Do Exporters Have to Keep Records, Too? A Guide to the Ins and Outs of Export Recordkeeping
I sincerely hope this does not shock anyone but recordkeeping is not only for importers! Exporters must maintain records as proof of compliance with U.S. government regulations for a minimum of 5 years. If Customs and Border Protection (CBP), or the Bureau of Industry and Security (BIS), Census, or any other U.S. Government Agency that has control over your product asks you to produce your records and you don’t have them, or even worse you instruct your staff to shred them, you are in Trouble with a Capital “T.”
What records should be kept, you ask? The Export Administration Regulations (EAR) provides a list of records that must be retained. Of course, when you read this list, you have to figure out exactly what this list includes — or shall I say, does not include…you won’t find the kitchen sink listed (but almost).
- Export control documents. Examples include license and license application, AES record, dock receipt, 7512 forms, and antiboycott reports. The only exception is a party that submits documents electronically to BIS via the SNAP-R system; these parties are not required to retain copies of submitted documents. Note: I would not count on this and I would be sure to keep all copies for reference purposes.
- Memoranda. Examples include written records of business communications, reminders, agreements, and contracts.
- Notes.
- Correspondences.
- Contracts.
- Invitations to bid.
- Books of account. This means accounting records, which may be used to defend against an audit.
- Financial records. All formal records of the financial activities of a business or person.
- Restrictive trade practice or boycott documents and reports.
- Notifications from BIS. This includes notification from BIS of an application being returned without action, of an application being denied, of the results of a commodity classification or encryption review request conducted by BIS.
- Other records pertaining to the types of transactions described in §762.1.
There are 40 more. I’m not kidding. I cannot in good conscience list all of the 51 record retention references! I will leave this up to you to review under Part 762.2. Remember, you must to be certain all of your recordkeeping requirements are met.
So, how long do you have to keep this stuff? Export Regulations state 5 years from the latest of the following times:
- The date of export from the U.S.
- The date of any known re-export, transshipment, or diversion.
- The date of the termination of the transaction, whether formally in writing or by any other means.
- In the case of records of pertaining to transactions involving restrictive trade practices or boycotts, the date the regulated person receives the boycott-related request or requirement.
OK, it’s been five years. Now I can get rid of it, right? Not so fast. If BIS or any other government agency makes a formal or informal request for a certain record or records before that 5 year period is up, such record or records may not be destroyed or disposed of without the written authorization of the agency concerned. This prohibition even applies to records that you may have been holding longer than 5 years.
What happens if I don’t have the records? Now we’re talking monetary fines and/or the loss of export privileges. Serious stuff. Export Enforcement Agents have said that companies beg them not to suspend their export privileges.
But I have some good news. There is a list of 36 records that are exempt from the recordkeeping requirements. Knock yourself out!
I’m sure you are saying, “Okay, enough already!” BUT there is more! Recordkeeping responsibilities and retention time frames can vary by specific transactions and agencies. The State Department, OFAC, CBP, and other government agencies with control over your particular commodity will have their own document retention time frames. You as the exporter have to abide by all these various recordkeeping requirements, no ifs, ands or buts about it.
It gets a little tricky for the retention time frame for each agency, so you need to be mindful. For example, under the State Department ITAR Regulations, the exporter must keep records for a period of five years from the expiration of the license or other approval. If you have a Customs drawback, you have to keep all records relating to the drawback for three (3) years after the date of the payment of the claim.
Take a look at the links below and give some serious thought as to whether your company is keeping all of the necessary records for the required time frame.
- Export Administration Regulations: 15 CFR 762 (EAR)
- Foreign Trade Regulations/ Electronic Export Information (EEI): 15 CFR 30.10 & 30.15 (FTR)
- International Traffic In Arms Regulations: 22 CFR 122.5 (ITAR)
- U.S. Customs and Border Protection (CBP): 19 CFR 163.4
- Office of Foreign Assets Control: 31 CFR Part 501.601 OFAC
If you feel overwhelmed by this and would like some guidance, contact us!
In the meantime, for some more useful export compliance information, check out Understanding Your Responsibilities as an Exporter and a breakdown of Common Terminology: Export Terms.
Delphine says:
Yes. Using the Free Trade Zone in Colon, (the second larsegt in the world after Hong Kong) you can drop ship in container sized shipments more efficiently and at less cost than any other port to other port cities in the Caribbean or South America. (You might also consider shipping from Colon to Limon, Costa Rica’s only Caribbean Port. Costa Rica and Panama have just signed a free trade agreement.)BUT it does depend on what kind of goods you are selling and what the market is in each of the three islands that you wish to sell to. Will you be competitive? Do you have a product that they want?Do you have sales reps in each island? Or a sales rep who will travel and sell. Nothing can happen until you have a sales order. And it takes shoe leather to get the order when you’re new. After you get buy-sell relations started, and get return orders, you will have a stable business. There are many of this type operating out of Colon, taking advantage of the location and the Free Trade aspect.Good luck! It’s a good idea.