U.S. agencies are continuing to increase their efforts to enforce export control and sanctions laws and regulations, prompting more exporters to focus on compliance as they seek to avoid the monetary and other costs that violations can incur. But it’s also important for exporters to have plans in place that set forth the steps they will take to minimize the consequences when violations do happen.
Export compliance programs can and should establish policies and procedures designed to address known risks and prevent violations, but it is equally important that they offer clear guidance on how to detect and respond to suspected or actual incidents of noncompliance. Among other things, they should provide for specific internal (including anonymous) reporting procedures; detailed processes for investigating, confirming, and correcting problems; and disciplinary actions for failures to act. ECPs should also be regularly reviewed and updated to reflect current laws and regulations, industry best practices, relevant changes in corporate operations, and lessons learned from internal and external audits, enforcement actions, and other experiences.
Of course, no policies or procedures will be effective unless they are followed, and a strong internal culture of compliance can go a long way toward making that happen. This culture typically starts at the top, where leaders should consistently communicate an intolerance of willful violations but should also create an environment in which employees are empowered to report potential problems in good faith without fear of retribution. Leaders should also ensure that employees have adequate training, knowledge, and resources tailored to their responsibilities; regularly monitor their compliance; and enforce standards consistently.
A good ECP also establishes what will happen when a violation is found. For example, the exporter should conduct a thorough internal investigation to ensure all violative actions are identified, determine why they happened, and then develop corrective actions to ensure they do not recur. These measures should be implemented as quickly as possible and monitored to make sure they are working properly.
Effective ECPs and rapid remedial measures are frequently given great weight as mitigating factors in enforcement actions. Voluntary self-disclosures of violations to federal agencies often receive similar treatment. However, there are both pros and cons to submitting VSDs, and exporters should strongly consider consulting a knowledgeable advisor like ST&R before making a decision.
Sandler, Travis & Rosenberg’s export professionals have decades of experience helping companies develop and implement ECPs and respond to enforcement proceedings.
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