Archive for 2011

More Pump Violations: Flowserve and Affiliates Pay Millions to Settle 288 Charges


By: Holly Thorne

Flowserve Corporation, one of the world’s largest manufacturers of pumps, valves, seals and components, has settled 288 charges of unlicensed export and reexports that occurred from its Irving, TX location, and among ten of its international affiliates. Flowserve has agreed to pay a civil penalty totaling $2.5 million to settle charges for violating the EAR by making unlicensed exports and reexports to a number of countries, including China, Singapore, Malaysia, and Venezuela.  BIS also alleged that six of Flowserve’s foreign affiliates caused the transshipment of EAR99 items to Iran and/or the reexport of EAR99 items to Syria. The transactions involved a total value of $2.15 million.

Flowserve and its affiliates will also be required to conduct external audits of their compliance programs and submit the results to BIS. Flowserve’s voluntary disclosure of its violations in late September 2011 significantly reduced its penalty amount.

Violations by Flowserve’s international affiliates:

Flowserve GB Ltd. (United Kingdom)

Twenty-six charges of engaging in prohibited conduct of unlicensed exports and reexports to Iran and Syria. Penalty: $405,000

Flowserve Spain

Causing, aiding, or abetting unlicensed exports to Iran. Penalty: $20,000

Flowserve Singapore

Engaging in prohibited conduct of unlicensed exports and reexports controlled for chemical and biological weapons proliferation reasons. Penalty: $510,000.

Flowserve Netherlands

Engaging in unlicensed exports to Iran and Syria. Penalty: $310,000.

Flowserve Hamburg

Unlicensed exports to Iran and reexporting pumps and pump components to Syria. Penalty: $125,000.

Flowserve S.A.S. France

Unlicensed exports to Iran. Penalty: $210,000.

Flowserve Pompes S.A.S. (France)

Unlicensed exports to Iran, reexporting pumps and pump components to Syria. Penalty: $135,000.

Flowserve Canada

Reexporting pumps and pump components controlled for chemical and biological weapons proliferation reasons to Taiwan and Singapore. Penalty: $25,000.

Flowserve Australia

Reexporting valves and valve components controlled for chemical and biological weapons proliferation reasons to Indonesia. Penalty: $5,000.

Worthington S.r.l. (“Flowserve Italy”)

Reexporting pumps and pump components controlled for chemical and biological weapons proliferation reasons to Saudi Arabia. Penalty: $30,000.

Flowserve’s home base in Irving, Texas, has also been penalized $725,000 for failure to comply with reporting requirements. In a related case, OFAC settled charges with Flowserve alleging 58 separate violations of its Iranian, Cuban and Sudanese sanction programs. Flowserve agreed to remit an additional $502,408 to OFAC to resolve the charges.

Texas Armoring to Pay $300,000 for Five EAR Violations for Armored Vehicle Exports


By: Holly Thorne

Texas Armoring Corporation, of San Antonio, TX, has agreed to pay $300,000 to settle charges stemming from five export violations, which include:

  • Two charges of exporting armored vehicles to Saudi Arabia without the required licenses.
  • Two charges of selling armored vehicles for export to Indonesia and Nigeria with knowledge that a violation was about or intended to occur.
  • Selling an armored vehicle for export to Mexico with knowledge a violation was about or intended to occur.

Despite receiving several notices from its freight forwarding company describing the required export licenses, Texas Armoring Corporation went ahead with its illegal exports. TAC did not voluntarily disclose their violations and now faces monetary penalties as well as a required external audit of its export compliance program.

In addition to the monetary penalty, the company agreed to have an independent party to conduct an audit of its export compliance program and report its findings to the Commerce Department.

Finally, in the settlement agreement the company also agree to send its CEO and its export compliance person to export compliance training.  Now that is what I call cruel and unusual punishment.  ECTI is happy to see that the government is now forcing people to do export compliance training!

The complete settlement information may be viewed here.

Toll Global Forwarding of NY to Pay $27,000 to Settle Charges for EAR99 Exports


By: Holly Thorne

In October 2009, Toll Global Forwarding, Inc., of Springfield Gardens, NY, acted as a freight forwarder and arranged for the export EAR99 electronic components, valued at $6,041, from the United States to Solid State Physics Lab in India, which is listed on BIS’s Entity List. Toll Global’s actions caused, aided and abetted an act prohibited by the Regulations and must pay a fine of $27,000. Toll Global did not voluntarily self-disclose their actions. Toll Global Forwarding doesn’t seem to learn from their mistakes.

The complete settlement agreement may be found here.

Essex Group of Indiana to Receives Charges and Fines for Illegal Exports to China


By: Holly Thorne

On 14 occasions between September 2006 and October 2007, Essex Group exported $381,700 worth of “aromatic polyamide-imide solution,” an item controlled for national security reasons, from the United States to the People’s Republic of China. Essex Group of Fort Wayne, IN,  self-disclosed their violations to BIS and have received a penalty of $200,000.

Complete settlement may be viewed here.

Missouri-based Freight Forwarder to Pay $40,000 for Unlicensed Exports to Pakistan


By: Holly Thorne

The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) announced that the freight forwarding company Ram International Inc. (Ram) of St. Louis, MO, has agreed to pay a $40,000 civil penalty to settle allegations that it committed two violations of the Export Administration Regulations (EAR).

BIS alleges that on two occasions in 2006, Ram’s Elk Grove Village, IL office aided and abetted the unlicensed export of salvage scrap electrolytic tin plate steel to Allied Trading Company in Karachi, Pakistan, without the required BIS licenses.  Allied is included on the Commerce Department’s Entity List which names certain foreign persons — including businesses, research institutions, government and private organizations, individuals, and other types of legal persons– that are subject to license requirements for the export, reexport and/or transfer in-country of specified items.

The Commerce Department Assistant Secretary for Export Enforcement, David W. Mills, commended the BIS Office of Export Enforcement Chicago Field Office for its work on the investigation.


Sunrise Technologies and Trading Corporation Settle with Treasury/OFAC over Iran Export Violations


By: Holly Thorne

Sunrise Technologies and Trading Corporation (“Sunrise”), of Flushing, NY, and its principal owner have agreed to settle administrative charges made by the Office of Foreign Assets Control (“OFAC”) arising from apparent violations of the Iranian Transactions Regulations. Between 2007 and 2011, Sunrise Technologies illegally exported computer-related goods indirectly from the United States through Dubai, United Arab Emirates, to Iran.

Sunrise and its principal owner each pleaded guilty to one count of criminal conspiracy to violate IEEPA and the ITR. Sunrise and its principal owner agreed to a money judgment in the amount of $1,250,000, with a suspended ten-year BIS Export Denial Order providing Sunrise and its principal owner remain in compliance with the terms of their Settlement Agreements with BIS and with the Export Administration Regulations.

Sunrise and its principal owner did not voluntary disclose these matters to OFAC. OFAC considers the apparent violations to be egregious.

The entire Settlement Agreement with OFAC is posted under the Selected Settlement Agreement section of OFAC’s Web site:

State/DDTC Updates Pakistan Policy: No New Licenses for MDE Exports to Pakistan Until Pakistan Act Waiver is Issued


By: Holly Thorne

Notice to Exporters – Pakistan Policy Update, 5 Oct 2011 (October 1, 2011) Section 203 of the Enhanced Partnership with Pakistan Act of 2009 (Public Law 111-73) prohibits for fiscal years 2012-2014 the issuance of export licenses for major defense equipment (defined in 22 U.S.C. 2794(6)) to be exported to Pakistan absent an appropriate certification or waiver under Section 203 in the fiscal year. Since no certification or waiver has been issued for fiscal year 2012, exporters are advised not to submit such license requests to DDTC. A new notice will be issued in the event of a waiver or certification in fiscal year 2012.


ITAR Changes for Electronic Payment of Registration Fees Now In Effect


By: Holly Thorne

The International Traffic in Arms Regulations (ITAR) amendments published in 76 FR 45195-45198 (July 28, 2011), changing ITAR Parts 120, 122, 123, and 129 regarding electronic payment of registration fees and the use of the DS-2032, Statement of Registration, went into effect September 26, 2011.

For additional information click here or contact: Lisa V. Aguirre, Director, Office of Defense Trade Controls Compliance, Directorate of Defense Trade Controls, Department of State, 2401 E Street, NW., SA-1, Room H1200, Washington, DC 20522-0112; telephone 202-632-2798 or fax 202-632-2878; or e-mail through, with the subject line, “Electronic Payment of Registration Fees.”


Commerce/BIS “Best Practices for Industry to Guard Against Unlawful Diversion”


By: Holly Thorne

The Bureau of Industry and Security (BIS) recently published a new set of “best practices” to help secure trade through transshipment hubs, or to any intermediate country before being shipped to the country of ultimate destination. Transshipment has logistical benefits, but also can be used illegally to disguise the actual country of ultimate destination.

BIS is encouraging industry to use the following best practices to avoid unlawful diversion:

  • Pay heightened attention to BIS’s Red Flag Indicators and communicate red flag concerns internally.
  • Seek to utilize only those trade facilitators and freight forwarders that administer sound export control management and compliance programs that include transshipment trade best practices.
  • Obtain detailed information on the credentials of foreign customers to assess diversion risk.
  • For routed transactions, establish and maintain a trusted relationship with parties to mitigate risks.
  • Communicate export control classification and destination information to end-users and consignees on government and commercial export documentation.
  • Provide the ECCN or the EAR99 classification to freight forwarders for all export transactions and report the classifications in the Automated Export System (AES), if applicable.
  • Use information technology to the maximum extent feasible to augment “know your customer” and other due-diligence measures in combating the threats of diversion and increase confidence that shipments will reach authorized end-users for authorized end-uses.

The full list of Best Practices can be found here

New Platform, Servers for AESDirect


By: Holly Thorne

In late August, the AESDirect database migrated to a new platform and new servers. and AESWeblink users will now notice a more manageable interface and a few minor changes within the application. Links on the Main Menu and within the application have been removed, added, or changed, as follows:

  • The “Retrieve an Existing Shipment”, “Delete Shipment from AES” and “AESDirect Archive Service” links have been removed from the Main Menu. The “Shipment Manager” provides you with access to all of your shipments and also allows you to retrieve, replace or delete them.
  • If you submit a shipment with a USPPI ID that is different from the EIN registered for that account, you will now see a pop-up message confirming that you are filing on the behalf of a party other than yourself.

User accounts were moved to the new database servers during the months of August and September. Users will notice the following changes:

  • Error messages have been revised to make it easier for you to determine where the errors in your shipment are.
  • You will no longer have to differentiate between archived and new shipments. The application will now combine these two in a single search.

EDI Vendors and Clients

If you use EDI to submit to AESDirect or you are an EDI vendor, you will notice changes to the text of the error messages. The EDI system will mirror the same error messages as in order to reduce the amount of Fatal Errors.

For additional information on the interface changes, please visit: