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In our first post in this series, we described the different agencies that could be involved in an investigation of export controls and sanctions violations, noting that the agencies have overlapping jurisdiction but different enforcement priorities, authority, requirements, and penalties.

In this post, we focus on how the potential involvement of multiple agencies in an investigation of export controls and/or economic sanctions will impact the way the investigation proceeds, its scope, and its underlying strategy. Ultimately, the goal should be a unified internal investigation that is appropriately scoped and undertaken to satisfy all the interested agencies, i.e., one and done.…

Continue Reading US Export Controls and Economic Sanctions Investigations: The Perils of Parallel Proceedings (Part 2: Investigation Strategy)

Facing an enforcement action arising from potential violations of US export controls and economic sanctions may mean a battle on two, if not three or four, fronts. Multiple agencies within the US government are responsible for oversight and enforcement of laws and regulations, with overlapping jurisdiction, but distinct requirements, potential penalties, and consequences for non-compliance. These agencies also have different authority, priorities, and powers.

Accordingly, a company should anticipate the real possibility that an investigation of these complex laws and regulations will involve more than one US government agency and develop a coordinated strategy to protect against collateral consequences of parallel proceedings.

In this series of blogs, we will set forth the following top five things you need to know about the possibility of multiple agency involvement in an investigation of export controls and/or sanctions:

  • The relevant agencies and regulations.
  • How the involvement of multiple agencies will impact the investigation.
  • Different agencies’ considerations of voluntary disclosures.
  • How to manage interagency communication.
  • How to manage global settlements and what can go wrong.

…
Continue Reading US Export Controls and Economic Sanctions Investigations: The Perils of Parallel Proceedings (Part 1 of 5)

In December 2019, the US Department of Justice (DOJ) announced a revised policy regarding voluntary self-disclosure of export control and sanctions violations by business organizations (VSD Policy).

The VSD Policy, issued by DOJ’s National Security Division (NSD), sets forth the criteria that DOJ, through NSD’s Counterintelligence and Export Control Section (CES) and in partnership with the US Attorneys’ Offices, will now use to determine an appropriate resolution for an organization that makes a voluntary self-disclosure in export controls and/or sanctions matters. Specifically, the VSD Policy encourages business organizations – which now include financial institutions – to self-disclose to NSD “all potentially willful violations of the statutes implementing the US government’s primary export control and sanctions regime.”

The VSD Policy increases incentives for self-disclosure, as the revised policy “signals the [DOJ’s] continued emphasis on corporate voluntary self-disclosure, rewarding cooperating companies with a presumption in favor of a non-prosecution agreement and significant reductions in penalties,” according to a DOJ press release.

The requirements to receive the benefits of the voluntary self-disclosure are set forth in the revised VSD Policy and discussed in further detail below. Importantly, the VSD Policy does not affect the process for businesses to make voluntary self-disclosures to regulatory agencies, such as the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) or the US Department of Commerce’s Bureau of Industry and Security (BIS). Companies that are aware of having committed a potential US sanctions or export controls violation will need to consider the VSD Policy in the context of their interactions with other US agencies. However, given the DOJ’s requirement to disclose willful violations of US economic sanctions and export controls “[p]rior to imminent threat of disclosure or government investigation” and “[w]ithin a reasonably prompt time after becoming aware of the offense,” any company considering disclosure of regulatory violations to either OFAC or BIS will also need to decide, early in the investigation, as to whether to also disclose to the DOJ. A “wait and see” approach may no longer be advisable given the timing consideration and may, in fact, necessitate an early assessment of willful conduct by the company or its employees.

The VSD Policy was designed to more closely align the NSD guidance with recent guidance issued throughout DOJ, thereby providing increasing clarity of the factors that a company should consider in determining whether to voluntarily self-disclose. The VSD Policy supersedes DOJ’s 2016 policy titled “Guidance Regarding Voluntary Self-Disclosures, Cooperation, and Remediation in Export Control and Sanctions Investigations Involving Business Organizations” (the 2016 Guidance).…

Continue Reading DOJ Adds Incentives for Disclosure in Updated Export Control and Sanctions Enforcement Policy