President Biden signed H.R. 815 into law on April 24, 2024 to address specific foreign policy and national security issues. This legislation includes an extension (Section 3111) for the International Emergency Economic Powers Act (IEEPA) and the Trading with the Enemy Act (TWEA) from five to ten years. This statute of limitations is applicable to criminal and civil violations of sanction regulations administered under multiple agencies.
The specific verbiage of the law is as follows: “An action, suit, or proceeding for the enforcement of any civil fine, penalty, or forfeiture, pecuniary or otherwise, under this section shall not be entertained unless commenced within 10 years after the latest date of the violation upon which the civil fine, penalty, or forfeiture is based“. The law will also further harmonize United States sanctions specific to Russia with those imposed by the UK and EU.
This new legislation will affect nearly all existing U.S. Sanctions. The IEEPA is the authority overseeing sanction programs enforced by the Department of Treasury’s Office of Foreign Assets Control (OFAC) and the Bureau of Industry and Security (BIS). The law does not specify if this change is retroactive.
Possible Concerns for Organizations Involved in Export
This change in export regulation enforcement poses numerous concerns for businesses involved in the export of regulated items with regards to this change in the statute of limitations.
- Moving forward businesses will likely be required to retain records for at least ten years. For conservative practices twelve years may be appropriate.
- Businesses currently under investigation may experience increased scrutiny for export activities that overlap or proceed the previous five-year limitation.
- Merger and acquisition activities currently underway or being planned should adjust the scope of their audit activities to reflect this increased liability.
- Revisions of existing legal agreements between companies may need to be made.
- Immediate adjustments will be required for organizations’ export compliance programs to ensure due diligence.
CVG Strategy Export Compliance Management Programs
As these latest changes to the statute of limitation for sanctions violations illustrate, export compliance is a growing and dynamic concern for businesses engaged in sales of items that are intended for international sales or could result in international sales. Failure to comply with regulations can result in criminal prosecution including imprisonment and fines. It can also result in civil penalties and disbarment from export activities.
Export Compliance Management Programs establish clearly defined policies and procedures for all departments within an organization. They ensure that registration, item classifications, license applications, denied part screening, and security measures are taken that will prevent violation. They also ensure that training, auditing, and record keeping are maintained according to requirements.
CVG Strategy can help you in understanding the ITAR and EAR, and help you establish a coherent and effective export compliance program. We can perform export control classifications, perform audits, assist in filings for export licenses and educate your team. Regardless of whether your business falls under EAR or ITAR, CVG Strategy has the expertise to help.