Imagine a company manufacturing goods for overseas markets. Their products go from the factory to a small regional airport, where they are loaded onto a private plane before being flown to the buyer. No paperwork is filed; no transactions are reported to the government. Why? Because the manufacturer views trade regulations as mere suggestions.
Guess what? They aren’t. Global trade regulations are every bit as much enforceable law as legislation passed by Congress and signed into law by the president. Not only that, but regulating authorities take the rules seriously. Violating them can land a company and its ownership in serious trouble.
Too Much Hassle
For some organizations, maintaining trade compliance involves too much hassle. They know all too well that correctly classifying their products for export takes time and effort. They are not interested in putting forth that time and effort, and they do not want to hire an outsourcing partner to provide export classification services. So they take their chances.
Though both illegal and ill-advised, the good folks at Vigilant Global Trade Services understand why some smaller companies might decide to do it. Export classification is not an easy thing to master. When you consider how many different types of products get shipped overseas, you realize just how monumental a task classification can become. The more products a company makes, the bigger the task.
All of that notwithstanding, the government does not make any exceptions. They really are not concerned with how much of a hassle export classification is. They expect it to be done accurately. They expect the proper paperwork to be filed. Fail to meet compliance requirements and the government hammer could come crashing down hard.
Penalties for Violations
So, just how serious is the government about global trade compliance? Very serious. Global trade compliance isn’t like medical marijuana. The government is not turning a blind eye and choosing not to enforce the law. They do enforce the law, and aggressively so.
Administrative violations can garner fines of up to $300,000 or twice the value of the affected shipment. Criminal violations can mean fines of up to $1 million along with 20 years in prison – and that is per violation! Both types of violations could lead to a loss of export privileges.
Administrative violations include things like:
- unintentionally misclassifying goods or services
- submitting incomplete or inaccurate paperwork
- failing to correctly identify export destination.
The main difference between an administrative violation and a criminal violation is intent. For example, if it could be determined that an exporter willfully misclassified goods in order to ship them without obtaining a required permit, the offense could be prosecuted as a criminal one.
Another example of a criminal offense would be intentionally shipping restricted goods to countries, entities, or persons currently on the government’s restricted list. This is considered the most serious type of criminal violation and is usually punishable with both fines and prison time.
Avoid Even the Smallest Violation
Whether it is outsourcing export classification services or hiring a contractor to handle every aspect of global trade management, the goal of working with companies like Vigilant is to avoid even the smallest violation. There is no need to give government authorities any reason to even suspect an infraction has occurred.
The fact is that global trade regulations are not suggestions. They are legal requirements enforceable by every jurisdiction that has them in place. The U.S. is one of those jurisdictions. So are most other countries around the world. If you are trading across borders, do yourself a favor and do not even come close to running afoul of the law.