DOJ Issues Guidance on Voluntary Self-Disclosures for Export Control, Sanctions Violations
The Department of Justice recently outlined its policies on remediation of penalties for willful export controls and sanctions violations when a company submits a voluntary self-disclosure (VSD). A guidance document (here) issued in early October sets forth the criteria DOJ’s National Security Division “uses in exercising its prosecutorial discretion in this area,” as well as “the possible benefits that could be afforded to an organization that makes a voluntary self-disclosure.” The guidance document directs companies to continue to submit VSDs to the relevant agency -- the Bureau of Industry and Security, the Directorate of Defense Trade Controls or the Office of Foreign Assets Control, depending on the violation -- and if the violation was willful, to also submit the VSD to the Counterintelligence and Export Control Section (CES) of the National Security Division.
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A valid VSD must disclose the company’s conduct “prior to an imminent threat of disclosure or government investigation” to CES and the appropriate regulatory agency “within a reasonably prompt time after becoming aware of the offense,” DOJ said in the guidance. The company must disclose “all relevant facts known to it, including all relevant facts about the individuals involved in any export control or sanctions violation,” it said. DOJ will also assess the level of a company’s “scope, quantity, quality, and timing of cooperation,” keeping in mind the circumstances of each case, including the capacity of the company to investigate, it said. Timely and appropriate remediation is another factor DOJ considers, though remediation will only be considered if a company cooperates, it said.
If a company submits a VSD, fully cooperates and appropriately remediates in accordance with the standards outlined in DOJ’s guidance, it “may be eligible for a significantly reduced penalty, to include the possibility of a non-prosecution agreement, a reduced period of supervised compliance, a reduced fine and forfeiture, and no requirement for a monitor,” DOJ said. In the case of aggravating factors -- including exports of items known to be used to construct weapons of mass destruction, exports to a terrorist organization, repeated violations and knowledge of upper management -- a “more stringent resolution” will be required. “Nevertheless, the company would still find itself in a better position than if it had not submitted a VSD, cooperated, and remediated,” said the guidance, which lists factors DOJ will consider when deciding whether a company cooperated and remediated, as well as aggravating factors.
If a company does not submit a VSD, but after learning of violations from the government’s investigation cooperates fully and appropriately remediates, it still may be eligible to receive some credit, DOJ said. This may “include the possibility of a deferred prosecution agreement, a reduced fine and forfeiture, and an outside auditor as opposed to a monitor,” it said. However, “a company that does not voluntarily disclose its export control and sanctions violations will rarely qualify for” a non-prosecution agreement, DOJ said. The guidance also includes four hypothetical examples “intended to assist federal prosecutors in exercising their discretion in prosecuting export control and sanctions cases, and organizations and their counsel in evaluating how to proceed in these matters.”