The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) recently imposed a $1 million civil penalty against Teledyne FLIR, a U.S. manufacturer of thermal imaging cameras, for multiple violations of the Export Administration Regulations (EAR) involving exports to China and Hong Kong. The enforcement action highlights a recurring compliance challenge for multinational exporters: the complex application of the EAR’s de minimis rules, as well as the importance of careful screening and strict adherence to license conditions.
According to BIS, the case involved 19 violations, including errors in calculating U.S.-origin controlled content under the de minimis rule, unauthorized exports to an Entity List address in Hong Kong, and failures to comply with recordkeeping obligations attached to a BIS license.
The $1 million penalty must be paid within 30 days of the February 26 enforcement order or the company risks revocation of export privileges for one year.
More than half of the violations stemmed from incorrect application of the EAR’s de minimis rules, which determine when foreign-made products incorporating U.S.-origin controlled components become subject to U.S. export controls.
Under the EAR, foreign-made items exported abroad can still require a U.S. license if they incorporate more than 25 percent controlled U.S.-origin content by value when exported to China. Determining this percentage requires exporters to calculate the fair market value of the entire discrete product at the time it was exported from the United States.
From February 2017 through April 2018, BIS said Teledyne FLIR exported thermal cameras from Sweden to China without a license because it undervalued the U.S.-origin content incorporated into foreign-made items.
The products involved were thermal camera kits classified under ECCN 6A003.b.4.b and camera cores classified under ECCN 6A003.
BIS determined that the company misapplied the valuation methodology in two ways.
First, when calculating the value of camera kits, the company based the valuation only on the focal plane array component rather than the entire camera kit. Because the focal plane array is the controlled component, the company mistakenly assumed that the rest of the system should not be included in the valuation.
Second, when calculating the value of camera cores, the company valued the camera cores without including the lens, even when the camera core was exported together with a lens. The company believed the lens — classified as EAR99 — should not be included because it was not controlled.
BIS rejected that interpretation. The agency stated that the entire discrete product, including lenses when shipped together, must be included when calculating fair market value for de minimis purposes.
These errors resulted in exports that exceeded the 25 percent threshold and therefore required a license for export to China.
Attempt to Adjust Product Value Raises Additional Compliance Concerns
Another violation involved Teledyne FLIR’s collaboration with a Chinese drone manufacturer to integrate a thermal camera into a gimballed camera platform used in civilian drones.
According to BIS, the parties negotiated a “market collaboration fee” intended in part to reduce the value of the U.S.-origin camera relative to the total system price. The apparent goal was to ensure that the U.S.-origin content represented less than 25 percent of the system value, thereby avoiding EAR jurisdiction.
BIS concluded that this approach constituted an impermissible de minimis calculation because the valuation did not reflect the fair market price of the product as required under the regulations.
The agency made clear that exporters cannot artificially structure pricing arrangements to manipulate de minimis calculations.
Recordkeeping Failures and Entity List Screening Issues
BIS also cited violations related to license recordkeeping requirements.
In 2020, a European subsidiary used a BIS license to export a thermal camera valued at approximately $1,000 to Teledyne FLIR’s Shanghai affiliate. The license allowed the camera to be used for demonstrations but required the company to maintain detailed records documenting each demonstration, including dates, locations, recipients, and serial numbers.
BIS found that the company failed to maintain those required records.
In addition, Teledyne FLIR made eight exports of thermal cameras classified under ECCN 6A993 to a Hong Kong address that had been added to the Entity List in 2024. BIS recently began adding specific addresses — rather than only company names — to the Entity List to target shell companies and temporary offices used to evade export controls.
Although Teledyne FLIR asked its screening vendor about implementing address-only screening updates, the company’s compliance system failed to identify the restricted destination until early 2025, when an employee reported the issue to the company’s trade compliance team.
Voluntary Self-Disclosure Mitigated Penalty
BIS noted that Teledyne FLIR submitted voluntary self-disclosures regarding both the de minimis violations and the Hong Kong exports. Such disclosures typically play an important role in mitigating penalties, though the agency nevertheless imposed a significant fine.
Key Compliance Lessons
This enforcement action highlights several important lessons for exporters:
- De minimis calculations must reflect the fair market value of the entire product, not just controlled components.
- Pricing structures cannot be manipulated to artificially reduce U.S.-content percentages.
- Screening systems must capture Entity List addresses, not just entity names.
- License conditions and recordkeeping requirements must be strictly followed.
As export controls continue to evolve — particularly regarding China-related technology — companies must ensure their compliance programs address the technical nuances of de minimis rules and screening obligations. Even seemingly technical valuation errors can lead to significant enforcement exposure.
