Do you need to file a Voluntary Self Disclosure?
Many companies face the challenge of whether or not they need to file a Voluntary Self Disclosure when they recognize a violation of US Export Law at their company. Violations of US Export Law for the Export Administration Regulations (EAR) and International Trade in Arms Regulations (ITAR) can often occur without malfeasance. The ITAR is regulated by the Directorate of Defense Trade Controls or DDTC, the EAR is regulated by the Bureau of Industry and Security. Most violations involve an improper export of a controlled item. It is important to realize however that information conveyed in an email or phone conversation to a non-U.S. person can fall under this classification. It is therefore easy to see how potential violations can occur.
In such cases it is appropriate to file a Voluntary Self Disclosure (VSD) of any significant potential of regulatory violation. Such a filing will help mitigate potential damage to your company and in most cases results in the avoidance of fines, penalties, and negative exposure.
It is important to realize however, that the Voluntary Self Disclosure is the first step in addressing the potential violation. Follow up measures must be taken to address the occurrence and organizational steps taken to prevent any subsequent similar violations. This can involve any number of administrative actions but must include training to ensure future compliance. Failure to implement these steps can lead to penalties from the enforcement agency involved. These penalties can occur years after the initial incident if there is a recurrence of the violation and it is found that sufficient action was not taken.
To be certain, compliance to export law as relates to EAR, ITAR can be a challenge for any organization. Development of a program tailored to the needs of your company is important in protecting its reputation and ability to conduct business. This program must include relevant and regular training to maintain organizational rigor and scheduled assessments to ensure that the compliance program is in sync with the dynamics of an organization’s evolution.
A voluntary self disclosure can be painless, as long as it is honest and the company filing it takes action to prevent its reoccurrence. This action would likely include a formal written ITAR compliance program, training, processes to control restricted items and data from foreign persons and licensing when required by US export law. It is recommended that when a company files a VSD, that you ensure that all the documentation is prepared properly and in compliance with the requirements of the EAR or ITAR.
The CVG Strategy team has over 20 years of experience in U.S. export controls. We can help you develop an ITAR Compliance Program appropriate to your organizations requirements and provide training to prevent occurrences that could lead to violations and the need to file VSDs. We also have the experience to assist in guidance when unforeseen incidents do occur to develop strategies to prevent future violations. CVG Strategy has filed dozens of Voluntary Self Disclosures in the past decade and is well equipped to help you, if your company needs to file.