Freight forwarders to implement export compliance as well
Members of the international forwarding community play a key role in ensuring the security of the global supply chain, stemming the flow of illegal exports, and helping to prevent Weapons of Mass Destruction (WMD) and other sensitive goods and technologies from falling into the hands of proliferators and terrorists.
With this introductory statement, the U.S. Bureau of Industry and Security issues a guidance to forwarding agents. These have compliance responsibilities under the Export Administration Regulations (EAR) even when their actions are dependent upon information or instructions given by those who use their services. As they are responsible for the representations they make in filing export data, they may not proceed with any transaction knowing that a violation of the EAR has, is about to, or is intended to occur.
Agents, especially those acting as the "exporter" in routed export transactions, should understand the "Know Your Customer" guidance and "Red Flags" found in Supplement No. 1 to Part 732 of the EAR. Agents and exporters should determine if Red Flags are present, exercise due diligence in inquiring about them, and ensure that suspicious circumstances are not ignored. Failure to do so could constitute a violation of the EAR.
In a "routed export transaction," the foreign principal party of interest (PPI) authorizes a U.S. agent to facilitate the export of items from the United States, and the U.S. PPI obtains from the foreign PPI a writing in which the foreign PPI expressly assumes responsibility for determining licensing requirements and obtaining authorization for the export. In this case, the U.S. agent acting for the foreign PPI is the “exporter” under the EAR, and is responsible for determining licensing authority and obtaining the appropriate license or other authorization for the export. An agent representing the foreign PPI in this type of routed export transaction must obtain a power of attorney or other written authorization in order to act on behalf of the foreign PPI.
In this type of routed export transaction, if the U.S. PPI does not obtain from the foreign PPI the writing described above, then the U.S. PPI is the “exporter” and must determine licensing authority and obtain the appropriate license or other authorization.
BIS has not hesitated to hold forwarders liable for participating in illegal transactions. Bad publicity alone can cost companies incalculable sums, in terms of future business, not to mention costs associated with lengthy and costly litigation, or administrative or criminal penalties. For example, in August 2009, after a government investigation lasting for more than five years, DHL reached a $9,444,744 Settlement Agreement with BIS and Treasury’s OFAC in a case involving hundreds of shipments to Iran, Sudan, and Syria, and a failure to adhere to government recordkeeping requirements.
Forwarders must therefore know their customers and be aware of suspicious circumstances and Red Flags that may be present in an export transaction. When presented with Red Flags, they have an obligation to inquire about the facts of the transaction, evaluate all of the information after inquiry and refrain from engaging in the transaction if the Red Flags cannot be resolved. These steps help protect not only the forwarder but also the forwarder’s client, who may be unknowingly engaging in a prohibited transaction.
An internal compliance program is therefore recommended to mitigate the forwarders' own and their clients' risks of liability. Compliance activities would differ depending on the nature of the items being exported and the destinations to which they are exported, but err on the side of caution to ensure that our U.S.-origin dual-use goods and technologies are exported in compliance with the EAR.
Oct 2023. Source: BIS
EU - Iran - No termination of sanctions after JCPOA Transition Day
On 26 July 2010, the Council adopted Decision 2010/413/CFSP concerning restrictive measures against Iran. On 14 July 2015, China, France, Germany, the Russian Federation, the United Kingdom and the United States, supported by the High Representative of the Union for Foreign Affairs and Security Policy, reached an agreement with Iran on a long-term comprehensive solution to the Iranian nuclear issue. The full implementation of the Joint Comprehensive Plan of Action (JCPOA) would ensure the exclusively peaceful nature of the Iranian nuclear programme, and provide for the comprehensive lifting of all nuclear-related sanctions.
The commitment to lift all Union nuclear-related restrictive measures in accordance with the JCPOA was without prejudice to the Dispute Resolution Mechanism specified in the JCPOA and to the reintroduction of Union restrictive measures in the event of significant non-performance by Iran of its commitments under the JCPOA.
On 14 September 2023, the Foreign Ministers of France, Germany and the United Kingdom stated that Iran was in non-compliance since 2019 and considered that this had not been resolved through the JCPOA’s Dispute Resolution Mechanism. They expressed their intention not to take the steps regarding the lifting of further restrictive measures on JCPOA Transition Day on 18 October 2023.
The EU Council has not decided that the European Union will maintain after JCPOA Transition Day the restrictive measures against certain persons and entities listed in Annexes I and II to Council Decision 2010/413/CFSP and Annexes VIII and IX to Council Regulation (EU) No 267/2012. This will also be valid for restrictive measures on financial messaging services, related to the transport sector, related to proliferation-sensitive nuclear activities and associated services, on metals and associated services, on software and associated services and on arms and associated services.
Read for you - Our readings of the week
Myanmar - A German TV report suggests that satellite technology from a German company apparently ended up in the hands of the military in Myanmar for years, in violation of Myanmar related sanctions. The named company denies having known about the deliveries and states that their exports were not questioned until now. 17 Oct 2023 Source.
Netherlands. The Dutch prosecutor has penalised four Dutch companies and eight people for breaching EU sanctions on Russia between 2014 and 2017 for helping Moscow build a bridge to Crimea. The eight people were sentenced to community service ranging from 20 to 60 hours while the companies paid fines totalling 160,000 euros ($169,000). The companies involved supplied machines, machine parts and other services for the construction of the 19 kilometre (11.8 mile) long bridge spanning the Strait of Kerch, the prosecutor's office said. 13 Oct 2023, Source