Guidelines on mitigating penalties for violations of foreign trade regulations
January 6, 2009
World Trade\Interactive
U.S. Customs and Border Protection has issued guidelines for the imposition and mitigation of civil penalties for violations of the Foreign Trade Regulations. These guidelines are effective Feb. 1 for FTR violations occurring on or after that date.
On June 2, 2008, the Census Bureau published a final rule amending the FTR to require mandatory filing of export information through the Automated Export System or AESDirect for all shipments where the export information is required by the FTR. Under the penalty provisions of this rule, which are administered by CBP, civil penalties of up to $10,000 per violation may be assessed against any culpable party with respect to the export transaction, including the U.S. principal party in interest, the foreign PPI, freight forwarders, authorized agents (e.g., brokers and other parties to the export transaction) and carriers. In addition, penalties should be assessed against the culpable party or parties per each AES transmission that is found to be in violation of the FTR rather than per each violation of the FTR with respect to the AES transmission.
CBP’s new guidelines address the imposition and mitigation of penalties for the following: (1) the failure to file the export information in AES, (2) the late filing of the export information in AES, (3) the failure to file all the necessary information in AES, the filing of incorrect information in AES or the failure to comply with some other requirement of the FTR, and (4) the failure of the exporting carrier to provide certain documents or information to CBP. Mitigating factors include voluntary self-disclosures, clear documentary evidence of remedial measures undertaken to prevent future violations and the existence of a systematic export compliance effort. Aggravating factors include the presence of several violations in the same export transaction, circumstances suggesting the intentional nature of the violation, a high number of violations in the preceding three-year period, a pattern of disregard for responsibilities under U.S. export laws and regulations and the lack of a systematic export compliance effort.
The guidelines also allow CBP to take action other than penalty assessment for first violations of the FTR, including educating and informing the parties involved in the export transaction of the applicable U.S. export laws and regulations or issuing a warning letter.
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