NEW DOJ GUIDANCE COULD BE A GAME CHANGER FOR EXPORT CONTROLS AND SANCTIONS ENFORCEMENT
The US Department of Justice (DOJ) has issued Guidance that will complicate the process of investigating and disclosing violations, which will likely create headaches and new risks for industries. The Guidance, published on 2 October 2016 by the DOJ’s National Security Division (NSD), sets out incentives for companies facing possible violations of sanctions and export control laws to disclose those violations voluntarily to the DOJ whenever any of the conduct could be considered ‘wilful’ and therefore, potentially criminal in nature. The incentives are also designed to encourage companies to cooperate in DOJ investigations, and take remedial steps, in exchange for promises of leniency. Notably, the Guidance does not apply to financial institutions, which, in the DOJ’s view, have unique reporting obligations that achieve a similar goal.
While export controls and sanctions violations have always carried a risk of criminal exposure, this new Guidance may dramatically change the risk profile and enforcement process by encouraging companies to assess themselves, from the outset, whether an element of wilfulness may be involved and, if so, to disclose to it to the DOJ. That would be in addition to a disclosure to the relevant administrative agency (primarily, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC), the US Department of State’s Directorate of Defence Trade Controls (DDTC) and/or the US Department of Commerce’s Bureau of Industry and Security (BIS)). The wilfulness standard, established in Bryan v. United States, essentially turns on whether the defendants knew their conduct was unlawful.
Jan-Mar 2017 Issue
Steptoe & Johnson LLP