The Bureau of Industry and Security (BIS) of the U.S. Commerce Department has proposed to rewrite Supplement No. 1 to 15 CFR Part 766 of the Export Administration Regulations (EAR), and to set forth factors that BIS would consider when setting administrative penalty amounts.
The penalty amounts would still be determined on a case-by-case basis with considerable discretion by BIS. However, the changes are intended to make BIS penalties more predictable, transparent, and aligned with the penalties imposed by Treasury’s Office of Foreign Assets Controls (OFAC).
Read the BIS proposed rule
Some the key differences between the proposal and current guidelines include the following:
One-half transaction *
(capped at $125,000 a violation)
|One-half of applicable
|VSD not filed||
Applicable schedule amount**
(capped at $250,000 a violation)
|Applicable statutory maximum|
The “factors” are grouped into four categories:
Aggravating (increase the penalty)
General (may be considered either aggravating or mitigating)
Mitigating (reduce the penalty)
Other relevant factors (case-by-case consideration)
The enforcement actions available to BIS’s Office of Export Enforcement (OEE) to address export violations will remain unchanged. OEE may still choose to issue warning letters, open administrative enforcement cases, seek civil penalties, make criminal referrals, revoke or suspend export licenses, deny export privileges, exclude company representatives from practicing, require training and audits, or take no action at all.
This is only a proposed rule—it is not final. BIS is accepting comments on the guidelines until February 26, 2016. The current regulations will stay in effect until a revised version is released in final form.
For more information, contact a professional with KPMG’s Trade & Customs practice:
Douglas Zuvich | +1 (312) 665-1022 | firstname.lastname@example.org
Andrew Siciliano | +1 (631) 425-6057 | email@example.com
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