DHL Settles BIS And OFAC Allegations For $9.44 Million

The U.S. Commerce and Treasury Departments announced last week that DPWN Holdings (USA), Inc. (formerly known as DHL Holdings (USA) Inc.) and DHL Express (USA) Inc. (collectively, "DHL"), recently settled allegations by the Bureau of Industry and Security ("BIS") and the Office of Foreign Assets Control ("OFAC") that DHL committed numerous violations of the Export Administration Regulations ("EAR") and OFAC regulations prohibiting U.S. persons from trading with Iran, Sudan and Syria, and an even greater number of EAR and OFAC recordkeeping violations.

In the joint settlement with BIS and OFAC, DHL has agreed to pay a civil penalty of $9,444,744 and to hire an unaffiliated third-party consultant to conduct external audits covering all of DHL's exports or reexports to Iran, Syria and Sudan from March 2007 through December 2011; further, DHL will provide complete copies of the audit reports to the Commerce Department's Office of Export Enforcement. According to BIS, "This case represents the largest joint settlement involving BIS and OFAC, and is the result of closer collaboration between the two agencies." The Treasury Department also credited U.S. Customs and Border Protection for intercepting many of the shipments, reporting them to OFAC, and assisting in the five and a half year investigation that led to the settlement with DHL.

1. BIS Allegations

   In a proposed charging letter, BIS alleged that, on eight occasions from June 2004 to September 2004, DHL caused, aided or abetted the export of items subject to the EAR to Syria when it transported such items to Syria without the required licenses. BIS also alleged that DHL failed to maintain air waybills and other required documents in connection with 90 export transactions from the United States to Syria from May 2004 to November 2004. In this respect, the DHL settlement is a warning to freight forwarders and other agents who might take comfort in not being the "exporter" for EAR purposes. Although the exporter is normally the person responsible for determining export authorization requirements and obtaining any required licenses, all parties to an export transaction, including agents, are required to comply with the EAR. Moreover, the EAR recordkeeping requirements apply, without limitation, to any person subject to U.S. jurisdiction who, as a principal or agent, participates in an export transaction subject to the EAR.

2. OFAC Allegations

   In an October 2008 prepenalty notice, OFAC alleged that...