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Enforcement Edge
January 31, 2024

Department of Commerce’s BIS Imposes Penalties for Failure to Report Pakistan-Origin Boycott Requests

Enforcement Edge: Shining Light on Government Enforcement

On January 29, the U.S. Department of Commerce, Bureau of Industry and Security (BIS) imposed a civil penalty of $153,175 against Wabtec Corporation for failing to report boycott requests that originated from Pakistan, in violation of the antiboycott provisions of the U.S. Export Administration Regulations (EAR). BIS found that Wabtec failed to report 43 requests to support restrictive trade practices imposed on Israel. (While not highlighted by BIS' press release, 23 of these requests also included requests to restrict trade involving Indian-origin goods.) Historically, BIS’ antiboycott enforcement actions have focused on boycott requests from countries in the Middle East or others identified on the U.S. Department of the Treasury’s List of Countries Requiring Cooperation with an International Boycott (Treasury Boycott List). The last time BIS’ public antiboycott enforcement action included a boycott request from outside of the Middle East or countries on the Treasury Boycott List was in August 2018, where there were boycott requests from Pakistan (in addition to Oman, Qatar, Lebanon, UAE, and Kuwait). This enforcement action reinforces that obligations under U.S. antiboycott laws and regulations apply to activities of U.S. persons — and their foreign subsidiaries — worldwide.

In addition to confirming the broad reach of U.S. antiboycott enforcement, the imposition of penalties against Wabtec Corporation also follows the recent trends we observed in our prior Advisory. First, BIS is continuing to impose penalties for violations of reporting obligations standing alone (which fall under “Category C,” the least serious category of violations under BIS’ guidance), even where such violations are voluntarily disclosed. Here, BIS imposed penalties on Wabtec even though Wabtec voluntarily disclosed the reporting violations and BIS did not identify any more serious violations. Second, BIS continues to require admissions of covered conduct as a condition of settlement. Wabtec’s settlement agreement with BIS specifically states that Wabtec “admits committing the alleged conduct described in the Proposed Charging Order.” We anticipate that BIS will continue to be active in bringing antiboycott enforcement actions.

For questions about U.S. antiboycott laws and regulations, please contact the authors or any of their colleagues in Arnold & Porter’s White Collar Defense & Investigations or Export Control & Sanctions practice groups.

© Arnold & Porter Kaye Scholer LLP 2024 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.