Welcome to Foley's International Trade, Enforcement & Compliance Recent Developments Update

Did you know that whistleblowers can use the False Claims Act to get the U.S. Government to investigate allegations of lost revenue to the U.S. Treasury, including underpaid Customs tariffs? A large importer recently found this out. Other recent developments include the release of guidance regarding how to comply with antidiscrimination requirements while implementing export control requirements, guidance regarding how to identify red flags indicating potential transshipment to Russia, and sharply increased enforcement of forced labor and human trafficking restrictions at the border by Customs.

Customs Enforcement/False Claims Act

A large importer paid a $1 million fine after admitting that it submitted documents as being lower-duty footwear when it knew that a higher-tariff classification was more appropriate. The matter was brought to the attention of the U.S. government after the filing of a whistleblower complaint as part of a False Claims Act (FCA) action, which is an increasingly common use of the FCA. U.S. v. Samsung C&T America, case number 16-cv-7216, U.S. District Court for the Southern District of New York. Does your organization maintain an up-to-date Customs Classification Index to ensure the accurate classification of goods imported into the United States?

Export Controls and Discrimination

The Department of Justice has released a fact sheet about how to comply with U.S. antidiscrimination requirements when dealing with export-controlled technical data, which often requires a license for non-U.S. persons to access. Has your organization reviewed the newest guidelines to determine if its hiring and promotion procedures, as well as licensing strategy, comply with the export control regulations and the latest governmental guidance?

Economic Sanctions and Export Controls Guidance

The Departments of Justice, Commerce, and Treasury have released a red flags guidance to help companies detect third-party shipments intended for Russia in violation of U.S. law. Does your organization promulgate tailored red flags to relevant personnel in order to help employees identify red flags that indicate potential attempts to circumvent U.S export control or economic sanctions requirements?

The U.S. Department of the Treasury has announced sanctions against 130 new firms and individuals for violation of the Russian sanctions in a bid to "disrupt Russia's international supply chains." Many of these companies are found in Turkey, the United Arab Emirates, and China, which the Treasury Department characterized as "hubs for exporting, reexporting, and transshipping to Russia foreign-made technology and equipment." This is a reminder of the risks of transshipment and the need for exporters to treat shipments to known transshipment destinations as high risk.

Customs/Forced Labor

U.S. law contains a special trade provision that specifically targets the use of forced labor by North Korea. The Countering America's Adversaries Through Sanctions Act (CAATSA) prohibits the entry of goods mined, produced, or manufactured wholly or in part by North Korean nationals, or North Korean citizens anywhere in the world, unless clear and convincing evidence is provided that such goods were not made with convict labor, forced labor, or indentured labor under penal sanctions. Does your supply chain integrity compliance policy, due diligence, and legal provisions extend to sub-suppliers who might be directly or indirectly sourcing from North Korea?


The SEC issued a $6.5 million penalty for the use of paid-for overseas conferences, educational events, and facility visits, supposedly as a "pretext to provide the Chinese government officials with overseas travel, including tourism activities, to induce them to purchase" company products. Does your company maintain a Gifts, Meals, Entertainment, and Travel policies as well as Anticorruption policies designed to ensure that entertainment and meals are not given as a means to obtain or retain business?

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.