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WESCCON 2008 EXPORT COMPLIANCE AWARENE$$

This seminar presentation by Paul DiVecchio highlights essential concepts in export compliance awareness, focusing on the roles and responsibilities of freight forwarders. It stresses the importance of due diligence, education, and proactive risk avoidance to ensure adherence to U.S. export regulations. Key topics include understanding obligations towards prohibited countries, maintaining accurate documentation, and the repercussions of non-compliance. Attendees will learn how to navigate the regulatory landscape and protect their businesses from potential fines and liability.

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WESCCON 2008 EXPORT COMPLIANCE AWARENE$$

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  1. WESCCON 2008 EXPORT COMPLIANCE AWARENE$$ Presented by : Paul Divecchio –DiVecchio & Associate Phone: (617) 513-3230, Fax: (508) 393-3645 Email: pauldivec@earthlink.net

  2. GLOSSARY OF TERMS BAHSTON = BOSTON CUBER = CUBA CAH = CAR VIZER CARD = VISA CARD I-DEAR = IDEA WINNAH = WINNER (PATRIOTS) (sorry –update: CHEATERS) further update Bradyless !! CUBA, IRAN, IRAQ, LIBYA, NORTH KOREA, SUDAN, SYRIA Report these sales to your financial group.

  3. Objective of this Seminar Scare the H*LL out of you !!!!!!

  4. Remember: The Government will push responsibilityfor violations UP the ladder And the Company will look DOWN the ladder for who is at fault!

  5. 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

  6. CULPABILITY? OR OPPORTUNITY!

  7. 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 !

  8. ACCOUNTABILITY Knowledge includes not only actual knowledge of an event, but also an awareness of “highprobability”* 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 THIS WAS WITHDRAWN BY BIS – REALLY?

  9. What You Know! Stated & Implied

  10. Export Compliance Decisions IT OUT, NOT: WHEN IN WHEN IN IT OUT 1. USE COMMON SENSE!! Everybody Has it?? 2. Document Decisions Demonstrate your D2 “Due Diligence” 3. Abide by the Exporters Cardinal Rule

  11. CURRENT CLIMATE • MANY REGULATORY CHANGES(You have to Keep Up With Them) • Coordinate and Communicate – A MUST

  12. Office of Export EnforcementRegions Chicago Boston San Jose New York Washington Irvine Dallas Ft. Lauderdale

  13. Methods of Enforcement ATS (Automatic Targeting System) • CBP = REAL TIME ENFORCEMENT • OEE = POST FACTO ENFORCEMENT

  14. What can happen if it goes wrong? • Fines (CONGRESS PASSED 11/3/07) $50k TO $250k IEEPA • NEGATIVE PUBLICITY • Denial export Privileges • Disruption of Business • Jail Time

  15. Some enforcement cases-Freight Forwarders- FOIA • Under Value • Ship to RPL • Embargoes • Anti-boycott • Wrong EIN • False Stmt AES • Record keeping • Early Release • Bad AES Info Pending: 89 forwarder-Carrier cases Negative Publicity: - BIS home page - FOIA (bottom of page) - Index of documents - Export violations

  16. 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…)

  17. 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$$$$$$

  18. U.S. Customs • Enhanced focus on the activities of Freight Forwarders and Carriers……. • Partnership with CBP: • - Failure = “closer scrutiny” • - Effort = “benefit of the doubt”

  19. KEY FORWARDER COMPLIANCE RISKS • NO POA FOR AES ENTRY • CLASSIFYING PRODUCTS FOR CUSTOMERS • NO RESTRICTED PARTY REVIEWS • CHANGING USPPI’S INFO • SLOPPY AES ENTRIES • EMBARGOES – DIVERSIONS • ANTIBOYCOTT COMPLIANCE

  20. REG CONTROVERSY • Who is the “Ultimate Consignee”?????? and Country of “Ultimate Destination” • Schedule B Description Defaults • Who is Responsible for the POA????

  21. Case study – freightforwarder 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?

  22. 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 (ECCN) - Multiple known end users – only (1) AES entry OTHER THAN THAT, IT WAS OKAY!!!!!!!

  23. 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!!!!!!

  24. Exporter’s Responsibility • Issue a proper POW (Power-of-Attorney) • Provide the Forwarder with: • COMPLETE AND ACCURATE INFORMATION • - Description of Product(s) - License Information - Correct Values < Coordinate and Cooperate >

  25. Forwarder’s Responsibility • When in Doubt - Check it Out! NOT • When in Doubt - ship it out! - Hold the Shipment -

  26. 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 !

  27. FORWARDER –RESPONSIBILITYOPPORTUNITY • COMPLIANCE OFFICER • EDUCATE PERSONNEL • COMPLIANCE REVIEW PROCESS • FORMAL PROCEDURES • ASSIST CUSTOMERS • NETWORK/SEMINARS

  28. KNOWYOUR CUSTOMER • SALES & OPs COLLABORATE • PROFILE THE CUSTOMER • CUSTOMER AWARENESS - Seminars – Consults-Hand Hold

  29. FORWARDER COMPLIANCE “TODAY” • Corporate Commitment to “engage” • Compliance Assessment to be conducted • Identified Compliance Focal Points • Formalize Policies/Procedures • Training for operations/sales

  30. FORWARDER COMPLIANCE“TOMORROW” • Seminars/workshops for existing/potential customers • 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 >

  31. EVERYONE'S ACCOUNTABLE

  32. .

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