What are the Penalties for Violating Export Control Laws and Regulations

Schuyler "Rocky" Reidel

Schuyler "Rocky" Reidel

Schuyler is the founder and managing attorney for Reidel Law Firm.

Reidellawfirm.com | What are the Penalties for Violating Export Control Laws and Regulations

“Those vials wouldn’t happen to contain bubonic plague would they?” asked the security official.

“O no sir, they are just regular diseases,” replied the college professor.

Back in 2003, a teacher at Texas Tech University was subject to criminal penalties for lying about vials from Tanzania. His willful violation resulted in 2 years of prison time.

National security in our country is maintained through export enforcement.

We will help you meet these federal regulations and avoid a similar scenario. Keep reading and protect your valuable exports.

Potential Penalties Imposed for Willful Violations

National security reasons are not the only motive for export control.

It’s also a way to keep a controlled item from causing economic ripples throughout our nation. Through foreign competition.

But regardless of their purpose, legislation like the Export Administration Act and Export Control Reform Act carry authority.

You as an individual or your entire operation can face civil penalties per violation. Pay attention to that last part as we continue.

There are also varying degrees of punishment. They are based on:

  • Willful violation

The term refers to an intentional act with a disregard for legal requirements.

  • Knowing violation

This next term describes an omission with an awareness that it breaks a law.

You’ll soon see that although they appear similar, penalties are different.

There are three main government entities involved. They will carefully review your exports for any gaps in compliance.

1) Export Administration Regulations (EAR)

Given authority by the Commerce Department, the Bureau of Industry and Security (BIS) is the first.

They mainly deal with “dual-use” items. Which means that they have both military and commercial applications.

Refer to their website and search “Commerce Control List” to check if your goods qualify. Even if you think your export is safe, it’s smart to double-check.

Results of an offense:

  • Criminal cases can lead to twenty years imprisonment and $1 million
  • Items involving national security carry administrative penalties of $120,000

For administrative cases, non-national security items incur a fine of $11,000.

The prospect of serious jail time reveals how seriously the United States takes these matters.

2) International Traffic In Arms Regulations (ITAR)

Next is the Directorate of Defense Trade Controls (DDTC).

Under their jurisdiction are exports, such as a defense service or defense articles. These products are “military in character” or designed for military use.

Unlike the EAR, their intended use is quite clear.

A license is required to export them, which we’ll cover later.

Results of an offense:

  • Criminal penalties of up to twenty years in prison and $1 million (knowing violation)
  • $1 million in civil penalties
  • Seizure or forfeiture of technical data and other goods, including vehicles carrying them
  • Termination of current government contracts

You can imagine how any combination of these damages would set back an exporting business. Charges quickly add up.

Bankruptcy isn’t uncommon after the dust has settled.

3) Office of Foreign Assets Control (OFAC)

Finally, the Department of the Treasury manages OFAC.

Their role is enforcement against targeted governments and individuals deemed a threat to our nation. Think Iran and North Korea.

When you have clients in sanctioned nations, expect to be under their watchful eye.

Results of an offense:

  • Spend up to ten years imprisoned and $1 million (willful violation)
  • Spend up to ten years imprisoned and $100,000 (knowing violation)
  • Under the International Emergency Economic Powers (IEEPA) Act, a civil penalty of $250,000 or twice the value of goods

Facing jail time is bad enough. But losing out on export privileges for good is another potential blow. Especially if your only experience is in this field.

Because it makes it hard to pay fines without a source of income.

Now that we’ve covered all the unpleasantries, we want to brighten your outlook via export compliance.

How to Avoid a Denial of Export Privileges

Anytime you’re working with foreign nationals, expect your conduct to be scrutinized.

This is even more true for those facing an embargo. Like Cuba.

Voluntary self-disclosures of business activity is one mitigating factor. And transparency before our government is wise 100% of the time.

A tricky subject, sanctions might simply restrict trade with the foreign nation. But other measures may apply.

Examples:

  • Assets being frozen to face seizure
  • Limited financial transactions for your industry
  • International traffic facing a complete ban

Sanctions may be temporary in some cases. But if you do business with Russia for example, legal assistance can help you avoid issues.

Consider it.

Facing possible criminal penalties, this expert advice usually pays for itself.

Meeting Export Control Regulations

An international trade lawyer is your best bet for decreasing overall risk.

But there’s a compliment to this asset. Export licenses.

Protecting against transshipment and transfer, they grant you two main perks:

  1. Crime control
  2. Guard commercial interests

To resell the item covered on your export license, a foreign buyer must seek authorization. If they don’t, BIS will investigate.

Trading overseas is tough enough without suffering financial loss in a case like this. Cushion yourself while also meeting export control.

Requests can be made online. Do this if you’re strapped for time.

But we recommend doing it the old-fashioned way.

Benefits of mailing it in:

  • More room for explaining your reasoning
  • Greater control over shipping destinations and dates

Detailed notes increase the chance that your application will be accepted. Which adds another layer of security should the transaction encounter problems.

Lastly, it’s time to discuss your top option for smooth exporting.

Reidel Law Firm Preventing Criminal and Administrative Penalties

In conclusion, you should always determine whether or not your exports are controlled. And if they are, don’t take a chance in shipping them out anyway.

Because the penalties are extremely stiff.

As experts in international trade law, we can help you handle the legal aspects of export controls.

And in doing so, keep customs and other trade regulators satisfied with reporting and filing.  

Conducting business across borders becomes much easier when they see reasonable care taken.  We are your partners in making this a reality.

Our international trade law division also supports:

  • Import Compliance
  • Litigation before the Court of International Trade (Section 337, anti-dumping/countervailing, and other trade-related cases)
  • Trade Compliance Audits and Training

Call Reidel Law Firm today at (832) 510-3292 or fill out our form to see how we can help you maintain export privileges. 

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