DHS/CBP Amends Customs Regulations to Include Civil Monetary Penalty Adjustments

On December 8, 2017, U.S. Customs and Border Protection (CBP) amended its regulations to adjust for inflation the amounts that CBP can assess as civil monetary penalties for the following three violations:

  • The penalty for transporting passengers between coastwise points in the United States by a non-coastwise qualified vessel has been increased from $750 to $762.
  • The penalty for towing a vessel between coastwise points in the United States by a non-coastwise qualified vessel has been increased from $875-$2,750 plus $150 per ton to a new amount of $889-$2,795 plus $152 per ton.
  • The penalty for dealing in or using an empty stamped imported liquor container after it has already been used once has been increased from $500 to $508. 

These changes are being made in accordance with the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 which was enacted on November 2, 2015. In addition, a number of other CBP civil penalty amounts were adjusted pursuant to this 2015 Act in previously published documents published in the Federal Register on July 1, 2016, and January 27, 2017; however, the adjustments for these three civil penalties were omitted from those documents inadvertently and so are being published now.   The rule went into effect on December 8, 2017.  The adjusted penalty amounts will be applicable for penalties assessed after December 8, 2017 if the associated violations occurred after November 2, 2015.

Suzanne DeCuir, Global Trade Expertise

DOC Announces New Civil Monetary Penalties Adjusted for Inflation

The Department of Commerce has announced new civil monetary penalty amounts adjusted for inflation that may be assessed for the following regulatory violations after January 15, 2017, including in instances when the associated violation took place before that date. 

  • failure to file export reports or information required by 13 USC 304 within prescribed period – maximum for each day’s delinquency has been increased from $1,333 to $1,360, maximum per violation has been increased from $13,333 to $13,605
  • other unlawful export information activities under 13 USC 305 – the maximum has been increased from $13,333 to $13,605
  • failure to provide the information required under 22 USC Chapter 46 (international investment and trade in services survey) – minimum increased from $4,527 to $4,619, maximum increased from $45,268 to $46,192
  • foreign-trade zone violations (19 USC 81s) –  maximum increased from $2,795 to $2,852; false or fraudulent claims under the Program Fraud Civil Remedies Act (31 USC 3802(a)(1) and (2)) – maximum increased from $10,957 to $11,181
  • prohibited acts relating to inspections or recordkeeping violations under the Chemical Weapons Convention Implementation Act (22 USC 6761(a)(1)(A) and (B)) – maximum increased from $36,849 to $37,601
  • violations of the International Emergency Economic Powers Act (50 USC 1705(b)) – maximum increased from $289,238 to $295,141

Several other adjustments were also made pertaining to the use of false records to pay or transmit money or property to the federal government (31 USC 3729(a)(1)(G)) and to Fastener Quality Act violations (15 USC 5408(b)(1)).  To see the full list of adjustments, see the Federal Register.

Suzanne DeCuir, Global Trade Expertise

Chinese Pharmaceutical Company Agrees to $12.8 Million Fine

According to the U.S. Securities and Exchange Commission (SEC), this February, SciClone Pharmaceuticals Inc. agreed to pay $12.8 million to settle the investigation into potential violations of the Foreign Corrupt Practices Act. Allegations stretch back to at least 2007, and include multiple instances of bribery in exchange for sales made to Chinese clients. Under the terms of the agreement, SciClone does not admit or deny any wrongdoing.

The details included in the SEC’s press release of February 4, 2016 point to numerous instances of SciClone’s offering lavish gifts, trips, and entertainment and then booking such expenses as legitimate business dealings. For instance, in April of 2010, SPIL (a wholly owned subsidiary of SciClone) sponsored Chinese health care professionals to attend a seminar in Japan pertaining to its principal drug, Zadaxin. Only half a day appeared to be devoted to educational activities; the rest of the 6-day trip involved visiting Mt. Fuji and other tourist locations. The SEC detailed numerous instances of travel and outings hosted by SPIL and designed to lure state health care employees to purchase the company’s pharmaceuticals and devices.

Included in the terms of the agreement are provisions that SciClone make a number of changes to improve its internal accounting controls and prevent the recurrence of any similar violations. SciClone has agreed to hire a compliance officer and create an internal audit department and compliance department; undertake a comprehensive review of the policies and procedures pertaining to employee travel; reduce the number of third party suppliers who provide travel and event planning services, and provide anti- corruption training to its own employees as well as to vendors.

SciClone is best known for its Hepatitis B treatment Zadaxin; its shares rose 16% to $9.47 following the news of the settlement agreement.

Suzanne DeCuir, Global Trade Expertise

Forwarder Required to Pay $10,000 Penalty for “Customs Business” without License

On January 21, 2015, the CIT ordered Freight Forwarder International (FFI) to pay a $10,000 penalty for intentionally paying duties and fees on behalf of non-related parties to CBP without a corporate license.  

Between June of 2009 and January 2010, FFI was the payer company for duties and fees on 19 entries paid on behalf of other persons.  FFI then invoiced its clients for the payments on its own letterhead.  Although FFI advertised itself as having in-house customs brokers services and retained an employee with a customs broker’s license, FFI did not hold a corporate custom’s broker’s license in accordance with 19 U.S.C. § 1641.  The CIT found “section 1641(b)(6) makes it a violation for any person who intentionally transacts customs business, other than solely on the behalf of that person, without holding a valid customs broker's license granted to that person.”  As per 19 U.S.C. § 1401(d) a person “includes partnerships, associations, and corporations.”  The CIT concluded “customs business includes payment of duties and the preparation of invoices intended to be filed with CBP.”

Because FFI was a corporation preforming customs business without a license, the CIT held FFI liable for a $10,000 penalty plus post-judgment interests and costs.

Source:  U.S. v. Freight Forwarder Int'l, Inc., Slip Op. 15-05, #14-00134, dated 01/21/15, Judge Kelly
Aaron Ambrite, Extern, Global Trade Expertise, February 6, 2015