Source: http://www.bis.doc.gov/complianceandenforcement/freightforwarderguidance.htm
Timestamp: 2013-05-22 11:32:56
Document Index: 154822340

Matched Legal Cases: ['art 30', 'art 30', 'art 762', 'art 163', 'art 122', 'art 501']

Home >Compliance And Enforcement > Freight Forwarder Guidance Freight Forwarder Guidance
Members of the international forwarding community play a key role in ensuring the security of the global supply chain, stemming the flow of illegal exports, and helping to prevent Weapons of Mass Destruction (WMD) and other sensitive goods and technologies from falling into the hands of proliferators and terrorists. Responsibilities of the Forwarding Community
In a "routed export transaction," in which the foreign PPI authorizes a U.S. agent to facilitate the export of items from the United States, the U.S. PPI obtains from the foreign PPI a writing in which the foreign PPI expressly assumes responsibility for determining licensing requirements and obtaining authorization for the export. In this case, the U.S. agent acting for the foreign PPI is the “exporter” under the EAR, and is responsible for determining licensing authority and obtaining the appropriate license or other authorization for the export. An agent representing the foreign PPI in this type of routed export transaction must obtain a power of attorney or other written authorization in order to act on behalf of the foreign PPI.
In this type of routed export transaction, if the U.S. PPI does not obtain from the foreign PPI the writing described above, then the U.S. PPI is the �exporter� and must determine licensing authority and obtain the appropriate license or other authorization. This is true even if the transaction is considered a routed export transaction for purposes of filing electronic export information pursuant to the Foreign Trade Regulations (15 C.F.R. part 30).
In a routed export transaction in which the foreign PPI assumes responsibility for determining the appropriate authorization for the export, the U.S. PPI obtains from the foreign PPI a writing wherein the foreign PPI expressly assumes responsibility for determining licensing requirements and obtaining licensing authority. The EAR requires the U.S. PPI to furnish the foreign PPI and its agent, upon request, with the correct Export Control Classification Number (ECCN) or sufficient technical information to determine the ECCN. In addition, the U.S. PPI must provide the foreign PPI and its agent with any information that it knows will affect the determination of license authority. The U.S. PPI also has responsibility under the Foreign Trade Regulations (15 C.F.R. part 30) to provide certain data to the agent for the purposes of filing electronic export information.
In a transaction that is not a routed export transaction, if the U.S. PPI authorizes an agent to prepare and file the export declaration on its behalf, the U.S. PPI is the “exporter” under the EAR and is required to: (A) provide the agent with the information necessary to complete the AES submission; (B) authorize the agent to complete the AES submission by power of attorney or other written authorization; and (C) maintain documentation to support the information provided to the agent for completing the AES submission. If authorized by either the U.S. or foreign PPI, the agent is responsible for: (A) preparing the AES submission based on information received from the U.S. PPI; (B) maintaining documentation to support the information reported on the AES submission; and (C) upon request, providing the U.S. PPI with a copy of the AES filed by the agent.
Additionally, upon written request, Census will provide companies with twelve months of AES data free of charge every 365 days. The Census Bureau�s Foreign Trade Division currently provides U.S. PPIs, and other filers requesting their AES data, with all ten data elements required in routed export transactions.
As noted above, forwarders may be subject to criminal prosecution and/or administrative penalties for violations of the EAR. BIS has not hesitated to hold forwarders liable for participating in illegal transactions. Bad publicity alone can cost companies incalculable sums, in terms of future business, not to mention costs associated with lengthy and costly litigation, or administrative or criminal penalties. For example, in August 2009, after a government investigation lasting for more than five years, DHL reached a $9,444,744 Settlement Agreement with BIS and Treasury�s OFAC in a case involving hundreds of shipments to Iran, Sudan, and Syria, and a failure to adhere to government recordkeeping requirements.
This case, and many others involving forwarders, demonstrate the need for forwarders to know their customers and be aware of suspicious circumstances and Red Flags that may be present in an export transaction. When presented with Red Flags, forwarders have an obligation to inquire about the facts of the transaction, evaluate all of the information after inquiry and refrain from engaging in the transaction if the Red Flags cannot be resolved. These steps help protect not only the forwarder but also the forwarder�s client, who may be unknowingly engaging in a prohibited transaction.
Forwarders can take steps to mitigate their own and their clients' risks of liability by establishing a compliance program that scrutinizes export transactions and checks the parties to transactions against BIS's and other U.S. Government agencies' various Lists to Check. Forwarders should also familiarize themselves with the types of activities to avoid in suspicious transactions as described in the BIS publication, Don't Let This Happen To You.
While the EAR allows flexibility in the manner in which U.S. companies meet these compliance requirements in a number of different methods, BIS strongly recommends that all parties dealing with export transactions maintain a vigorous and effective Export Management and Compliance Program (EMCP), incorporating the nine key elements (check the EMCP weblink at http://www.bis.doc.gov/complianceandenforcement/emcp.htm), and especially the screening of all parties to transactions, as part of their overall due diligence.
Concerning documentation requirements, refer to the EAR's part 762 (applicable to all transactions subject to the EAR) regarding records that have to be maintained, records that don't have to be maintained, requirements for producing records, retention period, etc. There are also recordkeeping requirements from, inter alia, Customs (19 CFR part 163), the Department of State (ITAR and 22 CFR part 122.5), the Census Bureau (15 CFR 30.66(c)), and Treasury�s OFAC (31 CFR part 501).
BIS�s Export Management and Compliance Division (EMCD, at 202-482-0062 and through the BIS website) is available to assist with compliance questions; our Outreach and Educational Services Division (OESD, at 202-482-4811, 949-660-0144, and through the BIS website) is available to assist with general questions involving exporting, and, for licensing issues, it may be helpful to speak with one of BIS�s expert Licensing Officers who deals with your particular line of products. Your local Export Enforcement Field Office would also be able to give you guidance; to find your local office call (202) 482-1208, or check here, and for a regulatory perspective, you may also contact BIS� Regulatory Policy Division (RPD) at (202) 482-2440 and through the BIS website.
You may additionally set up information briefings, whereby you invite EMCD, Customs and Border Protection (CBP), BIS�s Export Enforcement, and/or representatives from other government entities to make presentations to your company and your business partners, in order to support you in educating all regarding compliance. Make use of the BIS website and the other government websites, and send staff to BIS seminars and seminars offered by other government agencies.
Parties who believe they may have committed a violation of the EAR are encouraged to submit a Voluntary Self Disclosure (VSD) to BIS. VSDs are an important indicator of a party's desire to bring their export activities into compliance, and also may provide important information to BIS helping to identify foreign proliferation networks. Parties submitting VSDs may be eligible for significant reductions in administrative penalties, and those with well-implemented EMCPs may expect further significant reductions of administrative penalties. Procedures for submitting VSDs may be found in section 764.5 of the EAR. The procedures detailed in section 764.5 do not apply to VSDs involving violations of the antiboycott provisions of the EAR. Procedures for submitting VSDs for boycott violations are found in section 764.8 of the EAR.
If you have reason to believe a violation is taking place or has occurred, you may report it to the Department of Commerce by calling its 24 hour hot line number: 1 (800) 424-2980. Or if you prefer use our Web form to submit a confidential tip. Please note that use of the form will not generate any return e-mail to you so that the information you submit will remain confidential.