Category Archives: Export Administration Regulations (EAR)

Avoid Kicking the Hornet’s Nest: A Fresh Look at How to Anticipate, Avoid, and Respond to BIS Administrative Subpoenas (Part 2)

by Brent Carlson and Michael Huneke

Photos of authors.

Brent Carlson and Michael Huneke (photos courtesy of authors)

In Part 2 we pick up where we left off in Part 1 to continue our discussion of how best to avoid an administrative subpoena. We then discuss how best to respond, if and when they cannot be avoided, and conclude with some practical guidance.

Avoid:  How to Dissuade BIS from Resorting to Administrative Subpoenas (Continued)

Prepare well for outreach visits

Companies should prepare for outreach visits. Persons who will be meeting or speaking with OEE agents should be well prepared to do so with an eye toward and an awareness of the implications of the information and representations they are providing to BIS. Any and all information that company representatives provide to BIS representatives is fair game for future enforcement and for sharing with other U.S. agencies.

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BIS Final Rule on Voluntary Self-Disclosure Process and Penalty Guidelines Highlights Significant Export Control Violations and Higher Penalties

by Christopher Timura, David Burns, Adam M. Smith, Stephenie Gosnell Handler, Samantha Sewall, Cody Poplin, Chris Mullen, and Audi Syarief

Top left to right: Christopher Timura, David Burns, Adam M. Smith, and Stephenie Gosnell Handler.
Bottom left to right: Samantha Sewall, Cody Poplin, Chris Mullen, and Audi Syarief. Photos courtesy of the authors.

In a final rule effective September 16, 2024, the Department of Commerce’s Bureau of Industry and Security (“BIS”) updated its process for handling voluntary self-disclosures from industry and expanded its discretion to impose higher monetary penalties for violations of export control laws. Whether to submit a voluntary self-disclosure remains a fact-dependent decision and requires careful weighing of factual, legal, practical and policy considerations.

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Avoid Kicking the Hornet’s Nest: A Fresh Look at How to Anticipate, Avoid, and Respond to BIS Administrative Subpoenas (Part 1)

by Brent Carlson and Michael Huneke

Photos of authors.

Brent Carlson and Michael Huneke (photos courtesy of authors)

Anticipating, avoiding, and responding to administrative subpoenas pose the next in a long line of challenges facing U.S. companies and their legal and compliance teams as the new wave of export controls enforcement unfolds.

The Department of Commerce’s Bureau of Industry & Security (“BIS”) has primed the corporate enforcement engine[1] through (1) public guidance identifying “red flags” indicating a “high probability” of diversion in violation of U.S. export controls, (2) successful criminal prosecutions in partnership with the U.S. Department of Justice (“DOJ”) in the Disruptive Technology Strike Force of intermediaries facilitating diversion,[2] and (3) “supplier list” and “red flag” letters warning companies of the risks of diversion posed by certain counterparties.[3]

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It May Not Be Worth the Paper (or Pixel) It’s Written On (Part 1): A Fresh Look at Letters of Assurance Used to Bolster Sanctions and Export Controls Compliance

by Brent Carlson and Michael Huneke

photos of the authors

Left to right: Brent Carlson and Michael Huneke (Photos courtesy of the authors)

“The world has changed. And we must change with it.” So stated Assistant Secretary of Commerce for Export Enforcement Matt Axelrod at a recent summit in California.[1] This simple statement reflects the increasingly complex challenges companies now face in navigating export controls and sanctions in a world driven by new geopolitical realities.

These challenges call into questions past assumptions about compliance programs. The foundation of a robust compliance program starts with the reliability of the inputs relied upon to make informed, risk-based decisions. In the halcyon days of the post-Cold War era, export controls took on an administrative character. In that environment, certifications from counterparties—themselves the targets of the due diligence—were taken largely at face value. Yet today passive reliance, without more, carries profound risks because export controls and sanctions enforcement has already become more of a white-collar corporate enforcement environment driven by Russia’s continued ability to secure U.S.-brand microelectronics (both legacy and new production). Certifications alone accordingly may not be worth the paper they are written on—or the pixels of which they are made—especially when other data includes “red flags” that cast doubt on certifications’ veracity.

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BIS Primes the Corporate Enforcement Engine: A Fresh Look at What Recent BIS Actions & Statements Mean and a Proposed Framework for How U.S. Companies Can Best Prepare

by Brent Carlson and Michael Huneke 

Photos of the authors.

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

The risk of corporate criminal enforcement actions for export controls evasion or diversion is significantly increasing. Recent actions and statements by the Department of Commerce’s Bureau of Industry & Security (“BIS”) suggest that, beyond saber-rattling, BIS is deliberately priming the corporate enforcement engine with the fuel for an enforcement wave that will follow the Foreign Corrupt Practices Act (“FCPA”) “playbook” that the U.S. Department of Justice (“DOJ”) has successfully deployed for the last two decades.

The fuel comes in the form of official, multiagency guidance documents and other actions that describe circumstances indicating a “high probability” of misconduct, which as we have previously written is a freestanding basis for enforcement actions under both the FCPA and the Export Administration Regulations (“EAR”).[1] Such agency actions by BIS notably include the issuance to U.S. companies of lists of counterparties under cover of what BIS officials describe as “red flag” letters. Since our prior analysis,[2] BIS has reemphasized the significance of such letters and underscored the importance of how U.S. companies respond.

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