BIS Considers Enforcement Policies Changes

BIS Considers Enforcement Policies
BIS Considers Enforcement Policies

The Bureau of Industry and Security (BIS) considers enforcement policies changes an instrument for combatting national security threats.  This was highlighted in remarks released from Matthew Axelrod, Assistant Secretary for Export Enforcement.  In recent presentations he outlined the changing focus of the United States export control system and the need for bolstering enforcement actions of the Export Administration Regulations (EAR).

Administrative Enforcement Changes Under Consideration

The BIS is considering three major changes in the way that export regulations are enforced.  These proposed changes are as follows:

  1. Publicizing administrative charging letters when filed.  Currently charging letters are not publicized until the case has been resolved.  Making these letters public will incentivize other companies involved in similar violations to desist in those activities.  A policy to make administrative charges public would be similar to actions taken in criminal proceedings taken by the agency.
  2. Limiting the use of no admit / no deny settlements.  The BIS has often settled various administrative enforcement cases out of court, allowing organizations to pay reduced penalties without admitting to violation of export regulations.  While the agency does desire to incentivize companies to resolve violations, the overuse of no admit / no deny falls short of getting companies to admit fault and fails to identify root causes of those violations.
  3. The BIS is considering raising penalty amounts for administrative cases.  Axelrod pointed out that if penalties are not sufficiently severe, that organizations can conclude that the risk is not sufficient to deter violation of the law.  Furthermore, it was pointed out that penalties should be commensurate with the level of threat they present to national security.

Other Areas of Increased Enforcement Focus

Enforcement of Sanctions

Sanction enforcement is not a new area of enforcement for agencies involved with export regulations.  In fact, in the last decade, enforcement authorities actions in sanction cases have resulted in billions of dollars in civil and criminal penalties.  This is because many businesses are lax in ensuring that parties they are engaging in transactions are not on denied parties lists. 

In the past sanctions have been considered by many to be applicable solely to financial institutions.  Today, however, as sanctions have been increasingly utilized for national security and foreign ends, they are becoming increasingly relevant to any business in the international supply chain.  This is the case for companies doing business in any number of countries, as more and more nations are working together in imposing sanctions multilaterally. 

Antiboycott Compliance

Mr. Axelrod, along with enforcing the Department of Commerce’s EAR, also oversees the Office of Antiboycott Compliance.  Anti boycott regulations were adopted to require U.S. firms to refuse to participate in foreign boycotts that the United States does not sanction. They have the effect of preventing U.S. firms from being used to implement foreign policies of other nations which run counter to U.S. policy.

The enforcement of these regulations are also currently under review.  As with EAR enforcement, increases in administrative penalties and reconsideration of no admit / no deny settlements are being eyed.  Additionally, those involved with enforcement are looking to prioritize which violations are being actively investigated, placing emphasis on more severe violations.

Changes in the Implementation of Export Controls

Export controls are increasingly being implemented in response to a complex and challenging geopolitical landscape.  These issues include:

  • A growing concern over Russian actions and intentions
  • Nations engaged in genocide
  • Nations involved in subjection of ethnic minorities
  • Nations involved in slavery and forced labor
  • Nations actively engaged in theft of proprietary information including trade secrets
  • Nations involved in propping up illegitimate regimes through institutional corruption

As Axelrod pointed out, companies that engage in transactions with these nations, receive profit at the expensive of the world’s collective peace and prosperity.  It is therefore more important than ever that those involved in export activities to effectively engage in the complexities of export compliance.

CVG Strategy Export Compliance Expertise

CVG Strategy, a proven leader in export compliance, can help your organization implement and maintain viable export compliance programs to navigate this increasingly complex business concern.  We can provide expertise in Export Administration Regulations, International Traffic in Arms Regulations (ITAR), Sanctions, Denied Parties Screening, Anti Boycott and Canadian Goods Program (CGP).

We also provide assistance in item classification, Technical Assistance Agreements (TAA),  and voluntary disclosures.  Our staff can also provide effective training for all levels of an organization to ensure that all personnel are aware and up to date on export compliance issues.

As the BIS considers enforcement policies changes, it is becoming more and more important for companies to develop effective export compliance programs.  These developments are likely to continue to raise the complexity and associated risks for companies involved in the international supply chain.