Category Archives: Bureau of Industry and Security (BIS)

Matthew Axelrod, Assistant Secretary for Export Enforcement, Delivers Remarks on Enhancements to Voluntary Self-Disclosure Policies for Export Control Violations at PCCE Event on January 16, 2024

On January 16, 2024, the NYU Law Program on Corporate Compliance and Enforcement hosted Matthew Axelrod, Assistant Secretary for Export Enforcement at the Bureau of Industry and Security (BIS) at the U.S. Department of Commerce, to deliver remarks on enhancements to BIS’s corporate enforcement policy for voluntary self-disclosures of export control violations. Assistant Secretary Axelrod’s speech was accompanied by the release of an enforcement policy memo, available here. After Secretary Axelrod’s remarks, he participated in a fireside chat and took questions from the audience. The event also featured a panel of experts on export control enforcement policy. A full agenda of the event is available here.

Matthew Axelrod, Assistant Secretary of Export Enforcement, BIS (©Hollenshead: Courtesy of NYU Photo Bureau)

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Matthew Axelrod, Assistant Secretary for Export Enforcement at the United States Department of Commerce, Bureau of Industry & Security, to Announce Enhancements to Corporate Voluntary Self-Disclosure Policies for Export Control Violations at PCCE Event on January 16, 2024

Matthew Axelrod, Assistant Secretary for Export Enforcement at the United States Department of Commerce, Bureau of Industry & Security, will announce enhancements to corporate voluntary self-disclosure policies for export control violations. After delivering his remarks, Assistant Secretary Axelrod will engage in a moderated fireside chat and will be taking questions from the audience.

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An Ounce of Prevention is Worth a Pound of Cure . . . or an Imposed Compliance Monitorship: A Fresh Look at the DOJ’s Corporate Enforcement Toolkit Applied to Sanctions and Export Controls Enforcement

by Brent Carlson and Michael Huneke

From left to right: Brent Carlson and Michael Huneke (Photos courtesy of authors)

In our last article, we discussed the evolution of export controls penalties.[1] Beyond monetary penalties, the U.S. Department of Justice (“DOJ”) has additional items in its corporate enforcement toolkit that dramatically increase the cost of non-compliance. These include the DOJ’s new policies requiring companies to claw back or withhold executive compensation, requiring CEOs and chief compliance officers to make pre-release compliance certifications, and expanding the grounds for appointing independent compliance monitors.

Such corporate enforcement trends significantly increase the value of making front-end investments to avoid the “pound of cure.” In this post, we take a “fresh look” at these trends with an eye towards sanctions and export controls enforcement and offer practical guidance for dealing with them. Continue reading →

FinCEN and BIS Issue Joint Notice Emphasizing That Financial Institutions Should Monitor for Possible Export Control Violations

by Jessica S. Carey, John P. Carlin, Roberto J. Gonzalez, Brad S. Karp, Richard S. Elliott, David Fein, David Kessler, Nathan Mitchell, and Jacobus J. Schutte

Top left to right: Jessica S. Carey, John P. Carlin, Roberto J. Gonzalez, Brad S. Karp, and Richard S. Elliott. Bottom left to right: David Fein, David Kessler, Nathan Mitchell, and Jacobus J. Schutte. (Photos courtesy of Paul, Weiss, Rifkind, Wharton & Garrison LLP)

On November 6, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) and the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) jointly issued a notice (the “Notice”) announcing a new Suspicious Activity Report (“SAR”) key term, “FIN-2023-GLOBALEXPORT,” that financial institutions should reference when reporting potential efforts by individuals or entities seeking to evade U.S. export controls.[1]

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Know Your Customer, But Also Yourself: A Fresh Look at Sanctions & Export Controls Risk Assessments in the Era of the “New FCPA”

by Brent Carlson and Michael Huneke

From left to right: Brent Carlson, Michael Huneke (Photos courtesy of the authors)

We have written recently about liability pitfalls caused by misperceived “loopholes” in sanctions and export controls regimes.[1] We have also written about the meaning and practical implications of the U.S. government’s emphasis on sanctions enforcement as the “new FCPA,” discussing how to identify and respond to circumstances posing a high probability of sanctions or export controls evasion.[2]

Having identified these new priority issues, what is the first step towards a solution? Risk assessments are the starting point.[3] Assess your own risk, but do so in an updated—and more effective—manner that reflects the evolving economic sanctions and export controls enforcement environment. Here are some suggestions to help with the assessment.

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When Loopholes Create Liability Pitfalls: A Fresh Look at Export Controls

by Brent Carlson

Photo courtesy of the author

Export controls have been around for decades, but the pace of change has accelerated dramatically in recent years propelled by powerful geopolitical and national security drivers. The US Department of Justice (“DOJ”) has made it clear that sanctions and export controls constitute a new top enforcement priority.[1] With twenty-five new dedicated prosecutors on the DOJ roster, increasingly it will not just be the Department of Commerce’s Bureau of Industry and Security (“BIS”) knocking on the door anymore.

The rapid pace of change has left many companies struggling to catch up with new risk management challenges. Certain assumptions and practices around export controls, which may have been widely accepted in the past, have become not only obsolete but increasingly landmines leading to disastrous potential criminal liability.

In addition to administrative penalties which are on the rise, the criminal penalties are steep, up to one million dollars and twenty years imprisonment per violation.[2] However, by adopting a white collar enforcement perspective to export controls compliance, companies and individuals may avoid creating unnecessary potential criminal liability pitfalls.

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DOJ, BIS and OFAC Release Guidance on Voluntary Self-Disclosures

By Eric J. Kadel, Sharon Cohen Levin, Anthony J. Lewis, Shari D. Leventhal, and Edoardo Saravalle

Left to right: Eric J. Kadel, Sharon Cohen Levin, Anthony J. Lewis, Shari D. Leventhal, and Edoardo Saravalle (Photos courtesy of Sullivan & Cromwell LLP)

DOJ, BIS and OFAC Issue Joint Guidance on Policies Relating to Voluntary Self-Disclosures of Potential Violations of Sanctions, Export Controls and Other National Security Laws

Summary

On July 26, 2023, the Department of Justice, the Department of Commerce and the Department of the Treasury released a Tri-Seal Compliance Note describing voluntary self-disclosure and whistleblower policies applicable to U.S. sanctions, export controls and other national security laws. The release does not impose new obligations, but provides an overview that (i) clarifies the salient aspects of the agencies’ voluntary self-disclosure policies (particularly following recent updates to these policies), (ii) suggests the differences between each agency’s approach to voluntary self-disclosures (including with respect to the mitigation of civil or criminal liability) and (iii) underscores the agencies’ goal of shifting the private sector’s risk calculus toward greater voluntary self-disclosures.

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The New Era of Export Enforcement

by Matthew S. Axelrod

Photo courtesy of the author

In 2008, when Siemens AG and three subsidiaries pleaded guilty to Foreign Corrupt Practices Act (FCPA) violations and agreed to pay $450 million in combined criminal fines, the resolution put the world on notice.[1] Violating the FCPA – including through corrupt payments, falsified records, and weak internal controls – would result in significant penalties. Paying bribes to foreign officials now carried enterprise risk. While that seems obvious today – after a number of subsequent multi-billion-dollar FCPA settlements – it wasn’t always the case. Through the work of a small but dedicated group of prosecutors at the U.S. Department of Justice, the FCPA developed from an esoteric and underappreciated area of the law into one of the top risk and compliance areas for large companies. Export enforcement is now travelling a similar path.

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Russia Sanctions After One Year: United States Imposes New Round of Restrictions

by Mark Chalmers, Billy Hicks, Kendall Howell, Paul D. Marquardt, Will Schisa, Daniel P. Stipano, and Charles Marshall Wilson

Top row from left to right: Mark Chalmers, Billy Hicks, and Kendall Howell. Bottom row from left to right: Paul D. Marquardt, Will Schisa, Daniel P. Stipano, and Charles Marshall Wilson. (Photos courtesy of Davis Polk & Wardwell LLP)

One year after Russia’s invasion of Ukraine, the United States and its allies imposed a new round of sanctions targeting Russia’s metal, mining, and banking sectors and signaled an increased focus on enforcement.

On February 24, 2023, the United States and its allies marked the one-year anniversary of Russia’s invasion of Ukraine with a new round of sanctions and export control restrictions targeting Russia’s economy and financial system. Consistent with the U.S. sanctions response from the outbreak of the conflict, the latest round of sanctions focused on Russia’s banking sector and export-oriented industries –adding several major Russian financial institutions to the SDN List and targeting Russia’s metal and mining sector. On the same day, the U.S. Department of Commerce, Bureau of Industry and Security (BIS) released new rules significantly expanding and modifying the export control restrictions applicable to Russia and Belarus, which may require exporters to re-examine their processes for product classification.

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