The U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) recently issued a Final Order against The Indium Corporation of America, citing eleven (11) alleged violations of the Export Administration Regulations (“EAR”) between April 14, 2022, and March 31, 2023. The violations involved unauthorized exports of solder preforms, solder wires, and solder ribbons to Russia. These items, though classified as EAR99, required an export license under § 746.8(a)(7) of the EAR due to their inclusion in Supplement No. 5 to Part 746, which imposes licensing requirements on certain items destined for Russia and Belarus. The total value of these shipments was $96,505.89. The Indium enforcement action emphasizes the significance of adhering to export controls and addressing red flags in transactions involving restricted destinations.

The transactions in question began when Indium received an inquiry in March 2022 from Ostec Integra Ltd., a Russian electronics and defense contractor that specializes in microelectronics and has ties to aerospace and other sensitive industries. Ostec—part of the broader Ostec Group—placed an order for solder ribbon, an item used in various high-precision electronic applications, including microwave systems and aerospace components. Despite the designation of these items as EAR99, their specific classification under the Harmonized Tariff Schedule (“HTS”) meant they required a license for export to Russia. The transactions also involved two (2) intermediary freight forwarding companies: Inter-Trans Sp. z.o.o. of Poland and BMA Spedition GmbH of Germany. These intermediaries facilitated the shipments, which ultimately reached Russia, and played a significant role in the transactions. Notably, all three entities—Ostec, Inter-Trans, and BMA Spedition—were later designated by the Office of Foreign Assets Control (“OFAC”) as part of a network supporting Russia’s military-industrial complex.

BIS’s allegations highlighted multiple red flags that arose during these transactions but were not adequately addressed by Indium. For example, shortly after the initial order in April 2022, Ostec attempted to alter the shipping route, requesting that the goods be sent through Hong Kong instead of Germany, citing logistical convenience. Such requests are explicitly identified in BIS’s guidance as potential indicators of export control evasion. Furthermore, Inter-Trans requested that Indium delete personnel names and Russian contact details from shipping documentation, citing concerns about potential scrutiny. Despite the apparent risks associated with these requests, Indium complied, enabling the transactions to proceed. BIS noted that the combination of these factors—last-minute changes to shipping instructions, unusual routing through third countries, and incomplete documentation—constituted clear red flags that should have prompted greater scrutiny.

The violations were compounded by the involvement of entities that were later sanctioned by OFAC. Ostec Integra Ltd. was part of the Ostec Group, a Russian conglomerate supporting the military-industrial sector, including missile systems and aerial bomb production. Inter-Trans and BMA Spedition played key roles in facilitating hundreds of shipments to Ostec and other Russian entities following the imposition of sanctions and export controls on Russia. While the violations occurred before these designations, BIS emphasized the importance of identifying and mitigating risks associated with transactions involving high-risk jurisdictions and entities.

BIS ultimately charged Indium with eleven (11) violations under § 764.2(a) of the EAR for engaging in prohibited conduct. The potential penalties included civil fines of up to $364,992 per violation, denial of export privileges, and other administrative sanctions. Ultimately, however, BIS imposed a modest fine of $180,000 on Indium, a sum that reflected the company’s voluntary disclosure of the violations and cooperation during the investigation. Notably, BIS chose not to pursue additional charges related to misleading Electronic Export Information (“EEI”) filings, which omitted the ultimate consignee and destination, citing the voluntary nature of Indium’s disclosure.

This case underscores BIS’s commitment to enforcing export controls related to Russia and Belarus, particularly in the context of the ongoing conflict in Ukraine. The enforcement action highlights the critical importance of robust compliance programs, which must include comprehensive due diligence processes and the ability to identify and escalate red flags in real time. Exporters are reminded of their obligations under the EAR to ensure that transactions involving restricted destinations are fully compliant with U.S. export control laws and regulations. Failure to do so—even for items classified as EAR99–can result in significant penalties and reputational harm. As BIS continues to prioritize enforcement in this area, companies must remain vigilant, particularly when dealing with high-risk jurisdictions or transactions involving intermediaries and ultimate consignees linked to restricted end uses or users.