What is the consequence of using NLR when it should not be applied?

Using the NLR (No License Required) designation when it is not applicable can lead to significant consequences, including financial penalties. This misclassification can result in regulatory violations that attract fines imposed by government authorities.

Authorities such as the Bureau of Industry and Security (BIS) or the Office of Foreign Assets Control (OFAC) monitor export compliance closely. If a company incorrectly applies the NLR designation for an export that requires a license, they may face investigations revealing non-compliance with export regulations. Consequently, this can result in enforcement actions that impose monetary penalties, which can range from substantial fines to civil sanctions.

It's essential for exporters to fully understand export classification to ensure compliance with the regulations, as errors in this process can severely impact their operations financially and legally.