Authority to issue civil penalties under the
U.S. Census Bureau’s Foreign Trade Regulations (FTR)
was delegated to U.S. Customs and Border
Protection (CBP), which has published guidelines
on how penalties for violations will be
assessed.
Penalties under the FTR may be issued to any
U.S. Principal Party in Interest (USPPI), the
Foreign Principal Party in Interest (FPPI),
freight forwarders, authorized agents (including
brokers and other parties to the export
transaction) and carriers. The penalties are
based on four mitigation schemes outlined as
follows:
|
Offense |
Failure to File EEI* |
Late filing of EEI |
Other FTR violation |
Carrier violations |
|
First |
$750-$2,500 |
$250 per day to $1,500 |
$500 to $2,500 |
$500 to $2,500 |
|
Second |
$1,000 to $3,500 |
$500 per day to $2,500 |
$750 to $3,500 |
$750 to $3,500 |
|
Third |
$1,500 to $5,000 |
$750 per day to $3,500 |
$1,000 to $5,000 |
$1,000 to $5,000 |
|
Fourth and beyond |
$2,000 to $10,000 |
$1,100 per day to $10,000 |
$2,000 to $10,000 |
$2,000 to $10,000 |
*Any AES record filed
later than 10 days after the required date is
considered a “failure to file.”
Penalties considered as “other FTR violations”
include: incorrect value for shipment, failure
to cite license code or license number, failure
to obtain Power of Attorney for AES transmission
or the failure to correct information in AES as
the changes become known to the filer.
In addition to a voluntary disclosure, a number
of other mitigating factors may reduce the
penalty such as a first-time offense, documented
measures to prevent future violations, isolated
occurrence or assistance with the investigation.
If one or more mitigating factors are present,
it may result in a reduced penalty amount, with
a minimum penalty of $250 or $500, depending on
the mitigation scheme. In situations of a
first-time offense, CBP may take an alternative
action to the assessment of penalties, such as a
warning letter.
Multiple violations may occur in one transaction
and penalties could be assessed on a
per-shipment basis where violations are
repeated, so the total amount of fines may be
significant for companies that export regularly.
The penalty amount may also increase beyond the
prescribed amount, but no higher than $10,000
per violation if aggravating factors exist.
Typical aggravating factors include: several
violations in the same export transaction,
circumstances suggesting an intentional
violation, a high number of violations in the
preceding three-year period, evidence of
criminal conviction for related violation,
pattern of disregard for U.S. export laws
regulations and evidence of lack of systematic
export compliance effort.
To view a PDF of CBP’s notice in full,
click here.
Companies are urged to develop an export
compliance process to avoid penalties under the
FTR. Small mistakes may lead to violations,
which could result in serious consequences.
Avalon’s Regulatory Defense program
provides representation and legal defense for an
administrative penalty, license revocation
and/or suspension proceedings. Regulatory
Defense is just one of the many coverage options
within Avalon’s
Combined Transit Liability (CTL) program,
which can be added to the base Errors &
Omissions (E&O) and Cargo Legal Liability
coverage to tailor the policy to your
operational needs.
Click here for a no-obligation quotation on
Regulatory Defense for your own operation.
Offer your importers and exporters Regulatory
Defense
Exporters also need to ensure compliance with
the requirements of the FTR, especially
considering the impact of increased penalties on
their business. Avalon offers Regulatory Defense
to importers and exporters through their customs
broker or freight forwarder, in combination with
their Import Bond and/or Cargo Insurance
program. Regulatory Defense provides defense
costs for fines and penalties assessed against
importers and exporters by various government
agencies such as Census and CBP. While
Regulatory Defense does not pay the actual
penalty, significant legal expenses are often
incurred to defend and mitigate the fine.
Regulatory Defense appoints a legal expert for
advice and assistance in mitigating the penalty,
as well as the payment of all legal fees in
full.
Avalon can provide a quote on Regulatory Defense
based on the importer’s bond application or the
exporter’s cargo insurance shipments. Please
also
click here to obtain a quote. Avalon handles
all paperwork, issues the Regulatory Defense
Contract and offers brokers and forwarders a fee
for generating the business. Marketing support
is also available from Avalon for assistance in
promoting Regulatory Defense to export and
import customers.
Click here to learn more about offering your
clients Regulatory Defense. |
