A revised policy regarding voluntary disclosures of export control and sanctions violations has been issued by the Department of Justice. A DOJ press release suggests that these revisions, which were effective as of Dec. 13, are designed to persuade more companies to submit VSDs than have done so after the department issued its first guidance on this issue in October 2016.
For more information on export controls and compliance, please contact attorney Kristine Pirnia.
According to the DOJ, the revised guidance contains three changes intended to provide further incentives for corporations to voluntary self-disclose all potentially willful violations of the Arms Export Control Act, the Export Control Reform Act, and the International Emergency Economic Powers Act directly to the department’s National Security Division. Perhaps the most significant are clarifications that Assistant Attorney General for National Security John Demers said should “reassure companies that, when they do report violations directly to DOJ, the benefits of their cooperation will be concrete and significant.”
Specifically, the guidance now states that for companies that voluntarily disclose a violation, fully cooperate with NSD, and timely and appropriately remediate, there is a presumption that the company will receive a non-prosecution agreement and will not be assessed a fine if there are no aggravating factors. Such factors may include exports of items that are particularly sensitive or to end-users that are of heightened concern, repeated violations, the involvement of senior management, and significant profit from the violations.
In addition, if aggravating circumstances warrant an enforcement action other than a non-prosecution agreement (i.e., a deferred prosecution agreement or guilty plea) but the company satisfies all other criteria, the DOJ will recommend a fine that is at least 50 percent lower than would otherwise be available under the alternative fine provision and will not require the imposition of a monitor if the company has implemented an effective compliance program.
The DOJ states that the prior guidance did not provide a presumption of any kind and did not assign any concrete benefits to companies that met certain criteria.
Other changes include (a) clarifying that disclosures made to regulatory agencies but not the DOJ will not qualify for the benefits provided in the VSD policy and (b) drafting the policy to more closely resemble existing and analogous guidance from other DOJ components (e.g., in the definitions of VSD, full cooperation, and timely and appropriate remediation) in an effort to standardize DOJ voluntary disclosure policies to the extent possible.
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