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The Law

If foreign nationals ever visit your U.S. locations, you may be violating export restrictions and not even know it. One glance of your operations by an unauthorized person, or a slip of the tongue by an employee can constitute a breach of export regulations— even if the contact occurs on U.S. soil. This is because the definition of “controlled goods and technology”isn’t solely restricted to referring to physical products, just as “exporting”does not consist exclusively of moving an item beyond the borders of the United States. Any company that has dealings with foreign nationals requires strict oversight to ensure that they do not commit export violations.

Under United States export regulations, an export is deemed to have occurred if any controlled good or technology is made available for inspection, when its use has been demonstrated or explained, and even when documentation has been presented or related information has been discussed verbally.

The Risks

The penalties for violating U.S. export regulations, including the rules for Deemed Exports, are severe. Companies found to be in violation of deemed export laws face all the same penalties as they would for physically delivering, or allowing to be delivered, controlled goods to any denied, restricted, or debarred party—penalties which can include millions of dollars in monetary fines, restrictions on business activities such as the temporary or even permanent revocation of export licenses, and—for violations deemed to have been willful—criminal prosecution, potentially including imprisonment.

That’s not to mention the certain and irreparable damage to the reputation of any company found to be aiding America’s enemies, even if only through negligence.

The Penalties

In FY 2011 combined U.S. Government Export Compliance Enforcement resulted in penalties of $732.8 MILLION and criminal prosecutions of 50 individuals and businesses.

DON’T LET THIS HAPPEN TO YOU!

OFAC Penalties

In FY 2011, settlements with 11 businesses were reached for a total of $623,000,000 in penalties as compared to 21 settlements in FY 2010 for a total of $91,000,000.

Since FY 2008, OFAC investigations resulted in settlements with 339 businesses for a total of $2,670,000,000. ( that’s $2.6 BILLION ! )

BIS Penalties

BIS investigations in FY 2011 resulted in the criminal conviction of 39 individuals and businesses for export violations, as compared to 31 convictions in FY 2010. The penalties for these convictions came to $20,214,000 in criminal fines, more than $2,100,000 in forfeitures, and more than 572 months of imprisonment; compared to $12,298,900 in criminal fines, more than $2,000,000 in forfeitures, and more than 522 months of imprisonment in FY 2010.

In FY 2011, BIS investigations resulted in the completion of 47 administrative cases against individuals and businesses and $ 8,508,300in administrative penalties, as compared to 53 cases and more than $ 25,400,000 in administrative penalties in FY 2010.

DDTC Penalties

In FY 2011 DOS entered into 1 consent agreement for a total of $79,000,000 in fines, as compared to 3 consent agreements in FY 2010 for $43,000,000. The Department also pursued in FY 2011 a total of 11 criminal prosecutions, as compared to 51 criminal prosecutions in FY 2010.