Search Our Website:
BIPC Logo

The U.S. Department of Justice (DOJ) recently announced significant revisions to its Corporate Enforcement Policy (CEP) and promised a “surge of resources to address a troubling trend: the intersection of corporate crime and national security.” That same day, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS), the Department of the Treasury’s Office of Foreign Assets Control (OFAC), and DOJ released a Tri-Seal Compliance Note outlining red flags and enforcement priorities relating to the use of third-party intermediaries to evade Russia-related sanctions and export controls. DOJ put these national security enforcement policies into action on March 2, 2023 by arresting two individuals for allegedly conspiring to evade export laws by supplying aviation technology to Russian companies.

When read together, these developments and enforcement action, along with those discussed below, appear to send a clear message—that DOJ is set to prioritize the investigation and enforcement of various national security laws, including those involving economic sanctions and export controls.

Companies should expect an upshot in investigative activity and enforcement actions in this area and should carefully evaluate their corporate compliance programs to address the evolving sanctions and export controls regulations.

DOJ National Security Division Expansion

As stated by Assistant Attorney General for National Security Matthew G. Olsen, ever since Russia’s invasion of Ukraine, a DOJ “priority has been the robust enforcement of U.S. export and sanction laws and cracking down on efforts to evade those laws.” To support these increased enforcement efforts, which will include sanctions evasion investigations worldwide in various industries like fintech, banking, transportation, and defense, Deputy Attorney General Lisa Monaco (DAG Monaco) stated that the National Security Division (NSD) would onboard 25 new prosecutors within the NSD and create the new position of Chief Counsel for Corporate Enforcement. Outside of the NSD, the Bank Integrity Unit (BIU) of the Criminal Division’s Money Laundering and Asset Recovery Section (MLARS) is set to see increased funding and staffing and has been praised by DAG Monaco as having a significant track record or prosecuting global financial institutions for sanctions violations. Moreover, this push for additional funds and staffing to pursue further enforcement in the NSD comes on the heels of DOJ creating the Disruptive Technology Strike Force to combat attempted theft of advanced technology, and the KleptoCapture Task Force, formed shortly after the war in Ukraine, to seize luxury assets of Russian oligarchs.

Updated NSD Policy on Corporate Enforcement and Voluntary Disclosure

In addition to strengthening its enforcement apparatus, the NSD is also reengaging its efforts to encourage self-disclosure by those individuals and/or entities which may be in violation of national security regimes. On March 1, 2023, the NSD released an updated version of its Enforcement Policy for Business Organizations, which correlates with the Criminal Division’s CEP and the United States Attorneys’ Offices’ Voluntary Self-Disclosure Policy (VSD). The NSD policy emphasizes and encourages, as the other corporate enforcement policies do, a business’s voluntary self-disclosure, full cooperation, and timely and appropriate remediation when confronted with potential violations of the statutes implementing the U.S. government’s primary export control and sanction regimes—the Arms Export Control Act (AECA), 22 U.S.C. § 2778, the Export Control Reform Act (ECRA), 50 U.S.C. § 4819, and the International Emergency Economic Powers Act (IEEPA), 50 U.S.C. § 1705. Such voluntary disclosure by a company to NSD will generally qualify for a declination and no monetary penalty, subject to aggravating factors. Disclosures to other regulatory agencies, such as Commerce or Treasury, will not afford companies the benefits conveyed under NSD’s policy.

The policy will not only guide NSD through potential criminal violations, but also matters arising under the Foreign Agents Registration Act (FARA), laws prohibiting material support to terrorists, and criminal violations in connection with the Committee on Foreign Investment in the United States (CFIUS) and other national security proceedings.

Key Takeaways

This DOJ appears to have a renewed focus on ensuring corporate compliance through national security enforcement, including by working closely with U.S. Attorney’s Offices and the DOJ Criminal Division.

Thus, companies that engage with international counterparts must be vigilant in their compliance efforts. Conducting due diligence on each customer and business partner is critical and, companies should employ a risk-based approach to sanctions and export compliance by developing, implementing, and updating its own compliance policies and procedures based on its individual risk-profile.

As the new DOJ policies go into effect, companies should keep in mind the important factors considered by NSD when resolving corporate criminal matters involving export control and sanction regimes:

  • Self-Disclosure: Upon discovery of potential violations, companies should consult with outside counsel to navigate the legal issues and consider the risks and benefits of self-disclosure to NSD.
  • Cooperation: Companies should work closely with counsel to ensure proper coordination with NSD once an investigation has been initiated.
  • Remediation: Companies should ensure their compliance program(s) clearly outline policies and procedures to conduct root-cause analyses and, where appropriate, remediation to address violative conduct.

Buchanan’s International Trade and National Security practice group is available to help review and revise corporate compliance programs and answer any questions regarding NSD’s revamped export control and economic sanction enforcement policies.