compliance program, could face the following penalties per violation:

  • Criminal−fines up to $1 million and/or 20 years in prison
  • Civil−$250,000 or 2x the transaction’s value

Here are some recent penalty cases that were settled:

$88k penalty, Dresser Inc, for exporting control valves without a proper license.

$5k penalty and 2 years probation, Maple Pacific Corporation, for exporting valve parts to Iran via Italy.

$2.5 million penalty, Flowserve Corporation, for 288 violations of the Export Administration Regulations plus a $502k penalty from the Office of Foreign Assets Control for 58 violations of Iranian, Cuban and Sudanese sanctions programs.

Read about more penalty cases in the Bureau’s annual report.

The Bureau of Industry and Security recommends that you establish an export management and compliance program to stay in compliance with the Export Administration Regulations (EAR). Having such a program will be viewed as a mitigating factor if you are investigated.

Jim Trubits is Director of Business Development for Mohawk Global Logistics.

FacebooktwitterlinkedinFacebooktwitterlinkedin