US Export Control Violations and Penalties
Countries enforce export control and sanctions legislation with different levels of severity. Falling foul of these may expose businesses to fines and penalties, seizure/forfeiture of the goods involved, denial of export privileges, jail terms, and negative publicity. Export Control regulations affect not only the exporter but many other entities like customers, suppliers, banks, logistics providers, or other individuals or entities. Businesses are responsible for ensuring that they are compliant with government regulations and that their goods are not being sold to undesirable entities.
In the US, there are two export control relevant regulations, which need to be adhered to. the EAR and ITAR. As regards sanctions, there are the penalties imposed by OFAC. Today, we look at them from fines and penalty perspective.
The Export Administration Regulations (EAR)
Criminal and civil penalties exist for violations of the Export Administration Regulations. Criminal penalties apply to “knowing” or “willful” violations and civil penalties apply to non-willful violations.
For each criminal violation of the EAR, the institution involved can be subject to a fine that is the greater of $1 million or five times the value of the exports for each violation. The individuals involved can be fined up to $250,000 and/or imprisoned for up to 10 years for each violation.
For each civil violation of the EAR, the institution as well as the individuals involved can be subject to a $12,000 fine for each violation.
The International Traffic in Arms Regulations (ITAR)
Penalties for violations of the ITAR are similar to those under the EAR. Criminal and civil
penalties exist and can be levied against the institution as well as the individuals involved.
Criminal penalties include a fine of up to $1 million and/or up to 10 years in prison for each violation.
Civil penalties include a fine of up to $500,000 for each violation.
The Office of Foreign Assets Control (OFAC)
Penalties for violations of any regulations administered by OFAC are similar to those under the EAR. Criminal and civil penalties exist and can be levied against the institution as well as the individuals involved. Criminal penalties include a fine of up to $1 million and/or up to 20 years in prison for each violation. Civil penalties include a fine of up to $55,000 for each violation. Other penalties for violations of OFAC regulations include seizure/forfeiture of the goods involved.
Example of recent fines imposed by the US
Société Internationale de Télécommunications, $7.83 million, 2020, OFAC
The General Electric Company, $2.72 million, 2019, OFAC
British Arab Commercial Bank plc, $4 million, 2019, OFAC
UniCredit Bank, $660 million, 2019, OFAC
Zhongxing Telecommunications Equipment (ZTE) Corporation (China), $1.19 Billion, 2017, BIS, OFAC, DOJ
BNP Paribas SA (France), $963 Million, 2014, OFAC
Teva Pharmaceutical Industries Limited (Israel), $519 Million, 2016, FCPA
Crédit Agricole Corporate and Investment Bank (USA), $329 Million, 2015, OFAC
Commerzbank AG (Germany), $258 Million, 2015, OFAC
JPMorgan Chase & Co. (USA), $130 Million, 2016,FCPA
Weatherford International (Ireland), $100 Million 2013. BIS
General Cable Corporation (USA). $75 Million, 201. FCPA
GlaxoSmithKline plc (UK), $20 Million, 2016, FCPA
Hitachi (Japan), $19 Million, 2015, FCPA
Bristol-Myers Squibb (USA), $14 Million. 2015, FCPA
Cadbury Limited/Mondelez, International (USA), $13 Million, 2017
FCPA
Fokker Services B.V. (Netherlands), $10.5 Million,2014. BIS
PayPal. Inc. (USA), $7 Million, 2015,OFAC
EXAMPLE OF OFAC POWERS: Order Temporarily Denying Export Privileges & Majan Caby
Persons have been denied export privileges Read it here
Majan Carby’s export control violations. Read it here
Read the case study “What does it mean to become a Denied Person” here
EXAMPLE OF OFAC POWERS: Venezuelan aircrafts blocked
In 2020, OFAC identified fifteen aircraft as a blocked property of Petroleos de Venezuela,
S.A. (PdVSA). OFAC’s regulations generally prohibit all transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of blocked persons. Read more
Sources
Sanctions Page of OFAC: https://www.treasury.gov/resource-center/sanctions/CivPen/Pages/2019.aspx
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