Background

The Bureau of Industry and Security will act immediately to secure “significantly higher penalties” and make other changes designed to further enhance its export enforcement measures and promote export compliance efforts by companies. Matthew Axelrod, assistant secretary of Commerce for export enforcement, said in a recent memo to staff members of the BIS Office of Export Enforcement that these changes are designed to “send a powerful message: implement effective compliance programs on the front end or risk penalties on the back end that will hurt both your reputation and your bottom line, either through stiff monetary penalties, or the potential denial of export privileges, or both.”

For more information on how to ensure your company is in compliance with export rules, please contact attorney Kristine Pirnia at (202) 730-4964 or via email.

To ensure that the most serious administrative violations trigger commensurately serious penalties, Axelrod said BIS will “aggressively and uniformly” apply existing settlement guidelines, including aggravating as well as mitigating factors. This will ensure that all appropriate cases are properly deemed egregious, which in turn “opens the door for more significant penalties under our regulations.” In addition, OEE will act in all cases to ensure that aggravating factors are applied more uniformly to escalate penalty amounts where appropriate.

BIS is also ending its use of “no admit, no deny” settlements where companies or individuals resolve the allegations against them but do not admit their conduct. Axelrod said that in return for the reduced penalties that settlements provide “there needs to be an admission that the underlying factual conduct occurred” so that “others will have a clear sense of what the company or individual did to run afoul of our rules and can modify their own behavior to prevent a similar outcome.” (For similar reasons, BIS recently started making administrative charging letters public when they are filed with an administrative law judge instead of after the matter is resolved, which can take years.)

Further, BIS is accelerating its processing of voluntary self-disclosures for serious cases. The agency will resolve the vast majority of VSDs - those that involve minor or technical infractions – with a warning letter or no-action letter within 60 days of a final VSD submission. For VSDs that indicate potentially more serious violations, BIS will assign both a field agent and an Office of Chief Counsel attorney, and in the most serious cases the Department of Justice’s Counterintelligence and Export Control Section will assign an attorney as well. In both cases the assigned agent and attorney will follow up with the filer to obtain further information concerning the VSD.

Finally, for pending administrative cases where the violations are not egregious and have not resulted in serious national security harm, but rise above the level of cases warranting a warning letter or no-action letter, BIS will offer settlement agreements that will not impose monetary penalties but instead require remediation such as training and compliance requirements, provided that the alleged violator is willing to accept responsibility, admit to their conduct, and commit to enhanced compliance measures.

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