BIS reports no slowdown in voluntary self-disclosures

Concerns that U.S. companies would stop making voluntary self-disclosures of U.S. export control violations due to the drastic increase in penalty amounts have so far been unfounded, according to the Commerce Department's Bureau of Industry and Security.

Voluntary self-disclosures have not dried up like a desert, said Kevin Dellicolli, deputy assistance secretary of export enforcement for the Commerce Department, to industry members of the Regulations and Procedures Technical Advisory Committee in Washington Tuesday.

The rise in penalties doesn't appear to be a substantive issue for not engaging in voluntary self-disclosures, he said.

BIS has received an average of 180 voluntary self-disclosures per year since 2005. Dellicolli said 97 percent of the closed cases resulted only in a warning letter and no penalties.

President Bush's signing of the International Emergency Economic Powers Act in November raised the maximum penalty amount for civil violations of the export control regulations from $11,000 per violation to $250,000 per violation, or by twice the value of the transaction that is the basis for the violation. For criminal violations, persons may be fined up to $1 million and/or up to 20 years in jail.

Since 2004, BIS has stated that voluntary self-disclosures are a 'great weight' mitigating factor when determining the amount of export penalties to assess.

I've been here six to seven months and I have never seen the maximum penalty applied, Dellicolli said.

This isn't about the penalties. The penalties don't roll back into the agency for us to use, he said. Compliance is where the rubber meets the road. We're just trying to find the right balance in compliance.

Dellicolli, however, said penalty assessments would likely go up just because the IEEPA requires them to do so. Congress didn't expect us to be more creative with the mitigation factor, but instructed us to come up with a fair remedy, he said.

You can bring the (penalty) maximum down, Dellicolli told the RPTAC members. Have an effective compliance program in place and when you find a mistake make a voluntary self-disclosure.

But export control regulations experts still warn there are no guarantees that a company that makes a voluntary self-disclosure won't get hit with the full penalty amount. It's very scary, said long-time industry consultant Bill Root.

Benjamin H. Flowe Jr., a partner with law firm Berliner, Corcoran & Rowe, and a RPTAC member, said the exporters that he works with are zealous about compliance.

Just getting listed as a violator is a huge issue, Flowe said. It's a blow to their export compliance programs because that's when you get noticed (within the company). It's not just viewed as a cost of doing business.

 

Source: American Shipper