On 26 April 2018, Federal Express Corporation ("FedEx"), agreed to pay the Bureau of Industry and Security (the "BIS") USD 500,000 in order to settle claims related to the apparent violation of the United States ("US") export control regime. BIS determined, that between July 2011 and January 2012, FedEx committed 53 violations of Section 764.2 (b) of the Export Administration Regulations("EAR"), namely by causing, aiding and abetting unlicensed exports to entities on the Entity List.
According to the BIS, FedEx facilitated the export of civil aircraft parts and equipment used for electron microscope manufacturing, controlled items, for a total value of approximately USD 58,000 from the US to Aerotechnic France SAS ("Aerotechnic") in France, or to the Pakistan Institute for Nuclear Science and Technology ("Pinstech") in Pakistan, without the required BIS licenses.
The BIS concluded, that none of the 53 export transactions had the required BIS license and in providing both carrier and freight forwarding services in connection with these transactions, FedEX used proprietary screening software that failed to flag or detect matches to the Entity List listings for Aerotechnic and Pinstech. According to the BIS, FedEx knew or should have known, that its screening software did not flag a transaction unless the name of the recipient/consignee exactly matched the full name of the entity as found on the Entity List, even where address information was identical, or nearly identical.
As part of the settlement, FedEx agreed to complete eternal audits of it export control compliance program for the period 2017-2020 and hire an external export control specialist to conduct the external audits of its compliance program. Should FedEx fail to pay the settlement payment, or to complete any of the agreed audits, the BIS may issue an order denying all of FedEx’s export privileges under the EAR for a period of one year.
The BIS official order can be found here.
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