Who is an exporter?
If you ship and transport anything out of the country you are an exporter even if you do not think of it that way. The shipment can be a commercial shipment such as an export of manufactured products to another country; or, it can be personal shipment like shipping (or taking with you on a flight iPhone/Android mobile phones and laptops for your family in another country. While you don’t always need a license to export, that doesn’t mean that you don’t need to report the fact that you’re making an export. If you fail to file an export declaration (electronic export information in the AES), you could be liable for a hefty penalty from U.S. Customs & Border Protection (CBP).
CBP Penalty for Export Violations
CBP will issue a penalty for export violations; typically, the notice of penalty states that there was a violation of the Export Administration Regulations (EAR), which are in Title 15 Part 30 of the Code of Federal Regulations. These violations can include:
- Late filing of file electronic export information/shippers declaration in the AES [Automated Export System];
- Failure to file electronic export information in the AES;
- Failure to file correct and/or necessary export information in the AES (USPPI [U.S. Principal Party in Interest], Consignee, End User, Commodity Description, Port of Export);
- Failure of the exporting carrier to provide certain documents or information to CBP;
- Failure to cite license code or number;
- Failure to obtain Power of Attorney for AES transmission;
- Failure to identify transaction as a routed transaction;
- Failure to correct information as changes become known to the filer;
- Failure to provide carrier with proof of filing or exemption legend;
- Failure to retain records for 5 years;
Carriers themselves have different obligations under the Export Administration Regulations, and carrier violations can include failure to notify the USPPI with changes to date or port of export, failure to file manifest information, and failure to file proof of filing citation or exemption legends, to name a few.
What are my responsibilities as an exporter?
Electronic export information is filed in the AES — Automated Export System, which is now part of the ACE (Automated Commercial Environment). Export reporting is required for all exports valued at $2,500 or more, or if a license is required for export (for example, this can happen with dual use military goods, certain encryption hardware/software, or even innocent seeming items like things such as iPhones to prohibited/embargoed countries like North Korea). Some exceptions do exist. The Commerce Control List is a starting point for making these determinations.
The consequences for not making the required filing vary depending on the nature of the violation. For instance, shipping 10 iPhones to Mexico is far different than shipping weapons grade plutonium to Sudan.
Penalty Amount for Export Violations
The most typical penalty amount for AES export violations is $10,000. The party receiving the notice of penalty has 60 days from the date of the penalty to file a petition for mitigation of the penalty with CBP’s Fines, Penalties and Forfeitures’ officer who issued the penalty. CBP can consider certain mitigating factors in deciding whether to reduce the penalty, such as:
- First offense;
- First time filer (inexperience);
- An isolated incident (not part of broader violations, negligence or accidental)
- Voluntary self-disclosure was made by violator pursuant to 15 CFR 30.74;
- Exceptional cooperation by the filer;
- Demonstration of systematic export compliance;
- Assistance in investigation of another person;
CBP can also consider certain aggravating factors in deciding whether to reduce the penalty, such as:
- Second through Fourth and subsequent offenses (aggravating);
- Intentional violations (deliberate incorrect values, product descriptions, commodity codes, etc);
- High number of violations in last 3 years;
- Evidence of criminal conviction for a related violation;
- Exhibition of disregard for responsibilities under the export laws and regulations;
- Party is regular exporting, but does not have a compliance system in place
Is mitigation of liquidated damages possible?
The good news is that mitigation of penalties is available after they have been assessed. These penalties can often be greatly reduced through the mitigation process. If you’ve received a notice of penalty give contact Great Lakes Customs Law today and we can discuss what opportunities are available for obtaining mitigation of the penalty for violations of the Export Administration Regulations.