As a facilitator in the supply chain, forwarders are in no way exempt from U.S. export control regulations. Investigations by the Commerce Department's Bureau of Industry and Security may easily lead to stiff, and very public, penalties.
DHL recently found this out the hard way. In August, the company entered into a joint settlement with BIS and the Treasury Department's Office of Foreign Assets Control to settle allegations that it 'aided and abetted' in the unlawful export of goods to Syria, Iran and Sudan and failed to comply with recordkeeping requirements. The company paid a civil penalty of nearly $9.5 million.
'Large-scale compliance breakdowns lead to significant sanctions aimed at ensuring that freight forwarders put into place and maintain necessary measures to meet their compliance responsibilities,' said Kevin A. Delli-Colli, the Commerce Department's acting assistant secretary for export enforcement, in a statement related to the DHL case.
Export control regulations are extremely complex depending on the goods and their overseas destination. A forwarder, for example, may become unwittingly entangled in an anti-boycott violation. The Export Administration Regulations' anti-boycott provisions prohibit U.S. persons from complying with certain requirements of unsanctioned foreign boycotts, including furnishing information about business relationships with or in a boycotted country or with blacklisted persons.
With civil penalties of up to $250,000 per violation and the potential for criminal penalties of up to $1 million and 20 years in jail per violation, it's worth every penny spent by forwarders to properly train their employees and hire appropriate third-party experts to assist them with maintaining robust export compliance programs.
Export compliance also makes good business sense in this tight global market. Exporters have become more selective in choosing their forwarders, placing more emphasis on export compliance capabilities of these service providers. Violations by forwarders can just as easily implicate exporters as well.
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