BIS Considering Changes to VSD Review Process
The Bureau of Industry and Security is considering revising its voluntary self-disclosure review process to focus on “more serious” disclosures, said Matthew Axelrod, BIS’s top enforcement official. Axelrod, speaking during a June 14 Regulations and Procedures Technical Advisory Committee meeting, said the change could better dedicate the agency’s time to VSDs that warrant more attention.
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Axelrod asked RPTAC committee members for feedback on the idea, which could allow BIS to make sure disclosures that involve “minor technical violations get processed and returned very quickly.” But VSDs that disclose “more serious violations [would] get a more intensive review and investigation,” said Axelrod, BIS’s asistant secretary for export enforcement. “We'd be using our finite resources to dig into the disclosures that disclose more serious activity.”
Axelrod said the agency is still thinking through the idea, which would be similar to other shifts in BIS’s administrative enforcement policies he proposed in May (see 2205160062 and 2205230018), including limiting the use of no admit/no deny settlements or increasing penalty amounts. The agency revised its regulations this month to make one of the changes, which allows BIS to publicize charging letters before cases are resolved (see 2206030012).
Speaking to the RPTAC, Axelrod said BIS’s administrative enforcement policies have been “diluted a little bit,” partly because its charging letters have historically been kept sealed. “When we brought administrative charges, no one knew it,” he said. “And because no one knew it, there wasn’t an incentive for companies to try to resolve matters as quickly as they otherwise might.”
So far, he said, the change has proven helpful. “We think that the charging letter regulatory change is a positive step to making sure we're using our tools in the most effective way possible.”
BIS already has published two charging letters this month: one accusing Russian oligarch Roman Abramovich of illegally exporting U.S.-origin aircraft to Russia (see 2206060038), and another charging a Montana business owner with violating export controls after trying to ship controlled items with knowledge they would be used in Iran (see 2206100053).
Axelrod also stressed that the agency won’t always immediately turn to a public charging letter when pursuing a case, but will instead use its pre-charging letter process, which is private. That will “allow us to give a company notice of what we think they've done wrong, and that's a useful tool for us too, because in appropriate cases, that allows us to have conversations and negotiations about a resolution prior to a charging letter being issued,” Axelrod said.