Compliance & Risk Consulting Group LLC

Compliance & Risk Consulting Group LLC

Antiboycott

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United States anti-boycott laws are an often overlooked part of export compliance. These rules are significant for all businesses engaged in international commerce, but particularly for US-based manufacturers, distributors and their foreign-based subsidiaries. Violations of anti-boycott laws and regulations may have costly consequences.

What are Anti-Boycott Laws and Regulations?

In the 1970s, the United States adopted two laws that bar and penalize US citizens and companies from participating in other countries’ economic boycotts of US allies. Specifically, the antiboycott provisions of the EAR generally require companies to refuse to participate in unsanctioned foreign economic boycotts that conflict with U.S. policy. While the Arab League boycott of Israel is the principal foreign boycott addressed in the US anti-boycott laws, the laws apply to all foreign boycotts that the US does not endorse including Azerbaijan and Turkish boycott of Armenia.
Activities that may be prohibited under the EAR include:
  • Refusals or agreements to refuse to do business with or in a boycotted country or with blacklisted companies.
  • Discrimination or agreements to discriminate against a US person based on race, religion, sex, or national origin.
  • Furnishing information or agreements to furnish information about business relationships with or in a boycotted country or with blacklisted companies.
  • Furnishing information or agreements to furnish information about the race, religion, sex, or national origin of a US person.
  • Implementation of letters of credit containing prohibited boycott terms or conditions.
  • Taking actions with the intent to evade these regulations.

As of Q1 2024, the US Treasury Dept. list of countries requiring cooperation with an international boycott includes: Iraq, Kuwait, Lebanon, Libya, Qatar, Saudi Arabia, Syria and Yemen.

Reporting Requirements

In addition, the regulations require that US persons must report boycott requests received in connection with transactions or activities in the interstate or foreign commerce of the USA. The mere receipt of a boycott request triggers compliance obligations. Any US person that receives a boycott request is required to report that receipt to the Department of Commerce. Boycott-related requests are generally reportable regardless of whether the recipient complies with the request or not.

Enforcement

The US Dept of Commerce (Office of Anti-boycott Compliance) is charged with administering anti-boycott laws. Violations of the antiboycott laws are investigated by the FBI and US DOJ, and may result in administrative and criminal penalties. The law authorizes civil monetary penalties of $300,000 per violation or 3x the value of the export, and violations may result in revocation of US export licenses. In addition, a criminal penalty of up to $1 million may be imposed on individuals or companies, and individuals may face up to 20 years of imprisonment.

How we can help

If your company does business with third parties who operate in boycotting countries, we can design and implement a cost-effective anti-boycott program and provide appropriate training to your employees and contractors.
We offer a practical, cost-effective compliance & risk solutions to ensure your business does not run afoul of US, UK and EU compliance laws.

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