BIS Official Lists 5 Root Causes of Export Civil Enforcement Cases

During a November 15, 2011 NCBFAA webinar, a Bureau of Industry and Security’s Office of Export Enforcement Special Agent in Charge discussed the root causes of civil enforcement actions and what to do if export violations are found. According to the SAC, the root causes of civil enforcement cases are (1) incomplete transaction information, (2) ignoring red flags, (3) human error, (4) incorrect EEI filing¹, and (5) non-compliance with license conditions.

Highlights of the Special Agent in Charge's (SAC's) presentation include:

Five Root Causes of Civil Enforcement Cases

According to the SAC's discussion of the five root causes of export civil enforcement cases:

Incomplete transaction information -- can occur with an unknown end-user, unknown or inconsistent end-use, or multiple parties to a transaction not listed, incorrect product classification, etc.

BIS suggests identifying all parties to a transaction and confirming legitimate intermediaries and ultimate consignees.

Ignoring red flags -- can occur when the person placing the order is unfamiliar with product or information regarding end-use; there is an inappropriate end-user: banks, overseas freight forwarders, etc.; there is conflicting information on sales documentation and export routing correspondence, etc.

BIS suggests asking questions and inquiring further to resolve these red flags.

Human errors -- can occur when there is pressure to meet sales goals and rush order processing, new personnel using outdated go-by documentation, an export manager on vacation and no cross-trained backup, there is poor communication with sales staff and foreign distributors, etc.

BIS suggests increasing training and cross training personnel and ensuring export guidelines and classifications are current.

Incorrect electronic export information¹ filing -- can involve the wrong export control classification number (ECCN) entered, improper use of No License Required (NLR) exemption, incorrect ultimate consignee, etc.

BIS suggests seeking assistance from BIS and taking other actions to ensure correct classifications.

Non-compliance with license conditions -- can occur with a failure to identify all conditions on an issued license, failure to identify any conflict of conditions with sales transaction, etc..

BIS suggests resolving any conflicts before proceeding with the transaction (even if it means amending the license), notifying intermediate and ultimate consignees of the BIS license conditions, and submitting all reporting as required by the BIS license.

Recommended Actions if a Violation is Found

The SAC also stated that when a violation is found:

• Notify management
• Identify and contain immediate violation
• Conduct internal audit for scope of problem
• Initiate self-disclosure report to OEE

(See ITT’s Online Archives 11090216 for summary of BIS’ best practices for preventing dual-use diversion.)

¹The SAC presentation refers to incorrect SED filing; however, he acknowledged that SEDs are no longer filed. This summary refers to this cause as “incorrect electronic export information” filing instead.