AUTOMATED EXPORT SYSTEM PRESENTATION PRESENTED BY: HARVEY R. WAITE, II Partner, Director of Regulatory Compliance and Security OCEANAIR, Inc. December 11, 2012

AES – Automated Export System – What is it?  Facilitates filing of ELECTRONIC EXPORT INFORMATION (EEI) for collecting Statistical Data and Compliance Information  Creates an easily accessible database for multiple Governmental Enforcement Agencies  Source CFR TITLE 15, PART P6Q18TYDdszrYyqpHn6GnsNhDfKFRNJ1g3pJ8twhMkpVyHq W2l! ! ?selectedYearFrom=2012&go=Go Go to Title 15, Subtitle B, Chapter 1, Part Be Patient! It takes a while.

Suggestion: Print Part 30, Subtitle B, Chapter 1: Put a copy on your desk, in the bathrooms at work and at home. Further suggest that you put a magazine cover on the front of the copy at home to maintain domestic tranquility. “Memorize”

WHAT IS NEW? **** ENFORCEMENT, ENFORCEMENT, ENFORCEMENT ****  Why? IT IS THE LAW!  Who? CBP, Census, Directorate of Defense Trade Controls, Bureau of Industry and Security, Homeland Security, etc.  How? Massive data bases and extremely sophisticated targeting systems  Simple data checks at the local level. Low hanging fruit  I want to inspect your cargo and documents!  Enforcement result – Example from OCEANAIR  Agencies (CBP) will not know where cargo is located for examination if incorrect port, date of export or carrier are submitted.

$10,000.00

PENALTIES FOR OTHER FTR VIOLATIONS, INCLUDING THE FOLLOWING (Not an Exhaustive List):  Failure to File data.  Incorrect value of shipment.  Other incorrect information in the AES record, such as an incorrect USPPI, consignee, end-user, commodity description, or port of export.  Failure to cite license code or license number.  Failure to obtain Power of Attorney for AES transmission  Failure to identify transaction as a routed transaction.  Failure to correct information in AES as the changes become known to the filer.

PENALTIES FOR OTHER FTR VIOLATIONS, INCLUDING THE FOLLOWING (Not an Exhaustive List): - Cont.  Failure to provide carrier with appropriate proof of filing citation or exemption legend by the time periods set forth in the FTR.  Failure to retain all records relating to the export shipment for a 5-year period from the date of export.

PENALTY ISSUANCE These penalties may be issued against USPPIs, authorized agents, freight forwarders, and any other person as appropriate, or the FPPI or its authorized agent if a routed transaction, or other persons as appropriate. The Notice of Penalty will be issued at the maximum amount of $10,000.

PENALTY MITIGATION  First Recorded Offense - $500 to $2,500  Second Recorded Offense - $750 to $3,500  Third Recorded Offense - $1,000 to $5,000  Fourth and Subsequent Recorded Offenses - $2,000 to $10,000

WHAT IS COMING?  MORE ENFORCEMENT  E2C2 (Export Enforcement Coordination Center) – Started March 7, 2012 – Just Gaining Traction. For background, copy and paste: office/2010/11/09/executive-order export- coordination-enforcement-centerhttp:// office/2010/11/09/executive-order export- coordination-enforcement-center  Participating Organizations: o U.S. Customs and Border Protection o Defense Criminal Investigative Service o National Nuclear Security Administration o Defense Security Service o Bureau of Industry & Security o Department of Homeland Security (DHS) o FBI o Departments of Justice, Commerce, State, Treasury, Defense & Energy o Director of National Intelligence

WHAT IS COMING? (CONT.)  Developing ITU or Information Triage Unit Designated to collect information and intelligence from across the government. Oversight by the Office of the National Counterintelligence Executive. So this is where my AES data goes…among other places…sleep tight!  Where this is smoke, there may be fire!  AES will be part of ACE (Automated Commercial Environment) – A single electronic platform both import and export.