Penalties – Part 2: Aggravating Factors

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By: Omari Wooden

A few weeks ago, I discussed the penalty provisions found in Subpart H of the Foreign Trade Regulations (FTR). So let’s do a quick recap… Potential violations include, but are not limited to, failure to file Electronic Export Information (EEI) in the Automated Export System (AES), submission of false or misleading information, and late AES filing. The U.S. Customs and Border Protection (CBP) can issue penalties, which range from $1,100 up to $10,000 per violation. However, the best way to avoid fines and penalties is to understand the FTR and to establish compliance efforts throughout your organization.

Now that we’ve recapped, let’s move forward to a situation where a penalty has been issued against your company. There are aggravating factors that may increase the amount of the fine. Some of the aggravating factors, as stated in the CBP Penalty Guidelines (not an exhaustive list) include:

1. The party exhibits a pattern of disregard for its responsibilities under U.S. export laws and regulations.

2. Several violations in the same export transaction.

3. The party exports as a regular part of its business, but lacked a systematic export compliance effort.

Aggravating factors are elements that companies want to avoid! However, instead of avoiding them by chance, become familiar with them. Companies need to incorporate training and education for their staff, to systematically avoid aggravating factors. Training such as the AES Compliance Seminars, AES/FTR Webinars, and Bureau of Industry and Security’s Complying with U.S. Export Controls and How to Develop an Export Management and Compliance Program are available year round.

It is important for companies to understand the requirements set forth by the FTR to avoid multiple violations within the same export transaction. Companies should use internal checklists to make sure they are not entering into illegal export transactions. It is important that your company implements an adequate Export Compliance Program to avoid the occurrence of aggravating factors. As I’ve stated before, you are in control of your company’s compliance. BE PROACTIVE!!!!

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