First, if you are a trade compliance professional, you need
to read the complete Proposed Charging Letter (PCL), Consent Agreement and
Order in this case to thoroughly appreciate what happened and the lessons
learned.
Central to this settlement is the systemic and long standing
nature of the violations based on improper jurisdiction and
classification. Does that sound familiar
in light of previous DDTC settlements?
Essentially the Respondent did not know what they were
doing.
As the PCL states:
“In making proper jurisdiction and classification determinations the
DDTC Commodity Jurisdiction procedure is the only US Government method of
determining whether an article or service is covered by the USML. Note the word
“only.”
Further, “Respondent and subsidiaries failed to understand
the Department of Commerce can only classify items subject to the Export
Administration Regulations.” Note the
words “only” and “failed to
understand.” Additionally, “A Department
of Commerce commodity classification is not a jurisdictional determination for
purposes of the Arms Export Control Act.”
Note the word “not.” Well Dah!
The question is how many more organizations have made, are
making and/or will make similar mistakes and like Aeroflex learn the lessons
the hard way?
BOTTOM LINE: Making
correct jurisdiction and classification decisions are critical to avoid export
violations and lots of adverse visibility.
They are also fundamental to any sound export compliance program. In the context of evolving Export Control
Reform, experience, knowledge and skills in this area are even more important.
If you get it wrong or got it wrong, there is
significant exposure, liability and risk.
In the current invigorated enforcement environment, education and
training here are critical! If you blow it,
you and your organization could face and suffer a wide range of negative
consequences, just like Aeroflex, and others before them have done.
All the DDTC-Aeroflex settlement documents are available at http://www.pmddtc.state.gov/compliance/consent_agreements/Aeroflex.htm.
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Tuesday, August 13, 2013
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