The Bureau of Industry and Security has issued a final rule that, effective Sept. 16, revises the Export Administration Regulations to make it it easier for companies to file voluntary self-disclosures of export violations. This rule also updates BIS penalty guidelines so that potential penalties more appropriately reflect the seriousness of the offense by linking that determination directly to transaction value and other circumstances of the violation. Further, in connection with these efforts, BIS has announced the appointment of its first-ever chief of corporate enforcement.
BIS states that its final rule codifies in federal regulations the following changes made by agency memoranda released over the past two years to encourage the filing of VSDs. According to BIS, those changes have yielded a nearly 30 percent increase in significant VSDs and a nearly 20 percent increase in industry tips that resulted in actionable leads.
- provides that BIS’ Office of Export Enforcement will process VSDs in a dual-track manner, with those involving minor or technical violations resolved within 60 days (either by no-action letter or warning letter) and OEE agents and BIS Office of Chief Counsel enforcement attorneys being assigned to potentially significant violations
- adds a streamlined submission process for VSDs involving minor or technical violations, including an abbreviated narrative and the recommendation to bundle multiple minor or technical violations into one overarching quarterly submission
- makes clear that an entity’s deliberate decision not to disclose a significant violation will be considered an aggravating factor when OEE determines what administrative penalties, if any, will be sought
- clarifies that any person, not just a party submitting a VSD, may notify OEE that a violation has occurred and then request permission to return previously unlawful exports to the U.S.
According to BIS, significant revisions to the penalty guidelines include the following.
- gives OEE increased discretion to determine penalties that appropriately reflect the individual circumstances of violations while maintaining its ability to adjust penalties (up or down) within the statutory limits to reflect the applicable factors for administrative action set forth in the guidelines
- formalizes non-monetary resolutions as an enforcement response for cases that involve non-egregious conduct but rise above the level of cases warranting a warning letter or no-action letter
- amends aggravating factor C to include the enabling of human rights abuses as a specific consideration when BIS assesses the potential impact of a violation on U.S. foreign policy objectives
- amends general factor H to make clear that disclosures of conduct by others that lead to an enforcement remedy count as exceptional cooperation
For more information on whether a VSD is the right move for your company, please contact attorney Kristine Pirnia at (202) 730-4964 or via email.
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