On August 16, 2021, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) that it had reached a settlement agreement with Dynatex International (“Dynatex” or “the company”) – a California-based semiconductor company – where the company would pay a civil penalty of $469,060 for allegedly violating the Export Administration Regulations (EAR).

In its Proposed Charging Letter (PCL), BIS charged Dynatex with only one violation of Conspiracy (15 C.F.R. § 764.2(d)), alleging that Dynatex conspired with “others known and unknown,” between December 14, 2015 and January 17, 2020, to export a “DTX-150 MDB scribe and break tool and associated consumables and accessories, items subject to the Regulations and designated EAR99,” to the following two companies on BIS’s Entity List:

(1) Chengdu GaStone Technology Company (CGTC) (also known as Chengdu HiWafer Semiconductor); and

(2) China Electronics Technology Group Corporation 55th Research Institute (CETC 55).

Notably, the PCL details some of the activity, including that “prior to engaging in the transactions, Dynatex that CGTC was on a black list and was asked for clarification that Dynatex could ship the scriber breaker machine to CGTC in China without a problem.  Dynatex was also informed that CGTC’s name should not be shown on shipping documents.” Dynatex responded that the transaction could continue because “CGTC was not their customer, but that of their distributor.” The company also continued to ship items to both Chinese companies without the required licenses even after becoming aware that CGTC and CETC 55 were on the Entity List.

BIS states that at all times relevant, both CGTC and CETC 55, were (and remain) listed on BIS’s Entity List. . Additional licenses are required for the exportation, re-exportation, and transfer of commodities, software, and technology to any listed entities.

The Proposed Charging Letter and Settlement Agreement are available here.

For more information on BIS’s Entity List, the EAR, or possible violations of the EAR, contact our team and see previous posts below.

Bureau of Industry and Security (BIS) Fines Company $200,000 for Violating the Export Administration Regulations (EAR) | International Trade Law (cmtradelaw.com)

Commerce Adds 23 Companies to Entity List Citing Forced-Labor, Military Technology, and Sanctions Concerns | International Trade Law (cmtradelaw.com)

BIS adds more Burmese entities to Entity List | International Trade Law (cmtradelaw.com)