Navigating the fluctuating and often complicated terrain of international sanctions and export control laws can be a formidable task for any company. Even the existence of a sanctions compliance program, although highly recommended, is no guarantee against potential violations. Fortunately, just last month the Department of Justice (DOJ) announced a new policy offering leniency to businesses facing sanctions offenses. However, leniency is not granted lightly, as businesses must do their part to fulfill certain conditions.
DOJ's Export Control and Sanctions Enforcement Policy for Business Organizations
Paraphrasing what is noted in the Introduction to the DOJ's newly issued "Export Control and Sanctions Enforcement Policy for Business Organizations" (Policy), businesses and their employees are in the best position to combat and report export control and sanctions violations. Therefore, the DOJ encourages companies to voluntarily self-disclose all such violations to its National Security Division (NSD).
According to this new Policy, absent any aggravating factors, there is a presumption that a company will receive a non-prosecution agreement and will not be fined if the company meets the following three criteria:
voluntarily self-disclosure of export control or sanctions violations to the Counterintelligence and Export Control Section (CES) of the NSD,
full cooperation, and
timely and appropriately remediation of the conduct that led to the violation.
The new Policy provides additional details as to what actions constitute voluntary self-disclosure, what conduct is expected for full cooperation, what is meant by timely and appropriate remediation, as well as provides some examples of potential aggravating factors.
Additionally, the Policy explicitly requires that the disclosure be made directly to CES for a company to receive leniency under the Policy. Therefore, reporting to another agency, such as to the Office of Foreign Assets Control (OFAC), does not meet the requirements of the Policy, which may seem counterintuitive since OFAC is the primary administrator and enforcer of U.S. economic and trade sanctions.
As noted in the concluding paragraph, the Policy will serve to:
deter export control and sanctions violations from occurring in the first instance;
encourage companies to implement strong export control and sanctions compliance programs to prevent and detect such violations; and
increase the ability of the DOJ to prosecute individual wrongdoers whose conduct might otherwise have gone undiscovered or been impossible to prove.
The new Policy supersedes the DOJ's prior guidance titled, “Guidance Regarding Voluntary Self-Disclosures, Cooperation, and Remediation in Export Control and Sanctions Investigations Involving Business Organizations,” dated October 2, 2016. Notably, financial institutions were excluded from taking advantage of the prior guidance. This is no longer the case under the new Policy, which applies to all business organizations.
To read the full text of the DOJ's "Export Control and Sanctions Enforcement Policy for Business Organizations," see the pdf document here: https://www.justice.gov/nsd/ces_vsd_policy_2019/download