2. Disclaimer
The information and opinions presented herein are solely those of the
presenter, and do not necessarily represent the opinion of or any official
communication by PolyOne Corporation or any of its subsidiaries.
All case information presented herein is publicly available as reported by
the U.S. Bureau of Industry and Security. The selection of cases presented
herein are selected for the specific language that caused the penalty and
do not reflect any opinion on the specific entities involved.
3. Agenda
Anti-Boycott 101
BIS Rules vs. Treasury Rules
Boycott Language
Examples from penalties
Anti-Boycott Compliance Program
Manual
Software-based
Partnering with other departments
4. The U.S. and other countries prohibit companies from complying with
unsanctioned economic boycotts
These laws are specifically aimed at the Arab League Boycott of Israel, but
may also involve boycotts between India and Pakistan
Requests may be made by phone, email, or in documents such as: Purchase
Orders, Contracts, Tenders/RFP/RFQ, Letters of Credit / Applications for
Letters of Credit, Document requests from a freight forwarder, Powers of
Attorney, Certificates of Origin, Terms and Conditions, or Questionnaires
Primary countries: Iraq, Kuwait, Lebanon, Libya, Qatar, Saudi Arabia, Syria,
United Arab Emirates, Yemen. BIS also lists Bahrain, Bangladesh, and Oman in
its recent examples and Pakistan is listed in penalty cases.
Other possible boycotting countries include China, India, Indonesia, Malaysia, Taiwan, and Tunisia.
Anti-Boycott 101
5. Red flags: “no trans-shipment through Israel”, “goods of
Israeli origin are not acceptable”, “must not sail on a vessel
flying an Indian flag”
Penalties may be issued for complying with a boycott request
(such as changing sourcing); furnishing information to support
the boycott (such as information on activities with Israel); or
failure to report boycott requests.
The penalties for violations of the anti-boycott laws are
targeted at both the individual and the company
US$50,000 per violation
Imprisonment of up to five or ten years
Anti-Boycott 101
6. Levels of Boycotts
Primary: No imports from or exports to Israel
Secondary: No business with companies that do business with
Israel
Tertiary: No business with “blacklisted” companies that have
relationships with Israel
Who must comply with Anti-Boycott regulations?
U.S. “persons”
Foreign company controlled by a U.S. “person”
U.S. locations of foreign companies
Anti-Boycott 101
7. BIS Rules vs. Treasury Rules
Department of Commerce, BIS rules:
15 C.F.R. 760
Illegal to refuse to do business with a person or entity to comply
with a boycott, furnish information, or take discriminatory actions
Quarterly reports (Form BIS 621-P) sent by the end of the month
after the end of the quarter
Department of Treasury, Tax rules:
1979 Tax Reform Act Ribicoff Amendment
Illegal to comply even if no explicit reference to boycotting
Legal for the contract to be governed by the law of the boycotting
country
Annual reports (Form 5713)
8. What is prohibited under BIS rules?
1. Refusing or agreeing to refuse to do business with a boycotted country, its
citizens, or a blacklisted party.
Includes general agreement to comply with boycott laws, agreement
to use a carrier permitted to enter Arab ports, and negative
certifications (ex: These products are not of Israeli origin.)
2. Discrimination against a U.S. person due to race, religion, sex, or
national origin
3. Furnishing protected information about a U.S. person or employee of a
U.S. person or U.S. controlled foreign company
4. Furnishing information about business relationships for boycott reasons,
includes past, present, and future relationships
5. Furnishing information about charitable relationships for boycott reasons
6. Accepting a letter of credit with a boycott request
7. Failure to report any boycott request
BIS Rules vs. Treasury Rules
9. What is not prohibited under BIS rules?
Exceptions include:
Agreeing to not ship goods on an Israeli vessel or airline, or a vessel that will
call at an Israeli port, for shipments to a boycotting country
What is prohibited under Internal Revenue Code (IRC) rules?
Refusing to do business with or in a boycotted country or its companies,
nationals, or government
Refusing to do business with a blacklisted person
Discrimination in employment or business relationships due to nationality,
race or religion for boycott reasons
Refusing to use a blacklisted carrier or insure with a blacklisted insurer
Agreeing to certify non-blacklisted status
BIS Rules vs. Treasury Rules
10. Department of Commerce, BIS rules:
Exceptions may apply
Legal to agree to comply with requirement for no boycott country vessels, but
not refrain from using blacklisted vessels (positive vs. negative)
Legal to provide some shipping documentation such as positive Certificates of
Origin, positive statements on manufacturer and origin
Even if the exception applies, the language must still be reported!
Many penalties are assessed not for compliance with the boycott request,
but simply for failure to report.
Department of Treasury, Tax rules:
Even if the language is allowable, it must be reported.
Example: contract governed by the laws of Saudi Arabia
BIS Rules vs. Treasury Rules
11. So can I agree not to use an Israeli vessel or not?
While the BIS provides an exception, the language must be reported, and there isn’t
an exception under IRS rules. Best practice is to not comply.
When in doubt, consult Legal Counsel.
BIS Rules vs. Treasury Rules
12. Boycott Language – Real World Examples
Some boycott language doesn’t include “boycott” or Israel – may not
be a negative statement, but a positive one
47% of the Alleged Anti-boycott Violations published by BIS include
penalties for ambiguous language
Of those, UAE was the most common origin country at 55%, followed by
Oman
Letters of Credit were the most common document, followed by
shipping certificates
Some cases also included penalties for “standard” boycott language
that specifically referenced boycott or Israel, but some did not
13. Boycott Language – Real World Examples
Does this look like boycott language to you?
Insurance Broker’s Letter: Name and address of the insurance company surveyor in Qatar.
Case No. 99-15 / A687, 29 August 2007, shipments to Qatar, US$8,600
Penalties assessed for furnishing information and failure to report
Letter of Credit: “A certificate issued by the carrier or master of the vessel or their agents
stating that the ship is allowed by the Arab authorities to call at Arabian ports.”
Case No. 06-22 / A694, 20 October 2008, shipments to U.A.E., US$30,000
Failure to report
Letter of Credit: “Complete set of…ocean bills of lading…should state: - (1) that the carrying
vessel is allowed to enter Kuwaiti ports. Separate declaration to that effect from the
owner/captain of the vessel or from shipping company/their agent is acceptable.”
Case No. 07-10 / A702, 26 March 2010, shipments to Kuwait, Bahrain, U.A.E., US$19,800
Failure to report
14. Boycott Language – Real World Examples
Letter of Credit: “Certificate issued by the carrier/master or their agent certifying that the
carrying vessel is allowed by Arab authorities to call at Arabian ports during its voyage to the
United Arab Emirates.”
Case No. 08-06 / A707, 3 August 2010, shipments to U.A.E., US$28,800
Furnishing information and failure to report
Letter of Credit Application: “A certificate from the shipping company or their agents stating
that the goods are shipped on conference/regular line vessel…that is allowed by Arab
authorities to call at Arabian ports/Oman or in case of shipments from USA, Canada, Germany
and UK the vessel is allowed to enter ports in the Sultanate of Oman according to its maritime
laws and port regulations.”
Case no. 09-20(B) / A709, 13 August 2010, shipments to Oman, US$18,500
Refusal to do business, furnishing information, failure to report
15. Boycott Language – Real World Examples
Letter of Credit: “Documents Required…The name and nationality/origin of the
manufacturers of each item of the manufactured/processed goods. Bill of lading to
mention: The carrying vessel is allowed to enter Kuwaiti ports. A separate declaration
to this effect from the captain or owner or agent of vessel is acceptable.”
Case No. 09-13 / A719, 04 October 2011, shipments to Kuwait, US$8,000
Furnishing information and failure to report
Certificate of Insurance: “The undersigned does hereby certify on behalf of the above
insurance company, that the said company has a duly qualified and appointed agent
or representative in Kuwait, whose name and address appear below…”
Case No. 09-03 / A720, 06 October 2011, shipments to Lebanon and Kuwait, US$19,200
Furnishing information
16. Boycott Language – Real World Examples
Be careful with company questionnaires:
“What companies in whose capital are your shareholders? Please
state the name and nationality of each company and the
percentage of share of their total capital.“
Furnishing information to support a boycott is a violation, AND this
language is reportable.
17. Anti-Boycott Compliance Program
Do not trust that your forwarder or your bank will catch boycott
language
Major banks and freight forwarders are listed in the Alleged Violations!
Anti-Boycott compliance has to start with Sales
The first point of contact and the primary contact with the customer
needs to be trained in anti-boycott to recognize and report boycott
language
Don’t assume that your Legal Department understands Anti-Boycott
Don’t assume that they will report boycott language
Don’t assume that your Tax/Finance/Treasury Department
understands Anti-Boycott
18. Anti-Boycott Compliance Program
Manual program
Train Sales, Contracts, Finance, Order Entry, and Legal on Anti-Boycott
Flag transactions for any possible boycott country
Review contracts, Purchase Orders, Letters of Credit, Terms and Conditions,
shipping instructions, and any document requests for boycott language
Record any boycott requests received and file your quarterly (BIS) and annual
(IRS) reports
Issues:
Getting buy-in from other departments
Need to refresh training regularly and train new hires
Relying on the other department to recognize the transaction is for a
boycotting country
19. Anti-Boycott Compliance Program
Software Based
Use your ERP system to flag new customers and transactions for possible boycotting
countries
Automated alert to Trade Compliance and Legal to review the
customer/transaction
Manual review of the contract/LC/other documents still required
Still need to train Sales, Contracts, Finance, and Legal on anti-boycott; catch the
boycott language before the contract or L/C is finalized
Issues:
Getting buy-in/resources from IT to set up the system flag
Getting buy-in from other departments to catch boycott language early
Regularly reviewing the list of countries to include as possible boycotting countries
20. Anti-Boycott Compliance Program
Partnering with other Departments
Develop a close relationship with your Legal Department
Attend their monthly meetings
Keep them informed of your projects, concerns, struggles
Get them to see you as a resource too; differentiate between legal expert and
trade compliance expert
Tailor your communications to your audience, such as citing the specific
regulations
Getting Sales to buy-in
A Tale of Two Approaches: Personal Liability and Keeping the Sale
Personal Liability: Educate them on their liability for agreeing to boycott requests to
get them to contact Trade Compliance
Keeping the Sale: Stress the importance of involving Trade Compliance early in the
process to avoid having to reject a contract
21. Other departments:
Customer Service – personal liability usually works
Finance – avoid having to amend the L/C
Contracts – approach the same as Sales
Anti-Boycott Compliance Program
22. Final Thoughts
Don’t Assume
That only countries in the Middle East are boycott risks, or that all
boycott requests are about Israel
That all boycott requests are negative statements, or obviously
boycott related
That anti-boycott is just a BIS rule
That declining the boycott request is the end of your responsibility
That someone else is taking care of anti-boycott compliance – not
your bank, not your forwarder, not your Legal Department
24. References
U.S. Department of Commerce, Bureau of Industry and Security. Alleged
Antiboycott Violations. Retrieved from
http://efoia.bis.doc.gov/index.php/electronic-foia/index-of-documents/7-
electronic-foia/226-alleged-antiboycott-vilations
U.S. Department of Commerce, Bureau of Industry and Security. Examples of
Boycott Requests. Retrieved from
https://www.bis.doc.gov/index.php/enforcement/oac/7-enforcement/578-
examples-of-boycott-requests
Notes de l'éditeur
HornerXpress Worldwide, Inc., American Rice, Inc., United Source One, Inc.,
MultiCam, Inc., Thermon Europe BV (Netherlands),
Weiss-Rohlig USA LLC, JAS Forwarding (USA) Inc. (Los Angeles),
