On April 30, 2021, the Department of Commerce’s Bureau of Industry and Security (BIS) issued a notice announcing a settlement and fine of over $300,000 to FLIR Systems, Inc. for an egregious violation of the Export Administration Regulations (EAR). This settlement highlights that violations of the EAR are not limited to physical exports of goods or services. The settlement resolves allegations that FLIR made “inaccurate or incomplete representations, statements, or certifications in violation of the EAR” while seeking a commodity jurisdiction (CJ) determination on a newly developed product.
The notice indicates that during the review of the item, the government expressed concern over possible diversion of FLIR’s product to end-uses of concern. However, at the time of the CJ submission, FLIR claimed the item was “designed specifically for insertion into commercial smartphones and recognized the need to prevent its diversion to uses other than insertion into smartphones” while internally the company was contemplating other markets for the product – including military and drone applications. Adding to the egregious nature of the violation was FLIR’s representation that the item had incorporated a novel anti-tampering encryption protection device to protect against diversion, but never actually developed or included such protections on the item.
The order issued by BIS provides details on the two charges where FLIR made misrepresentations and concealed certain facts. In addition to the civil fine, FLIR must complete internal audits of its export controls compliance program. Further, the payment of the fine and audit reports submitted to BIS by the company are conditions to the granting, restoration or continuing validity of any export license, license exception, permission or privilege granted to FLIR Systems.