Today, the Department of Commerce’s Bureau of Industry and Security (BIS) announced an administrative settlement of $439,992 for the submission of a backdated document to make it appear that a transaction complied with the Export Administration Regulations (EAR) and for exporting military parts without BIS authorization.

BIS identified the false document after requesting a copy of a Prior Consignee Statement (PCS) that exporters are required to obtain prior to utilizing License Exception Strategic Trade Authorization (STA). The  company  had not obtained the required statement, but instead of admitting the mistake to BIS, advised its overseas customer to back-date the PCS. Without License Exception STA, this export would have required a license from BIS.

The settlement underscores the importance of acquiring and retaining all necessary documentation when using license exceptions, particularly license exception STA. BIS performs frequent audits of companies who use license exception STA. As such, it is important that any company using exception STA send and receive all required notifications and statements/acknowledgements and that the documentation is easily retrievable should BIS audit the export.

It also highlights the importance of being honest and forthcoming with BIS audits and also doing periodic outside or self audits of export transactions. If the offending company had told the truth and not tried to deceive, it is likely that they would only have received a warning, even more so if they had discovered the violation themselves and submitted a voluntary self disclosure.

Should you require any assistance qualifying shipment for the use of an exception, or in using exception STA in particular, please contact our office.