The Export Administration Regulations (EAR) subchapter of Federal Regulation Title 15 (15 CFR) lists out general prohibitions and factors for determination of applicability in Part 736.2. The factors that will alert an exporter of possible prohibitions of their transactions are the classifications of the cargo, cargo final destination, the end user, end use of the cargo and the conduct of how the transaction is effected. The following ten general prohibitions list out conduct that an exporter should not engage in without the appropriate license. License exceptions, only apply to general prohibitions 1, 2, 3 and 8. If a license exception conflicts with any of the other prohibitions, the prohibition overrides the exception unless there is special consideration or scenarios that are referenced in EAR Part 746.
Export and reexport of controlled items to listed countries
Reexports and export from abroad of foreign made items with more than a de minimis amount of controlled US content
Reexport and export from abroad of Foreign produced direct product of U.S. tech and software
Export or reexport to prohibited end users or end users
Export or reexport to embargoed destinations
Support of Proliferation activities
In transit shipments and items to be unladen from vessels or aircraft
Violation of any order, terms and conditions
Proceeding with transactions with knowledge that a violation has occurred or is about to occur
Most of the general prohibitions are straightforward and the title gives the necessary scope of the provision but if greater insight is needed, each prohibition has a description in EAR Part 736.2. Some of the prohibitions have information about their applicability to certain country groups or export types while also offering further definitions. Prohibition 4 prohibits businesses from conducting any type of export that falls under EAR due to an official order from the Bureau of Industry and Security revoking the business’s privilege to export. A denial order is issued for businesses that have committed regular or particularly egregious violations to the EAR. Prohibition 8 in part prohibits the interaction with cargo that is knowingly passing through one of the listed or prohibited countries found in the regulation.
EAR Part 764.2 explicitly states the actions that would constitute a violation of the general prohibitions. There are eleven actions ranging from failure to comply with recordkeeping to conspiracy. This list should be familiar to any exporter that regularly exports cargo that is subject to the EAR because violations do have a strict liability standard with BIS often holding businesses accountable for having reasonably constructive knowledge. EAR Part 764.3 describes how administrative, criminal and other sanctions can be imposed on an exporter that commits a violation. Codified under each type of sanction are classifications for actions that will lead to those violations and the extent of punitive action that will be taken given the circumstances.
BIS Compliance Activities
BIS offers general activities that should be done regularly by exporters to both comply with the EAR and avoid potential violations.
• Use watch list to review all license application parties
• Prepare “bona fides” reports on foreign transaction parties for licensing and law
• Review exports using the Automated Exports System (AES)
• Review and share with industry where possible, intelligence information
• Encourage voluntary self disclosures
• Check end users and end uses after export via post shipment verifications
• Leverage interagency partners in review of visa applications
• Maintain on-site “outreach” and license exception document reviews
• Uphold an Exporter compliance program of best practices, education and training
• AES edits and error messages created with Census to enhance compliance for AES
The checklist of actions above are extremely helpful in understanding how to avoid committing sanctions violations while also keeping systems in place to avoid worsening the punitive action once a violation is discovered. All of these elements should be incorporated into a compliance program so that there are responsible individuals who not only know compliance regulations but understand the best actions to take in avoiding penalties.
Have questions? Give our office a call today at (917) 546-6997, we would be happy to speak with you.
Have you found yourself in trouble with U.S. Customs and Border Protection (CBP), the U.S. Fish and Wildlife Service (FWS), or the Bureau of Industry and Security (BIS)? We are determined to help you. Click the link below to check out our booklets and learn how we can help guide you through this.
Ready to Learn More About CBP, OFAC,
BIS, FWS, and FDA?
We have dozens (literally!) of videos in our educational library on our YouTube channel related to importing, exporting, US Customs, BIS, OFAC, FWS, FDA, NFTs, and so much more. Subscribe to our channel now to stay up to date on the latest on these topics!
Our law firm helps growing companies who import and export comply with government regulations. We love what we do and we take our oath of confidentiality over your matters very seriously. How much? Watch this video to learn about it. CLICK HERE
Wondering "why should you have an attorney on your side?" Click here to watch one of our attorneys, Susan Steinman, break down the critical benefits as to why you want to have one on your side - whether you hire us to help you or another law firm.
Have questions? We are determined to help you.
We listen carefully to clients to ensure our understanding of the legal issues at hand, their factual context, and any limitations that might impact a chosen strategy. Feel free to connect with us using the contact form at the bottom of the Home page or send us an email at firstname.lastname@example.org.