Category Archives: Export Controls

From Peanuts to Prison Time – A Fresh Look at the Evolution of Export Controls Penalties

by Brent Carlson and Michael Huneke

Photos of the authors

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

New export controls rules recently issued by the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) have set the corporate compliance world abuzz, as export controls continue to increase everywhere amid accelerating economic and geopolitical competition. Multinational companies are placed in an increasingly precarious position, caught between superpowers in a “disordered,” multipolar world. The consequences of failing to navigate successfully through myriad export controls regimes are only going to grow more severe, with the U.S. government signaling that a wave of increasing enforcement activity is on the way.

In this installment of our Fresh Looks series, we examine the evolution of export controls penalties, from where they are today to where they are heading tomorrow. The U.S. Department of Justice (“DOJ”) has called export controls and economic sanctions the “new FCPA” and included both among America’s national security enforcement priorities. This provides an important—and unambiguous—signal of the directional trends underway for export controls enforcement. Continue reading →

Slow is Smooth, Smooth is Fast: A Fresh Look at Planning and Executing Internal Investigations into Allegations of Sanctions or Export Controls Evasion

by Brent Carlson and Michael Huneke

Photos of the authors.

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

“Slow is Smooth, Smooth is Fast.” U.S. Navy SEALs and Aikido martial arts masters have valued this mantra as a reminder that deliberate, thoughtful action is—unexpectedly—the quickest way to accomplish your objectives in the face of chaotic circumstances.

Next in our “fresh look” series on economic sanctions and export controls compliance—and the convergence of both with anti-corruption compliance following the declaration by the DOJ that sanctions are the “new FCPA”—we apply this principle to responding to allegations of sanctions or export controls evasion. Continue reading →

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

by Brent Carlson

Photo of the author

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.

Continue reading →

The New Era of Export Enforcement

by Matthew S. Axelrod

Photos of the author

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.

Continue reading →