August 7, 2009
The Commerce Department's Bureau of Industry and Security (BIS) and the Treasury Department’s Office of Foreign Assets Control (OFAC) have announced a settlement agreement with DPWN Holdings (USA), Inc. (formerly known as DHL Holdings (USA), Inc.) and DHL Express (USA), Inc. (collectively “DHL”), regarding allegations that DHL unlawfully aided and abetted the illegal exportation of goods to Syria, Iran and Sudan and failed to comply with record keeping requirements of the Export Administration Regulations (EAR) and OFAC regulations. DHL agreed to pay a civil penalty of $9,444,744 and conduct external audits covering exports to Iran, Syria and Sudan from March 2007 through December 2011.
BIS charged that on eight occasions between June 2004 and September 2004, DHL caused, aided and abetted acts prohibited by EAR when it transported items subject to the EAR from the United States to Syria, and that, with regard to 90 exports between May 2004 and November 2004, DHL failed to retain air waybills and other export control documents required to be retained under Part 762 of the EAR.
OFAC charged that DHL violated various OFAC regulations between 2002 and 2006 relating to thousands of shipments to Iran and Sudan. Like DHL’s EAR violations, its OFAC violations primarily involve DHL’s failure to comply with applicable recordkeeping requirements.
In addition to the monetary penalty, DHL will hire an expert on U.S. export controls laws and sanctions regulations for an external audit of DHL transactions to Iran, Sudan and Syria between March 2007 and December 2009. Annual calendar year audits will be conducted in 2010 and 2011. The external auditor will assess DHL’s compliance with the EAR and OFAC regulations, including recordkeeping requirements.
“Preventing exports to sanctioned countries and preserving export records are fundamental components of effective compliance,” said Kevin A. Delli-Colli, Acting Assistant Secretary of Commerce for Export Enforcement. “Large-scale compliance breakdowns lead to significant sanctions aimed at ensuring that freight forwarders put into place and maintain necessary measures to meet their compliance responsibilities.”
This case represents the largest joint settlement involving BIS and OFAC, and is the result of closer collaboration between the two agencies.
These high profile cases serve as an important reminder to forwarders and exporters alike regarding the importance of recordkeeping and compliance programs, even for low tech and low value shipments.
A copy of the settlement agreement can be viewed on our website at http://www.tuttlelaw.com/newsletter_links/001_e2119.pdf.
If you have any questions on the issues raised in this newsletter, please contact George R. Tuttle, III, at the Law Offices of George R. Tuttle, A P.C. at (415) 986-8780 or at email@example.com.
George R. Tuttle, III, is an attorney with the Law Offices of George R. Tuttle in San Francisco.
The information in this article is general in nature, and is not intended to constitute legal advice or to create an attorney-client relationship with respect to any event or occurrence, and may not be considered as such.
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