1. Anti-Money Laundering
Selling overseas, or to customer who exports your product, may raise risk of
recently unveiled anti-money laundering programs.
2. International Traffic in Arms Regulations ("ITAR")
The Arms Control Act and ITAR prescribe criminal penalties (fine of up to $
1 million and/or imprisonment up to 10 years, 22 U.S.C. Sec. 2778(c)) for willful
violations. In addition, ITAR violations may result in loss of export or import
privileges (called "debarment"), 22 C.F.R. 127.7. Inadvertent violations should
not generate penalties at the higher levels, but the government has discretion
in these matters, and several violations have been reported prior to Sept.
11. For example, McDonald Douglas was fined by the Commerce Department for
$2.1 million for selling China aerospace equipment which China installed at
a military facility. It is expected that the Department of State will increase
its scrutiny as a result of the events of Sept. 11.
In this global economy, companies buy and sell worldwide. Running afoul of
ITAR's regulations can be unintentional. For example, it may not be a time
to export top-ofthe- line PC's to certain Middle Eastern countries - when the
PC's might be used to aid against USA military actions.
In addition to bullets, tanks, and the usual items which vendors consider to
be of military use, ITAR applies to hardware, products, data, software, engineering
designs and the like. Refer to the U.S. Munitions List 21 C.F.R. 121.
ITAR also regulates the importation of these items into the USA. Even Canada
and other members of NATO countries are affected to some degree by ITAR. Refer
to the Office of Defense Trade Controls at www.pmdtc.org.
3. Computer Hacking and RICO Prosecution
Under new anti-terrorism legislation, the USA Patriot Act, some computer crimes
may be treated as terrorist acts which may be prosecuted under RICO, the federal
racketeering statute. The RICO law was originally designed to battle organized
crime. The provision will protect attempts to cause damage to commercial and
4. USA Patriot Act and the Dot-Com
The federal government is concerned that terrorists may be communicating their
plans via e-mail and the Internet. The USA Patriot Act, a federal law signed
by the President on October 26, gives federal law enforcement easier access
to a computer user's Internet activity. If the credit professional is employed
by a dot-com or telecom company, the Patriot Act may affect them as follows:
cable companies providing Internet service are governed by wiretap laws; authorizes
interception of a hacker's ecommunications; allows search and seizure of property
without notice; Internet service providers may disclose information without
a subpoena if information could save lives. It is unclear as to what will be
the financial cost to dot-coms to comply with subpoenas and search warrants.
Douglas G Fox, GSCFM, CCE is a member of Mid-Atlantic NACM
and is active in the Greater Delaware Valley Region and Philadelphia area.
Scott E. Blakeley is a principal of Blakeley & Blakeley LLP
where he practices creditors' rights and bankruptcy law. He can be reached