US Thermal Imaging Camera Producer Discloses Possible Export Control Violations

Flir Systems, a U.S.-based producer of thermal imaging cameras, is being investigated for possible export control violations, the company said in an Aug. 6 filing with the Securities and Exchange Commission. Flir said it voluntarily disclosed the potential violations to the State, Commerce and Justice departments in 2017.

Flir did not provide details about the possible violations but said Commerce’s Bureau of Industry and Security was concerned about sales to China. One month after Flir disclosed the violations, BIS “informed” the company of “additional export licensing requirements” that restrict its ability to sell certain thermal products without a license to Chinese customers. “This action was precipitated by concerns of sale without a license or potential diversion of some of the Company's products to prohibited end users” and sanctioned countries, the filing said. The company said BIS eventually “favorably modified these restrictions” to reduce their impact on sales of Flir’s “Tau camera cores” to certain customers in China.

Flir said it may be subject to “substantial fines and penalties,” suspension of existing licenses and loss of export privileges if Commerce decides it violated export controls. The company added that it is “unable to reasonably estimate the time it may take to resolve these matters.”

In a separate matter, Flir signed a consent agreement in 2018 with the State Department’s Directorate of Defense Trade Controls after it illegally exported technical data and defense services, improperly used export licenses and failed to report certain payments. Flir said it voluntarily disclosed those violations and is in the process of paying a $30 million fine, half of which was suspended if it adheres to an agreement to dedicate $15 million to improving the company’s compliance procedures.