DEPARTMENT OF HOMELAND SECURITY 

Office of Inspector General 

Audit of CBP Export Control Activities 

(Unclassified Summary)

OIG-07-76 September 2007
Office of Inspector General 

U.S. Department of Homeland Security 

Washington, DC 20528 

September 24, 2007 

Preface 

The Department of Homeland Security Office of Inspector General was established by the 

Homeland Security Act of 2002 (Public Law 107-296) by amendment to the Inspector General Act 

of 1978. This is one of a series of audit, inspection, and special reports prepared as part of our 

oversight responsibility to promote economy, effectiveness, and efficiency within the department. 

This report assesses the effectiveness of the United States government’s export control policies and 

practices with respect to the inspection of outbound cargo by Customs and Border Protection. It is 

based on interviews with agency officials, direct observations, and a review of applicable 

documents. 

The recommendations herein have been developed according to the best knowledge available to our 

office, and have been discussed in draft with those responsible for implementation. It is our hope 

that this report will result in more effective, efficient, and economical operations. We express our 

appreciation to all of those who contributed to the preparation of this report. 

Richard L. Skinner 

Inspector General 
OIG 

Department of Homeland Security 

Office of Inspector General 

Background 

This is the eighth and final review in a series of interagency Office of 

Inspector General (OIG) audits. The overall objective of the interagency 

audits is to assess the effectiveness of the United States (U.S.) government’s 

export control policies and practices with respect to preventing the transfer of 

militarily sensitive technology to countries and entities of concern. 

Each year, billions of dollars in dual-use items—items that have both 

commercial and military applications, as well as defense items—are exported 

from the United States. To protect American interests, the U.S. government 

controls the export of dual-use commodities and munitions1 for national 

security and foreign policy purposes under the authority of several laws, 

primarily the Export Administration Act of 19792 and the Arms Export Control 

Act.

3 

The U.S. Census Bureau (Census) is responsible for collecting, compiling, and 

publishing export trade statistics for the United States. Exporters, carriers, 

forwarders, and Customs brokers file this information on the Shipper's Export 

Declaration (SED) or electronically in the Automated Export System (AES). 

The majority of SEDs are filed predeparture in AES. However, the Census 

Option 4 program allows participants to file a SED up to 10 days after export. 

Option 4 was implemented by Census in March 1999 and is available to 1,982 

approved exporters. While Census does allow the filing of paper SEDs 

predeparture, items on the Commerce Control List and the U.S. Munitions 

List require a license and must be filed electronically through AES prior to 

export. Foreign Trade Regulations (15 CFR 30.12 and 22 CFR 123.22) 

require that SEDs be filed between 8 and 24 hours in advance of export for 

licensable goods depending on the mode of transportation. SEDs for 

nonlicensable goods are required to be filed at the time the cargo is tendered 

to the exporting carrier. 

1

 Munitions are defense articles or technical data on the U.S. Munitions List. 2

 Although the Export Administration Act expired on August 21, 2001, the President has repeatedly extended existing 

export regulations, invoking emergency authority under the International Emergency Economic Powers Act. The most 

recent 1-year extension was effective August 18, 2006 (71 Federal Register 44551 dated August 7, 2006). 3

 Section 38 of the Arms Export Control Act (Title 22 of the United States Code, Section 2778) authorizes the President 

to control the export and import of defense articles. 

UNCLASSIFIED 

Audit of CBP Export Control Activities 

1 
Customs and Border Protection’s (CBP’s) role in exports is: 

• To enforce other U.S. government agencies’ laws and regulations 

through the examination of export documentation and inspection of 

outbound cargo; 

• The detention of shipments where a violation is suspected; 

• The initiation of enforcement actions for those shipments found to be 

in violation of export control laws and regulations; and 

• The facilitation of the lawful exportation of American goods and 

services. 

CBP’s specific role regarding the export licensing process for militarily 

sensitive commodities is to ensure that all U.S. exports comply with licensing 

requirements at the ports of exit. CBP uses various enforcement methods to 

screen export commodities. 

CBP screens and inspects outbound cargo to deter and interdict the: 

• Export of unauthorized militarily sensitive technology and munitions; 

• Export of stolen vehicles, computers, and other goods; 

• Smuggling of currency and monetary instruments out of the country; 

and 

• Export of goods in violation of trade sanctions. 

Failure to deter and interdict any of the above could allow terrorist groups, 

rogue nations, criminal organizations, and individuals the ability to terrorize 

and threaten the United States and its citizens, and could unjustly enrich 

criminal and terrorist organizations. 

Executive Summary 

The objective of the audit was to determine whether CBP consistently targets 

and inspects outbound shipments for compliance with federal export laws and 

regulations. In addition, the audit team determined the status of Department 

of Homeland Security actions to implement the open recommendations from 

the prior audit reports. 

We determined that outbound shipments are not consistently targeted and 

inspected by CBP Officers at the ports for compliance with federal export 

laws and regulations. This occurs because CBP does not devote sufficient 

resources to the function, does not have the information necessary to 

effectively monitor the program, and does not have performance measures to 

evaluate program results. The agency has reallocated resources devoted to 

UNCLASSIFIED 

Audit of CBP Export Control Activities 

2 
export targeting and inspection since September 11, 2001. As a result, 

shipments could be exported that violate export laws and regulations. 

We made several recommendations that, if implemented, can help CBP ensure 

trade adherence with federal export laws and regulations. CBP expressed 

partial concurrence with our first recommendation, since resolution also 

requires action by Census. However, CBP fully concurred with the remaining 

recommendations and is implementing corrective actions. There is an open 

recommendation from the audit report, Review of Controls Over the Export of 

Chemical and Biological Commodities (OIG-05-21), dated May 2005, for 

CBP to evaluate the Outbound Program, including current resources and 

staffing needs. 

UNCLASSIFIED 

Audit of CBP Export Control Activities 

3 
Appendix F 

Report Distribution 

Additional Information and Copies 

To obtain additional copies of this report, call the Office of Inspector General (OIG) at 

(202) 254-4199, fax your request to (202) 254-4305, or visit the OIG web site at 

www.dhs.gov/oig. 

OIG Hotline 

To report alleged fraud, waste, abuse or mismanagement, or any other kind of criminal 

or noncriminal misconduct relative to department programs or operations: 

• Call our Hotline at 1-800-323-8603; 

• Fax the complaint directly to us at (202) 254-4292; 

• Email us at DHSOIGHOTLINE@dhs.gov; or 

• Write to us at: 

DHS Office of Inspector General/MAIL STOP 2600, Attention: 

Office of Investigations - Hotline, 245 Murray Drive, SW, Building 410, 

Washington, DC 20528. 

The OIG seeks to protect the identity of each writer and caller.