DOJ emphasizes business cooperation for export penalty mitigation

The U.S. Justice Department (DOJ) has updated its 2016 policy to encourage companies to voluntarily self-disclose export control and sanctions violations to the department.

The department said the revised Export Controls and Sanctions Enforcement Policy for Business Organizations signals its “continued emphasis on corporate voluntary self-disclosure (VSD), rewarding cooperating companies with a presumption in favor of a non-prosecution agreement and significant reductions in penalties.”

“We need the private sector to come forward and work with DOJ,” said Assistant Attorney General for National Security John C. Demers in a statement. “The revised VSD policy should reassure companies that, when they do report violations directly to DOJ, the benefits of their cooperation will be concrete and significant.”

Specifically, DOJ encourages companies to voluntarily self-disclose potentially willful violations of the Arms Export Control Act, Export Control Reform Act, and International Emergency Economic Powers Act to National Security Division’s Counterintelligence and Export Control Section (CES).

“Business organizations and their employees are at the forefront of the effort to combat export control and sanctions violations. As the gatekeepers of our export-controlled technologies, business organizations play a vital role in protecting our national security,” the new policy said.

The updated policy clarifies the benefits to companies that voluntarily self-disclose an export control or sanctions violation, fully cooperate with the department and demonstrate immediate compliance improvements. 

“If aggravating circumstances warrant an enforcement action other than a non-prosecution agreement, but the company satisfies all other criteria, the VSD policy states that DOJ will recommend a fine that is at least 50% lower than what would otherwise be available under the alternative fine provision and will not require the imposition of a monitor,” the department said. 

To benefit from this policy, companies must self-disclose export control and sanctions violations to DOJ in addition to the relevant regulatory agencies, such as the Commerce Department’s Bureau of Industry and Security, the State Department’s Directorate of Defense Trade Controls and the Treasury Department’s Office of Foreign Assets Control.

“Of course, companies should continue to make voluntary self-disclosures to appropriate regulatory agencies under existing procedures, but to benefit from the department’s policy, companies must report to CES,” said Deputy Assistant Attorney General David Burns in a speech in Washington, D.C., on Dec. 13.

In April, DOJ’s Criminal Division released updated guidance to white-collar prosecutors on the evaluation of corporate compliance programs, with a focus on fraud.

Burns said the department’s new Export Controls and Sanctions Enforcement Policy does not include a “carve-out” for financial institutions (FIs) like the 2016 policy. “As a result, going forward, all business organizations, including FIs, can take advantage of the policy,” he said.