The start of the new year is the perfect time to reflect on the international trade enforcement actions of the past year and to predict what they might mean for the year ahead. This exercise is made exponentially easier by the “Summary of Major U.S. Export Enforcement, Economic Espionage, Trade Secret, and Embargo-Related Criminal Cases” (the “Enforcement Summary”) which recently was updated through December 6, 2012. The Enforcement Summary suggests a number of important trends in export enforcement and embargo-related cases.
The first is the U.S. government’s fixation on Iran and China. Of the export enforcement and embargo-related cases of 2012 addressed by the Enforcement Summary, more than half appear to involve exports to Iran or China (less than a third of cases did in 2011). We think this statistic illustrates the government’s enforcement priorities, which we think are unlikely to change anytime soon.
Second, the U.S. government remains willing to impose prison sentences. This is the case even in situations involving non-military exports. As just one example, a Florida resident was sentenced to four years in prison for conspiring to export computers and related equipment to Iran without obtaining an export license from the U.S. Treasury Department.
Finally, 2012 saw the U.S. government aggressively prosecute non-U.S. persons for violations of export and embargo laws. The Enforcement Summary includes various cases of foreign persons located abroad who were indicted or sentenced for receiving illegally exported items or acting as a conduit for items on their way to prohibited destinations. Often relying on a theory of conspiracy (which we also observed in the FCPA context here), the U.S. government was able to reach these individuals, once again highlighting the vast reach of U.S. international trade laws.
We expect each of these trends to continue in the year ahead, with aggressive enforcement the norm. Particularly if your company has operations in China, or if your business could be of interest to parties desperate to re-route goods and services into Iran’s struggling oil industry, you should examine your compliance processes to identify potential weaknesses. Identifying and addressing such weaknesses could be the difference between inclusion – or not – in the 2013 enforcement summary.