Nov

6

I’m from the Government and I’m Here to Fine You (Twice)


Posted by at 12:25 am on November 6, 2015
Category: BISSDN List

PPI via https://m.facebook.com/ProductionProducts/photos/pb.207851795988965.-2207520000.1438832505./368040763303400/?type=1&source=54 [Fair Use]

Back in August, we detailed the sad story of Production Products,  a small family-run business in Maryland that sent OFAC into a tizzy and received a $78,5000 fine because, heaven forfend, the company had never heard of the SDN list and sent HVAC duct manufacturing worth $500,000 to an SDN in China, which equipment is now probably being used to make bombs and missiles and stuff. We took the occasion to suggest that, rather than pitch a fit, OFAC should engage in a bit of reflection and wonder why a small mom-and-pop company in Maryland might never have heard of its SDN list.

Well, Production Products’s woes were scarcely over because BIS, equally annoyed that Production Products doesn’t have someone read the Federal Register cover-to-cover every day, has decided it ought to pile on with its own $50,000 fine for the same violation, as well punishing the company with a year in detention or the equivalent, namely requiring three officials to attend export school and report back to BIS Special Agents with “attendance certificates.”

BIS gets to attend this punching party as a result of section 744.8 of the Export Administration Regulations which makes it a violation of the EAR to deal with any SDN that is listed “with the bracketed suffix [NPWMD].” And that was the case here. The Chinese company on the list has the “bracketed suffix [NPWMD]” which means (for those of you who don’t speak the Low Middle Inflected Dialect of the Exportish language) that they were put on the list for reasons having to do with their involvement in nuclear proliferation and/or weapons of mass destruction.

Like OFAC, BIS was miffed that Precision Products had never heard of the SDN and, as a result, imposed a fine and the requirement that the miscreants take course at Export School and bring back proof of attendance. But, also as was the case with OFAC, this was less an opportunity for BIS to get lathered up than it was an opportunity for self-reflection. What has BIS done to make sure that small businesses know about its arcane and complex regulations?

 

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Copyright © 2015 Clif Burns. All Rights Reserved.
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3 Comments:


I have much sympathy for this little small company. I am wondering how this could happen. In Germany, you would have declare the export via a software which would make your customs office stop the consignment (they get a “red flag” on their computer and give you call). Same for the forwarder who tries to ship this (which he couldn’t with customs release). Even if you shipped, I am sure you would here – taking into account that incomes and price level in the US are not very different from Germany – get a away with a warning and perhaps a small administrational fine (around EUR 1000,– = USD 1100,–). We once shipped something to a EU country out of the validity of a licence and were only told when caught to be more careful in future.

Comment by Martin on November 6th, 2015 @ 3:18 am

Well, when does “ignorance is not an excuse” apply? In the Freight Forwarding industry I ran into many mom and pop shops that basically felt taking the time to learn about Export Compliance was a waste of their time.

I would also wonder why the agency handling their shipment didn’t step up and let them know they were shipping to an SDN? A lot of Mom and Pops rely on third party expertise for this.

Comment by Charles on November 6th, 2015 @ 10:23 am

Clif: To be fair, while folks who practice within the Beltway might not notice, the Department of Commerce, through the Commercial Service and its associated District Export Councils, often in conjunction with state economic development agencies, chambers of commerce and universities, do far, far more than either OFAC or DDTC to reach out to small businesses and educate them about Commerce controls through seminars and free consulting. The OEE regional offices can always be counted on to provide a speaker, and even BIS HQ in DC will send speakers for seminars that can expect a decent turnout. OFAC, by contrast, rarely reaches out to anyone other than bankers, even though it administers comprehensive trade embargoes and gleefully pursues criminal cases against small businesses exporters in order to rack up its body count.

Comment by Mike Deal on November 9th, 2015 @ 10:02 am