Effective August 18, 2023, the U.S. Department of Commerce, Bureau of Industry and Security (BIS) issued amendments to the Commerce Control List (CCL) (15 CFR Part 774) of the Export Administration Regulations (EAR) to formalize changes based on Nuclear Supplier Group (NSG) commitments to prevent nuclear proliferation and the development of nuclear-related weapons of mass destruction.…
Continue Reading BIS Promulgates CCL Changes Based on Nuclear Supplier Group Commitments
On July 26, 2023, Assistant Secretary for Export Enforcement Matthew Axelrod of the US Department of Commerce’s Bureau of Industry and Security (“BIS”) spoke at the Society for International Affairs “Back to Basics” conference about BIS’s recent efforts to build partnerships in export controls regulation and enforcement and developments in antiboycott rules. In his address, Assistant Secretary Axelrod likened the Marvel cinematic universe—the blockbuster superhero films that feature intertwined characters and storylines—with the current export control landscape. By way of this analogy, Assistant Secretary Axelrod articulated BIS’s view that an ensemble cast of its interagency colleagues, international partners, private industry, and academia is central to a successful export control strategy.…
On July 26, 2023, the US Department of Commerce’s Bureau of Industry and Security (BIS), the US Department of the Treasury’s Office of Foreign Assets Control (OFAC), and the US Department of Justice (DOJ) issued a joint compliance note (the Note) focusing on the voluntary self-disclosure (VSD) policies that apply to US sanctions, export controls, and other national security laws. The Note is the second collective effort by the three agencies to inform the private sector about civil and criminal enforcement trends, as well as to provide guidance to the business community and all persons regarding compliance with US sanctions and export laws. The first joint note, which focused on combatting third-party intermediaries used to evade Russia-related US sanctions and divert export-controlled items that are contributing to Russia’s foreign harmful activities, was issued on March 2, 2023.
The Note does not change the existing VSD policies of the three agencies, but highlights the benefits of their existing VSD policies to incentivize companies to promptly disclose and remediate. Likewise, the Note highlights the risks companies face, in at least some instances, should they choose not to disclose.
The Note also encourages whistleblowers to report suspected violations of sanctions and anti-money laundering laws to the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN), for which persons that submit whistleblower tips may be awarded up to 10% to 30% of the monetary penalty collected for successful US government enforcement actions.…
On April 18, 2023, Matthew Axelrod, Assistant Secretary for Export Enforcement at the Department of Commerce’s Bureau of Industry and Security (BIS), issued a memorandum outlining two important changes to BIS’s settlement guidelines when significant potential violations of the Export Administration Regulations (EAR) are identified. Specifically, BIS announced that (1) the deliberate non-disclosure of a significant potential violation will now be treated as an aggravating factor in civil enforcement cases, and (2) whistleblowing of significant potential violations by another party that ultimately results in a BIS enforcement action will be considered a mitigating factor in any future enforcement action involving the whistleblower, even for unrelated conduct. The policy changes are intended to incentivize the submission of disclosures to BIS when industry or academia uncovers significant EAR violations (i.e., those reflecting possible national security harm, as opposed to minor, technical violations).
BIS’s new policy of treating non-disclosure of significant potential violations of the EAR as an aggravating factor marks a potential sea change in the voluntary self-disclosure (VSD) risk calculus for exporters and reexporters. By reorienting the purpose of the VSD to serve as both carrot and stick, BIS has now interjected more complexity into the voluntary disclosure decision making process. Companies that may have been inclined, previously, to remediate significant potential violations but not disclose may now face a more difficult choice. While it may take years for the civil penalty data to demonstrate the concrete costs of non-disclosure of significant potential violations of the EAR, consideration of that factor is likely to weigh heavily in any future BIS VSD decisions.…
Continue Reading A Carrot and a Stick: BIS Clarifies Policy on Self-Disclosures and Whistleblowing
On February 16, 2023, the Department of Justice (DOJ) and Commerce Department announced the creation of the Disruptive Technology Strike Force with a mission to prevent nation-state “adversaries” from acquiring “disruptive” technologies. The strike force will be co-led by Assistant Attorney General Matthew Olsen of the DOJ’s National Security Division (NSD) and Assistant Secretary for Export Enforcement at the Commerce Department’s Bureau of Industry and Security (BIS) Matthew Axelrod, and will bring together the DOJ’s NSD, BIS, the Federal Bureau of Investigation, Homeland Security Investigations, and 14 US Attorneys’ Offices in 12 metropolitan regions.
The strike force’s mandate, and remarks by Deputy Attorney General Lisa Monaco announcing the new initiative, illustrate the US government’s continuing focus on protecting sensitive data and “disruptive” technologies, as well as the regulatory and enforcement tools that the US government has used and will continue to use to prevent the acquisition, use, and “abuse” of “disruptive” technologies by autocratic governments to commit human rights abuses and seek strategic advantage vis-à-vis the United States.…
