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Regulatory Defense
Government fines on various shipping regulations are rapidly increasing. In response to this increased focus on compliance, Avalon Risk Management, Inc. is proud to announce several enhancements to our Regulatory Defense Program. In addition to providing legal defense for regulatory fines and penalties assessed against brokers and forwarders, importers and exporters can now purchase Regulatory Defense through their brokers and forwarders, in combination with Import Bonds and/or Cargo Insurance. The program is now available to truckers, couriers and warehouse operators as well.
The following claims illustrate penalties government agencies may assess for violating various trade regulations. Avalon’s Regulatory Defense Program pays for all legal services to defend and mitigate government penalties, but does not pay the penalty itself.
Customs broker
USDA Investigation – Inaccurate Information
USDA Penalty – Mitigated, Never Assessed
Legal Fees: $34,000
A customs broker was hired to transport loads of cotton to three different warehouses. There were a total of 348 bales scheduled to be delivered between the warehouses. The cotton shipments required USDA 572 forms to be completed for the phytosanitary certificate. The customs broker submitted the 572s to the USDA stating the shipment would be arriving at the three different locations. Confusion arose regarding the delivery instructions and the 348 bales were delivered to one warehouse instead of the three different warehouses as originally scheduled on the 572s. The USDA conducted an investigation because of the inaccurate information provided on the 572s prior to shipment. Avalon’s Regulatory Defense Program appointed an attorney and paid legal fees to assist during the investigation and eliminate any penalty.
Exporter
Exporting goods without proper licenses
DOC penalty: $650,000
Legal Fees: Undisclosed
An owner of an international electronics business exported controlled U.S. technology to two government enterprises in India. These government enterprises were on the Department of Commerce’s (DOC) Entity List, but the electrical components were shipped without the proper licenses. In addition, the owner provided U.S. suppliers with fraudulent certificates indicating the end-users of the products were non-restricted entities. The owner also routed the products through the company’s Singapore office before sending them to India.
The actions resulted in a violation of U.S. export control laws and regulations. After a DOC investigation, it was determined that the owner exported a total of 500 microprocessors included on the U.S. Munitions List to a government entity in India without first obtaining the required licenses from the State Department.
Although the exporter may have had to pay part or all of the fine, the legal fees were paid in full by the Regulatory Defense coverage.
Any administrative and/or criminal penalty such as the ones illustrated above can jeopardize your business. The simplest mistake can lead to a violation of regulations which could result in serious consequences. Avalon’s Regulatory Defense provides representation and legal defense for an administrative penalty, license revocation and/or suspension proceedings against you or your company. Regulatory Defense is just one of the many coverage options within Avalon’s
Combined Transit Liability (CTL) program, which can be added on top of the base
E&O and Cargo Legal Liability to tailor the policy to your operational needs.
Avalon offers the following additional coverage options:
- Motor Truck Cargo Liability
- Warehouse Legal Liability
- Contingent Cargo Liability
- Contingent Auto
- Pollution Cleanup
- First Dollar Defense
- Ground Up Defense
- Worldwide Defense
- Special Contract Coverage
For further information, contact Bridgette Collins, Product Manager at Avalon’s corporate headquarters. Bridgette Collins can be reached at (847) 700-8124 or at
bacollins@avalonrisk.com. Please do not hesitate to contact one of our ten regional offices throughout the United States. To view a directory of Avalon's office locations, please visit our Web site at
www.avalonrisk.com.
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