Export Administration Compliance Basics

The sale of products and services from the U.S. overseas or otherwise to foreign nations requires a review of export regulations that may be applicable to the transaction.  For the sale and export of certain commercial and military items, the regulations that require review are known as the Export Administration Regulations ("EAR"). 

The EAR, promulgated under Title 15, Chapter VII, Subchapter C of the Code of Federal Regulations (and its supplements) by the U.S. Department of Commerce (through its Bureau of Industry and Security), regulate the export of goods and services that are found on the Commodity Control List as well as regulate certain U.S. person activities related to anti-boycotting of U.S. friendly foreign nations.  The EAR formally state that they are intended to serve the national security, foreign policy, nonproliferation, and short supply interests of the United States and, in some cases, to carry out its international obligations.  See 15 CFR 730.6

First in determining whether a product or service is subject to the the export control provisions of the EAR, the central question is whether a product or service is actually being exported.  An export under the EAR includes the sale or transfer of such product or service to a foreign country.  It also includes the re-export of that product or service to other foreign countries.  Finally, it includes the release of the products or information to a foreign national on U.S. soil.  This last item is of particular concern to U.S. entities that employ foreign nationals as well as institutions of higher learning that develop of products and services through the work of students who are citizens of other countries.

If an item is being exported under the EAR, the next determination to make is whether such product or service falls with the EAR Commerce Control List.  The Commerce Control List, or the CCL for short, is found at 15 CFR 774 (including Supplement #1) and include predominantly dual use products and services that have a military use as well as a civil or commercial use.  Categories of products and services include nuclear materials, chemicals and micro organisms, materials processing, electronics, computers, telecommunications, information security, lasers and sensors, marine items, navigation and avionics and propulsion systems. 

If the product or service is being exported under the EAR and is found on the CCL, then the next determination is to match the particular ECCN assigned to that product or service with the Commerce Country Chart found in 15 CFR Sec. 738.   A relatively small percentage of exports and reexports subject to the EAR actually match up to a country on the Commerce Country Chart.  The countries most likely affected include embargoed countries such as Iran, Cuba, North Korea, Sudan and Syria.

If the product or service (i) is being "exported", (ii) is on the CCL and (iii) is being exported to a country that matches up to the Commerce Country List as requiring further due diligence, the export administrator, then an application for an export license must be made to the BIS.  The license application will then be issued to permit such export under the terms as applied for. 

In later series of this journal, we will discuss more about the EAR and export controls in particular.

Brief Overview of the FCPA

In November 2012, the criminal division of the Department of Justice and the Enforcement Division of the Securities and Exchange Commission published A Resource Guide to the U.S. Foreign Corrupt Practice Act.  The Foreign Corrupt Practices Act (the “Act” or the “FCPA”) is a U.S.-based law that restricts U.S. Companies and entities under various circumstances from engaging in bribery of foreign officials to gain a business advantage.  The USDOJ and the SEC share enforcement of the Act and any person or business engaging in business overseas needs to be mindful of these provisions, as even innocuous commercial practice could get caught up in the Act’s restrictions.  The Guide is intended to assist companies in their compliance with the salient provisions of the Act.

Originally enacted in 1977, and amended over the last 35 years to create affirmative defenses, expand the definition of foreign officials and to comply with  the Anti-Bribery Convention, the FCPA contains both anti-bribery and accounting provisions intended to reduce or eliminate corrupt payments to foreign officials.  Violations could lead to fines, imprisonment or disgorgement of revenues.  Below are some general requirements of the FCPA.  We will tackle specific issues under the FCPA in later releases.

The anti-bribery provisions of the Act prohibit (i) U.S. persons and businesses, (ii) U.S. and foreign public companies listed on stock exchanges in the United States or which are required to file periodic reports with the Securities and Exchange Commission, and (iii) certain foreign persons and businesses acting on United States soil from making corrupt payments or other bribes to foreign officials to obtain or retain business.The purpose of the FCPA was to eliminate unseemly advantages that some U.S. companies (and others acting on U.S. soil) had, which reduced competition in many marketplaces.

The accounting provisions further seeks to eliminate bribery by requiring the persons and business subject to the Act to make and keep accurate books and records and to devise and maintain an adequate system of internal accounting controls. By creating controls and systems that all companies had to abide by, irregularities that would trigger FCPA audit could be easily identified.  The accounting provisions also prohibit individuals and businesses from knowingly falsifying books and records or knowingly circumventing or failing to implement a system of internal controls.  The playing field was leveled.

Bribery and corrupt payments can take many forms.  It can include the intent to make a corrupt payment (and not necessarily the execution of the said corrupt payment). It can also include items of nominal value in the U.S. if it has significant value in the country the payment is made.  Further, a corrupt payment can be found even if the identity of the recipient is unknown.

The accounting provisions of the Act consist of two components.   The books and records provision of the Act require issuers to make and keep books, records, and accounts that, in reasonable detail, accurately and fairly reflect an issuer’s transactions and dispositions of an issu­er’s assets.  This is borne out of the fact that corrupt payments are often mischaracterized as consulting fees, royalties, reimbursement of expenses or rebates.    The internal controls provi­sion of the FCPA, requires issuers to create and maintain a system of internal accounting controls sufficient to assure management’s control, authority, and responsibility over the issuer’s assets in such a way that accurate reporting of financial information is made.  An issuer is any entity that has its shares traded over a U.S. stock exchange or is otherwise required to report under the Securities Exchange Act, as amended and interestingly enough many of the reporting requirements for financial information of issuers have broader requirements under the Securities Exchange Act and the Sarbanes-Oxley Act.

For more information, the following websites offer a plethora of information that will help your business in complying with and reporting issues related to the FCPA

www.justice.gov/criminal/fraud/fcpa

http://www.commerce.gov/os/ogc/transparency-and-anti-bribery-initiatives

How to Capture Criminals Using Facial Recognition in Everyday Settings

A recent story about how federal authorities are starting to use facial recognition in everyday settings, such as social media sites like Facebook and Twitter and dating sites like match.com and eharmony.com, to capture criminals brings up the age old question as this technology starts catching up to criminal activities.

How do you balance advanced biometric technology with an individual's right to privacy?

There is no easy solution to this question.  Biometrics like fingerprint, iris and facial recognition have become more precise and accurate.  Technology such as facial recognition now permits someone to use their iPhone or Android to snap a picture or video and compare it against a database of images to match subjects.  As this process becomes more mainstream, privacy issues and concerns have been expressed by various groups, so much so that the FTC has conducted workshops and meetings to address concerns.  Unfortunately, these same groups don't have a solution to the issue, and as a result fail to bring anything constructive to the table.

"Facial recognition leads to discovery of your social security number!"  These folks scream.

To actively deal with privacy concerns the conversation needs to focus on how technology may be used to capture criminals and prevent criminal activiites while not impeding on any person's rights.  But ultimately, it is not that simple.

Take, for instance, the statistics that Facebook and Twitter has on usage and accounts.  Millions upon millions of people have signed up for these services and hundreds like them.  Why is the inherent lack of privacy associated with social media acceptable with the same people who are having an issue with law enforcement technology?  If you read anything on the Internet today, you will be bombarded with avatars of people - on Facebook, Twitter, Huffington Post, the list goes on and on.

We don't see an issue with biometric analysis used in everyday settings.  We believe that an individual loses most of his or her rights to privacy (at least with respect to his/her name and likeness) once they create a Facebook, Google+ or Twitter account or any service that requires a photograph as part of the person's Profile.  Apps like Foursquare, Pinterest and Gowalla track your every movement, we've never read any cautionary posts about this complete lack of privacy.  It's more and more difficult to decry privacy concerns when someone can Google you and find you all over the "information superhighway" (bear with me, I like that archaic term).

The vast majority of law enforcement uses of this kind of technology is reactive.  In other words, police don't use facial recognition until a mug shot has been taken or a person has been pulled over.  Once this happens, wouldn't it be safe to say that all bets are off?  We believe that capturing a criminal because a match was made to a criminal database after pulling someone over due to a busted taillight is ok.  People who make an issue of these kinds of technique beg the question about what they have to hide.

Ultimately, we believe that we as a society are better off if criminals are apprehended and incarcerated at the expenses of losing a little bit of privacy. 

Wisconsin OJA Offers Grant Program for Small Agencies

Many departments across the country are faced with budget shortfalls and cuts in every facet of public safety. Need a facial recognition tool or a mugshot system? Unfortunately local, county and state budgets in many cases just don't allow the purchase of these types of necessities (and they are becoming necessities). This is true particularly for smaller departments that don't have the economies of scale or capital budgets to purchase new equipment.

The OJA in Wisconsin realizes this shortfall between funding sources depending on the size of the department, and created four years ago the Smaller Police Agency Crime Initiative grant funding program. The SPACI program as it is commonly known, provides smaller departments - typically with 20 or fewer sworn officers - with grant opportunities up to a maximum of $10,000 per year. THis past year, 106 agencies applied for over $850,000 in assistance and $300,000 was awarded to Wisconsin departments. This is an important equalizer for smaller departments as criminals, realizing that smaller departments don't have teh same resources as larger metropolitan areas, are beginning to set up shop in smaller, rural communities.

I hope more State and Federal programs come to same conclusion as well.

Fingerprinting Systems One Would Never Debate

Fingerprinting Systems have been at the crux of debate issues over the past several months. Many feel the use of a finger or thumbprint in order to classify our children as 'present' or 'absent' in homeroom, or having returned their library book, or as payment for their school lunch is just that - debatable.

But would anyone ever say that assembling an ID packet of our children's information, fingerprints included, to have on hand in case, Lord help us, we ever needed to supply police and local authorities with them, is debatable?

Not us. That is why we believe whole-heartedly that this technology, that has become so mainstreamed, should be utilized to the best of its capacities.  And when you get right down to it, keeping our children safe in today's world of unknowns and even worse is a top priority.

Hunter Systems Group recently began the SAFEChild Initiative, using its state-of-the-art biometric fingerprinting system to create portable ID cards for parents and caregivers to carry with them.  The card has an up-to-date photo, fingerprints, and the child's physical attributes. In addition, Hunter Systems Group provides a USB drive with all of the same information, making quick dissemination of the data possible in the case of an Amber Alert situation.  Police tell us that time is of the utmost importance in these scenarios.

It's a hard fact to wrap our heads around, but more than 800,000 children are reported missing each year. And we know that it is better to be prepared with information and especially an up-to-date photograph in order to expedite a public announcement for help. Working within the public safety and law enforcement industry for the past 15 years, we have been able to capitalize on our proven technologies and apply them to a very specific and crucial part of public safety by introducing this new initiative: the wellbeing of our children.

Our products and systems, such as facial recognition technologies and biometric ID platforms have been used to identify and apprehend wrongdoers for those years - with great success. Now we aim to apply these capabilities to an even more rewarding market segment- the young and the innocent.

Our system is available for lease or purchase. Not that you could ever put a figure on the peace of mind it offers.  Contact us today or leave a comment below to find out more.

 

Amber Alert image courtesy of http://www.missingkids.com/missingkids/servlet/AmberServlet

 

Old Fashioned Strength and Determination Rather Than Cutting-Edge Products Aided in the Search for Survivors in Japan

They are foregoing their body worn video and facial recognition products for this deployment. Law enforcement professionals from all around the US and world have traveled to disaster-ravaged Japan offering their help. And while they will not be using any cutting-edge biometric products that they are used to using here; their hands, strength and determination will be put more to the test than with any law enforcement product they have previously used.

Immediately after the 8.9 magnitude earthquake hit on March 11 near the coast of Honshu, Japan, relief efforts began. More than 70 nations offered their help in rebuilding the devastated region. But first, there were survivors to be rescued and people to be accounted for.

Twelve days later relief and recovery efforts are still underway. Help from near and far
has enabled the search and rescue to fan out widely among the many towns that are utterly unrecognizable. In the midst of these teams are several task force teams from the United States and abroad. California and Virgina elite search and rescue groups, as well as teams from France, Britain and Germany are all apart of the efforts - searching through rubble hoping to find survivors.

We offer our support to these elite groups of rescue professionals, as well as our sincere empathy and condolences to those affected by this tragedy. We are proud to be a part of the public safety community of which the special task forces initiated.
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Photo CourtesyL.A.CountyFire/CaliforniaTaskForce

Fingerprint Systems in Schools at Debate Again

We've posted before about the fingerprint scanning of children in order to pay for their school lunches in Ohio Schools.  We've also posted about the prevalence of biometric tracking of children in UK schools for everything from attendance to paying for lunches.  It seems this trend is gaining momentum rather than losing to its opposes, as we have seen a dramatic rise in the fingerprinting of children across the UK.
 
But one wonders if this rise is due in part to a new amendment to the Freedom Bill  requiring parental consent to fingerprint their children, that has been proposed.  As of now, school in the UK do not need the parent's consent in order to fingerprint school children for such activities as borrowing library books, attendance and cashless lunches.
 
Many are pleased about the proposal, which gives parents the right to choose whether or not they wish their children to be enrolled in biometric programs.  And that is perhaps why it has been reported that "school are falling all over themselves" to get the prints taken in time, before the proposed bill is enacted.
 
What do you think? Should children be fingerprinted for the course of their daily school activities, or is this an example of advanced technology being used for the wrong purposes? Leave your comment below.