BIS Update 2007, Day 2, Plenary Session: Export Enforcement
In his opening remarks during the Export Enforcement Plenary Session at the 2007 BIS Update, Darryl Jackson, Assistant Secretary for Export Enforcement introduced the three office directors of BIS's enforcement team, including Kevin Delli-Colli, the new Director of the Office of Export Enforcement, Glenn Krizay, the new Director of the Office of Export Analysis and Ned Weant, the Director of the Office of Antiboycott Compliance.
In keeping with the theme of Update 2007, Assistant Secretary Jackson took a look at the past, present and future of export enforcement. He noted that more than 75% of all of BIS's past enforcement cases fell within BIS’s three priority areas of weapons of mass destruction (WMD), terrorism and unauthorized diversion/transshipment. He also noted that BIS does not take lightly false statements made by exporters on SEDs and AES records and that pre-license checks are an important part of the BIS enforcement strategy.
With respect to the present, Assistant Secretary Jackson noted that the Justice Department’s recent export enforcement initiative is an important part of the increased emphasis on export enforcement and that the Justice Department intends to train more law enforcement personnel to understand and focus on export control-related issues.
He noted that when it comes to issuing penalties for export violations, more serious penalties call for increased penalties. He also noted that voluntary disclosures will be considered to a "great weight" mitigating factor, leading to at least a 50% reduction in the penalty amount. With respect to the future of export enforcement, Assistant Secretary Jackson said it is still BIS’s priority to pass the renewal of the Export Enhancement Act. He also noted that is necessary to have cooperation among nations and he recognized that nearly 75 countries were represented at Update 2007.
Next, Kevin Delli-Colli, the newly appointed director of BIS's Office of Export Enforcement discussed his experience in export control issues during his long career in law enforcement. He then summarized the FY 2007 enforcement statistics, which included:
- 25 criminal arrests for export control violations
- 16 cases led to convictions
- 65 administrative cases were settled, resulting in approximately $5.8 million in civil penalties
With respect to BIS’s three priority areas of WMD, terrorism and unauthorized diversions/transshipment, Mr. Delli Colli noted that transshipments create a special dynamic in conducting investigations. The most prevalent countries involving prohibited transshipments of controlled U.S. goods are Singapore, UAE and Hong Kong, which also happen to be the three largest transshipment points of legitimate commerce too. This allows bad actors to operate as a needle in a haystack. He noted, however, that transhipments, can occur from any country, and this past year there were enforcement cases involving transshipments from UK, Netherlands and Spain. China, Iran, Pakistan and India are the most common transshipment destinations. BIS is working many countries in an effort to control and reduce anauthorized transshipments. Mr. Delli-Colli also warned that U.S. domestic transactions are also a source of concern for diversion., as individual may attempt to smuggle items out of
In his various travels, Mr. Delli-Colli recognized the prominent role the Internet plays in export transactions. Criminals are just as capable to use the Internet and other emerging technologies. Exporters are at risk
Other frequent enforcement actions involve exporters submitting false information on SEDs and AES records. Frequently, this involves the misrepresentation of the value of shipped items on the SED or AES record at the customer's request in order to reduced customs duties.
He also noted that most investigations are conducted with the assistance of other agencies. BIS applauds the DOJ’s efforts, particularly their recent export enforcement initiative. The agency continues to encourage the filing of voluntary self-disclosures for violations. Not only are voluntary disclosures potentially advantageous to the exporter, but they provide the agency reliable intelligence with respect to bad actors.
The next member of the export enforcement plenary panel was Glenn Krizay, the newly appointed director of the Office of Export Analysis. Mr. Krizay discussed the objective of his office, which is to support BIS's enforcement efforts and is handled by tracking illegal transfers through end-use checks and providing in-depth research and analysis to support compliance and enforcement investigators.
End-use checks occur in the form of a pre-license checks or as post-shipment verifications. Pre-license checks are performed on unknown entities and exporters of sensitive products. Post-shipment verifications are a way to perform a check to develop a level of confidence in the end-user and licensee. In FY 2007, he noted that BIS conducted 854 end-use checks, 36% of which were pre-license checks and 64% were post-shipment verifications. Of the end-use checks performed, 11% were unfavorable.
Mr. Weant noted that outreach and awareness is also decreasing boycott activity. For, example, he noted that BIS is making outreach visits to business located in and governments of boycotting countries. He also stated that BIS has visited all of the Gulf Cooperation Council countries.
In other news, Mr. Weant reported on the following trends in boycott activity:
continues to be the biggest problem in terms of the number of boycott requests issued. BIS received 74 reports relating to boycott requests received from the UAE in 2006, and BIS received 53 in the first six months of 2007. The United Arab Emirates appears to be backing away from boycott practices, as the number of reports fell from 10 in 2006 down to 2 this year. Saudi Arabia has also decreased its unsanctioned boycott activities from 48 in 2006, to 28 this year. Syria Many exporters are receiving boycott requests from Iraq.
, there were 18 prohibited requests in 2006 and 9 in 2007 to date. Libya
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