CBP Identifies Most Common Reasons for Outbound Detentions and Seizures

International Alert

On June 10, 2010, U.S. Customs and Border Protection ("CBP") held a webinar focusing on CBP's front-line enforcement of U.S. export controls rules and regulations. A copy of the PowerPoint presentation can be found here.

Although much of the webinar covered basic information familiar to the seasoned exporter, even the most sophisticated exporters may be interested in the common reasons identified in the presentation for outbound detention and seizures (as quoted directly from the presentation):

  • The absence or late filing of the Electronic Export Information in the Automated Export System (AES). Late filing of AES commodity data subjects the shipment to seizure. CBP has found that many times the USPPI has submitted the information to a third party for completion of the AES transmission. The third party, in turn, "batches" the transactions and they are filed on a daily basis. This process causes the AES filing to be either not in the system or late.
  • If the commodity has been declared as under $2500 and invoicing or other documents show that it clearly is over $2500, the cargo is subject to seizure.
  • Exporters who fraudulently declare cargo as under $2500 in order to avoid completing AES filing will be referred to fraud investigators for criminal prosecution.
  • Claiming an ITAR exemption rather than getting a Department of State License.
  • Failure to file AES on USML goods.
  • Failing to obtain DSP-61 licenses for USML in-transit movements through the U.S.
  • Paperwork for a licensed commodity is not transmitted within the correct time frame and the commodity is at the dock.
  • Failure to claim a license or license exemption.
  • Parties to the movement of the cargo not listed on the license.
  • Indicating a license on the EEI that has nothing to do with the shipment.
  • For licensable cargo, using a forwarder that is not an approved freight forwarder.
  • Exporters using the ITAR exemptions in situations where they do not apply.
  • Using the AES Canadian exemption on CCL/USML exports.
  • Failing the submit AES filing on DSP 61/ 73 exports. Failing to submit ECCN # on AES submissions.
  • Submitting the wrong mode of transportation.

To be sure, many of these reasons are not new. But it is certainly worth reminding ourselves of several overarching themes. First, defense articles controlled under the ITAR continue to be a focus of CBP, for obvious reasons. Five of the 16 reasons above relate solely to ITAR-related issues. Thus, as for all controlled exports, exporters should continue to be mindful of the requirements for exporting defense articles.

Second, errors committed by or related to freight forwarders continue to be a reason for outbound detention and seizures, thereby reinforcing the need to select and monitor your forwarders carefully.

Finally, license exemptions also continue to be a focus of CBP, with four out of the 16 reasons identifying exemptions as a basis for detention and seizure. Although a few of the reasons suggest that mere use of an exemption may lead to detention and seizure, detention or seizure most likely requires at least an indication that an exemption is being used improperly. In any event, exporters should ensure that an exemption truly applies before citing it as a basis for a controlled export.

With all of this in mind, exporters should tailor their business processes, compliance programs, and export transactions to avoid the common reasons outlined above. Consider using the reasons as a checklist or as a supplement to your existing list. Although no single compliance measure will eliminate the risk of detention or seizure, an eye towards the above reasons is likely to reduce that risk.

For more information, please contact:

Daniel Wendt, dwendt@milchev.com, 202-626-5898

David Hardin

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