VIEWS: 3 PAGES: 31 POSTED ON: 10/1/2012
WESCCON EXPORT COMPLIANCE AWARENE$$ Presented by : Paul Divecchio –DiVecchio & Associate Phone: (617) 513-3230, Fax: (508) 393-3645 Email: email@example.com GLOSSARY OF TERMS BAHSTON = BOSTON CUBER = CUBA CAH = CAR VIZER CARD = VISA CARD I-DEAR = IDEA WINNAH = WINNER (PATRIOTS) (sorry –update: CHEATERS) Objective of this Seminar Scare the H*LL out of you !!!!!! OBJECTIVE * Create Marketing Opportunity 1. Be unique 2. Be Educated 3. Be Proactive * Risk Avoidance 1. No Violations 2. No Negative Publicity 3. No Bad Attitude CULPABILITY? OR OPPORTUNITY! FREIGHT FORWARDER’S ROLE First source of information for new exporters Last line of defense - documentation & prohibitions Attitude and knowledge of forwarding staff - can be a marketing advantage or liability CREDIBILITY ! ACCOUNTABILITY Knowledge includes not only actual knowledge of an event, but also an awareness of “high probability”* of its occurrence. Not this! So … use all available information. Seek more information if you have suspicions. *The US government would like to revise its regulations to say that you have “knowledge” of an event if a reasonable exporter would consider the event “more likely than not”. THIS WAS WITHDRAWN BY BIS – REALLY? What You Know! Stated & Implied Export Compliance Decisions 1. USE COMMON SENSE!! Everybody Has it?? 2. Document Decisions Demonstrate your D2 “Due Diligence” 3. Abide by the Exporters Cardinal Rule WHEN IN IT OUT, NOT: WHEN IN IT OUT CURRENT CLIMATE Mandatory AES Compromised (DHS vs. Census) Patriot Act Penalty Increase - $10K to $50K (per charge per violation-creative) PRC – “Catch All”-conventional military? Enforcement Oversight - AGGRESSIVE Industry Compliance Initiative – A MUST Office of Export Enforcement Regions Chicago Boston San Jose New York Irvine Washington Dallas Ft. Lauderdale Methods of Enforcement Confidential and Industry Sources Intelligence Sources Safeguards Verification Program Visa Application Review Program Export Document Review ( SED/AES, Airway Bills, Bills of Lading) Public Sources - Newspapers, Trade Publications, Internet What can happen if it goes wrong? Fines (CONGRESS PASSED 10/03/07) $50k TO $250k IEEPA Negative Publicity Denial Export Privileges Disruption of Business Jail Time Some enforcement cases -Freight Forwarders- FOIA Under Value Pending: 56 forwarder-Carrier Ship to RPL cases Embargoes Negative Publicity: Anti-boycott - BIS home page Wrong EIN - FOIA False Stmt AES - Index of documents - Export violations Record keeping Early Release Bad AES Info Exporter - Forwarder Relationship The Party with the “principal interest” has the primary responsibility for export compliance. HOWEVER The selection/accountability of the forwarder is CRITICAL PERCEPTION IS REALITY!!!!!! Exporter’s Responsibility • Issue a proper POA (Power-of-Attorney) • Provide the Forwarder with: COMPLETE AND ACCURATE INFORMATION - Description of Product(s) - License Information - Correct Values < Coordinate and Cooperate > Forwarder’s Responsibility • When in Doubt - Check it Out! NOT • When in Doubt - ship it out! - Hold the Shipment - FORWARDER – RESPONSIBILITY OPPORTUNITY COMPLIANCE OFFICER EDUCATE PERSONNEL COMPLIANCE REVIEW PROCESS FORMAL PROCEDURES ASSIST CUSTOMERS NETWORK/SEMINARS KEY EXPORT COMPLIANCE RISKS WRONG JURISDICTION (Boeing –L3) CLASSIFICATION (NONE/WRONG) GLOBAL DENIED PARTY REVIEWS EPCI END USE CHECKS? SLOPPY PAPERWORK EMBARGOES – DIVERSIONS ANTIBOYCOTT COMPLIANCE + (EXPORTER): TECHNICAL DATA TRANSFER EMPLOYEES OUTSOURCE CUSTOMER’S DATA SPONSOR LETTERS FOR VISAS U.S. Customs • Major Discrepancies: - Failure to file SED/AES - No notification on Bill of Lading when SED/AES not required - No generic product description on SED/AES - Mishandling of State Dept. shipments by the Freight Forwarder - “old” or invalid licensing information - No licensing information - Values on SED/AES “UNDERVALUED” - Suspicious transaction! (Notations, markings, packaging etc…) Enforcement Initiatives Forwarder Negligence - Impact on Exporter? • Enhanced scrutiny of all export and reexport transactions • Increased risk of negative exposure • May be held accountable for the mistakes of others (e.g., freight forwarders) • LOSS of BUSINE$$$$$$ U.S. Customs • Enhanced focus on the activities of Freight Forwarders and Carriers……. • Partnership with CBP: - Failure = “closer scrutiny” - Effort = “benefit of the doubt” Case study – freight forwarder Exporter/forwarder Relationships–facts: U.S. company exports Titanium in raw and processed form worldwide Exporter uses Freight Forwarders to prepare export documents and expedite shipments Exporter has no licensing information on the products Freight Forwarder receives no Power of Attorney from exporter Freight Forwarder decides goods are de-controlled Why was the Freight Forwarder fined by BIS? A SEIZED SHIPMENT… What happened……. - AES info conveyed by exporter’s invoice - Multiple ECCNs – No Custom’s codes (NLR does not mean EAR99) - Poorly trained forwarder ops staff - Forwarder did not follow instructions (sched B) - Multiple known end users – only (1) AES entry OTHER THAN THAT, IT WAS OKAY!!!!!!! Exporter - Forwarder Relationship • The Exporter must hold the freight forwarder accountable. • Memo to all forwarders (including those nominated by the overseas buyer “routed”) insisting on the following: - No changes/document substitution without prior authority - Forwarder to review export documents for: - Completeness and accuracy (HOLD) - Affirmation that a copy of the “completed” SED (or AES print-out if requested) will be returned • Forwarder to acknowledge receipt and affirm compliance & Indemnify exporter, if at fault ! KNOW YOUR CUSTOMER SALES & OPs COLLABORATE PROFILE THE CUSTOMER CUSTOMER AWARENESS - Seminars – Consults-Hand Hold FORWARDER COMPLIANCE “TODAY” Corporate Commitment to “engage” Compliance Assessment to be conducted Identified Compliance Focal Points Formalize Policies/Procedures Training for operations/sales FORWARDER COMPLIANCE “TOMORROW” • Seminars/workshops for existing/potential cust. • Expand Network with related organizations • Offer Export Compliance Assistance (guidance) • Enhance Website to include a “Compliance” • “News Briefs related to export compliance” • Form Compliance Committee • Automate Compliance Checks Wherever Possible < Maintain a Robust Program > .
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