This is the tenth in our 2024 Year in Preview series examining important trends in white collar law and investigations in the coming year. Our previous post, "Health Care Fraud Enforcement in 2024," can be found here.
Throughout 2023 and early 2024, we continue to witness deepening geopolitical and economic divides globally. The U.S. and its allies (most significantly the EU and the G7), spurred on by Russia’s war in Ukraine, continue to engage in unprecedented coordination of their efforts to punish and technologically constrain adversaries. Sanctions, export controls, and other international trade laws have been central to these efforts. The targets are familiar ones: Russia, China, Iran, and North Korea. Robust enforcement will continue to be critical to the U.S. pursuit of its national security, foreign policy and economic objectives. In 2023, several U.S. government agencies collaborated not only on issuing enforcement guidance but also on notable enforcement actions. Both the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) and the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) imposed their highest penalties ever in 2023. In addition, BIS and the U.S. Department of Justice (“DOJ”), updated their respective voluntary self-disclosure (“VSD”) policies which, together with OFAC’s preexisting VSD policy, are likely to spur additional disclosures and the resulting enforcement activity.
Actions taken over the past year and government priorities for 2024 ensure that businesses worldwide must remain vigilant and continue to focus on building and strengthening their international trade compliance programs. This blog post will focus on U.S. trade sanctions and export controls compliance and enforcement activity.
U.S. ENFORCEMENT ACTIVITY
The U.S. continues to press its “whole of government” approach to enforcement of U.S. trade sanctions and export controls, expanding their use to further U.S. foreign and economic policy objectives, providing additional guidance, increasing the incentives for voluntary self-disclosure and conducting robust investigation and prosecution efforts. As Russia’s war on Ukraine persisted, and as terrorism and military conflicts flared across the Middle East and in Africa, many companies and individuals seen as aiding the military or economic interests of Russia, Iran or other adversaries have been targeted for enforcement actions. China, too, remains a focus of U.S. economic and national security concerns, and those involved in illicit technology transfers to China continue to face investigation and prosecution. The U.S. continues to focus on the serious risks (money laundering, sanctions evasion, and terrorism or other criminal finance, to name a few) presented by virtual currency and continues to press enforcement actions against individuals and companies operating in this space. Finally, U.S. government agencies expanded their collaboration efforts, jointly issuing enforcement and compliance guidance and cooperating on notable enforcement actions.
A. Tri-Seal Compliance Notes
Over the past year, the DOJ, OFAC, and BIS (“Agencies”) jointly issued three Tri-Seal Compliance Notes outlining common approaches on several key topics.
First, in March 2023, the Agencies released a Tri-Seal Compliance Note (“March 2023 Note”) identifying tactics used by bad actors involving third-party intermediaries to conceal transactions with SDNs, parties on the Entity List, or Russian end users. The Agencies highlighted these tactics “to assist the private sector in identifying warning signs and implementing appropriate compliance measures.” Common red flags include transactions involving personal email accounts (as opposed to company accounts) or entities with minimal (or no) internet presence (e.g., website). In addition, private sector actors should be wary of customers who are reluctant to provide information regarding a product’s end use or end user.
Second, in July 2023, as described in a previous client alert, the Agencies issued a Tri-Seal Compliance Note (“July 2023 Note”) regarding the voluntary self-disclosure of potential violations of U.S. sanctions and export controls. The July 2023 Note outlined the Agencies’ respective voluntary self-disclosure (“VSD”) policies (as of the time of that publication) and built upon actions that were taken in 2023 by OFAC and BIS under their respective pre-existing VSD policies. The July 2023 Note describes many—but not all—of the same details about the VSD policies discussed below (in Section V.B), and also describes the whistleblower program implemented by the Financial Crimes Enforcement Network (“FinCEN”).
Under the FinCEN whistleblower program, those who report to FinCEN (or the DOJ) violations that relate to U.S. trade and economic sanctions or the Bank Secrecy Act may receive a financial reward. If the whistleblower’s report leads to a successful enforcement action, the potential award ranges from 10 to 30 percent of the money FinCEN (or the DOJ) obtains through the enforcement action. FinCEN is also open to rewarding whistleblowers who disclose information that leads to the enforcement of a “related action” (e.g., an action under the Export Control Reform Act). FinCEN’s program will accept anonymous reports as well, although FinCEN states that such reports must be made through legal counsel.
Finally, in March 2024, the Agencies announced their first Tri-Seal Compliance Note of 2024 (“March 2024 Note”) concerning the applicability of U.S. sanctions and export controls against non-U.S. individuals or entities located in foreign countries or territories. The March 2024 Note describes the range of enforcement mechanisms available “for the U.S. government to hold non-U.S. persons accountable for violations of such laws, including criminal prosecution.”
With respect to OFAC, the March 2024 Note provides illustrative examples of the type of conduct where OFAC would seek to penalize foreign persons, including, for instance, a scenario in which a non-U.S. person conducts an illicit transaction using the U.S. financial system that causes a U.S. financial institution to process a payment in contravention of OFAC sanctions.
With respect to BIS, the March 2024 Note makes clear BIS’s position that “U.S. export control laws may extend to items subject to the EAR anywhere in the world and to foreign persons who deal with them.” It goes on to reiterate that the EAR applies not only to the initial export of a product, but also to reexports, in-country transfers (e.g., within the foreign country), items with more than de minimis U.S. content, and products subject to the various foreign direct product rules. The March 2024 Note also generally outlines recent DOJ, BIS, and OFAC enforcement actions that highlight how the Agencies have prosecuted non-U.S. persons who violate U.S. sanctions and export controls overseas. It concludes by providing compliance considerations for non-U.S. persons, including that such persons should develop and maintain internal trade compliance programs, institute comprehensive know-your-customer programs, and be ready to take action immediately, and in an effective manner, when compliance issues arise.
B. VSD Policy Updates
1. DOJ
DOJ continues to prioritize two main threats: (1) “the unlawful export of sensitive commodities, technologies, and services [which] pose a serious threat to the national security of the United States”; and (2) U.S. individuals and companies or organizations transacting with sanctioned individuals and entities. The DOJ’s National Security Division (NSD) issued a revised VSD policy in early March 2023 addressing these threats, and highlighting incentives for companies to self-disclose as a way to reduce, and potentially eliminate, criminal liability when they have identified and notified potential criminal violations of U.S. sanctions and export control laws.
As discussed in a prior client alert, this VSD Policy confirms for the first time that where a company voluntarily self-discloses potentially criminal violations, fully cooperates, and timely and appropriately remediates the violations, NSD generally will not require the disclosing party to enter a criminal a guilty plea, and there will be a presumption that the company will receive a non-prosecution agreement and will not pay a fine. However, this policy is only applicable to those companies who disclose a potential violation to NSD “within a reasonably prompt time after becoming aware” of the possible infraction, in circumstances where the company does not already have a legal obligation to disclose, and when the voluntary disclosure occurs “prior to an imminent threat of disclosure or government investigation.” If aggravating factors are present, such as a substantial profit from the misconduct or involvement by high-ranking executives, then the non-prosecution agreement presumption is inapplicable and DOJ would be able to pursue criminal prosecution. Moreover, in all circumstances, the company will be required to disgorge any funds gained from the underlying misconduct.
This VSD policy will only cover an entity if it has made its disclosure to NSD, so disclosures made only to other agencies such as BIS and OFAC will not qualify. Consistent with other VSD policies, the disclosing entity must share “all relevant non-privileged facts known at the time” and fully cooperate with NSD. Timely “cooperation” includes collecting and preserving relevant documents and information and identifying potential avenues of investigation for NSD.
To benefit from NSD’s policy, the disclosing party must also “timely and appropriately remediate any violations.” Notably, NSD will consider whether the party “implemented an effective and sufficiently resourced compliance and ethics program.” NSD will also be considering whether the party imposed disciplinary measures, such as compensation clawbacks, with respect to employees who were involved in, or were supervising areas in the company connected to, the underlying misconduct.
2. BIS
In April 2023, BIS issued guidelines clarifying its policies regarding voluntary self-disclosures. Like the other agencies, these BIS guidelines were published to incentivize entities and individuals to self-disclose violations. Unlike other agencies, though, BIS has used these guidelines to expressly focus attention on the disclosure of “significant” possible export controls violations. That is, BIS has created a dual-track system to deal with VSDs: one that fast-tracks minor or technical violations and another that handles “significant” violations.
In the April 18 memorandum setting out the guidelines, BIS Assistant Secretary for Export Enforcement Matthew Axelrod (“Axelrod”) described BIS’s intention to affect the risk calculus of filing a VSD for significant violations, explaining that, filing a VSD could result in a substantially reduced—or even a fully suspended—penalty. A VSD must be timely, comprehensive, and involve full cooperation to qualify for a substantial reduction in the applicable civil penalty under BIS’s base penalty matrix. Notably, filing a VSD will not alone guarantee a reduced penalty, but instead will be considered together with a company’s forward-looking efforts to enhance its compliance program to prevent reoccurrence of the violation. Axelrod also highlighted that an entity’s affirmative choice to not submit a VSD for a significant violation would be considered an aggravating factor in BIS’s assessment of penalties.
Axelrod also explained that multiple minor or technical violations would be treated differently. BIS now advises that minor violations, if close in time, can be bundled into a single VSD. As stated in Axelrod’s April 18 memorandum, “[w]e’re not focused on increasing the number of minor or technical VSDs we receive… submit one overarching submission … to streamline the process on their end and conserve resources on ours.” In most cases, BIS has indicated it will issue a warning or no-action letter in connection with minor or technical violations within 60 days of such a submission.
Further, BIS states that it will view the disclosure by one party (Party A) of a violation by another party (Party B) that leads to an enforcement action as an instance of “extraordinary cooperation.” BIS asserts that it will consider the fact that Party A made such a disclosure as a mitigating factor in any future enforcement action that may be brought against Party A, even for unrelated conduct. Understood literally, BIS would seem to be promising to “bank” a company’s current good behavior (in the form of the disclosure of another entity’s violations) against the disclosing company’s future bad behavior. To the extent that this policy could be viewed as incentivizing future violations, this is likely not quite what BIS intended, but at a minimum, it seems that BIS seeks to reinforce the view that the making of such a disclosure is part of being an otherwise good corporate citizen, and would deserve receiving some benefit in the future.
The VSD policy appears to be having the intended effect. BIS recently announced that while the overall number of VSDs remained constant from 2022 to 2023, BIS received 80% more VSDs containing potential serious violations in 2023 than in 2022.
In January 2024, BIS released an additional memorandum describing steps to enhance the “efficiency and effectiveness” of its VSD program. In this memorandum, BIS strongly encouraged electronic submissions of VSDs. Additionally, BIS will now allow an abbreviated narrative account to describe the nature of violations that involve only minor or technical infractions under the “fast-track” resolution policy, so long as there are no aggravating factors present. In another effort to streamline the process for VSDs of minor violations, BIS will no longer require the full five-year lookback recommended in Section 764.5(c)(3) of the EAR, nor all of the accompanying documentation outlined in that Section, unless requested by the Office of Export Enforcement. In the memorandum, BIS indicated that if a party seeks to return an unlawfully exported item back to the US, BIS will presumptively authorize such a reexport (this has already been BIS’s approach in practice).
3. OFAC
Like BIS and the DOJ, OFAC also encourages VSDs and has drafted similar policies to incentivize companies to self-disclose potential violations of U.S. sanctions. As noted in its Enforcement Guidelines (31 CFR Part 501), OFAC considers VSDs to be a mitigating factor in an enforcement action. In situations where a civil monetary penalty may be imposed, an OFAC VSD can result in up to a 50 percent reduction in the base amount of the proposed penalty. OFAC evaluates conduct described in a VSD using a totality of the circumstances approach, including for example, considering the party’s compliance program (or lack thereof) and its effectiveness, as well as identifying whether the party has taken corrective action to address the possible violation.
C. Creation of Disruptive Technology Strike Force
As discussed in a previous client alert, in February 2023, the DOJ and the Department of Commerce launched the Disruptive Technology Strike Force. The Strike Force brings together experts from different government agencies, including the FBI, Homeland Security Investigations, and 14 U.S. Attorneys’ Offices. The purpose of the Strike Force is to target illicit actors, strengthen supply chains, and protect critical technological assets from being acquired or used by nation-state adversaries. Its work will focus on investigating and prosecuting criminal violations of export laws, enhancing administrative enforcement of U.S. export controls, fostering cooperation with the private sector, and leveraging partnerships to coordinate law enforcement actions and disruptive strategies. The Strike Force also plans to strengthen its connections with the intelligence community.
D. Significant Enforcement Actions
1. DOJ
Last year, DOJ prosecuted several violations committed by foreign and domestic actors, in many cases involving U.S. adversaries and military end-users in China, Russia, Iran, and North Korea.
For example, a California resident was convicted of conspiring to ship aeronautics software to a Beijing university while contracted as a program administrator to a space science research nonprofit. The nonprofit had a contract with NASA to license and distribute Army flight control software, which the defendant sought to procure. In another instance, two U.S. Navy servicemembers were arrested and charged with “transmitting sensitive military information” to a Chinese intelligence officer. Some of this sensitive national defense information included technical manuals and key information on the “weapons, propulsion and desalination systems” used on certain U.S. Navy assault ships.
In cases involving Russian military end-users, two U.S. citizens were charged with violating U.S. export controls for a two-year scheme repairing, procuring, and shipping aviation-related technology headed to Russian end-users. In another elaborate conspiracy to procure and ship U.S. critical technologies for Russian military end-users, two Russian nationals were charged by the DOJ in a sophisticated procurement network using Brooklyn-based companies to buy goods on behalf of sanctioned end-users to support Russia’s military. Similarly, the DOJ charged a Belgian national in two separate indictments for allegedly helping to illegally export military-grade technology from the U.S. to end-users in China and Russia. The Belgian national allegedly procured more than $2 million worth of sensitive technology, and worked with a U.S. resident to smuggle the items out of the U.S. The Belgian national was subsequently arrested in Belgium. And, in another high-profile prosecution, the DOJ charged former senior FBI official, Charles McGonigal, in connection with a scheme to violate U.S. sanctions by providing services to a sanctioned Russian oligarch, Oleg Deripaska.
In cases involving Iranian end-users, a dual citizen of Iran and the U.S. was sentenced to 30 months in prison for “conspiring to illegally export U.S. goods and technology to users in Iran, including the Central Bank of Iran.” The defendant used two United Arab Emirates-based front companies to illegally purchase electronic goods and technology from American tech companies for Iranian end-users. Another Iranian national was also found guilty of violating U.S. export controls by illegally shipping electrical cables and connectors from the U.S. through Hong Kong, and ultimately to Iran. Two companies, Tawain-based DES International and Brunei-based Soltech Industry, were ordered to each pay a fine and serve a 5-year corporate probation term for conspiring to violate U.S. sanctions and export control laws by shipping U.S.-made goods, including a power amplifier and cybersecurity software, to Iran.
The DOJ charged five individuals from Iran, Turkey and the United Arab Emirates with violations of the Arms Export Control Act and the International Emergency Economic Powers Act for attempting to export U.S. technology to assist Iran’s ballistic missile and UAV (drone) programs between 2005 and 2013. Moreover, a U.S. national received a four-year prison sentence for conspiring to violate U.S. sanctions law by providing financial services to the Iranian government. These financial services were used to aid other Iranian individuals and entities, including a co-defendant, who plotted to kidnap a journalist in the U.S. to quell dissent against the Iranian regime. Lastly, and in its first-ever criminal resolution involving the sale of Iranian oil, the DOJ secured a guilty plea from Empire Navigation for violating U.S. sanctions by facilitating the sale and transport of more than 980,000 barrels of Iranian oil.
2. BIS
In the “largest standalone administrative penalty in BIS history,” BIS imposed a $300 million civil penalty on Seagate Technology LLC of Fremont, California and Seagate Singapore International Headquarters Pte. Ltd., of Singapore (collectively “Seagate”) for violations of U.S. export controls related to Seagate’s continued shipment of millions of hard disk drives to Huawei. Even after Huawei was placed on the Entity List for its conduct against U.S. national security interests and after Seagate’s competitors stopped selling to Huawei, Seagate continued to sell hard disk drives to Huawei. The settlement identifies 429 violations of the EAR between August 2020 and September 2021. In addition to the financial penalty, Seagate will now be subject to a multi-year audit requirement.
As discussed in a previous client alert, in a coordinated effort, BIS and OFAC imposed a combined $3.3 million penalty against Microsoft Corporation for its apparent violations of U.S. sanctions and export controls involving conduct by its foreign subsidiaries. Although the violative conduct predated the sanctions and export controls imposed on Russia related to its war in Ukraine, Microsoft allegedly failed to ensure its compliance program was effective and current. Despite having self-disclosed the violations, BIS and OFAC imposed a substantial penalty due to the presence of aggravating factors including: (a) that the over 1,300 apparent violations (resulting from software licenses sold and services provided to SDNs, blocked persons and users in sanctioned jurisdictions) directly impacted U.S. foreign policy objectives; (b) the determination that Microsoft acted with “reckless disregard” for U.S. sanctions; and (c) the “substantial experience and expertise” Microsoft has in software transactions.
Additionally, BIS worked with DOJ to obtain guilty pleas from individuals attempting to smuggle weapons and sensitive material to foreign countries. Most notably, BIS worked with DOJ to obtain a guilty plea from a Rhode Island man who purchased “ghost gun” kits and manufactured them into working firearms to be unlawfully exported to the Dominican Republic.
Finally, in an enforcement action alongside the DOJ and the State Department, BIS fined South Carolina-based 3D Systems Corporation over $2.7 million for committing multiple violations of the EAR, including violations of recordkeeping requirements. The company was found to have committed a range of export violations, including the illegal shipment of U.S.-origin aerospace blueprints and military electronics to China and controlled design documents to Germany. BIS highlighted that 3D Systems Corporation acted with “disregard” for its export compliance responsibilities, particularly by continuing to export the technical data even after discovering its own violations. The State Department’s parallel enforcement action is discussed below in Section D.4.
3. OFAC
OFAC’s enforcement actions broke records in 2023, generating civil monetary penalty/settlement amounts totaling over $1.5 billion. In total, OFAC brought 17 enforcement actions in 2023, with penalty and settlement amounts ranging from $31,000 to $968 million. Notably, most of the enforcement actions were brought against companies operating in the financial services (6 out of 17) and virtual currency (4 out of 17) sectors. Additionally, it appears that we will continue to see an increased coordination effort and alignment of enforcement priorities among OFAC and other agencies including the DOJ, BIS, and FinCEN as well as greater cooperation between the U.S., the EU, the UK, and other allies especially in the context of Russia sanctions. OFAC’s most significant enforcement actions of 2024 are described below. Additionally, OFAC continued its efforts to target Russia’s military and financial infrastructure and to enforce the Russian oil price cap by adding two new shipping entities and their registered vessels to the SDN List for violating the price cap policy.
British American Tobacco p.l.c.
The British American Tobacco p.l.c. (“BAT”) enforcement action highlights the weight that aggravating factors (e.g., harm to national security or willful acts) can have on a penalty amount. BAT’s Singapore subsidiary and a North Korean company established a joint venture company (“Joint Venture”). The Joint Venture was located in North Korea and had the purpose of manufacturing and distributing BAT cigarettes. The BAT subsidiary exercised effective control over the Joint Venture, holding a 60 percent stake, and supplied the Joint Venture with professional services, equipment, tobacco, and other material to produce cigarettes. BAT later directed the subsidiary to sell its stake in the Joint Venture to a Singapore-based trading group (“Singapore Company”) for one euro, seeking to obscure BAT’s continued effective ownership and control over the Joint Venture. Ultimately, twelve U.S. financial institutions processed several hundred USD payments from North Korea to the Singapore Company, including payments that were ultimately remitted to the BAT subsidiary. In addition, the BAT subsidiary, in partnership with the Singapore Company, also exported cigarettes to the North Korean Embassy in Singapore up through 2017.
BAT’s conduct was found to have resulted in a violation of § 544.205(b) of the Weapons of Mass Destruction and Proliferators Sanctions Regulations and fifteen violations of § 510.212 of the North Korea Sanctions Regulations. OFAC identified five substantial aggravating factors, including: (1) BAT management’s willful conduct, knowing that U.S. sanctions prohibited the transactions but engaging in them anyway; (2) BAT’s active concealment of facts surrounding the transactions, ignoring requests for information from banks and deleting references to North Korea from the information provided; (3) knowledge and participation by senior management; (4) that BAT’s misconduct enabled North Korea to establish a billion-dollar cigarette industry, thus materially helping the North Korean regime; and (5) BAT’s size and sophistication. The enforcement action resulted in a settlement of $508 million to OFAC and $629 million to the DOJ. In the settlement, OFAC stressed that BAT’s attempts to create the illusion of distance between the company and the violations was a significant aggravating factor. In addition, OFAC was highly critical of the ongoing failure by BAT’s senior management to create and enforce a culture of compliance, to conduct risk assessments or implement an effective risk-based compliance program, and to adapt that program over time as the risks evolved.
Binance
On November 21, 2023, OFAC announced a historic $960 million settlement with Binance, a Cayman Islands company and the world’s largest virtual currency exchange. The enforcement action and subsequent settlement resulted from Binance’s apparent violations of Iranian, Syrian, North Korean, Ukrainian/Russian, and Cuban U.S. sanctions regimes between August 2017 and October 2022. Binance allegedly carried out virtual currency trades on its online exchange platform between U.S. persons and users in sanctioned jurisdictions or blocked persons. Binance also allegedly took steps to project an image of compliance but did so by misleading third parties about its controls. Senior Binance management knew of and permitted the presence of both U.S. and sanctioned jurisdiction users on its platform and did so despite understanding OFAC-administered sanctions programs.
The $968 million settlement amount was based on several aggravating factors, including the fact that Binance’s violations were not self-disclosed and that the conduct was egregious. Specifically, OFAC determined that Binance knew, or likely knew, that its conduct would violate U.S. sanctions regulations and that Binance’s senior management mischaracterized its commitment to sanctions compliance to third parties. Finally, OFAC also highlighted the fact that Binance was a “commercially sophisticated actor.” The Binance settlement underscores the importance of establishing management commitment to sanctions compliance that is backed by adequate resources. For companies operating in the virtual currency industry, such as Binance, OFAC expressly indicates that compliance mechanisms should be incorporated into the company’s platforms and systems, such as through “KYC [know-your-customer] protocols, transaction monitoring, sanctions screening, algorithmic configurations, and other controls as appropriate.” Companies operating in this space should also be mindful that virtual currency exchanges existing outside of the United States should not cause U.S. persons to violate U.S. economic sanctions or result in the exportation of goods and services to sanctioned jurisdictions or blocked persons.
4. The U.S. Department of State Directorate of Defense Trade Controls (“DDTC”)
In the past year, DDTC has also been active, imposing civil penalties for violations of the Arms Export Control Act (“AECA”) and the ITAR in connection with unauthorized exports and retransfers of technical data.
In February 2023, as mentioned above, 3D Systems Corporation entered into a consent agreement with DDTC in connection with unauthorized exports and retransfers of technical data to various countries, including China. 3D Systems Corporation was fined a total of $20 million (with $10 million suspended on the condition that this amount be applied to remedial compliance costs as outlined in the Consent Agreement), and was required to appoint a designated Special Compliance Officer for the entire term of the Consent Agreement, in addition to conducting two audits during this period. DDTC credited extensive cooperation, and 3D Systems’ agreement to take significant steps to improve its compliance program, as the reason DDTC did not issue a debarment.
In April 2023, VTA Telecom Corporations (“VTA”) entered into a consent agreement with DDTC in connection with both unauthorized exports and attempted exports of defense articles, including technical data to Vietnam. DDTC asserted that the violations were willful, including false statements as to the items involved and the end use, and the conduct was discovered as the result of a DOJ criminal investigation including the execution of a search warrant at the company. Pursuant to ITAR §127.7(a), VTA was administratively debarred for a period of 3 years, and thereby prohibited from participating directly or indirectly in any transaction subject to the ITAR. VTA must then submit a request for reinstatement after the expiration of the debarment period, subject to DDTC approval, before resuming such transactions.
In August 2023, Island Pyrochemical Industries Corp. entered into a consent agreement with DDTC in connection with its unauthorized brokering in connection with the transfer of ammonium perchlorate from a Chinese company to a company in Brazil, using false statements on license applications. Island Pyrochemical agreed to pay $850,000 (with a potential $425,000 suspended on the condition that it be applied to specified compliance costs). Compliance measures included in the agreement include the appointment of a designated Special Compliance Officer, an independent audit, and strengthening compliance policies, procedures, training, and an automated export compliance system.
Most recently, in February 2024, the Boeing Company (“Boeing”) settled with DDTC in connection with unauthorized exports to China and violations of DDTC license terms and conditions. As a result, DDTC imposed a $51 million penalty (with $24 million suspended on the condition that this amount will be used towards remedial compliance measures outlined in the Consent Agreement). Boeing has consented to two audits in addition to strengthening its compliance policies, procedures, and training, which will be implemented under the supervision of a Special Compliance Officer for the entire term of the Consent Agreement.
OUTLOOK FOR 2024
Enforcement activity across the whole of government, including DOJ and the Departments of State, Treasury and Commerce, was extraordinarily active over the past year. BIS and OFAC both had record-breaking years in 2023, and neither shows any signs of slowing down. Indeed, both OFAC and BIS obtained some of the highest—or in the case of BIS’s Seagate action, the highest—penalty and settlement amounts in their respective histories. Moreover, given the significant number of interagency collaborations on enforcement, it is expected that the agencies will continue coordinating efforts to maximize their respective resources and investigate and prosecute potential violations from multiple angles.
Developments in international trade law continue to gather pace overwhelming both regulators and regulated entities. Those responsible for ensuring compliance with an ever-increasing number of legal requirements must keep abreast of changes to the law and modify their compliance programs accordingly. Foley Hoag’s international trade and national security group regularly assists companies of all sizes seeking to navigate international trade laws.
For the full series, please see: White Collar Year in Preview
