Although international trade compliance has been around since the passage of the Export Control Act in 1940, it has increasingly become a hot issue since the terrorist attacks of September 11, 2001. Security concerns over commodity and technology exports are greater than ever, and now, so are concerns over products and materials imported into the U.S. In addition, documentation requirements, whether electronic or hard copy, have become more stringent. Regardless of your company's commodity or technology, the compliance bar has been raised significantly and the penalties for non-compliance have risen accordingly.

Each of the federal agencies tasked with enforcement of international trade compliance have increased resources to better screen, investigate and prosecute illegal or non-compliant activities. Agency facts clearly support these efforts.

Directorate of Defense Trade Controls (DDTC)
In FY2007 the DDTC reported a 50% rise in support to criminal investigations and a 50% jump in criminal indictments/convictions as well as a 60% increase in voluntary disclosures.

Bureau of Industry and Security (BIS)
The BIS reported a rise in administrative violation cases from 69 in FY2005 to 104 in FY2006 and a doubling of administrative penalties from $6.8 million to $13.1 million in the same period.

Office of Foreign Asset Controls (OFAC)
OFAC also reported a 17% increase in civil penalties from the first half of 2007 to the first 6 months of 2008.

Customs and Border Protection (CBP)
CBP reported a 40% increase in fines and penalties from the FY2004 to FY2007.

If the latest statistics aren't enough to convince you that now is the time to get compliant, consider the fact that the penalties for violations have increased significantly in an effort to improve compliance with federal regulations. On October 16, 2007, President Bush signed into law the International Emergency Economic Powers (IEEPA) Enhancement Act. The Act provides for civil penalties amounting to the greater of $250,000, or twice the value of the transaction on which the violation is based, imposed for each violation of IEEPA. Willful violators can expect criminal penalties including fines up to $1,000,000 and up to 20 years in prison. The IEEPA penalties apply to violations of the Export Administration Regulations (EAR) as well as sanctions programs enforced by OFAC. Under Secretary of Commerce for Industry and Security Mario Mancuso said that "the new law provides significant additional support for our cases, which we intend to apply in an equitable, deliberative and rigorous way. Most important, we think the enhancements will better align incentives to improve overall compliance with our regulations."

Census and other agencies have also climbed on the increased penalty bandwagon. New Federal Trade Regulations (FTR) effective September 30th, 2008, mandate tougher penalties for everyone involved in the export process. Penalties may be imposed per violation of the FTR from $1,100 to $10,000 both civil and criminal for the delayed filing, failure to file, false filing of export information and/or using the Automated Export System (AES) to further any illegal activity.

These beefed up regulatory requirements will not likely end here. Under Secretary Mancuso is urging Congress to follow Senator Chris Dodd's lead to pass the Export Enforcement Act (EEA) which reauthorizes the EAA (which lapsed in 2001) and includes several other important measures that would enhance U.S. national security through controls on 'dual use' goods. He stated that "Congress should move quickly to provide our law enforcement agents with the full range of statutory authorities they need to more effectively combat illegal trade in these goods".

Is your international trade compliance program keeping up with the latest changes in the regulatory and enforcement environment? Companies lacking a good compliance program will not likely fly under the radar for long due to increased enforcement efforts, improved data mining and cargo screening techniques. Achieving these objectives is the job of every member of the international trade community. Establishing and maintaining international trade compliance is not a cost of doing business. Aside from being the 'right thing to do', it can save you money, keep away negative publicity, and improve your international transaction efficiency.

Will you comply?... Right now!

Author's Bio: 

Compliance Assurance LLC offers in-depth import and export trade compliance assessment, training, and trade management systems. Solutions are available for U.S. companies and their foreign subsidiaries as well as non-U.S. companies bound by U.S. export laws.