Next to willful violation, self blinding (refusing to accept information about an export) is the most significant aggravating factor in increasing an exporter’s chance of getting slapped with a major civil penalty from the Bureau of Industry and Security (BIS). So, what is the best way to mitigate administrative penalties? Effective compliance programs, says BIS Assistant Secretary Darryl W. Jackson.
At a recent BIS Export Control Forum 2008 in Newport Beach, CA, Secretary Jackson stated that "for effective compliance programs, we give 'great weight mitigation' - a reduction of 25 percent - in assessing the penalties in administrative cases". He continued by saying that the Department of Justice is focusing more resources on export violations, so you should expect to see an increase in criminal prosecutions.
Thus, compliance is more important than ever. Compliance will help you avoid enforcement actions. And, if you cannot avoid an enforcement action, having an effective compliance program will get you great weight mitigation in our administrative cases if the program was in place before the violation occurred and you have taken steps to address any compliance concerns raised by the violation.
9 Principles of Effective Compliance Programs for Great Weight Mitigation in BIS's Administrative Cases:
1. Whether the company has performed a meaningful risk analysis.
2. The existence of a formal written compliance program.
3. Whether appropriate senior organizational officials are responsible for overseeing the export compliance program.
4. Whether adequate training is provided to employees.
5. Whether the company adequately screens its customers and transactions.
6. Whether the company adequately meets recordkeeping requirements.
7. The existence and operation of an internal system for reporting export violations.
8. The existence and result of internal / external reviews or audits.
9. Whether remedial action has been taken in response to export violations.
Finally, Secretary Jackson mentioned that the burden is on you, the exporter, to demonstrate that your compliance program is effective. If you are seeking great weight mitigation you must clearly demonstrate that you are entitled to it. He continued that merely sending in your lawyers to do a 'document dump' will not demonstrate adequate burden of proof required for great weight mitigation of administrative penalties.
For more information about international trade compliance and customs trade compliance please visit http://www.wearecompliant.com.
Compliance Assurance LLC offers in-depth import and export 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.