Matthew Axelrod, the Assistant Secretary for Export Enforcement at the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”), told a conference held by the Society for International Affairs on May 16, 2022, that his agency is considering major policy changes to its administrative enforcement authorities.  Axelrod said the policy changes, expected to be rolled out in the next few months, are intended to incentivize export compliance by corporations under the Export Administration Regulations (“EAR”).  First, BIS may begin publishing Charging Letters when they are initially filed, rather than waiting until the charges are settled months or years later as is currently the practice.  Additionally, BIS may begin rejecting ‘no admit/no deny’ terms often demanded by companies as part of an administrative settlement with the government.  Without such terms, companies would be expected to admit their wrongdoing to resolve administrative violations.  Civil monetary penalties may also be substantially increased to discourage companies from risking a small fine in lieu of investing in effective compliance programs, according to Axelrod.

For those cases where Commerce makes criminal referrals to the U.S. Department of Justice (“DOJ”), companies should expect an increasingly aggressive DOJ posture.  In a November 2021 speech to the American Bar Association, Deputy Attorney General Lisa Monaco indicated DOJ is considering weighing past violations of types other than the potential violations immediately before them.  Theoretically, in an export controls context, that could mean DOJ would take into account past violations in diverse areas such as Foreign Corrupt Practices Act (“FCPA”), tax, environmental, or other areas when DOJ makes U.S. export controls-related charging decisions, settlement offers, and sentencing recommendations.  To minimize the risk of costly civil or criminal penalties, companies dealing in products “subject to the EAR” should monitor federal agencies’ enforcement postures and invest in their internal compliance functions.

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