On May 22, 2024, the US Department of Justice’s National Security Division (“NSD”) announced its first-ever corporate declination under the NSD’s Export Control and Sanctions Enforcement Policy for Business Organizations (the “Policy”) in connection with a voluntary self-disclosure by Massachusetts biochemical company Sigma-Aldrich, Inc., doing business as MilliporeSigma. The declination related to allegations of US export control violations that occurred when a former employee and his co-conspirators submitted falsified export documentation for hundreds of shipments of MilliporeSigma products to China. The former MilliporeSigma employee and one coconspirator pleaded guilty to wire fraud conspiracy for their roles in the scheme. 

The NSD’s Export Control and Sanctions Enforcement Policy creates a presumption that a company will receive a non-prosecution agreement (“NPA”), or, where appropriate under the provisions of the Justice Manual, a full declination of any action, including through an NPA, and no fine when it voluntarily self-discloses potentially criminal violations of US export controls and sanctions laws to the NSD’s Counterintelligence and Export Control Section (“CES”), fully cooperates, and timely and appropriately remediates. The presumption of an NPA or declination does not apply where aggravating factors are present. “Potentially” aggravating factors include egregious or pervasive criminal misconduct within the company, concealment or involvement by upper management, repeated administrative and/or criminal violations of national security laws, the export of items that are particularly sensitive or to end users of heightened concern, and a significant profit to the company from the misconduct. Where such aggravating factors are present, NSD has the discretion to seek a different resolution, such as a deferred prosecution agreement or guilty plea.

While NSD has touted the MilliporeSigma declination as an example of the clear benefits companies may receive under the Policy when they commit fully to voluntary self-disclosure of export controls and sanctions violations at the earliest sign of potential criminal wrongdoing, the facts and circumstances of the case, as set forth by the Justice Department, raise significant questions for companies who may uncover similar or more serious conduct within their own operations. Such questions, and the specific facts at issue here, should prompt companies to carefully assess whether the MilliporeSigma declination is a seminal moment representing the new normal under NSD’s VSD Policy or a potential outlier with somewhat limited precedential value.Continue Reading DOJ’s National Security Division’s First-Ever Declination Under Its Voluntary Self-Disclosure Policy Raises Critical Questions

On May 21, 2024, the UK Department for Business & Trade’s Export Control Joint Unit (“ECJU”) published notice to exporters 2024/11 regarding its new guidance on the sale of oil tankers to countries other than the United Kingdom, Isle of Man, or Russia (“Third Countries”) under the Russia (Sanctions) (EU Exit) Regulations 2019 (the “Russia Regulations”) (the “ECJU Guidance”).  The purpose of the ECJU Guidance is to provide information and tools to the maritime sector that will assist in the prevention of sanctions evasion in relation to the sale and brokering of second-hand vessels to Third Countries.  The ECJU Guidance underscores the continued efforts of UK sanctions agencies to clamp down on evasion of the UK’s Russia sanctions, as well the UK government’s recognition of the need to collaborate with the private sector to succeed in those efforts.Continue Reading UK Issues Guidance on Oil Tanker Sales to Third Countries under the Russia Sanctions Regime

On May 15, 2024, the Sanctions (EU Exit) (Miscellaneous Amendments and Revocations) Regulations 2024 was laid before parliament (“Regulations”).  Among other things, the Regulations included a package of new trade sanctions measures under the UK’s Belarus sanctions regime targeting aluminum, as well as expanding sanctions on electronics (including semiconductors, electronic integrated circuits, and the machinery / apparatus needed for their manufacture), navigational instruments and appliances, aircraft, spacecraft and related parts.  The new trade sanctions came into effect on May 16, 2024.Continue Reading UK Imposes New Trade Sanctions on Belarus

On September 6, 2023, the Financial Conduct Authority (“FCA”), the UK regulator for financial services firms and markets, published a review of its assessment of sanctions systems and controls in place at financial services firms in the UK.  The review sought, in particular, to assess firms’ response to the rapid expansion in the size, scale, and complexity of sanctions following Russia’s invasion of Ukraine.  The FCA’s review considered sanctions compliance systems and controls at over 90 firms spanning various aspects of the financial services sector, including payments, retail banking, wholesale banking, wealth management, insurance, and electronic money.  The objective of the review was to assess the adequacy and effectiveness of firms’ systems and controls in addressing sanctions risks and their ability to respond promptly to changes in the UK’s sanctions regime.Continue Reading FCA Publishes Findings of its Assessment of UK Financial Services Firms’ Sanctions Systems and Controls