Export Compliance: How Outsourcing Can Help Your Business Stay Legal

The penalties for violating export laws are complex

, varied, and significant for anyone wishing to do business internationally. Sanctions faced by companies violating US regulations regarding exports may result in both criminal and civil actions. Penalties run the gamut from fines and prison time to administrative sanctions such as forfeiture of goods, license denial or complete exclusion from practice. One need only read the current headlines to realize that violating export regulations, intentionally or unwittingly, is a frequent enough occurrence for companies of any size or stature to warrant concern.

A case in point is the March 2007 conviction of ITT Corp., which pled guilty to the illegal export of night-vision technology to several countries, including China. ITT was a special case since it was the first major US defense contractor to criminally violate the Arms Export Control Act. The $100 million dollar fine levied against ITT was the largest paid by a US defense contractor for an export violation. Although you or your business may not fall into the size or level of this example, anyone doing export business in the US is well-advised to take steps to ensure that they are not violating export regulations.

Monetary fines alone begin at $12,000 and, depending on the severity of the violation, typically determined by the willfulness of the act leading to the infraction, can be up to $1 million per incident. Compliance may involve a complex tangle of government agencies and their accompanying paperwork, including but not limited to Export Administration Regulations (EAR), International Emergency Economic Powers Act (IEEPA), International Traffic in Arms Regulations (ITAR) and Office of Foreign Assets Control (OFAC).

How does one stay aware of the constant changes in US export law and prevent a costly export regulation infraction that could cost you your reputation, or even your business? One of the most viable options is to hire an export outsourcing company. Since many businesses lack the expertise, time or manpower to investigate applicable export laws on their own, an export outsourcing company can mitigate risk as well as other expensive errors likely to occur in complex export transactions. These companies can provide a multitude of services including invoicing, product preparation and shipping.

Perhaps the most valuable asset provided by an export outsource provider is their knowledge of the environments in which business is done and the support they can provide in response to these factors. Legal and regulatory constraints can have a crucial impact on the way business is done abroad. Finding the right export outsourcing company could mean the difference between a successful and smoothly operating business, and one which could encounter complete failure after a single mishandled transaction.

by: Matt Gardner

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